There has been another EB-5 (immigrant investor) program scandal and it has all the hallmarks of many previous ones:
- The victims: 45 investors, all from China.
- The accused: Two Americans with Chinese names, Edward and Jean Chen.
- The scene: California real estate.
- The EB-5 investments: $22.5 million.
- The job creation claim: 345 new jobs (only 450 were required).
- The alert cop: Securities and Exchange Commission.
- The useless bystander: Department of Homeland Security (which runs the E-5 program).
The Chens and a cluster of companies they controlled, including a DHS-licensed regional center, Home Paradise Regional Center LLC, diverted many millions of dollars away from EB-5 investments for their own personal use.
In one of the investments, $9.5 million was supposedly to be used for the development of an interior design center in Ontario, Calif. Of this, $8.9 million was channeled to other purposes. It is rare that this high a proportion of the EB-5 funds is stolen and a black mark on the DHS regulators that this much was gone before corrective action was taken.
Another $13 million was to be used to build a condo in Los Angeles; of this, $3.5 million was diverted to other Chen holdings, or to cash.
The SEC filing in the Central District of California asked the judge to freeze the Chens' assets to avoid further loses of the EB-5 investments. The full set of court documents can be seen on the PACER system as case 2:17-cv-06929-PA-JEM.
The slow-moving folks at DHS, as this is written on September 28, still had the Home Paradise Regional Center on its list of approved regional centers, despite the SEC filing of September 20.