SEC announces asset freeze against Potala Place Shoreline developer
Tuesday, August 25, 2015
The developer of Potala Place Shoreline in Aurora Square is under investigation by the Securities and Exchange Commission, charged with fraud. See previous story.
Washington D.C., Aug. 25, 2015 — The Securities and Exchange Commission today announced an asset freeze obtained against a man in Bellevue, Wash., accused of defrauding Chinese investors seeking U.S. residency through the EB-5 Immigrant Investor Pilot Program by investing in his companies.
The SEC alleges that Lobsang Dargey and his “Path America” companies have raised at least $125 million for two real estate projects: a skyscraper in downtown Seattle and a mixed-use commercial and residential development containing a farmers’ market in Everett, Wash. But Dargey diverted $14 million for unrelated real estate projects and $3 million for personal use including the purchase of his $2.5 million home and cash withdrawals at casinos.
“We allege that Dargey promised investors their money would be used to develop specific real estate projects approved under the EB-5 program, but he misused millions of dollars to enrich himself and jeopardized investors’ prospects for U.S. residency,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.
According to the SEC’s complaint filed yesterday in U.S. District Court for the Western District of Washington:
- Under the EB-5 program, foreign citizens may qualify for U.S. residency if they make a qualified investment of at least $500,000 in a specified project that creates or preserves at least 10 jobs for U.S. workers.
- Dargey and his companies obtained investments from 250 Chinese investors under the auspices of the EB-5 program. Path America SnoCo and Path America KingCo operated as regional centers through which EB-5 investments could be made.
- Dargey told U.S. Citizenship and Immigration Services (USCIS) and EB-5 investors that he would use investor money only for the Seattle skyscraper and Everett, Wash., projects.
- Dargey and his companies misled investors about their ability to obtain permanent residency by investing in the Path America projects. For example, Dargey knew that USCIS can deny investors’ residency applications if investor money is used for a project that materially departs from the approved business plan presented to USCIS. Dargey failed to tell investors that he and his companies had departed from the business plan by using investor money for personal expenses and unrelated projects.
Late yesterday, the court granted the SEC’s request for an asset freeze and issued an order restraining Dargey and his companies from soliciting additional investors. The SEC also was granted an order expediting discovery, prohibiting the destruction of documents, and requiring Dargey to repatriate funds he transferred to overseas bank accounts.
The SEC’s investigation was conducted by Brent Smyth and Michael Foley of the San Francisco office and supervised by Steven Buchholz. The SEC’s litigation will be led by Mr. Smyth and Susan LaMarca. The SEC appreciates the assistance of the USCIS.
Assets from the alleged fraud project were frozen by Judge James L. Robart. Dargey is scheduled for a preliminary hearing for the three fraud claims on Sept. 14 in the U.S. District Court in Seattle.
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6 comments:
Is this the City of Shoreline's idea of economic development: getting in bed with thugs? Shoreline is my place to get ripped off.
Will this provide an opportunity for Shoreline planners to rethink the monstrosity?
Seized by the feds, like the former Sugar's stripper joint, is this what the City of Shoreline considers economic development. The City of Shoreline was going to amend the development code 6 years ago for Michael Mastroianni and his partner in support of a project on Midvale but Janet Way and Cindy Ryu asked for more details, within mere weeks of their request Mastro's house of cards collapsed. And Mastro was behind Arabella II, his empire's collapse resulted in years of blight on 15th Ave NE. Strangely enough, the City would have you believe Sears at Aurora Square is blighted even though there are no vacant, boarded up buildings like Arabella II.
This would be an excellent time to reconsider the notion that building more apartment complexes, with all the attendant traffic and higher taxes it will mean for all of Shoreline, is a good idea.
What Shoreline needs isn't more apartment complexes, we need more offices, more neighborhood stores, and more trees. That way, we can accommodate anticipated growth while preserving what makes Shoreline a great place to live and raise a family, lowering our taxes (the highest in King and Snohomish Counties!), and ensuring a great future.
EB-5 Program
Lobsang Dargey is in deep trouble with the SEC. The fall out of his legal issues now fall directly onto my community, the citizens of Shoreline.
Please read this article...it was a view into topic today....https://www.planning.org/news/daily/story/?story_id=id:eFTyc2FAS2JSAK4UqV7di0VtQjwUhLyMgdSiDRiphXp_4FwbQ52IdFs9iK1IjbUh&source_type=O
It demonstrates an interesting perspective on how the loopholes are being exploited.....especially by Lobsang Darbey and his peers in Seattle. Lots of new buildings...many funded through EB-5 loopholes and misrepresentations.
Wake up Shoreline! You have a council and city staff that will deal with anyone to create their idea of growth for your city. Vote these people out of office! This is just the latest in a list of outrageous behavior.
Do you really think they are looking out for your best interests? These folks get in bed with rats and wonder why they infest the city with fleas!
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