(Source: SEC) The Securities and Exchange Commission today announced fraud
charges and an asset freeze against a husband and wife accused of misusing
two-thirds of the money they raised from investors for the purpose of building
and operating a new cancer treatment center that would use proton beam
radiation to help oncology patients in Southern California.
According to the SEC’s complaint unsealed today in federal
court in Los Angeles, Charles C. Liu and Xin “Lisa” Wang raised $27 million for
the proton therapy cancer treatment center from 50 investors in China through
the EB-5 immigrant investor program. They touted in promotional materials
that the project would create more than 4,500 new jobs and have a substantial
impact on the local economy while giving foreign investors an opportunity for
future U.S. residency. But presently there is no construction at the
proposed site after more than 18 months of collecting investments. Liu
meanwhile has transferred $11 million in investor funds to three firms in China
and diverted another $7 million to his and his wife’s personal accounts.
In granting the SEC’s request to freeze the assets and
accounts of Liu, Wang, and related entities, the court’s order prohibits them
from raising further money from investors or spending remaining funds.
“We allege that Liu and Wang are using investor funds as
their personal piggy bank and exploiting Chinese residents who were assured
they were investing in an innovative project to create jobs and cure cancer
patients,” said Michele Layne, Director of the SEC’s Los Angeles Regional
Office.
According to the SEC’s complaint, one of the websites Liu
and Wang have used to promote investments in the cancer center project includes
a section entitled “Government Support” with photos of former president George
Herbert Walker Bush and former California governor Arnold Schwarzenegger.
Their photos are accompanied by what appear to be letters they wrote in support
of proton therapy in general rather than the depicted EB-5 project, which had
not even been initiated at the time the letters were written.
The SEC’s complaint names Liu and Wang along with the
companies behind the EB-5 project: Pacific Proton Therapy Regional Center,
Pacific Proton EB-5 Fund, and Beverly Proton Center LLC. They are charged
with violating antifraud provisions of Section 17(a) of the Securities Act of
1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5. The SEC seeks preliminary and permanent injunctions as well as the
disgorgement of ill-gotten gains plus interest and penalties.
The SEC’s investigation was conducted by Tony Regenstreif
and Lorraine L. Pearson and supervised by Victoria A. Levin of the Los Angeles
office. The SEC’s litigation will be led by John Berry. The SEC
appreciates the assistance of U.S. Citizenship and Immigration Services.