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Chinese investors say they were scammed in Palm Beach development

Chinese investors say they were scammed in Palm Beach development

A lawsuit filed by dozens of investors from China and Iran accuses promoters of the long-dormant Palm House Hotel of defrauding them of $50 million.

The allegations are just the latest setback for the prime piece of real estate located less than a block from the ocean. The civil suit, filed in U.S. District Court for the Southern District of Florida, names a long list of defendants, including Joseph J. Walsh of Royal Palm Beach, developer Robert Matthews and Palm Beach real estate attorney Leslie Evans.

To raise money for what they pitched as a “five-star hotel” likely to be worth more than $100 million, the suit says, Walsh, Matthews and others courted investors through the EB-5 visa program, which grants U.S. residency to foreigners who back job-creating developments.

Matthews’ marketing materials, filed as exhibits in the suit, included a photo of him standing between former President Bill Clinton and Hillary Clinton. In another photo, Matthews posed with President-elect Donald Trump. Investors were falsely told that Bill Clinton and Trump would serve on the Palm House Hotel’s advisory board, the suit says.

The claims came years before this year’s nasty presidential election. The Clintons and Trump weren’t the only big names touted by Palm House Hotel. The developers also claimed they were in talks to brand the property as a Tommy Hilfiger hotel. And they said the Palm House Club would include such members as singers Tony Bennett and Celine Dion, Google Chairman Eric Schmidt and Palm Beach billionaire Bill Koch.

+Chinese investors say they were scammed in Palm Beach development photo

The lawsuit says investors were falsely told that Donald Trump, among other high-profile business people, would serve on the Palm House Hotel’s advisory board. There is no evidence or indication that Trump, seen here in a photograph with Matthews that is included in the lawsuit’s exhibits, was in any way connected to the project.

The defendants have yet to file a response to the suit.

Investors turned over at least $500,000 apiece, plus an administrative fee of $40,000, the suit said. In return, the investors and their children were promised visas, along with a free one-week stay in the hotel, plus a cut of the profits.

The investors accuse the Palm House developers of using $6 million of their money to buy a 151-foot yacht. The rest went to such expenses as a luxury car, paying off a tax lien and retiring a secret mortgage, the suit says.

“Virtually none of Plaintiffs’ funds were used develop the property, no jobs were created, and no EB-5 visas were issued to any of the plaintiffs,” the suit says. “Accordingly, over 80 foreigners are now unable to leave their respective countries and have lost their entire life savings.”

The suit calls Walsh the “mastermind” of the scheme. He ran South Atlantic Regional Center of Royal Palm Beach.

Investors claim that the group pitching the investment took elaborate steps to appear legitimate. In one instance, Matthews and others took the Chinese investors’ immigration agents to a charity event at Mar-a-Lago, where he introduced them to Trump.

In another episode, the Palm House Hotel arranged for phony workers to appear at the property to create the appearance of a bustling construction site, the suit says.

The property at 160 Royal Palm Way is the subject of at least two other lawsuits, and last year it was placed under the control of a court-appointed receiver.

Marketing materials, which were issued in Farsi, Chinese and English, predicted the hotel would generate $13 million a year in revenue in 2014.


Source: http://www.mypalmbeachpost.com/news/business/chinese-investors-say-they-were-scammed-in-palm-be/ns8zk/

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