Litigation Release No. 25975 / April 12, 2024

Securities and Exchange Commission v. Lixin Azarmehr, JL Real Estate Development Corporation, Nevada Skilled Nursing Lender, LLC, and Nevada Skilled Nursing Development, LLC, Civil Action No. 2:24-CV-00707 (D. Nev. April 11, 2024)

SEC Charges Real Estate Developer JL Real Estate Development Corporation, its principal, Lixin Azarmehr, and related entities with EB-5 Financing Offering Fraud

The Securities and Exchange Commission today announced fraud charges against a Los Angeles real estate developer, JL Real Estate Development Corporation, its chief executive officer, Lixin Azarmehr, and EB-5 offering and developing entities Nevada Skilled Nursing Lender, LLC ("Lender") and Nevada Skilled Nursing Development, LLC ("Developer") (collectively "Defendants") for an offering fraud in which the Defendants allegedly diverted approximately $10 million of investor funds for use in an unrelated real estate venture. Lender was the EB-5 offering entity for the stated purpose of financing the construction of three skilled nursing facilities in the Las Vegas, Nevada metropolitan area ("Nevada Project").

According to the SEC's complaint, from at least September 2015 through March 2018, Azarmehr, and others acting on behalf of these entities, offered and sold securities in the Nevada Project, raising $14 million from 28 investors primarily from China. These investments were made via the federal U.S. Citizenship and Immigration Service's ("USCIS") EB-5 Immigrant Investor Program ("EB-5 Program"). The complaint alleges that offering documents signed by Azarmehr and Lender indicated that investor funds would be used solely for the construction and administration of the Nevada Project. Instead, the Defendants redirected most of the money raised for other purposes.

The complaint alleges that in March of 2017, Azarmehr pledged $10 million in investor funds as collateral to support JL Real Estate Development Corporation's receipt of a financial institution's ("Bank") line of credit. The line of credit was allegedly used to pay off a higher interest rate on a credit line for a separate JL Real Estate Development Corporation real estate venture - an uncompleted mixed-use project located at 631 S. Vermont Avenue in Los Angeles, California. Using the investor fund-backed line of credit saved JL Real Estate Development Corporation substantial costs in interest payments.

For almost four years, from March 2017 to February 2021, the pledged investor funds were allegedly subject to seizure by the Bank if JL Real Estate Development Corporation did not meet its obligations to the line of credit. The Nevada Project's offering documents did not disclose to investors that investor funds could be used by or for JL Real Estate Development Corporation. Nor was it disclosed that investor funds would be or were at risk as pledged collateral for an unrelated real estate debt. While these funds were allegedly pledged as collateral, they were unavailable for their promised use - the construction of three skilled nursing facilities in Las Vegas.

The SEC's complaint charges all Defendants with violating Sections 17(a)(1), (2), and (3) of the Securities Act of 1933, 15 U.S.C. § 77q(1-3) and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b), and Rules 10b-5(a) and (c) thereunder, 17 C.F.R. §240.10b-5(a) and (c). The complaint further charges Azarmehr and Lender with violating Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder, 17 C.F.R. §240.10b-5(b).

The SEC's investigation was conducted by H. Norman Knickle, Ernesto Amparo, and Kam Lee from Washington, D.C., and was supervised by Mark Cave and Sarah Lamoree. The SEC's litigation is being handled by Rebecca Dunnan and H. Norman Knickle from Washington, D.C., and is supervised by Melissa Armstrong.

The SEC appreciates the assistance of the United States Citizenship and Immigration Services (USCIS).