In October 2011, EB5News.com reported and further chronicled in a video documenatry of failed projects on how the El Monte Regional Center in El Monte, California had its designation from USCIS revoked, meaning that it could no longer solicit capital or immigrant investors under the EB-5 Immigrant Investor visa program. In the agency's own words, the regional center was "no longer promoting job creation or the kind of local economic development for which it was initially certified to do" under the EB-5 visa program mandate. Now they are being investigated by the SEC for fraud and embezzlement.
History of Troubles
The City of El Monte originally hired developers Transit Village, LLC (TV, LLC) to transform a 65-acre area around its bus station into a $1 billion mixed-use development called, fittingly, Transit Village. El Monte received USCIS approval to raise money for the project via the EB-5 investor visa program, and after three years of trying was only able to convince two Chinese foreign nationals who invested $1 million. However, the project quickly soured as the El Monte Regional Center had been embroiled in legal troubles that began in 2009. TV, LLC executives John Leung (pictured left) and Jean Lang were arrested for alleged fraud and embezzlement (they were never charged). As for the city, it no longer wanted anything to do with TV, LLC and selected a different developer.
But TV, LLC wasn't through with El Monte. Alleging that the city violated its contract when it selected the new developer, the company filed suit with El Monte for $18 million. Not only that, but TV, LLC's new owner, Bang Zhao Lin, still wanted to develop Transit Village, and his attorney, Ben Reznik, said the company still had the rights to do so. The city of course filed a countersuit claiming that funds that were granted for the development were misused. Claims were that Lin’s Cross Ocean Holdings is simply a front to defraud Chinese nationals of their investment. In July 2012, the city emerged victorious in the $18 million lawsuit TV, LLC had lodged against it.
Even with these problems, TV, LLC representatives continued to promote the Transit Village project in China and Korea, even using the city’s official seal to convince them of the support they have from the City of El Monte. It's also worth noting that TV, LLC had filed for bankruptcy in the wake of its legal proceedings, another issue that Lin's company, Cross Oceans Holdings, had to deal with.
TV, LLC appealed the USCIS termination decision. In the summer of 2012, the appeal was dismissed by USCIS stating that TV did not have the financial resources nor the support of the city to proceed with the El Monte Regional Center program. It also attracted only two immigrant investors in a more than two-year period.
The City of El Monte then filed a countersuit against TV, LLC in October 2012 for $4 million. The city claims TV did not follow through with its development agreement and alleges Leung and Lang created TV, LLC and another company to hide "fraudulent business schemes and criminal activity,” and that they were likely still using the defunct project in the City of El Monte as sinkholes to attract immigrant investors.
In a letter dated June 26, 2013, the U.S. Securities and Exchange Commission Los Angeles Regional Office announced it is conducting an investigation into the El Monte Regional Center along with the El Monte Transit Village project (TV, LLC of Pleasanton, CA). The time period covered in the investigation is from Nov. 1, 2009 to present. They have requested records from or related to TV, LLC and “all entities in which it has or has had a controlling interest, all subsidiaries, affiliates, predecessors, successors, officers, directors, employees, agents, general partners, limited partners, partnerships, websites and aliases, code-names or trade or business names used by any of the foregoing: AC Landmarks, LLC; EM Incubator, LP; El Monte Regional Center; Pacifica Manufacturer Direct Business Incubator and the El Monte Transit Village project.” Namely this is a case filed against representatives of Jean Lang and John Leung, the managing members of TV, LLC and the El Monte Regional Center.
The investigation aims to discover if investors were taken advantage of and if the project promoters were in compliance with securities laws. Jenny Pei Lin, the majority owner of TV, LLC, is the only person named in the SEC subpoena, although it's intended for the former developers of the El Monte Regional Center and all documents related to the Transit Village project. TV, LCC had until July 10 to produce the documents listed in the subpoena, but Ken Wong, CEO of GEM/AC Landmarks, requested to push back the date to July 17, which was granted.
Regarding the investors, the first of the two, Han Sung Hye, received I-526 (temporary visa) approval from the USCIS in May 2009. On July 3, 2013, she received a notice indicating USCIS intends to revoke the decision made on her case. In return she has filed a formal complaint with the SEC.
In the meantime, El Monte is moving forward with a scaled down version of the El Monte Transit Village, now called the Gateway project, with new developers, El Monte Deputy City Attorney Dave Gondek said, as reported in the SGV Tribune.
Some of the information in this story was provided by Leo A. Guillen, a business consultant with New Idea Touch in El Monte, CA.