U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23778 / March 15, 2017
Securities and Exchange Commission v. Andy Shin Fong Chen, et al., No. 2:17-cv-00405 (W.D. Wash. Filed Mar. 15, 2017)
SEC Charges Businessman with Misappropriating EB-5 Investments
The Securities and Exchange Commission today announced fraud charges against a Renton, Washington-based businessman accused of misappropriating money he raised from EB-5 investors.
The SEC's complaint, filed in federal court in Washington, alleges that Andy Shin Fong Chen and his company Aero Space Port International Group, Inc. (ASPI) falsely told foreign investors that their $500,000 investments would be used to develop an EB-5 business he formed to develop a parcel of commercial real estate in Moses Lake, Washington. This would qualify the investors for a potential path to permanent U.S. residency through the EB-5 program. Chen allegedly jeopardized investors' residency prospects when he unlawfully misappropriated virtually all of the approximately $14.5 million he raised from them for his and his family's personal use, ASPI's operating expenses, and several of his other business interests, including other EB-5 projects he operated and personal businesses unrelated to the EB-5 program. According to the SEC's complaint, Chen used investor funds to satisfy margin calls, increase his borrowing capacity, and fund his speculative securities trading in a brokerage account he controlled in ASPI's name, and pay the lease on his luxury automobile. He also allegedly transferred funds directly to himself and his family members. The SEC further alleges that - to obscure his fraudulent scheme - Chen transferred millions of dollars between the various bank accounts he controlled and engaged in deceptive conduct as to the U.S. Citizenship and Immigration Service (USCIS), which administers the EB-5 program, regarding how he would use EB-5 investor funds.
The SEC's complaint charges Chen and ASPI with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933, and seeks permanent injunctions, disgorgement of ill-gotten gains with interest, and penalties. The SEC's complaint also charges North American Foreign Trade Zone Industries, LLC; Washington Economic Development Capital, LLC; Washington Economic Development Capital II, LLC; EVF, Inc.; Moses Lake 96000 Building LLC; Sun Basin Orchards, LLC; PIA, LLC; John Chen; Tom Chen; Bobby Chen; and Heidi Chen as relief defendants for the sole purpose of recovering investor funds they received from Chen or ASPI.
The SEC's investigation was conducted by Marc E. Johnson, George J. Bagnall, and Donato Furlano and was supervised by Ricky Sachar and Antonia Chion. The SEC's litigation will be led by John D. Worland, Jr. and Gregory N. Miller and will be supervised by Cheryl Crumpton. The SEC appreciates the assistance of USCIS.