Fate of $580 Million Queens Development at Stake
New York, NY – A critical federal court hearing this Wednesday will shine a spotlight on what attorneys say is a disturbing pattern of misconduct by the U.S. Securities and Exchange Commission (SEC) that threatens to derail nearly $600 million worth of real estate projects in New York City and harm hundreds of immigrant investors.
WHO: U.S. District Court for the Eastern District of New York
WHAT: Court hearing in the matter Securities and Exchange Commission v. Xia et al
Case No.: 1:21-cv-05350-PKC-JAM
Case No.: 1:21-cv-05350-PKC-JAM
WHEN: Wednesday, April 2
10:00 a.m. EDT
10:00 a.m. EDT
WHERE: Public Access via Telephone
(646) 828-7666
Meeting ID: 160 750 0891
Passcode: 600759
(646) 828-7666
Meeting ID: 160 750 0891
Passcode: 600759
DETAILS:
This case underscores a broader, troubling trend within the SEC — an agency that has faced increasing scrutiny for its aggressive and ethically questionable enforcement tactics. In this matter, the SEC allegedly relied on misleading and incomplete representations to obtain an ex parte emergency asset freeze against developer Richard Xia and Fleet Financial Group, freezing nearly $600 million in assets, including $229 million in EB-5 capital raised.
The SEC’s key affidavit — submitted by SEC attorney David Stoelting, who previously faced judicial reprimand in the Verdmont case — allegedly failed to disclose material facts. Notably, the SEC allegedly omitted that Mr. Xia and his team had cooperated for over three years prior to the freeze and had made no attempts to transfer or hide funds. The court was also allegedly not informed of independent appraisals and ongoing project work that directly contradicted the SEC’s claims of fraud and dissipation.
To date, $82 million in investor funds has vanished, labeled for civil penalties and post-judgment interest — even though no investor has been repaid and no construction has resumed. Meanwhile, Mr. Xia’s personal and project-related assets remain frozen, despite a settlement being reached and liens already placed on the properties. The defendant is thus left without a single penny to fund his legal defense, further calling the fairness of the proceedings into question.
In Wednesday’s hearing, Mr. Xia’s legal team is requesting an eight-month extension to make the required settlement payments and unfreeze critical funds so that construction can resume. As part of that process, Mr. Xia has proposed to transfer ownership of the EB-5 regional center — not the real estate itself — to new owners committed to finishing the projects and helping investors obtain permanent residency.
These incoming stakeholders have pledged to revive construction efforts and restore investor confidence. Yet the SEC, instead of supporting these recovery efforts, continues to push for forced liquidation of Kings Point, Eastern Mirage, and Eastern Emerald — despite knowing EB-5 investors are opposed to such liquidation and have voiced a desire to stay in the program.
This case underscores a broader, troubling trend within the SEC — an agency that has faced increasing scrutiny for its aggressive and ethically questionable enforcement tactics. In this matter, the SEC allegedly relied on misleading and incomplete representations to obtain an ex parte emergency asset freeze against developer Richard Xia and Fleet Financial Group, freezing nearly $600 million in assets, including $229 million in EB-5 capital raised.
The SEC’s key affidavit — submitted by SEC attorney David Stoelting, who previously faced judicial reprimand in the Verdmont case — allegedly failed to disclose material facts. Notably, the SEC allegedly omitted that Mr. Xia and his team had cooperated for over three years prior to the freeze and had made no attempts to transfer or hide funds. The court was also allegedly not informed of independent appraisals and ongoing project work that directly contradicted the SEC’s claims of fraud and dissipation.
To date, $82 million in investor funds has vanished, labeled for civil penalties and post-judgment interest — even though no investor has been repaid and no construction has resumed. Meanwhile, Mr. Xia’s personal and project-related assets remain frozen, despite a settlement being reached and liens already placed on the properties. The defendant is thus left without a single penny to fund his legal defense, further calling the fairness of the proceedings into question.
In Wednesday’s hearing, Mr. Xia’s legal team is requesting an eight-month extension to make the required settlement payments and unfreeze critical funds so that construction can resume. As part of that process, Mr. Xia has proposed to transfer ownership of the EB-5 regional center — not the real estate itself — to new owners committed to finishing the projects and helping investors obtain permanent residency.
These incoming stakeholders have pledged to revive construction efforts and restore investor confidence. Yet the SEC, instead of supporting these recovery efforts, continues to push for forced liquidation of Kings Point, Eastern Mirage, and Eastern Emerald — despite knowing EB-5 investors are opposed to such liquidation and have voiced a desire to stay in the program.
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