U.S. Immigration Fund - NY vs Douglas Litowitz

Filing Date:April 10, 2018

Case:U.S. IMMIGRATION FUND LLC et al - v. - DOUGLAS LITOWITZ ESQ et al

Jurisdiction:New York State Court

Status:Resolved

Civil / Criminal:Civil

Breach of Contract

Plaintiffs U.S. Immigration Fund LLC, U.S. Immigration Fund-NY LLC, 701 TSQ 1000 Funding, LLC, 701 TSQ 1000 Funding GP, LLC, by and through their attorneys, Otterbourg P.C., as and for their Verified Complaint against defendants Douglas Litowitz, Esq. ("Litowitz"), Xuejun Makhsous, also known as Ma Xuejun, also known as Zoe Ma ("Zoe Ma") and RevivEast Legal Consultants (HK) Co., Ltd., also known as Hong Kong Zhendong Legal Services Consulting Co. Ltd. ("Consultants") allege, on knowledge as to their own status and actions and otherwise upon information and belief, as follows:

INTRODUCTION

1. This action arises from the seedy side of the legal profession. It asserts claims for fraud and related causes of action against Litowitz, an Illinois attorney, Zoe Ma, Litowitz' purported "Chief Investigator," and Consultants, their purported "legal consulting" business in Hong Kong. The claims arise from a desperate, bankrupt lawyer, his willing cohort and the business they created for the purpose of the fraud, deceptively and maliciously insinuating themselves, in furtherance of their own adverse interests, into an ongoing, U.S. government approved EB-5 program project affording certain accredited Chinese families much coveted green cards for themselves and their children to reside in the U.S., in return for investments by these Chinese investors in certain real estate development projects in the United States that under the program are designed to create, and have in fact created, a significant number of jobs for U.S. citizens. Among other things, defendants individually and in collusion with one another, and with knowledge of their fraudulent scheme, disseminated false and defamatory statements by which they attempted to raise their own profile while darñaging the reputation of plaintiffs, their affiliates and the aforementioned EB-5 capital investment projects, to the detriment of plaintiffs, so as to engage these Chinese investors in an attorney-client relationship and to induce them to withdraw their substantial investments from these EB-5 projects, so as to have them pay a portion of the returned investment to defendants as "Contingency-Based Legal Fees." The violations of the codes and canons of legal ethics are numerous and are described here to illustrate the Defendants' malicious course of conduct.

2. Defendants improperly approached these Chinese investors at a time when they were most vulnerable, owing to a backlog in recent years for EB-5 visas to investors from China that resulted in their investments - here, in the form of a pooled $200,000,000 loan in the EB-5 project - being paid back in accordance with the loan's terms and conditions but before approval of the coveted green cards. This resulted in the need to redeploy those repaid funds into another approved investment during the backlog period, or to give up on the green cards.

3. Importantly, had any of these Chinese investors properly requested from plaintiffs a withdrawal of their capital without defendants' interference, their entire investment would have been returned in full without any fees paid to defendants. In addition, withdrawal from these projects would jeopardize, if not extinguish, the investors' opportunity to obtain the green cards that they had been working towards, which is apparently of no concern to Defendants, who seek only to enrich themselves at the expense of both Plaintiffs and Defendants' own "clients." To date, approximately seventy Members have been refunded.

4. Worse still, upon information and belief, Defendants maliciously waged this campaign of fraud and defamation because of immense financial pressure upon both Litowitz and Zoe Ma arising from: first Litowitz's recent termination from his previous employers, Duff & Phelps, where he worked as a legal consultant, and SBI Securities (HK) Ltd., where he worked as an in-house lawyer; second, Litowitz filing for personal bankruptcy in January of 2018; third, the fimal and non-appealable adjudication on May 4, 2018 by the United States Bankruptcy Court in the Northern District of Illinois that a portion of Litowitz's debt was nondischargeable as it was obtained by Litowitz under "false pretenses, a false representation, or actual fraud" (see Exhibit A); and fourth the "financial ruin" of Zoe Ma arising from the failure of her actual business and sanctions imposed by the Wisconsin Department of Health Services in connection with her operation of two assisted living facilities in Marionette County, Wisconsin that "has cost her all of her life savings."

5. Defendants' fraudulent and otherwise wrongful conduct here has caused the Plaintiffs substantial harm for which they are entitled to relief, including punitive damages, both in an individual capacity and derivatively in their capacity as principals in Consultants.