A Flushing couple is accused of duping Chinese nationals into investing in two development projects. The construction of the Eastern Emerald Project, pictured on Sept. 14, 2021, has barely gotten underway. (Photo via SEC complaint)
Oct. 13, 2021 By Michael Dorgan
A Flushing couple has been accused of duping hundreds of Chinese nationals out of millions of dollars, by luring them into buying into two failed development projects in Queens — with the promise that their investments would help secure them residency in the United States.
Yi “Richard” Xia and his wife Julia Yue persuaded more than 450 investors to fork over $229 million to pay for the construction of two luxury hotels – one in Flushing and the other in Corona, according to a complaint filed by the U.S. Securities and Exchange Commission in Brooklyn Federal Court last month.
The couple told their victims that their investments would earn them entry into the EB-5 visa program – which provides foreign nationals with permanent residency if they make a qualified investment of $500,000 or more in a specified project.
The couple allegedly misappropriated a portion of investor funds and funneled nearly $10 million into personal bank accounts. Construction work on both buildings got underway but remain unfinished.
According to the complaint, Xia, 52, and Yue, 41, solicited $500,000 from each investor between 2010 and 2017 through a real estate company co-owned by Xia called Fleet New York Metropolitan Regional Center LLC. The victims were also charged a $50,000 processing fee each.
The pair told the victims that their funds were being loaned to the developers of the projects, who were affiliates of Fleet, for construction purposes—and that their investments would be returned to them once the loans matured.
The pair claimed that the projects were also being financed through government bonds and bank loans when in fact the scammed investors were effectively the only source of capital – which resulted in the projects falling significantly short on funding, according to the SEC complaint.
The development in Flushing called the Eastern Mirage Project, located at 42-31 Union St., was supposed to be finished in 2013 but remains “an unfinished and empty glass tower,” the SEC complaint states.
The development in Corona called the Eastern Emerald Project, located at 112-21 Northern Blvd., has barely gotten underway and the complaint describes the site as “a largely vacant dirt hole surrounded by a concrete wall.”
The Eastern Mirage Project on Union St., pictured on Sept. 14, 2021 (Photos via SEC complaint)
Some of the funds collected by the defendants were repeatedly misappropriated from one project and used for another, according to the complaint.
For instance, $17 million in the Eastern Mirage investor fund was used to purchase land for the Eastern Emerald Project — and at least $11.8 million in Eastern Emerald investor funds were used to pay for costs associated with the Eastern Mirage Project.
Additionally, Xia also re-directed at least $85.9 million of investor funds into accounts of other entities he controlled – with no invoices for around $43.6 million of these transfers.
Moreover, invoices totaling $32.2 million in transfers from Xia’s entities to general contractors “appear spurious,” the complaint states.
The complaint goes on to state that at least $9.7 million was also routed to personal bank accounts for Yue for no legitimate business purpose.
Xia is also accused of using investor funds in 2012 to pay off a $820,000 mortgage on a building in Flushing.
Since 2018, many investors have been demanding the return of their funds. To date, no investor has received any of their capital back, the complaint states.
The SEC alleges the couple violated federal securities laws and has requested that the court order them to disgorge all ill-gotten gains they received and pay unspecified civil penalties.
The agency obtained an asset freeze against Xia and Fleet on Sept. 27, the day of the SEC filing.
The Eastern Emerald Project on Northern Boulevard, pictured on Sept. 14, 2021 (Photos via SEC complaint)
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