South Atlantic Regional Center spends millions of dollars to protect EB5 investors from developer fraud in the Palm House Hotel project

South Atlantic Regional Center spends millions of dollars to protect EB5 investors from developer fraud in the Palm House Hotel project

EB-5, EB5

PALM BEACH, Fla., Dec. 29, 2016 /PRNewswire/ -- Palm House Hotel, LLLP, the Lender for the Palm House Hotel reconstruction, along with its General Partner, South Atlantic Regional Center ("SARC"), and Joseph Walsh vigorously deny the allegations in the recently filed Federal lawsuit concerning the long delayed and troubled Palm House Hotel. The Lender and Mr. Walsh are 2 of 32 defendants sued by Chinese and Iranian investors seeking favored immigration status through their investment in jobs created by the refurbishment of the Palm Beach-based hotel. Neither the Palm House, LLLP, SARC, nor Mr. Walsh had any involvement in the improper use of loan proceeds by named defendants, Robert Matthews and his wife, Mia Matthews, and his brother Gerry Matthews and their related entities and accomplices. This is supported by the facts documented within the Civil RICO suit filed with the courts many months ago.  

To the contrary, the Palm House, LLLP and Mr. Walsh have been successful in their State Court lawsuits in having a Court-appointed Receiver take control of the Hotel property. The Court has also taken control of the sales proceeds of the 151-foot luxury yacht purchased by Mia Matthews with funds inappropriately siphoned from the loan for development and construction of the Palm House Hotel.

Recently there was an attempt by those controlling the Palm House, LLC. (the Borrower) to delay upcoming court hearings, as they have done on numerous occasions. Mr. Walsh and the Palm House, LLLP (the Lender) was able to stop this action in the Circuit Court of the 15th Judicial Circuit in Palm Beach. This ruling clears the path for the hearing on December 30th, 2016, whereby the Receiver will have his role enlarged. 

The Palm House, LLLP and Mr. Walsh plan to continue the prosecution of their civil lawsuits to recapture diverted loan proceeds used for the personal gain of the Matthews family and related entities and accomplices. At the same time, Palm House, LLLP and Mr. Walsh are seeking Court approval to expand the Receiver's powers to refinance the completion of the Hotel, to restructure ownership, and to provide for legal expenses for the Limited Partners. This restructuring will create the jobs necessary to complete the immigration application process in which the Plaintiffs originally invested.

The Palm House, LLLP and Mr. Walsh are supported in their efforts by Joseph Walsh, Jr., South Atlantic Regional Center, LLC, USREDA, LLC and JJW Consultancy, Ltd., also named as defendants in the Federal lawsuit, to recapture diverted loan proceeds. Mr. Walsh and his entities have spent over $3.5 million dollars the last 2 years endeavoring to procure a positive outcome for the investors and the immigration status. They have also sent more than 3,800 emails and held 85 hours of direct meetings with investors and their agents in an effort to keep them abreast of the lawsuits filed against several of the bad actors related to the Palm House Hotel development, including a Civil RICO suit.

Additionally, a significant and comprehensive compliance service was hired by Mr. Walsh to ensure that all forensic accounting was completed. The Principal of this firm is a former FBI Agent, who is familiar with sophisticated scams and able to discern and ferret out the fraud from within the information of complex organizations. The outcome of this firm's investigation on the Palm House LLC has produced more than 200 pages of exacting documentation, showing the fraud committed by the Mathews Family and their accomplices. This information has been provided to the proper authorities.

The recent suit by the international investors is indicative of the frustration caused by the length of time it takes for U.S. civil courts to achieve a positive outcome. The records clearly show that the path to a successful legal outcome for the Hotel and the investors is, was, and always has been, the desire of Mr. Walsh and his companies.

Mr. Walsh continues to demonstrate the sustained and significant efforts of he and his companies and the expenditures on behalf of the investors and the Hotel's completion. These efforts were underway well before allegations were made in recent lawsuits.  Meanwhile the facts are being distorted by the developers to try to benefit the Matthews family and their co-conspirators. These bad actors used the investors' money to enhance their lifestyle through the purchase of homes, properties, yachts, and other luxury items in their own names or names of many entities they control both on and off-shore. The sophistication of the fraud, including the fraudulent documentation, forged signatures, the fake bank accounts etc. have been found out and brought to light.  

"Clearly, these fraudulent parties are nearing the end of their ability to defraud anyone else," said Mr. Walsh. "We feel confident that actions will result in a positive outcome for all stakeholders in the very near future."  

The December 30th, 2016 date was put on the court docket in October 2016.  It is the opinion of the many attorneys close to the case that a path to finishing the property is close at hand.  Beyond this, Mr. Walsh, as the General Partner of the Limited Partnership, has negotiated a significant funding vehicle to pay for the expenses involved with appealing the immigration cases on behalf of the investors.


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