“The Cold Never Bothered Me Anyway!” SEC Again Uses Its Power To Freeze An Alleged EB-5 Scam
Like Elsa, the Princess in Disney’s classic Frozen, once again the Securities and Exchange Commission (SEC) has utilized its power to freeze. In this case, the freezing of assets. In what has become an increasingly common tactic, the SEC successfully sought to freeze assets of several individuals and corporate entities in a complaint it recently brought alleging fraud in connection with securities offerings for projects under the EB-5 immigration program. As we have reported previously, particularly in the EB-5 space, the SEC has in recent years utilized the asset freeze as an enforcement tool. The EB-5 program allows foreign investors to apply for green cards in exchange for a minimum $500,000 investment in a job-creating enterprise.
In its case against Edward and Jean Chen, both residents of Arcadia, California, the SEC alleged that the Chens engaged in a “staggering” misappropriation of investor funds – diverting to themselves at least $8.6 million of the $9.5 million they raised from investors in one project, and another $3.5 million of investor funds from a second project. Rather than use the investors’ money for the EB-5 approved projects, the SEC claimed that the Chens took it for their own use, purchasing numerous foreclosed residential real estate properties.
Last week, Judge Anderson in the US District Court for the Central District of California agreed with the SEC, “that good cause exists to believe that, unless restrained and enjoined by order of this Court, Defendants will dissipate, conceal, or transfer assets which could be the subject to an order directing disgorgement or the payment of civil money penalties in this action” and froze 16 separate bank accounts controlled by the Chens. In addition, Judge Anderson appointed a receiver to take control of the several related corporate entity defendants the Chens controlled and also ordered the Chens and the corporate defendants to submit an accounting of all property valued at $5,000.00 or more.
Subscribe for News
This website is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities. Any such offer or solicitation will be made only by means of an investment's confidential Offering Memorandum and in accordance with the terms of all applicable securities and other laws. This website does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or any invitation to offer to buy or subscribe for, any securities, nor should it or any part of it form the basis of, or be relied on in any connection with, any contract or commitment whatsoever. EB5Projects.com LLC and its affiliates expressly disclaim any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from: (i) reliance on any information contained in the website, (ii) any error, omission or inaccuracy in any such information or (iii) any action resulting therefrom.