The Securities and Exchange Commission today announced that it filed an emergency action and obtained an asset freeze, among other relief, against Richard Xia (aka Yi Xia) and his company, Fleet New York Metropolitan Regional Center LLC (formerly known as Federal New York Metropolitan Regional Center LLC), for committing securities fraud in connection with two real estate projects in Queens, New York.
The SEC's complaint alleges that from 2010 through late 2017, Xia, through Fleet, fraudulently raised more than $229 million through five EB-5 offerings from more than 450 investors. The funds were allegedly raised for Xia's two real estate development projects – the Eastern Mirage project and the Eastern Emerald project. According to the complaint, the offering materials made material misrepresentations regarding the sources of financing for the projects, the experience of the projects' development and construction team, the scope of the Eastern Emerald project, and the existence of lease agreements among several entities that Xia owns and controls. Additionally, Xia allegedly misappropriated approximately $17 million in Eastern Mirage investor funds, and at least $11.8 million in Eastern Emerald investor funds.
"Developers offering securities in connection with the EB-5 program have the responsibility to be truthful with their investors," said Richard Best, Director of the SEC's New York Regional Office. "As we allege in our complaint, Xia misappropriated millions of dollars in investor funds and misled investors about the financing for the projects and the experience of the projects' development and construction team."
The SEC's complaint, filed in federal district court in Brooklyn, New York, charges Xia and Fleet with violating the anti-fraud provisions of the federal securities laws. The complaint seeks, among other relief, a permanent injunction, disgorgement, prejudgment interest, civil penalties, an asset freeze, and the appointment of a monitor. The complaint also names Xia's wife, Julia Yue (aka JiQing Yue), as a relief defendant and seeks disgorgement and prejudgment interest from her.
The SEC's investigation was conducted by Kim Han, Brenda Wai Ming Chang, Neil Hendelman, David Stoelting, and Judith Weinstock under the supervision of Lara Shalov Mehraban. The examination that led to this investigation was conducted by the NYRO Broker-Dealer Exchange Examination Program. The SEC's litigation is being led by Mr. Stoelting, Kevin McGrath, and Ms. Han.
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