A woman in California was arrested Friday, 19 June on a criminal complaint alleging she got $21.6m from prospective home buyers in China for a condominium and hotel complex in the Coachella Valley that had not begun construction and had no development approvals.
Following an investigation by the FBI, prosecutors say Ruixue "Serena" Shi, 36, spent her victims’ money on lavish living, including luxury cars, travel and designer clothing.Â Â
Shi used a promise of visas to lure buyers, it is alleged.
She has been charged with one count of wire fraud.
If convicted, Shi would face a statutory maximum sentence of 20 years in federal prison
According to an affidavit, between November 2015 and July 2018, Shi solicited investments for the Hyde Resorts and Residences Coachella Valley. It was to be a 207-unit luxury condominium and hotel complex with conference facilities, a pool and other amenities.
Shi was the president and owner of Global House Buyer (GHB), a China-based real estate development company, and was also CEO of the Beverly Hills-based company Hyde Morgan Development, LLC, the affidavit states. The Hyde complex was to be developed by GHB while Hyde Morgan solicited investments.
The affidavit alleges that Shi contacted prospective investors – mostly based in China – through sales presentations at hotels, radio advertisements and on WeChat, a Chinese social media platform.
Shi is accused of telling investors that the development would begin construction in 2017.
From $400,000 to $700,000
Condos ranged in price from $400,000 to $700,000, according to the affidavit. Investors were required to pay 40% upfront, while Shi promised that GHB would help them finance the balance with loans from US banks when the project was completed, the affidavit claims.
Chinese buyers were falsely told that their investments would enable them to obtain visas through an immigrant investor programme, the affidavit states.
According to the affidavit, one victim told police that Shi said she would procure a long-term visa if the buyer invested $500,000 in the Hyde project.
Shi allegedly told investors that GHB had bought a 47-acre lot of land in Coachella Valley for the Hyde development, but Shi had purchased only 20 acres of that property, the affidavit states.
Shi also told investors that GHB had obtained the required city development approvals when no such approvals had been given, the affidavit says.
When some investors began demanding refunds after hearing GHB was no longer in operation, Shi allegedly offered them partial refunds if they signed a contract preventing them from disclosing they had received the refund.
She also allegedly sent investors phony photographs purporting to be of construction that was underway, when GHB never began construction, the affidavit states.
Police claim that Shi transferred the victims’ funds to her personal accounts and spent $2.2m to pay a company that provided luxury travel and concierge services, nearly $295,000 to purchase two Mercedes-Benz cars, and hundreds of thousands of dollars to buy clothes, restaurant meals, and hotel stays in Beverly Hills, France, Thailand and China.
If convicted, Shi would face a statutory maximum sentence of 20 years in federal prison.
This case is being prosecuted by Assistant United States Attorney Alexander C.K. Wyman of the Major Frauds Section.
Image Â©GCR, illustration by Denis Carrier