Three Houston-area developers charged with misusing almost $50 million in investor funds raised from 90 Chinese investors have agreed to settle, reported the Securities and Exchange Commission (SEC).
The three developers – America Modern Green Senior, America Modern Green Community, and America Modern Green Residential — misused investor funds raised from 90 Chinese investors under the EB-5 Immigrant Investor Program on unrelated projects. They told investors that their funds would be used only for a large mixed-use real estate development EB-5 project. However, the SEC learned that they transferred $20.5 million of investor funds for various undisclosed and improper purposes, including purchases of two unrelated real estate projects.
The developers violated antifraud provisions of the Securities Act of 1933. Without admitting or denying the SEC’s findings, the developers agreed to repay to the investors the $49.5 million plus $1,144,135 in interest. They also agree to pay an $800,000 penalty. The SEC action also imposes a cease-and-desist order on the developers.
“These developers obtained almost $50 million from investors in connection with an EB-5 offering that was based on misleading statements and involved a misuse of the funds raised,” Shamoil Shipchandler, director of the SEC’s Fort Worth Regional Office, said. “Today’s resolution provides full relief to all of the affected investors.”
The SEC’s investigation was conducted by Sarah Mallett and supervised by Eric Werner and James Etri of the SEC’s Fort Worth Regional Office.