Judge awards $4 million in damages to Chinese investors in investment scheme case

By Daniel Beauregard | Jul 25, 2018

LOS ANGELES – A California judge ordered $4 million in compensatory damages be paid to Chinese nationals involved in a fraudulent Los Angeles investment scheme.

LOS ANGELES – A California judge ordered $4 million in compensatory damages be paid to Chinese nationals involved in a fraudulent Los Angeles investment scheme.

U.S.District Judge Otis D. Wright II of the Central District of California granted the plaintiffs’ motion requesting default judgment July 11.

“Each plaintiff invested a minimum of $500,000. The principal amount lost thereby totals $4 million,” Wright said. “Each plaintiff lost the entirety of their investment when the property was foreclosed upon and no EB–5 visas were provided through the VLP investment.”

The case, involving Chinese nationals Liu Hongwei, Li Xia, Liu Shuang, Xie Youshang, Wang Ying, Yu Zhihai, Wang Wei and Yan Qiujin, stems back to September 2012 when they were talked into investing in a real estate scheme run by Velocity Limited Partnership (VLP) and subsidiary Jellick Rowland LLC, the order states.

A business plan, delivered to Chinese nationals by VLP in 2011, outlined a project involving the collection and loaning of $15 million from 30 investors for the renovation, rental, and future management of four properties in the Pomona area.

The real estate firm claimed that as a United States Immigration Service-approved EB-5 project sponsor, it could equip investors with visas. More than 26 individuals, including the plaintiffs, invested in the project for a total of $13 million, the order states.

Rather than use the funds collected to purchase the lien on said properties, defendant Yin Nan Wang, owner of VLP and Jellick, distributed more than $8 million of the funds to companies owned by he and his associates.

Wang characterized these payments as construction expenses to investors, but minimal construction was ever performed on the properties.

The plaintiffs’ request for default judgment stems from Wang’s reportedly frequent stalling in the case.

“Wang has had sufficient time to appear in this suit, but has not done so. At this point, default judgment is the only way for Plaintiffs to receive compensation for Wang’s securities fraud and negligent misrepresentation,” Wright said.

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