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Thread: News: SEC Charges Oil Company and CEO in Scheme Targeting Chinese-Americans and EB-5

  1. #1

    News: SEC Charges Oil Company and CEO in Scheme Targeting Chinese-Americans and EB-5

    SEC Charges Oil Company and CEO in Scheme Targeting Chinese-Americans and EB-5 Investors



    Washington D.C.,
    July 6, 2015

    The Securities and Exchange Commission today charged a Bay Area oil and gas company and its CEO with running a $68 million Ponzi-like scheme and affinity fraud that targeted the Chinese-American community in California and investors in Asia, including some solicited as part of the EB-5 Immigrant Investor Program.

    The SEC alleges that Bingqing Yang knew that Luca International Group was earning no profits and sinking under a mountain of debt, yet she made presentations to investors portraying a successful oil and gas operation with millions of barrels of oil reserves and billions of cubic feet in gas reserves.  Yang falsely projected outsized investment returns ranging from 20 to 30 percent annually.  She allegedly commingled investor funds to prevent the scheme from collapsing and used money from new investors to make sham profit payments to earlier investors.  Yang also allegedly diverted $2.4 million in investor funds through her brotherís company in Hong Kong, purportedly for the purchase of an oil rig, but instead used it to purchase a 5,600-square-foot home in an exclusive gated community in Fremont, Calif.  In addition, Yang allegedly spent investor funds on pool and gardening services, personal taxes, and a family vacation to Hawaii.

    According to the SECís complaint filed in federal court in San Francisco, Luca International conducted seminars for investors at the companyís offices and hotel conference rooms in California.  Besides targeting investors in the Chinese-American community through advertisements in Chinese-language television, radio, and newspaper outlets, Yang and Luca International allegedly zeroed in on Chinese citizens who sought permanent U.S. residence through the EB-5 program, which provides a way for foreign investors to obtain a green card by meeting certain U.S. investment requirements.  Yang is alleged to have raised approximately $8 million from EB-5 investors purportedly to finance, through a loan to another Luca entity, jobs and development costs for eight oil and gas drilling projects.  Yang allegedly told these investors that loan was fully secured, but the Luca entity the EB-5 investors funded was hopelessly in debt and contrary to the rosy representations Yang made to investors, had no realistic possibility of ever repaying the loan.

    ďAs alleged in our complaint, Yang falsely claimed that Luca International was a profitable oil and gas drilling operation when it was really a Ponzi-like scheme preying on Chinese-Americans and EB-5 investors who lost millions of dollars while Yang lined her pockets,Ē said Jina L. Choi, Director of the SECís San Francisco Regional Office. 

    Others charged in the SECís complaint include Luca Internationalís former vice president of business development Lei (Lily) Lei, who allegedly sold securities to investors and helped Yang divert investor funds, and Yong (Michael) Chen, who allegedly raised investor funds for Yang through his company Entholpy EMC, which did business under the name Mastermind College Funding Group.  Luca Internationalís former CFO Anthony Pollace agreed to pay a $25,500 penalty to settle charges that he played a small role in the alleged fraud. 

    As part of a related administrative action instituted today, Hiroshi Fujigami and his company Wisteria Global agreed to settle charges that they acted as brokers to illegally sell securities of two Luca entities.  Fujigami and Wisteria must disgorge allegedly ill-gotten gains of more than $1.1 million and Fujigami agreed to be barred from the securities industry and from participating in any penny stock offering.

    The SECís investigation was conducted by Alice Liu Jensen and Michael D. Foley of the San Francisco office and supervised by Steven D. Buchholz.  The SECís litigation will be led by Ms. Jensen, Sheila OíCallaghan, and John S. Yun.  The SEC appreciates the assistance of the U.S. Citizenship and Immigration Services, the Financial Industry Regulatory Authority, the Hong Kong Securities and Futures Commission, and the China Securities Regulatory Commission.


  2. #2
    Not only this the EB5 qualification is amount 500 thousand and create atleast 10 jobs with 10 thousand visas per year . if this visa are properly used they should create 10 thousand times 10 about 100 thousand jobs a year , Do the EB5 centers have the number where this jobs are created ? by this way they miss the real entrepreneur who can really create jobs with less investments .

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