Federal securities regulators said this week that they had agreed to settle with a San Mateo County woman accused of misappropriating at least $45 million in investment funds from Chinese citizens who were aiming to gain U.S. permanent residency via investments in local real estate developments.
Federal securities regulators said this week that they had agreed to settle with a San Mateo County woman accused of misappropriating at least $45 million in investment funds from Chinese citizens who were aiming to gain U.S. permanent residency via investments in local real estate developments.
Bethany Liou, 55, did not admit to wrongdoing, the U.S. Securities and Exchange Commission said Monday, but agreed to pay $50 million to settle the charges related to the alleged EB 5 visa scheme.
The controversial EB-5 Immigrant Investor Program gives foreigners the chance to obtain American green cards in exchange for making large capital investments or job-creating ventures in the U.S.
According to the SEC, Liou sold at least $45 million in limited partnership interest in her GCRC Cupertino Fund, LP, to foreign investors at the cost of $500,000 — plus up to $55,000 in administrative fees — per partnership unit. But, instead of deploying those funds to mixed-use development projects in Cupertino as promised, she allegedly transferred the money to accounts in her own name and then pledged it as collateral on personal lines of credit.
Her Palo Alto-based company, Golden California Regional Center, LLC, was an approved EB 5 regional center, the SEC said, and a general partner to the investment fund.
“According to the Cupertino Fund offering documents, the proceeds of the offering would be used to partially finance the acquisition, development, and operation of a mixed-use residential, commercial, and hotel development in Cupertino, California,” the SEC said. “Liou never transferred the investment funds to the developer of the Cupertino-based project.”
The SEC said it would “seek to distribute the money to the Cupertino Fund investors.” Under the terms of the agreement, Liou is required pay $48.2 million back to investors within 10 days of the settlement being entered on Nov. 4.
Separately, a lawsuit by the Chinese investors accusing Liou of fraud is proceeding, the Mercury News noted.