Fleet Group Queens Hotel Project and EB-5 Program Investors Class Action

The EB-5 Immigrant Investor Program allows investors in US businesses to apply for permanent residence in the US for themselves and their immediate families under certain conditions. This class action is brought by a group of investors aspiring to qualify for that program who claim they were duped into investing in a fraudulent project for the construction of a luxury hotel complex in Queens, in New York City.

The class for this action is all persons and entities who invested in the partnership for the project and who were damaged thereby.

The EB-5 program permits investors, along with their spouses and unmarried children under 21, to obtain a Green Card for permanent residence in the US if they (1) invest the required amount in a commercial enterprise in the US (2) which leads to the creation or preservation of ten permanent full-time jobs for qualified US workers.

The plaintiffs in this case invested $500,000 plus an additional $50,000 in administrative fees in a project to be constructed in Corona, Queens. The defendants are Fleet New York Metropolitan Regional Center, LLC (the general partner), EEGH II, LP (the partnership), La Guardia performance Center, LLC (the developer), and Richard Xia, an individual who controlled all the other defendants.

The offering documents included the project’s Limited Partnership Agreements, Private Placement Memorandum, and the Comprehensive Plans. But they set forth a project that could not or would not be completed on schedule and that has not resulted in the necessary conditions for the investors to apply for Green Cards under the EB-5 program. The problems included a number of areas in which the offering documents overpromised:

Scope: The project was supposed to include a hotel, convention center, performing arts center, retail store and restaurant areas, and a parking garage. “However,” the complaint alleges, “as Department of Buildings filings have revealed, no such convention center, performing arts center, or retail center was ever part of the plan.”

Size: The offering documents outlined a plan for a building of nearly 1.2 million square feet. But buildings in the area have a maximum Floor Area Ratio (FAR) based on zoning ordinances. The FAR for the indicated area was nowhere near that high and possibly as low as 150,000 square feet.

Timeline: The offering documents showed a forty-four-month schedule, but not even the foundation has been completed.

Job Creation: The documents anticipated as many as 3,025 jobs would be created. Only 110 were needed to qualify the investors for the EB-5 program, but even that smaller number has not yet been achieved.

The claims include common law fraud, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty.

Article Type: Lawsuit
Topic: Fraud
Tags: Aiding, Breach of Fiduciary Duty, Fraud