A New York City real estate developer has entered into a $272 million settlement with the Securities and Exchange Commission (SEC) over accusations that he defrauded Chinese EB-5 investors.
The federal EB-5 federal program enables foreign investors to obtain a U.S. visa in exchange for at least $500,000 in a commercial enterprise. The Real Deal reported Richard Xia and his firm Fleet Financial reportedly obtained more than $228 million in financing from over 400 EB-5 investors between 2010 and 2017.
The SEC claimed that Xia gave the investors incorrect information regarding the sources of financing, the experience of the development and construction team, and the scope of the projects being financed. Xia was also charged with channeling $30 million of the investors’ money for the purchase of three homes – one of the properties was used to dump contaminated soil from another real estate development.
Under the terms of the settlement, Xia will repay $228 million that he took from the EB-5 investors, plus $25 million in pre-judgment interest. Xia will also pay a civil penalty of $3.1 million while his company Fleet Financial will pay a civil penalty of $15.5 million. Furthermore, Xia agreed to be banned from participating in most future securities offerings while Fleet Financial will be prohibited from participating in any future securities offering.
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