SEC Slaps Senior Housing Developer with EB-5 Lawsuit

A development group with plans for a $500 million senior housing pipeline now is embroiled in a lawsuit with the Securities and Exchange Commission (SEC), which is alleging that the developer misused tens of millions of dollars raised through the EB-5 program.

Between 2009 and 2016, defendant Taher Kameli raised about $88.7 million from at least 226 immigrant investors, mostly Chinese and Iranian citizens, according to the legal complaint filed Thursday. Kameli allegedly told these investors that their capital would be used to fund a number of senior living projects in Illinois and Florida, producing a return for them and ultimately enabling them to obtain green cards. The EB-5 program is designed to enable foreign investors to gain green cards by helping fund projects in the United States.

However, Kameli and the development groups he created, including Bright Oaks Group, improperly commingled the funds and also used them for personal enrichment, the SEC is alleging.

Among other wrongdoing, Kameli generated more than $1 million in profits for his companies through land transactions related to the development projects and diverted $475,000 from two projects to a different one, in an effort to complete construction, the complaint states.

In 2014, Bright Oaks shared their ambitious plans with Senior Housing News, describing a pipeline of 11 senior living properties of about 100-200 units each, offering assisted living and memory care in a homelike setting.

Just one project has been completed so far, and that 60-unit community in Aurora, Illinois—named Bright Oaks of Aurora—only has 12 residents, according to the complaint.

Reached after business hours on Thursday night, workers at the Aurora community were not able to put Senior Housing News in contact with Kameli for comment. Kameli also did not immediately respond to an email from SHN Thursday night.

The SEC is seeking a temporary restraining order and preliminary injunction against the defendants, as well as an order that they “disgorge ill-gotten gains,” the imposition of civil penalties, and a jury trial.

In a separate brief filed Thursday, the SEC recommended George Mesires of Faegre Baker Daniels to act as receiver to assess the viability of the projects and determine how to proceed.

This is not the first time that a senior housing developer has been accused of defrauding EB-5 investors. In January, the SEC sued a private equity group over an alleged $9.5 million scheme.

Cases like these also have occurred in other real estate sectors, leading some members of Congress to call for the program to be discontinued or revamped. Recently, Sen. Dianne Feinstein (D-CA) called for the program to end due to conflicts of interest with the White House.

As it stands, funding for the program would run out in September.

http://seniorhousingnews.com/2017/06/22/sec-slaps-senior-housing-developer-with-eb-5-lawsuit/

Mentions

• UNITED STATES SECURITIES AND EXCHANGE COMMISSION
• Aurora Memory Care, LLC
• Taher Kameli

Litigation Cases

• UNITED STATES SECURITIES AND EXCHANGE COMMISSION vs Taher Kameli & Chicagoland Foreign Investment Group (CFIG) Regional Center

States

• New York