The FBI and Department of Homeland Security raided the offices of a purported senior living community developer on Wednesday, alleging a multimillion dollar scheme to defraud the federal government through the EB-5 visa program and obtain “green cards” for some fugitives who are on China’s “Most Wanted” list.
In addition to the San Gabriel, CA, business office of California Investment Immigration Fund, the search also included two residences. A spokeswoman for U.S. Immigration and Customs Enforcement, part of the Department of Homeland Security, told McKnight’s Senior Living on Thursday that the case began in 2013 and still is in the evidence-gathering stage. No arrests have been made, a spokeswoman for the FBI said.
The EB-5 Immigrant Investor Program, administered by U.S. Citizenship and Immigration Services, part of the Department of Homeland Security, provides lawful, permanent residence to foreigners in exchange for their investing at least $500,000 in a U.S. business visa program that creates 10 new American jobs. On its website, CIIF said its EB-5 projects focus on financing and developing commercial and mixed-use real estate projects including senior living facilities and other housing, hotels, restaurants and retail.
According to a copy of the 113-page search warrant application obtained by McKnight’s Senior Living, investigators allege that Victoria Chan, an attorney, and her father, Tat Chan, a foreign national, have defrauded the federal government since 2008. Federal authorities executed the search warrants seeking evidence of possible mail fraud, wire fraud, visa fraud and money laundering.
The Chans are believed to have “convinced more than 100 foreign Chinese nationals to invest a total of more than $50 million with CIIF and related companies,” according to the affidavit, dated April 4. “However, rather than legitimately investing the funds into American businesses, CIIF either refunded the funds to the EB-5 investors while their EB-5 petitions were pending, in direct violation of the EB-5 program, or stole millions of dollars to use for personal expenditures, including buying million-dollar homes.”
Authorities believe that nine homes, including five that cost more than $1 million each, and two vacant lots, were purchased with misappropriated funds, and “no real construction actually took place at any of the proposed project locations,” according to case documents.
Although investigators believe that many of the “investors” in the scheme were complicit in the fraud, it’s possible that some thought the projects were legitimate and were duped, the ICE spokeswoman said.
Several of Victoria Chan’s clients, according to the search warrant application, were fugitives on the People’s Republic of China’s “100 Most Wanted” list, charged with crimes such as bribery or abuse of power, and their residency petitions contained false information. At least three of them ultimately received their green cards, the affidavit said.
California Investment Immigration Fund did not respond to a request for comment from McKnight’s Senior Living.
It’s happened before
Wednesday’s raid marks at least the second time within the past year that a senior living community developer is alleged to have used the EB-5 visa program to defraud the U.S. government.
In late December, the Securities and Exchange Commission accused California-based developer Emilio Francisco, through his private equity firm, PDC Capital Group, of stealing at least $9.6 million from a total of 131 foreign investors, mainly from China, to finance his businesses illegally and pay for his “luxury lifestyle.”
At the time, PDC Capital Group said it was developing 25 SummerPlace Assisted Living & Memory Care communities as well as Caffe Primo restaurants and a production facility for environmentally friendly agriculture and cleaning products, according to the the company’s website (since taken down) or the SEC complaint.
Francisco is seeking to have the case thrown out, according to Law360, but the SEC is fighting the attempt.
More information on that case can be found here.