COMPLAINT - CORRECTED COMPLAINT AND REQUEST FOR INJUNCTIVE RELIEF (F/B PLT) November 26, 2018 (2024)

 
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 Filing # 81191244 E-Filed 11/26/2018 01:55:46 PMIN THE CIRCUIT COURT OF THE FIFTEENTH JUDICIAL CIRCUITIN AND FOR PALM BEACH COUNTY, FLORIDACASE NO.: 50-2018-CA-014081XXXXMBWANG JUE, an individual; WANG JIAN, anindividual; SUN MENYANG, an individual; GAOLI, an individual; CHEN JUN, an_ individual;ZHANG SHIKUN, an individual; CHENG LI, anindividual; TAN JING, an individual; LI XIANG, anindividual; LIU DANQING, an individual; MANMINGYUE, an individual; WANG JING, anindividual; and LIU CHENGLIN, an individual;Plaintiffs,Vv.JOSEPH WALSH, an individual; JOSEPH WALSH,JR., an individual; J. MARCUS PAYNE, anindividual; SOUTH ATLANTIC REGIONALCENTER, LLC, a Florida Limited LiabilityCompany; UNITED STATES REGIONALCENTER, LLC, a Delaware Limited LiabilityCompany; JIW CONSULTANCY, LTD., a HongKong Company; GERRY MATTHEWS, anindividual; MARIA a/k/a MIA MATTHEWS, anindividual; RYAN BLACK, an individual; CRAIGBODEN, an individual; DAVID DERRICO, anindividual; THIRD SEVEN CAPITAL, LLC, aDelaware Limited Liability Company; SILVERLEAF PARTNERS, LLC, a New York LimitedLiability Company; PALM HOUSE, LLC, aDelaware Limited Liability Company; PALM |HOUSE PB, LLC, a Florida Limited LiabilityCompany; MIRABIA, LLC, a Delaware Limited ~Liability Company; BONAVENTURE 22, LLC, aFlorida Limited Liability Company; ALIBI LLC, aDelaware Limited Liability Company; NICHOLASLAUDANO, an_ individual; NEW HAVENCONTRACTING SOUTH, INC., a Florida -corporation, BOTTICELLI ADVISORS, LLC, aFlorida Limited Liability Company; NIJLDEVELOPMENT GROUP LLC, a DelawareLimited Liability Company; LESLIE ROBERTEVANS, an individual; LESLIE ROBERT EVANS& ASSOCIATES, P.A., a Florida professionalassociation; KK-PB FINANCIAL, LLC, a FloridaLimited Liability Company; GLENN STRAUB, an1178357v.1FILED: PALM BEACH COUNTY, FL, SHARON R. BOCK, CLERK, 11/26/2018 01:55:46 PMindividual; and PALM HOUSE HOTEL, LLLP, aFlorida limited liability limited partnership;Defendants.CORRECTED COMPLAINT ANDREQUEST FOR INJUNCTIVE RELIEFPlaintiffs WANG JUE, WANG JIAN, SUN MENYANG, GAO LI, CHEN JUN, ZHANGSHIKUN, CHENG LI, TAN JING, LI XIANG, LIU DANQING, MAN MINGYUE, WANG JINGand LIU CHENGLIN (collectively “Plaintiffs,” the “Other Palm House Litigants” or “OPHLs”),hereby file their Corrected Complaint and Request for Injunctive Relief! (the “Complaint’”) againstDefendants JOSEPH WALSH (“Walsh”), JOSEPH WALSH, JR. (“Walsh Jr.”), J. MARCUSPAYNE (“Payne”), SOUTH ATLANTIC REGIONAL CENTER, LLC (“SARC”), UNITEDSTATES REGIONAL CENTER, LLC (“USREDA”), JJW CONSULTANCY, LTD (“WalshAsia”), RYAN BLACK (“Black”), CRAIG BODEN (“Boden”), DAVID DERRICO (“Derrico”),GERRY MATTHEWS, PALM HOUSE LLC, PALM HOUSE PB, LLC (“Palm House PB”),MIRABIA, LLC, (“Mirabia”) BONAVENTURE 22, LLC (“Bonaventure”), ALIBI LLC(“Alibi”), NICHOLAS LAUDANO (“Laudano”), NEW HAVEN CONTRACTING SOUTH,INC. (““NHCS”), BOTTICELLI ADVISORS, LLC (“BOTTICELLI”), NJL DEVELOPMENTGROUP LLC (“NJL”), MARIA A/K/A MIA MATTHEWS, LESLIE“ROBERT EVANS(“Evans”), LESLIE ROBERT EVANS & ASSOCIATES, P.A. (“Evans Law Firm”), (together,Leslie Robert Evans and Leslie Robert Evans & Associates, P.A. shall be referred to as the “EvansDefendants”), KK-PB FINANCIAL, LLC. GLENN STRAUB (collectively, the “Bad Actors”),along with PALM HOUSE HOTEL, LLLP, SILVER LEAF PARTNERS, LLC (“Silver Leaf”)and THIRD SEVEN CAPITAL, LLC (“Third Seven”) (collectively, the Bad Actors, Silver Leaf,Third Seven and Palm House Hotel, LLLP shall be referred to as the “Defendants”), and state asfollows:' Corrected Complaint corrects a scrivener’s error to match the parties in the caption and body.21178357v.1INTRODUCTION1. The OPHLs are 13 EB-S investors originally from China (one of whom now residesin Palm Beach County, Florida) who are among 90 victims of the Palm House Hotel EB-5 fraudwhich has been the subject of news storics of predicate acts of wrongdoing, SEC actions andcriminal indictments (the “Palm House Enterprise”). Over $45 million of funds from EB-5investors, including over $7 million of that of the OPHLs, was frittered away in self-dealing andwrongful conduct perpetrated or aided by Defendants, some of whom have been engaged in otherEB-5 frauds.2. The Bad Actors conspired to fraudulently induce the OPHLs and others to invest$500,000 in the Palm House Enterprise, in addition to a $40,000-$60,000 “administrative fee”from which some money was allegedly used for the payment of legal services of dubious value.3. As is customary in the EB-5 industry, the OPHLs’ funds were supposed to be heldin an escrow account or at least represented in some sort of reserve account unless and until their1-526 immigration petitions (“I-526s”) were approved by United States Citizenship andImmigration Services (“USCIS”).4. If and when the OPHLs’ I-526s were approved, under the investment documentsand applicable law, the funds by law were only supposed to be used to complete their EB-5 jobcreating project. See 8 C.F.R. §§ 204.6(j); 216(a). The Palm House Enterprise, for each investor’s$500,000 investment, was purported to create at least 10 full-time jobs for qualifying U.S. workersbased on completion of the renovation and development of the Palm House Hotel into a flourishingbusiness. These funds instead found their way into the pockets of several of the Bad Actors orothers, or were simply wasted through various predicate acts of conversion and fraud in furtheranceof the Palm House Enterprise.5, The Palm House Enterprise solicited and obtained EB-5 investors through 2015.However, funds of EB-5 investors, including those of the OPHLs, were not held in escrow pending31178357v.11-526 approval or reserved in the event they were used. Instead, the Palm House Enterprise reliedupon a rogue’s gallery of companies and individuals to carry out its malevolent objectives.6. Once funds were committed to the Palm House Enterprise, those funds weredeposited into a fake escrow account -- which was in reality just a regular business checkingaccount — and then distributed to other accounts and thereafter