A Tibetan-American developer from Bellevue in Washington state, who scammed more than $235 million, off investors during his real estate investment scheme, including over $140 million from immigrant investors, was sentenced Aug. 4, in U.S. District Court in Seattle to four years in prison. None of the 281 foreign investors received permanent residence
Lobsang Dargey, 43, entered guilty pleas in January 2017 to two federal felonies, admitting that he defrauded immigrant investors, federal regulators, and institutional investors. Dargey promised to use the immigrant investors’ investment funds in compliance with a federal immigration program designed to stimulate growth and create jobs. Instead, he secretly diverted tens of millions of dollars of investor funds to unauthorized uses and used falsified financial records in an attempt to obtain additional funding to make up the shortfall, a press release from the Justice Department said.
At the sentencing hearing, U. S. District Judge Robert S. Lasnik said Dargey engaged in “reckless behavior . . . putting these people in jeopardy of never achieving their immigration dreams”
Many of the investors were from China where they sold off much of their assets to pay off Dargey for the promised benefits. According to records filed in the case, between 2012 and 2015, Dargey recruited overseas investors, primarily in China, to fund two development projects – one in Everett, Washington known as the “Path American Farmer’s Market” and one in Seattle’s Belltown neighborhood known as the “Potala Tower.”
Dargey promoted the projects under the federal “EB-5” program, which allows immigrant investors to qualify for permanent residency if they create American jobs by investing $500,000 in a qualifying American business project. He represented to the immigrant investors and to the U.S. Department of Homeland Security that he was investing all of investors’ funds in the Everett and Seattle projects in compliance with program requirements.
Instead, he used tens of millions of investor dollars to pay unauthorized sales expenses, including sales commissions to Asian brokers. The money also went for lavish meals, expensive gifts, and cash withdrawals at casinos, and the purchase of a $1.4 million Bellevue home for a Dargey business associate. He withdrew more than $10 million in investor funds from the project as developer fees to fund his lavish lifestyle, including his purchase of a $2.5 million home in Bellevue.
In addition, Dargey told investors and the United States government that he would contribute $32.5 million of his own money toward the projects. In fact, he admitted that he did not contribute any funds to the projects. To cover shortfalls in the projects, Dargey tried using a falsified bank statement to obtain a $25 million construction loan, and by using altered financial statements to obtain $60 million in additional funding from a private institutional investor. He was outed at the end of 2015, when the Securities and Exchange Commission which froze his assets.
As part of his plea agreement in this case, Dargey agreed to provide restitution of more than $24 million to the investors.