Feds near to closing fraud case against Port St. Lucie City Center developer Lily Zhong

The federal government has settled its investment-fraud case against absentee City Center developer Lily Zhong.

The Securities and Exchange Commission and Zhong reached an agreement earlier this month that bars her from violating the federal laws she was accused of breaking; waives her right to appeal the judgment and its enforcement; and requires her to pay an unspecified amount of fines.

Zhong agreed to the settlement without admitting or denying the allegations against her, according to court documents.

U.S. District Court Judge Joan A. Lenard signed off on the settlement on March 16, court records show.

Zhong faced six counts of violating the Securities Act and Exchange Act. The SEC in November alleged she used money from Chinese investors, intended for Port St. Lucie's City Center and residential projects in Palm Bay, to purchase luxury cars and a boat.

The SEC claimed Zhong, a citizen of New Zealand, fraudulently raised at least $8.5 million from at least 17 investors between March 2011 and August 2014 through the EB-5 Immigrant Investor Program, and diverted nearly $1 million to buy the pricey items.

How much Zhong will have to pay is yet to be determined, SEC officials said.

"That part ... is still being litigated," SEC Regional Director Eric Bustillo said Wednesday.

It could take at least 60 to 90 days to reach an agreement on the monetary amount, SEC lawyer Andrew Schiff said Wednesday.

Zhong's properties, vehicles and boat will be sold to compensate her alleged victims, SEC officials said.

Her assets were frozen and controlled by a receiver while the case played out in court. The receiver, Michael I. Goldberg, on Wednesday asked the court to approve the sale of Zhong's Highland Beach home for $2.85 million, court records show.

Goldberg, who is also responsible for selling the City Center land, couldn't be reached for comment Wednesday.

Zhong purchased the 22 parcels that encompass City Center — at the corner of Walton Road and U.S. 1 — two years ago for $500,000 through her company US Investment LLC. She also set up a regional EB-5 center, a federal program that requires foreign investors to put down at least $500,000 each and create 10 American jobs per investor in exchange for green cards.

Zhong has had virtually no communication with city officials since then and owes approximately $18 million in outstanding taxes on the land. Last year, however, she submitted a preliminary proposal for a $380 million downtown at City Center.

Goldberg has been "in constant contact with the city of Port St. Lucie" since Nov. 12 about possibly selling the land to the city, according court documents.

The Port St. Lucie City Council earlier this month authorized interim City Attorney John Fumero to engage in more talks with the SEC to explore options for the property, which could include a sale to the city. Should the city decide not to buy, the council directed Fumero to attempt to partner with the SEC to protect the city's interest should the land go to another party.

http://www.tcpalm.com/news/shaping-our-future/property-values/feds-near-to-closing-fraud-case-against-port-st-lucie-city-center-developer-lily-zhong-2ebb84e2-8974-373297911.html

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