looted by the Bad Actors involvedand aiding in the malevolent enterprise.7. Specifically, once the OPHLs’ funds and those of others arrived in the fake escrowaccount, most of the money was quickly moved to a second “clearing” account.8. From those two accounts, funds were “skimmed” right off the top by DefendantJoseph Walsh and his affiliated companies, as he admitted under oath in a related state court action,and never sent to the Palm House Hotel EB-5 project or anyone purportedly associated with theproject. Rather, those funds were likely used for non-allowable purposes, including lavish partieson Walsh’s boat, at least one of which is believed to have been headlined by rapper Flo-Rida, whosupposedly was assisting on an EB-5 project for Walsh involving a motorsports venture.9. As part of the Palm House Enterprise, the funds of the OPHLs and others were alsomoved to the Evans Defendants and thereafter used by several of the Bad Actors for non-allowablepurposes including, upon information and belief, personal tax and mortgage expenses, a 151 footyacht that cost almost $6,000,000, expensive homes, commercial investment property, a pizzaparlor, cars, vacations and six-figure memberships at the Breakers and the Mar-a-Lago Club, allwholly unrelated to the creation of jobs at the Palm House Hotel, and all in violation of EB-5regulations,10. Virtually none of the OPHLs’ funds were used to renovate and develop the PalmHouse Hotel, no EB-5 jobs were created and no EB-5 visas were issued to any of the OPHLs. Thisis par for the course with the EB-5 projects in which Walsh and his regional centers have beeninvolved, as only a handful of the dozens of people investing with Walsh have ever received EB-41178357v.15 immigration benefits (or have any hope of receiving them) from a project in which he has beeninvolved.11, | The Palm House Enterprise solicited and obtained EB-5 investors through 2015from Brazil and elsewhere, even after it was clear to those involved with its operation that no jobswould ever be created for EB-5 benefits. Compounding matters further, the Bad Actors kept theOPHLs in the dark, engaged in a practice of lulling, and used the legal system to placate the OPHLsand to cover up their conduct by bringing neutered, passive claims against one another. While thismay have given the appearance -- to the press and to the courts -- that justice was being pursued,in reality the legal “actions” did nothing to right the wrongs or return the funds, and were controlledby the Bad Actors using the stolen funds of the EB-5 investors, As a result, those actions,purportedly to help and on behalf of the victims, actually hurt them and served as obstacles to theirattempts to obtain visas, discover what happened, and ultimately seek redress. Meanwhile, thoselegal “actions” served to perpetuate the Palm House Enterprise, and allowed the Bad Actors toshamelessly box out the victims while they continued to dissipate the assets.12. On top of this, Walsh with the approval of several of the Bad Actors and othersinvolved in the Palm House Enterprise, actually corresponded with EB-5 investors and issued pressreleases at the same to tell them that all was well with their investments and that legal action wasnot necessary to protect their interests, when at the same time the Palm House Enterprise continuedto facilitate the self-dealing and wrongdoing of those in control of its operations and finances,including predicate acts of several of the Bad Actors.13. The OPHLs come to this Court with clean hands, are entitled to equitable tolling ofall statutes of limitation to the extent necessary to facilitate justice, and seek injunctions freezingand preserving what remains of their funds, to dissolve and pierce the limited partnership and anyother entities that have been or continue to be used to perpetrate fraud on the OPHLs and others,and to enter all appropriate orders so that they can pursue their rights against all persons that51178357v.1received stolen funds, benefited from stolen funds, and/or actively conspired with or aided andabetted those that did.14, The Palm House Enterprise operated as follows:(a) The Bad Actors preyed on EB-5 investors seeking a path to United States residencyfor themselves and their minor children,(b) The Palm House Enterprise fraudulently obtained $500,000, plus $40,000-$60,000in administrative fees and “legal fees” from each EB-5 investor through the sale ofalleged interests in Palm House Hotel, LLLP, a Florida limited liability partnershipthat would be involved in the development of the Palm House Hotel, claiming thatthe investment would qualify them under the EB-5 program administered by UnitedStates Citizenship and Immigration Services (“USCIS”),(c) The Bad Actors materially, indeed crucially, represented, among other things, that:1178357v.1@ There was a 100% guaranty for the return of the OPHLs’ investment andfees in the event their 1-526 petition is denied;Gi) 100% of the OPHLs’ funds would be held in escrow until their Form 1-526immigration petitions were approved by USCIS;ii) A “limited number” of 79 equity interests would be sold in Palm HouseHotel, LLLP at the price of $500,000 each, plus $40,000-$60,000 inadministrative fees;(iv) | The OPHLs’ funds would be exclusively invested in the Palm HouseHotel to create both direct and indirect jobs by helping to finish therenovation and development, which was near completion;(v) The Palm House Hotel would be open for business by the “Season” of2013/2014, and was 80-90% completed prior to the OPHLs’ investments;(vi) The funds would create 930 jobs, more than the required 790 full-timejobs for the offering;(vii) The OPHLs’ funds would be the third and final source of funds. The EB-5 funds were in addition to an equity investment by the developer inexcess of $22,000,000 and a bank loan (by a bank that had done full duediligence justifying such a loan) in excess of $29,000,000;(viii) The OPHLs’ funds would be held in escrow, and were not yet needed,because the developer’s investment in excess of $22,000,000 and a bankloan in excess of $29,000,000 was being used for construction andrenovation;(ix) | The