In a recent two-week period, a single news source (Law360) carried articles about three different EB-5 court cases in three different states with these similarities:
- All three cases involved Chinese investors;
- All three involved charges that U.S. middlemen defrauded them of millions; and
- All were in federal courts.
The one reported on August 30 was different from run-of-the-mill EB-5 scandals because it took place in Manhattan, the focus of much EB-5 investment in glitzy real estate but generally EB-5-scandal-free until now.
In that case, both the august New York Port Authority and the routinely spineless U.S. Department of Homeland Security stood by as an alleged $57 million was “squandered” by the developers of a bus terminal at the New York end of the George Washington Bridge in upper Manhattan (not to be confused with the older Port Authority bus terminal at 40th St.).
Six days later came news about an older EB-5 controversy involving developer Nicholas Mastroianni II (whose name was previously linked with those of Jared Kushner and Mickey Cohen) and the Harbourside development in Jupiter, Fla., which we have written about in the past. In this instance, the investors asked the court to enforce the terms of a settlement on the U.S. players in the dispute.
Another six days passed and we learned that the Tenth Circuit has revived a case involving expensive condominiums in Vail, Colo. In a case that I have not written about earlier, the investors were stuck with 19 “impossible to sell condos” in an earlier settlement of the case.
“My clients are down over 80% while the Colorado managers got rich,” said Douglas Litowitz, who has represented many EB-5 investors in other cases, according to the Law360 coverage.
I suspect that “impossible to sell” could be translated to read “impossible to sell at prices that would compensate us for our losses”.
All this in two weeks.