SEC Charges Couple with $10 Million EB-5 Fraud and Cover-Up

 

The SEC this week charged California-based lawyer Jean Danhong Chen and her husband Tony Jianyun Ye with raising over US$10 million in undisclosed commissions through the sale of EB-5 securities, as well as for attempting to tamper with evidence after they learned they were under investigation.

According to an SEC press release, the couple conspired with a personal friend, Kuansheng Chen, to defraud “hundreds” of clients by secretly acquiring an EB-5 regional center – Golden State Regional Center LLC – and subsequently advising their clients to invest in the project without disclosing their ownership interest.

The SEC alleges that the couple hired one Kai Hao Robinson to pose as the sole manager in control of the project while being, in reality, a figurehead controlled by JD Chen and TJ Ye.

Read also: 450 Chinese EB-5 Investors Sue US Govt. Over 15 Year Wait Times

The SEC further maintain that the couple, upon learning of the investigation, attempted to tamper with the evidence by backdating documents and “scrubbing other business records to conceal their role in the alleged scheme.”

“Ms. Chen’s alleged self-dealing breached her clients’ trust and violated the federal securities laws,” said Melissa R. Hodgman, Associate Director of the Division of Enforcement. “Where conduct harms investors in our markets, attempts to stymie our investigation by fabricating evidence and withholding documents will not deter our efforts.”

Filed in a federal district court in the Northern District of California, the SEC’s complaint “alleges that the defendants violated or aided and abetted violations of antifraud provisions of the federal securities laws, and that certain of the defendants violated or aided and abetted violations of registration provisions. The complaint seeks permanent injunctions, disgorgement, prejudgment interest, civil penalties, and the appointment of a receiver.”

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Christian Henrik Nesheim is the founder and editor of Investment Migration Insider. He welcomes readers to connect on Linkedin.

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