The Securities and Exchange Commission announced fraud charges and an asset freeze Thursday against a husband and wife accused of misusing two-thirds of the $27 million they raised through the EB-5 immigrant investor program to build a cancer treatment center.
The SEC's complaint, filed in federal court in Los Angeles, says that Charles C. Liu and Xin "Lisa" Wang raised the money from 50 investors in China for the purpose of building and operating the center that would use proton beam radiation to help oncology patients in Southern California.
The complaint states that they touted in promotional materials that the project would create more than 4,500 new jobs and have a substantial impact on the local economy while giving foreign investors an opportunity for future U.S. residency.
"But presently there is no construction at the proposed site after more than 18 months of collecting investments," the SEC states. "Liu meanwhile has transferred $11 million in investor funds to three firms in China and diverted another $7 million to his and his wife's personal accounts."
The EB-5 visa program grants residency to foregners who invest at least $500,000 in a business that creates at least 10 jobs in certain areas. The SEC and the Financial Industry Regulatory authority have said that they are scrutinizing the program, in which attorneys are often caught acting as unregistered brokers.
In granting the SEC's request to freeze the assets and accounts of Liu, Wang and related entities, the court's order prohibits them from raising further money from investors or spending remaining funds.