OPHLs’ funds would not be taken from the escrow account, andwould not be used, unless and until the developer’s investment in excess6(@)1178357v.1of $22,000,000 and the bank funds in excess of $29,000,000 had beenused at the project;(x) The real property at issue was currently worth $110,000,000-$137,000,000(the current value representation varied, depending on what the BadActors believed a particular Plaintiff wanted to hear) before completion,which made the investment “one of the safest EB-5 offerings from a JobCreation and Investment position;”(xi) 1-526 immigration petitions for the Palm House EB-5 Offering had alreadybeen approved by USCIS for the initial investors;(xii) An insurance policy was purchased by the Developer that guaranteed thatconstruction of the Palm House Hotel project would be completed;(xiii) The local government guaranteed that construction of the Palm HouseHotel project would be completed, and that this would be the last 5-starhotel property they would allow on Palm Beach;(xiv) The developer, Non-Party Robert Matthews, was a famous real estatedeveloper in the United States;(xv) Each investor’s investment would be fully secured by the real property atissue and by the State of Florida pursuant to a UCC form. As there wouldbe 79 rooms and 79 investors, each investor would be given a UCCsecurity interest in an individual room; and(xvi) Donald Trump and Bill Clinton would serve on the Palm House Hoteladvisory board, would assist with any issues related to construction, andwould also play a key role in recruiting celebrities and dignitaries to theclub, Celebrities such as Tony Bennett, Celine Dion, Bill Koch, and EricSchmidt were already members of the hotel club.The Bad Actors targeted EB-5 investors with children between the ages of 18 and21 because, under the EB-5 program, applicants have the right to apply for a greencard for themselves, their spouse, and unmarried children under 21. Once theinvestor’s funds were stolen and time continued to pass without the issuance of an1-526 petition approval, the Bad Actors would use the fact that the investor’s childhad “aged out” to silence the investor, perpetrate the continuing fraud, and preventthe investor from seeking redress or judicial assistance. The Bad Actors threatenedthe EB-5 investors that, if the Palm House EB-5 Offering was interfered with orterminated, because the investor’s child was no longer under 21, they would nolonger be able to obtain a green card through their parent and would need to obtaintheir own EB-5 visa through at an additional cost of $500,000.As to any Plaintiff brave enough to question or demand the return of theirinvestment, they were fraudulently told that all was well, that additional appeals ofthe application process were in place, that the country’s foremost immigrationattorney had been hired to prosecute the appeals, and that all was well with theconstruction of the hotel, thereby further lulling the OPHLs and falsely allowingthe Bad Actors to deny any rights to reimbursem*nt. In truth, of course, the money7was gone, no jobs were created, the federal government had closed the appeals, theimmigration attorney was not retained to prosecute any appeals and the 1-526immigrant petitions were never issued.15, The representations made to induce the OPHLs’ investments into the Palm HouseEnterprise were mostly lies, calculated to induce investments by needy, trusting, unsuspectingforeigners with $500,000 to pursue a life for themselves and their children with more opportunitiesthan those afforded to them in China.16. The 100% guaranty signed by Defendant Black on behalf of USREDA was notworth the paper it was printed on. The OPHLs’ I-526s, all of which contained information thatwas known or should have been known to be false by Attorney Derrico and others at USREDAand SARC, and uncovered by KK-PB Financial, LLC (under the control of Defendant GlennStraub) in the course of its due diligence, were all denied, yet their funds were never returned.17. Instead of holding the OPHLs’ funds in escrow or reserving them until their Form1-526 immigration petitions were approved, the funds were stolen and distributed through the PalmHouse Enterprise among several of the Bad Actors and others.18. The conspirators involved in the Palm House Enterprise did not sell 79 purportedequity interests in Palm House Hotel, LLLP. Despite registering this offering for only 79 units,they perpetrated this fraud on over 90 unsuspecting EB-5 investors.19. | The OPHLs’ funds were not exclusively used to help finish the renovation anddevelopment of the Palm House Hotel. Instead, the funds were used for unlawful purposes.20. The hotel was nowhere near completion, let alone anywhere close to being able toopen for business by the “Season” of 2013/2014. As of the filing of the Complaint, it remained adangerous nuisance and a desolate construction wasteland, accruing local fines of $2,000 per day.21. The OPHLs’ funds were not used to create 10 full-time jobs for each $500,000advanced, which was the only purpose for the funds to come to the United States. Further, the fact1178357v.1that over 90, as opposed to 79 interests were sold, prevented that from occurring even if the projectwas not a complete charade.22. The OPHLs’ funds were not in addition to an equity investment by the developerin excess of $22,000,000 and a bank loan in excess of $29,000,000. There was no bank loan, therewas no developer’s equity, and there was no other source of funds for the Palm House Enterprise.23. The real property was not worth $110,000,000-$137,000,000. Indeed, the propertyhad been purchased out of foreclosure for $10,000,100, and was described by a court-appointedreceiver as “circling the drain.”24, No I-526s were ever approved by USCIS for the Palm House EB-5 Offering. Whilethe Bad Actors had provided a written notice of approval for the project, the notice was fraudulentand did not relate to the Palm House EB-5 Offering.25. There was no insurance policy that guaranteed the completion of construction ofthe Palm House Hotel project. The Bad Actors had fraudulently represented that certaindocumentation was an American surety bond guaranteeing performance when, in reality, it wasnot.26. The local government never guaranteed the completion of construction of the PalmHouse Hotel or certified it as a 5-star property. Instead, the local government was imposingsignificant fines against the property. 