SEC v. Palm House Hotel, LLLP, et al.
Case No. 18-cv-81038 (S.D. Fl.)
On August 18, 2018, the Commission filed a complaint (the “Complaint”) against Palm House Hotel, LLLP (“PHH”), South Atlantic Regional Center, LLC (“SARC”), Joseph J. Walsh, Sr. (“Walsh”), Robert V. Matthews (collectively, the “Defendants”), and named 160 Royal Palm, LLC (“Royal Palm”) and United States Regional Economic Development Authority LLC d/b/a EB5 Petition (“USREDA”) as relief defendants. According to the Complaint, from November 2012 to March 2015, the Defendants defrauded 88 investors participating in the Immigrant Investor Program (“EB-5 Program”) of approximately $44 million by misrepresenting that PHH would loan investor funds to Palm House LLC to acquire, develop, and operate the Palm House Hotel located in Palm Beach, Florida. Instead, Walsh and Matthews misappropriated a significant portion of the investor funds. See Complaint.
On November 20, 2019, the Court entered final judgment against Royal Palm, ordering Royal Palm to pay disgorgement and prejudgment interest of $27,671,214.35. See Royal Palm’s Final Judgment. By final judgments entered on March 11, 2020, the Court ordered SARC, Walsh and USREDA to pay a total of $65,172,165 in disgorgement and prejudgment interest, and ordered Walsh to pay a civil penalty of $8,078,000. See SARC’s Final Judgment, Walsh’s Final Judgment, and USREDA’s Final Judgment.
On June 12, 2020, the Commission filed a motion for an order appointing Miller Kaplan Arase LLP, as the Tax Administrator to fulfill the tax obligations of the Distribution Fund and appointing JND Legal Administration, as the Distribution Agent to oversee the administration and distribution of the Distribution Fund to harmed investors. See the Commission’s Motion.
On June 18, 2020, the Court entered an order approving the Commission’s motion. See the Court's Order.
On November 10, 2020, the Commission filed a motion for an order approving a proposed distribution plan (“Plan”) and related relief. See the Commission’s Motion together with supporting documents .
Royal Palm is currently subject to Chapter 11 bankruptcy proceedings in the Southern District of Florida (18-19441-EPK) and the Commission has collected approximately $6.7 million of its judgment against Royal Palm through those bankruptcy proceedings (the “Distribution Fund”). Any additional funds collected pursuant to the Defendants’ final judgments will be added to the Distribution Fund.
Pursuant to the Court’s June 18, 2020 order, the Distribution Agent has filed its first status report and future status reports are to be filed within twenty days after the end of each quarter. Copies are available on the Distribution Fund’s website, https://www.palmhousehotelfund.com/, under the “Important Documents” tab.
For more information, please contact the Distribution Agent: