Bellevue developer pleads guilty to fraud federal charges

Bellevue developer pleads guilty to fraud federal charges

EB-5 Visa, EB5 Visa, EB-5 Investment

Bellevue developer Lobsang Dargey faces as much as 10 years in federal prison after pleading guilty to fraud-related charges Wednesday.

Speaking in a subdued voice, Dargey entered his pleas in U.S. District Court in Seattle, more than a yearafter federal investigators raided his offices and home.

Sentencing is scheduled for April 6. Each charge carries up to five years in prison.

Dargey also has reached a tentative agreement to settle a civil lawsuit brought by the U.S Securities andExchange Commission, according to court papers and his attorney in that case, Peter Ehrlichman ofDorsey & Whitney.

It may take several weeks before it is finalized, he said.

An SEC representative declined comment Tuesday.

Dargey’s legal troubles began in August 2015 when the SEC filed the lawsuit in U.S. District Court,alleging fraud and misuse of investors’ money. The court appointed a receiver and handed him control ofDargey’s companies.

Even as Dargey has negotiated with the government on is criminal and civil matters, Dargey continues tofight the receiver’s plan to finish Potala Place in Everett, often referred to in court documents as PathAmerica Farmer’s Market and Everett Farmer’s Market.

Dargey entered the real estate market in 2006 when he purchased the Everett Public Market in downtownEverett. Next he purchased and renovated the former Federal Building on Colby Avenue. Then in themidst of the recession, he turned a former used-car lot into Potala Village, a four-story apartmentbuilding with ground-floor retail.

His career as a developer took off when he found a ready source of cash investors — Chinese citizensinterested in moving to the United States. A federal program called the EB-5 program offered foreigninvestors temporary residence and an accelerated shot at a green card if they put at least $500,000 intoa development project that created jobs in the U.S.

Dargey began laying the groundwork in 2010. He created development projects in Seattle and Everett,and enrolled them in the EB-5 program. He established contacts in China to help recruit investors.

From 2012 to 2015, Dargey and associates raised $153.6 million from 282 Chinese investors. In all, 80investors put $43.6 million into Potala Place in Everett and 202 investors put $110 million into PotalaTower in Seattle.

However, investigators determined that Dargey put millions of investors’ dollars into other projects inearly stages in Seattle, Kirkland and Shoreline. The investors knew nothing about these projects, whichdid not qualify for the EB-5 program — meaning they likely would not get a green card if U.S.immigration officials became aware of the misuse of money. Dargey also did not invest huge sums of hisown money as he had promised.

Those actions “resulted in gaping funding deficits” for the Potala Place and Potala Tower, assistant U.S.attorneys said in charging papers filed Tuesday. “Dargey filled these deficits by raising tens of millions ofdollars from a lender and a new equity investor.”

To hide his misuse of individual investors’ money, he provided the financers with falsified documents,according to court documents. Voya Insurance and Annuity Co. loaned the Everett project $25 million,and Shanghai Binshun Investment Management Co. — better known as Binjiang — invested $30 millionin Potala Tower. It invested another $30 million in two of Dargey’s side projects.

He told potential investors that putting money into the projects brought a “green card guarantee.” Thatwas not true, federal prosecutors said in court papers.

Dargey was a good salesman, though, and convinced public officials from former Lt. Gov. Brad Owens toEverett Mayor Ray Stephanson to talk up his projects to potential foreign backers. Seattle Mayor EdMurray praised Dargey at the groundbreaking ceremony of Potala Tower, an event attended by actor TomSkerritt.

In addition to siphoning off EB-5 money for other development schemes, Dargey spent investors’ moneyon gambling trips to casinos, to pay a $31,000 jewelry bill and to help buy a luxury home in a poshBellevue neighborhood.

Federal immigration officials have ended his companies participation in the EB-5 program. Appeals havebeen filed on behalf of investors.

A Las Vegas-based developer bought the Potala Tower project in October in a court-approved sale.



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