727. Non-Party Robert Matthews is not a famous real estate developer in the UnitedStates, He was (and still is) instead in massive debt and had a history of questionable financialdealings in the past with, among others, Glenn Straub both in a Massachusetts hotel project severalyears ago and in the foreclosure of the Matthews’ home in Nantucket.28. The OPHLs’ investments were not fully secured by the real property or the State ofFlorida. In fact, a secret, unrecorded mortgage in the amount of $27,468,750 was granted to theprior developer of the project in August 2013 who no less than three times waived due diligence91178357v.1on the project and Matthews, knowing well that uncovering the panoply of wrongdoing byMatthews while EB-5 funds were raised would cause the Palm House Enterprise to collapse.29. To that end, the mortgage was not recorded until March 28, 2014 -- seven (7)months after it was granted -- and after almost all EB-5 investors had undertaken their duediligence and wired their investments for the project. A mortgage to secure the OPHLs’ interestin the real property was not recorded until October 2014, after whatever equity existed in theproject had been subsumed by the prior developer’s secret mortgage.30. Bill Clinton and Donald Trump are not on the Palm House Hotel advisory board,and there is no such board.THE PARTIES AND NATURE OF THE ACTION 31. This action involves, among other things, common law fraud, theft, conspiracy, andbreach of fiduciary duty that was perpetrated on the OPHLs to obtain each of their investmentsand “administrative fees” of $500,000 and $40,000-$60,000, respectively.32. This action also relates to the unlawful conduct of additional defendants who,among other things, (i) aided and abetted the Bad Actors in their acts of fraud and theft; (ii) wereunjustly enriched by their unauthorized receipt of the OPHLs’ funds; (iii) were the recipients offraudulent transfers; or (iv) were otherwise independently engaged in unlawful acts.33. The OPHLs were fraudulently induced to each invest $500,000, plus $40,000-$60,000 in administrative fees, based on the representations made by Joseph Walsh, Walsh Jr.,Payne, Detrico, Boden, SARC, USREDA and Walsh Asia. Other Bad Actors undertook efforts toconceal their wrongful conduct or assistance, aiding and/or abetting of such conduct.34. Palm House Hotel, LLLP is a Florida Limited Liability Limited Partnership withits principal place of business in Palm Beach County, Florida formed on January 9, 2013. TheOPHLs were fraudulently induced to each invest $500,000 into Palm House in exchange for an101178357.interest, the false promises of United States EB-5 visas, and the ultimate return of their investment,with interest.35, Walsh is an individual who, upon information and belief, was a resident of PalmBeach County, Florida at the time all acts complained of herein occurred and is otherwise swi juris.On information and belief, Walsh resides in Asia or Australia but maintains his U.S, citizenshipand a Palm Beach County residential address, Walsh served as a general partner of Palm Houseuntil July 2016, and owns and/or operates and/or controls SARC, USREDA and Walsh Asia. Uponinformation and belief, Walsh was the criminal mastermind behind the Palm House Enterprise,and organized all the players and their respective roles. Walsh and his accomplices made orassisted in making, false representations to the OPHLs that induced them to provide and continuewith their investments. Further, despite not being incorporated to provide legal services, Walsharranged for an in-house attorney previously involved in a massive EB-5 fraud to “draft projectlegal documents” and provide legal services through USREDA to the OPHLs in connection withthe processing of their EB-5 visa applications. This served several purposes for the Bad Actors inthat outside lawyers would not be hired by the non-English speaking EB-5 investors to furtherquestion or examine the Palm House Enterprise. Walsh has since been named in an enforcementaction by the United States Securities and Exchange Commission (“SEC”) concerning his conductin the Palm House Enterprise. See Exhibit “1” annexed liereto,36. Walsh Jr. is an individual who resides in Palm Beach County, Florida and isotherwise sai juris, Walsh Jr. is the son of Walsh and owns and/or operates and/or controls SARC,USREDA and Walsh Asia. Walsh Jr. and his accomplices made or assisted in making, falserepresentations to the OPHLs that induced them to provide and continue with their investments.On information and belief, the OPHLs believe Walsh Jr. has set up bank accounts for Walsh Asiaand entities under its control in Hong Kong and elsewhere in Asia.iW1178357V.137. Payne is an individual who, upon information and belief, resides in Illinois and isotherwise sui juris, Payne is an attorney, served as a general partner of Palm House until July2016, and owns and/or operates and/or controls SARC and USREDA. Payne and his accomplicesmade or assisted in making, false representations to the OPHLs that induced them to provide theirinvestments. Payne is subject to personal jurisdiction in Florida because he operated, conducted,engaged in, or carried on a business or business venture in this state and/or committed a tortiousact within this state and/or is engaged in substantial and not isolated activity within the State ofFlorida.38. Boden is an individual who, upon information and belief, resides in Hong Kongand continues to associate himself with Walsh Asia, and is otherwise sui juris. As he states on hisbiography on www.linkedin.com (see Exhibit “2” annexed hereto), Boden served as a ManagingMember of USREDA, de facto or otherwise, from 2013 - 2016 while registered with Silver LakeCapital and Third Seven, New York based FINRA member broker-dealers, On information andbelief, Boden violated FINRA rules as he