They just keep coming — stories about EB-5 fraud, that is. This is the third blog I have written about this subject in the last 10 days. Each case was new to me and seemed to be more troublesome than the last.
The latest one involves Bingqing Yang, CEO of a Northern California oil and gas company. The Securities and Exchange Commission, according to an industry website, charged her with running a $68 million Ponzi-like scheme that victimized several Chinese EB-5 investors.
She falsely "projected outsized investment returns ranging from 20 to 30 percent annually. She allegedly commingled investor funds to prevent the scheme from collapsing, and used money from new investors to make sham profit payments to earlier investors", according to eb5projects.com.
It continued, "Yang also allegedly diverted $2.4 million in investor funds through her brother's company in Hong Kong purportedly for the purchase of an oil rig, but instead used it to purchase a 5,600 square-foot house in an exclusive gated community in Fremont, CA."
She is said to have used advertisements in Chinese in newspapers, television, and radio to promote the scheme.
In an earlier blog I reported on a civil suit filed by a former executive against his ex-employer, LA-based SolarMax, saying that the firm had engaged in "Enron-type 'round trip' transactions with sham middlemen entities ... in order to create a false impression of stronger financial performances". It was reported that SolarMax raised some $60 million in EB-5 funds from Chinese and Taiwanese investors; SolarMax's officers have Chinese names.
Michael McCaffrey, who filed the court case, was the chief financial officer of the firm, and says that he was fired for revealing these deals.
A few days earlier I wrote about how the official running the new EB-5 office for the state of Michigan had been forced out of his office for lavish spending in the Middle East as he and colleagues sought EB-funding for projects in that state. In this case it was Michigan tax money that was said to be wasted, not investors' EB-5 funds.