When visiting Chicago in 2013 I had a chance to visit the site of the largest EB-5 regional center scandal up to that date, “A Chicago Convention Center”, which I reported in blog post http://www.internationalappraiser.com/2013/05/attempt-to-defraud-261-chinese.html. This was at the same time that there was a proliferation of local (Los Angeles) realtor and appraiser seminars about how to profit from the EB-5 visa program.
After returning from Chicago I called a former neighbor, Marvin Vong, who is a former Chinese national and now a licensed immigration attorney in Los Angeles. I asked him if he steered clients towards EB-5 regional centers. He said no. I asked him why, and he said, “I don’t want to go to jail”. That was my first alert to the corruption going on in the EB-5 visa industry.
Not long afterwards I visited the San Gabriel Hilton hotel and found a plush office in the hotel lobby occupied by the California Investment Immigration Fund (CIIF), an EB-5 regional center whose purpose is to secure EB-5 visas for wealthy Chinese investors. Because of my Chicago experience I entered their office with some skepticism and asked them what projects they were trying to fund.
The young manager on duty explained that they were developing a commercial center in Indio, California, a low-income desert community, with an 82-room Holiday Inn Express, an office building, and 3 restaurants.
Curious about why they were so specific about the hotel but vague about the office building, I asked “How large is the office building?” I did not get an answer.
I called the Indio planning department to verify this project, and they explained that indeed a development plan had been submitted for their approval of a hotel and restaurants, but there was no office building in the development plan. At that time I surmised that this discrepancy was probably due to a lack of investors, not necessarily a fraud. Lots of projects get downsized due to lack of funds.
Two years later, in November 2015, I revisited their office to inquire about the success of Victoria Center. There was a look of fear on the manager’s face when I asked that question. She then claimed no knowledge of Victoria Center but instead touted a project to be built in Rancho Cucamonga to be called “California China Town”. I called the Rancho Cucamonga planning department and they denied that there was a development application for any such thing and that they were not familiar with CIIF.
Mythical project "California China Town" in Rancho Cucamonga
Strangely enough, when I contacted the City of Indio Planning Commission about Victoria Center, I was informed by assistant planner Laila Namvar that development of Victoria Center had been approved on January 14, 2015, but no development had started yet, two years later.
I did a search on Baidu, China’s leading search engine, and found that CIIF had a separate Chinese web site, www.ciif-eb5.com, which advertised several real estate projects not mentioned on their U.S. web site. These were projects in Ontario, Riverside, and Rancho Cucamonga, California. Calling the respective planning departments for these cities I found that these were all fake projects for which development plans had not been submitted. The Chinese web site even boasted that CIIF is the most successful EB-5 regional center in America.
I then wrote up a complaint to the SEC (Securities and Exchange Commission) about violation of securities laws. They contacted me shortly and asked me to contact their “embedded agent” in the FBI to provide useful information about their Chinese web site, the fake real estate projects that they were promoting in China and that the principals of CIIF, Tat and Victoria Chan, bought luxury homes within two weeks of each other after they started advertising Victoria Center. Tat Chan's home, bought for almost $5 million, is in the gated community of Bradbury, while Victoria Chan bought a Diamond Bar home for almost $1 million.
Yesterday, the CIIF office in San Gabriel was raided, in addition to homes owned by Tat and Victoria Chan, by the FBI for information pertaining to fraud and violation of immigration laws.
As I have learned from my own work, and from the "A Chicago Convention Center" scandal, the quickest way to stop fraud at the start is to verify the project with the relevant local planners. It is a phone call that takes only a few minutes. Once I found all of the fake projects advertised on their Chinese web site and called the relevant city planners, I knew that CIIF was a fraudulent enterprise.
I see an interesting pattern among fraudsters in this industry. They go out of their way to get photographed with prominent politicians. Anjoo Sethi of the Chicago Convention Center scandal aggressively pursued photo opportunities with the governor and senator from Illinois to provide the illusion of legitimacy for his fake project. Here is Victoria Chan posing with Hillary Clinton in a photo on a big screen outside the CIIF office:
The man in the photo is believed to be a brother of Victoria Chan. The big screen presents a slide show of poses with other public figures, such as former L.A. mayor Antonio Villaraigossa, and the front window is covered with letters of commendation from various local and state legislators for CIIF's contributions to local commerce or to the local community, but there is no record that CIIF actually did anything for the community or for commerce. They did make campaign donations, however.