did not disclose his involvement with USREDA to hisbroker-dealer because if he did, the frauds of the Palm House Enterprise would have been clearlyevident to them. See Exhibit “3” annexed hereto. Boden as a non-disclosed principal ofUSREDA and his accomplices made or assisted in making, false representations to the OPHLsthat induced them to provide their investments. Boden is subject to personal jurisdiction in Floridabecause he operated, conducted, engaged in, or carried on a business or business venture in thisstate and/or committed a tortious act within this state and/or is engaged in substantial and notisolated activity within the State of Florida.39. Silver Leaf and Third Seven (collectively the “Broker-Dealer Defendants”) arebroker-dealers licensed to conduct business in the State of Florida and FINRA members, AsFINRA members, they had obligations to supervise Boden in connection with his conduct ofsecurities business on behalf of USREDA under FINRA Rule 3270, among other rules, and121178357v.1perform due diligence on securities in which Boden was involved in the placement or sale. Atpresent, Silver Leaf is named in FINRA Disciplinary Proceeding No. 20140422606902, whichaddresses alleged supervisory failures in connections with payments to unregistered finders.40. Derrico is an individual who, on information and belief, resides in Florida and isotherwise swi juris. A member of the California Bar but not the Florida Bar, Derrico served as theSenior Immigration Counsel for USREDA and SARC and “drafted project legal documents” asregistered in-house counsel at all times relevant to this proceeding. Prior to joining SARC andUSREDA, Derrico served as immigration counsel for the Chicago Convention Center EB-5project, which to date has been one the largest EB-5 frauds in history. Derrico and his accomplicesmade or assisted in making, false representations to the OPHLs that induced them to provide theirinvestments. Dertico is subject to personal jurisdiction in Florida because he operated, conducted,engaged in, or carried on a business or business venture in this state and/or committed a tortiousact within this state and/or is engaged in substantial and not isolated activity within the State ofFlorida.41. Black is an individual who resides in Florida and is otherwise sui juris. Black is anindividual who served as a Managing Member of USREDA, was a 1% owner of USREDA andexecuted the guarantys for each investor lured to place funds with the Palm House Enterprise.While Black purportedly assisted in “kicking out’ people from the Palm House property oncediscovering the misuse of funds, he did not undertake any action to communicate with the OPHLsor other EB-5 investors as to the effectiveness of the guarantys he signed. Black also was aninstigator of the “circular” litigation that was intended to lull the OPHLs and other EB-5 investorsthat actions were being taken on their behalf to protect their money when in fact the litigation wasyet another scheme to further the Palm House Enterprise.42. SARC is a Florida Limited Liability Company with its principal place of businessin Palm Beach County, Florida formed on June 10, 2010. SARC is a regional center approved by131178357v.1USCIS. Walsh, Walsh Jr., Boden and Payne represented to the OPHLs that SARC was the generalpartner of Palm House. SARC made or assisted in making, false representations to the OPHLsthat induced them to provide their investments. SARC was intended to, and did, influence theOPHLs to trust and rely upon it rather than hire outside advisors who might ask difficult questions,make difficult demands, or discover the fraudulent scheme orchestrated through the Palm HouseEnterprise.43, USREDA is a Delaware Limited Liability Company with its principal place ofbusiness in Palm Beach County, Florida formed on February 3, 2011. USREDA purported to actas a law firm (arguably impermissible under Florida Bar rules) and contracted to provide legalimmigration services to the OPHLs regarding the EB-5 visa program. USREDA guaranteed theapproval of any 1-526 application it completed and the return of all service fees in the event ofdenial. USREDA made or assisted in making, false representations to the OPHLs that inducedthem to provide their investments. USREDA was intended to, and did, influence the OPHLs totrust and rely upon it rather than hire outside advisors and attorneys who might ask difficultquestions, make difficult demands, or discover the fraudulent scheme that was being perpetrated.In reality, USREDA was a front that Walsh, Walsh Jr., Boden, Derrico and Payne used to commitand further the fraud, and was used to launder/hide money once the OPHLs sent their investmentsto the fake escrow account. Millions of dollars of the OPHLs’ funds were transferred to andthrough USREDA, and such amounts had no correlation whatsoever to the purported legal servicesit agreed to provide or the purported fees for same.44, Walsh Asia is a Hong Kong entity with offices in, among other places, London,England. Walsh Asia purports to be a premier provider of citizenship by investment programs,and through which Walsh and Walsh, Jr. made or assisted in making, false representations toinduce EB-5 investors to provide and continue with their investments. Walsh Asia is subject topersonal jurisdiction in Florida because it operated, conducted, engaged in, or carried on a business141178357V.1or business venture in this state and/or committed a tortious act within this state and/or is engagedin substantial and not isolated activity within the State of Florida and/or operated merely as acorporate front for the fraudulent actions of Walsh and Walsh Jr.45. Palm House, LLC is a Delaware Limited Liability Company that was formed on orabout December 5, 2012 to complete the renovations and development of the Palm House Hotel.Upon approval of the OPHLs’ I-526s, Palm House was supposed to loan the OPHLs’ money toPalm House LLC so that it could complete the development of the hotel and pay off the purported$29,000,000 bank loan. In return, Palm House LLC was supposed to obtain a first mortgage onthe real property that fully secured the debt.46. Gerry Matthews is an individual who, upon information and belief, resides inConnecticut, and is otherwise swi juris. Gerry Matthews is the brother of Non-Party RobertMatthews, an owner of Palm House LLC, and was instrumental in allowing Non-Party RobertMatthews to access and steal several million dollars of the OPHLs’ money. Gerry Matthews issubject to personal jurisdiction in Florida because he operated, conducted, engaged in, or carriedon a business or business venture in this state and/or committed a tortious act within this state.Gerry Matthews has been indicted for criminal conduct in connection with the Palm HouseEnterprise (See Exhibit “4” annexed hereto).47. Palm House PB, LLC is a Florida Limited Liability Company that, uponinformation and belief, was formed on or about February 28, 2012 for the purpose of hiding andstealing the OPHLs’ money. One or more bank accounts were opened in the name of Palm HousePB, LLC, and the OPHLs’ stolen money was transferred to such accounts and then used topurchase a 151 foot yacht, among other things.48. Mirabia is a Delaware Limited Liability Company formed on or about May 16,2014. Upon information and belief, Non-Party Robert Matthews used this entity to hide and stealthe OPHLs’ money and to purchase investment property near the Palm House Hotel.151178357V.149. Bonaventure is a Florida Limited Liability Company formed on November 11,2011 that, upon information and belief, Maria a/k/a Mia Matthews used to hide and steal theOPHLs’ money. On information and belief, Miami attorney Alan Burger assisted Mia Matthewsin the formation of Bonaventure.50. Alibi is a Delaware Limited Liability Company formed on or about June 18, 2014.Maria a/k/a Mia Matthews used this company to hide and steal the OPHLs’ money and to purchasea 151’ yacht that cost approximately $6,000,000.51, Evans is an attorney based in Palm Beach, Florida. Mr. Evans and his law firm,Leslie Robert Evans & Associates, P.A., took possession of the OPHLs’ funds in their trust accountafter they were stolen from the fake escrow account at PNC Bank. The Evans Defendants thendistributed the OPHLs’ funds to persons and accounts selected by the conspirators, and paidthemselves compensation to do so. Evans has since been indicted for mail fraud and wire fraud inconnection with his conduct in the Palm House Enterprise. (See Exhibit “5” annexed hereto).52. Laudano is an individual who, upon information and belief, resides in Palm BeachCounty, Florida, and is otherwise sui juris, Laudano held himself out as the general contractor onthe Palm House Hotel project, and entered into a construction contract to build the project.Laudano received and accepted the OPHLs’ stolen funds, and aided and abetted Non-Party RobertMatthews and Maria a/k/a Mia Matthews in their theft of millions of dollars of the OPHLs’ money.Laudano was indicted for his wrongful conduct in connection with the Palm House Enterprise andpled guilty to the charges. (See Exhibits “6” and Exhibit “7” annexed hereto).53. NHCS is a company owned and operated by Laudano formed on or about May 15,2006. NHCS entered into a construction contract to build the Palm House Hotel project. Laudanoused this entity to receive, accept, and steal millions of dollars of the OPHLs’ money,54, NJL and Botticelli are entities that Laudano used to steal the OPHLs’ money forthe purpose of purchasing a mansion in Connecticut on behalf of and/or for the benefit of Non-161178357v.1Party Robert Matthews and Maria a/k/a Mia Matthews. NJL was formed on or about February 3,2014.55. Botticelli is a Florida Limited Liability Company and the managing member ofNIL, a Delaware Limited Liability Company, Craig Galle, long time counsel for the former ownerof 160 Royal Palm LLC, on information and belief assisted in the formation of Botticelli in January2012,56. KK-PB is a Florida Limited Liability Company owned and/or controlled byDefendant Glenn Straub, the former owner of 160 Royal Palm LLC, which owns the real propertyupon which the Palm House Hotel is located. KK-PB was formed on or about August 28, 2013,which is about the time Defendants Straub, Walsh and Non-Party Matthews together decided tofollow through on the scheme that would become the Palm House Enterprise. On information andbelief, his long-time attorney Craig Galle assisted in the formation of KK-PB. Waiving duediligence on Matthews and the property (see Exhibit “8” annexed hereto), Defendant Glenn Straubsold his interest in 160 Royal Palm LLC in August 2013, and received a mortgage on the RealProperty for $27,468,750 in favor of KK-PB as purported consideration. However, the mortgagewas not recorded until seven (7) months later, on March 28, 2014, which created the falseimpression that the Palm House Hotel was unencumbered by such a debt and that the OPHLswould, indeed, obtain a first mortgage on the real property that fully secured their investment oncethe purported bank loan was paid off. Further, KK-PB and ultimately Straub improperly benefitedfrom the scheme by receiving transfers of the OPHLs’ stolen money. Despite claims of themortgage scheme being a “typical Florida transaction” and innocence and non-involvement in thePalm House Enterprise, Defendant Glenn Straub and his entities were still “doing business” withthe Matthews family well into 2018.57. Maria a/k/a Mia Matthews is an individual who, upon information and belief,resides in Palm Beach County, Florida, and is otherwise sui juris. Maria a/k/a Mia Matthews is171178357v.1the wife of Non-Party Robert Matthews and, along with him, stole several million dollars of theOPHLs’ money, using it to purchase a 151’ yacht, among other things. Mia Matthews has beennamed in a superseding indictment in the matter involving her husband (See Exhibit “9” annexedhereto).NON-PARTIES58. 160 Royal Palm LLC is a Florida Limited Liability Company formed in 2009 andis arguably an owner of the real property located at 160 Royal Palm Way, Palm Beach, Florida,upon which the Palm House Hotel is located (the “Real Property”). This company is ownedentirely by Palm House, LLC, which purchased the membership interests from Glenn Straub in2013. As purported consideration, 160 Royal Palm LLC granted a $27,468,750 mortgage on theReal Property to Glenn Straub’s entity, KK-PB Financial LLC, which was kept secret and notrecorded until March 28, 2014, after most of the OPHLs had conducted their due diligence andmade their investments. 160 Royal Palm is now in bankruptcy (see Exhibit “10” annexed hereto).59. | Non-Party Robert Matthews is an individual who, upon information and belief,resides in Palm Beach County, Florida, and is otherwise sui juris. Non-Party Robert Matthewsrepresented himself as the developer of the Palm House Hotel project, and claimed to be in chargeof Palm House, LLC and the construction and renovation of the Palm House Hotel. Non-PartyRobert Matthews stole several million dollars of the OPHLs’ money, using it to purchase realproperty and a 151” yacht with his wife (which he named ALIBI), among other things. Non-PartyRobert Matthews helped prepare the marketing materials that were provided to the OPHLs toinduce their investments. Matthews has since been indicted for mail and wire fraud (See Exhibit“5,” supra). He has since sought bankruptcy protection (see Exhibit “11” annexed hereto).JURISDICTION60. This is an action for damages in excess of $15,000, exclusive of interest, attorneys’fees and costs.181178357v.161. This Court has jurisdiction pursuant to Chapter 605 of the Florida Statutes.62. Venue is Palm Beach County, Florida is proper because a substantial amount theactivities giving rise to this action occurred in Palm Beach County, Florida, Additionally, SARC,USREDA, Walsh, Walsh Jr., and Laudano are residents of Palm Beach County, Florida, andtransacted business in Palm Beach County, Florida, and the other individual Defendants eitherreside in Palm Beach County, Florida, transacted in substantial business activities in Palm BeachCounty, Florida, had an agent in Palm Beach County, Florida or were licensed to conduct businessin Florida.63. The OPHLs have retained the undersigned counsel to represent them in this actionand have agreed and obligated to pay a reasonable fee for their services.GENERAL ALLEGATIONS EB-5 Visa Program in General64, The Immigrant Investor Program, more commonly known as the EB-5 program,was created by the Immigration Act of 1990. Congress established the EB-5 program to stimulatethe U.S. economy by giving immigrant EB-5 investors the opportunity to permanently live andwork in the United States after they have invested in a new commercial enterprise (“NCE”). Inthe case of an NCE that is located in a Targeted Employment Area (“TEA”), i.e., either a rural areaor an area beset by high unemployment, the required equity investment need only be $500,000.65. In 1993, Congress created the Immigrant Investor Pilot Program to increase interestin the EB-5 visa program. This new pilot program established EB-5 Regional Centers (“RegionalCenters”), which are entities that receive special designation from USCIS to administer EB-5investments and create jobs. Public and private entities may apply to the USCIS for approval asan EB-5 Regional Center.66. EB-5 visa programs administered by a Regional Center provide more flexibility,because the immigrant investor who invests in such a program is permitted to take credit not only191178357v.1for direct jobs created in the NCE but also “indirect jobs” created outside the NCE in a job creatingenterprise (“JCE”), such as a construction contracting firm that builds an improvement for theNCE or the nearby creation of jobs through other entities that will develop to service the businessbeing created. In addition, the immigrant investor need not handle the day-to-day management ofthe NCE or even necessarily live in the region where the NCE is located.67. By necessity, investments into an EB-5 program are “closed-ended,” available onlyto a specified number of EB-5 investors, and that number is tied to the number of direct or indirectjobs created by the investment. If too few jobs are created with the money invested, the immigrantwill not be able to become a permanent resident in the United States.EB-5 Practice and Procedure68. Under the EB-5 program, the immigrant investor first applies for an immigrant visaby submitting a Form 1-526, Immigrant Petition for Alien Entrepreneur. USCIS’ approval of theForm I-526 is conditioned upon the immigrant’s investment of the requisite amount of money inan NCE that satisfies the applicable legal requirements. Upon approval of the Form I-526 petition,the immigrant investor may either: (1) file the appropriate form to adjust their status to aconditional permanent resident within the United States; or (2) file an application to obtain an EB-5 visa for admission to the United States. Upon the approval of the application or upon entry intothe United States with an EB-5 immigrant visa, the EB-5 investor and derivative family memberswill be granted conditional permanent residence for a two-year period.69. To remove the conditional resident status, the immigrant investor must file a Form1-829, Petition by Entrepreneur to Remove Conditions, ninety days before the two-yearanniversary of the granting of the EB-S investor’s conditional resident status, USCIS’ approval ofthe Form I-829 is conditioned upon proof that the immigrant investor’s investment as reported onthe 1-526 has created at least ten full-time jobs in the NCE or JCE. If an insufficient number ofjobs was created, the foreign national is subject to removal from the United States.201178357v.1||tEB-5 Program at the Palm House Hotel70. SARC held itself out as a Regional Center, headquartered in Palm Beach County,Florida, and claimed to specialize in investment-based immigration services with association ofother affiliated entities under common control.71. SARC was approved by USCIS to serve as a Regional Center, which allowed EB-5 investors to take credit for direct and indirect jobs and not be involved in the day-to-day operationof the NCE,72, SARC was operated and controlled by Walsh, Walsh, Jr., and Payne.73, USREDA was an entity that claimed to specialize in providing legal immigrationservices regarding the EB-5 visa program, held itself out as a law firm, and required clients to signengagement letters for its services. It charged clients $15,000 USD to file an 1-526 petition and anadditional $5,000 USD to file an I-829 petition.74, USREDA was operated and controlled by Walsh, Walsh, Jr., Payne and Boden.75. Walsh Asia held itself out as an expert in citizenship by investment programsthrough promotional materials, advertisem*nts in captive magazines and presentations, with theexpertise, knowledge, and track record of success to provide successful immigration outcomes.76. Walsh Asia was operated and controlled by Walsh and Walsh, Jr, managed byBoden in Hong Kong (under supervision of the Broker-Dealer Defendants), and maintained bankaccounts in Hong Kong and, on information and belief, other Asian jurisdictions.77. USREDA, SARC and Walsh Asia were all instrumentalities of the Palm HouseEnterprise.78. During solicitations for investment in the Palm House Enterprise, the OPHLs wereprovided with three (3) items:(a) Frequently Asked Questions (the “FAQ”). An exemplar of the FAQ provided tothe OPHLs is annexed hereto as Exhibit “12,”211178357v.1(b) Sales Brochure (the “Sales Brochure”). An exemplar of the Sales Brochureprovided to the OPHLs is annexed hereto as Exhibit “13.”; and(c) Signature Booklet (the “Signature Booklet”), An exemplar of the SignatureBooklet is annexed hereto as Exhibit “14.” Collectively, the FAQ, Sales Brochure,and Signature Booklet will be referred to as the “Offering Documents.”79, While the Signature Booklet contained signature pages for a Private PlacementMemorandum (the “PPM”) and a Palm House limited partnership agreement (the “Palm HouseLimited Partnership Agreement”), the OPHLs were not provided with copies of the full documentsuntil after they made their investments. Exemplars of the PPMs and Limited PartnershipAgreements provided to the OPHLs are annexed hereto as Exhibit “15” and Exhibit “16,”respectively,80. Additionally, during the Palm House Hotel solicitations, the OPHLs were providedwith a writing claiming that an 1-526 petition for an early Palm House Hotel investor had beenapproved by USCIS, thereby assuring the OPHLs that, if they invested in the project, they toowould soon obtain approval (the “USCIS Approval”). A true and accurate copy of the USCISApproval is annexed hereto as Exhibit “17.”81. The representations in the Offering Documents were originally made by Walsh,Walsh Jr., Payne, Boden (under the supervision of the Broker-Dealer Defendants), Matthews,SARC, USREDA, and Walsh Asia and, on information and belief, with the review and approvalof Derrico. Given Boden’s status as a FINRA registrant with the Broker-Dealer Defendants, eachof them reviewed the Offering Documents given their bedrock obligations to do so under FINRAtules.82. The representations in the PPM, Palm House Limited Partnership Agreement, andUSCIS Approval were originally made by Walsh, Walsh Jr., Payne, Boden, SARC, USREDA, andWalsh Asia and, on information and belief, with the review and approval of Derrico. GivenBoden’s status as a FINRA registrant with the Broker-Dealer Defendants, each of them reviewedthese documents as well, given their bedrock obligations to do so under FINRA rules.221178357v.183. SARC, USREDA, Walsh Asia, Walsh, Walsh Jr., Payne, Boden (under thesupervision of the Broker-Dealer Defendants), Derrico and Non-Party Robert Matthews each madeor assisted in making, knowingly false representations to induce investments into the project.84. Further, SARC, USREDA, Walsh Asia, Walsh, Walsh Jr., Payne, Boden (whileunder supervision of the Broker-Dealer Defendants), Derrico and Non-Party Robert Matthewseach withheld material information that they had a duty to disclose.85. Each limited partnership unit in Palm House required a minimum investment of$500,000, plus an administrative fee of $40,000-$60,000.86. Any subscription funds received from the OPHLs were to be held in a specialescrow account or, if they were to be used in connection with the project pending I-526 approval,they were to be reserved for in some manner in the event that the funds needed to be returned.87. Among the many misrepresentations, the OPHLs were promised that their monieswould be held in the escrow account and released to Palm House, LLC only if and when theirJ-526s were approved by USCIS (the “Escrow Representation”).88. The Escrow Representation was made to the OPHLs several times, and in severaldocuments.89. The Escrow Representation was made to the OPHLs in the PPM. See Exiibit “15”at p. 15, 37, 38, and 41. 790. The Escrow Representation was made to the OPHLs in the Limited PartnershipAgreement. See Exhibit “16” at p. 6.91. The Escrow Representation was made in the loan agreement between Palm Houseand Palm House LLC (the “Loan Documents,” annexed hereto as Exhibit “18”), where PalmHouse, LLC, on the one hand, and Walsh, SARC, and Palm House, on the other hand, agreed thatthe loan was dependent on USCIS’ approval of the OPHLs’ J-526s. See Exhibit “18” at p.1.1178357v.192.If an investor's I-526 application was denied by USCIS, the investor was promisedthat they would receive their money back within 90 days of the official denial notice.93.There were many other knowingly false representations in the Offering Documents,including but not limited to:(a)(b)(c)@)©)®(g)(h)0)@(k)Oo()(n)(0)1178357v.1There was a 100% guaranty for the return of the OPHLs’ investment and feessigned by Defendant Ryan Black in the event their 1-526 petition is denied;There would be a maximum of 79 limited partnership units offered in Palm House;They were seeking, in total, a $39,500,000 investment into Palm House, which wasequal to the maximum of 79 limited partnership units being offered at $500,000each;USREDA guaranteed the approval of any 1-526 application it completed and thereturn of all service fees in the event of denial;SARC was the general partner of Palm House,The developer had already invested $22,000,000 of their own equity into theproject;There was a bridge loan from a bank, in the amount of $29,500,000, to allowcontinuation of the construction whi 

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