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The article ‘SEC adds millions to developer’s alleged fraud in Seattle’ features a recent multi-million fraud scandal involving Lobsang Dargey, developer at Path America. Dargey is facing trial for a case of fraud amounting to millions of dollars (Bhatt, 2015). According to the U.S. immigrations laws, anyone who wishes to invest half a million dollars in the American economy may be entitled to the EB-5 visa program (Bhatt, 2015).
Dargey used the visa program as a façade for his fraud luring about 250 Chinese businessmen into investing as much as $125 million for two real estate projects (SEC, 2015). The investors who agreed to finance the projects were promised by Dargey that their funds would be used in accordance with EB-5 program goals when in reality, only $17 million was used by Dargey for legitimate purposes while the remaining $63 were spent on unrelated projects not eligible for EB-5 visa program (SEC, 2015).
The fraud case has gained its notorious popularity because it is international in nature. Moreover, the case revolves around socially-important, large-scale real-estate projects: a skyscraper in Seattle and a commercial and residential development. Undoubtedly, the magnitude of the fraud affects many parties involved, both inside and outside the U.S.
According to the United States District Court (2015) “Most of the direct victims of this fraud are foreign nationals seeking residency in the United States” (p. 2). The court referred mainly to the direct victims of the fraud, who had lost their money hoping to obtain citizenship in the U.S. However, the court’s ruling to freeze Path America’s bank accounts, a company owned by Lobsang Dargey, put a halt to several large-scale projects leaving thousands of U.S. citizens without jobs.
Choices and tradeoffs
Although the involved parties could request their money back, interestingly, very few of the investors asked for a refund (Bhatt, 2015). The main reason is that the real-estate project is 95% complete, and there is little to no sense for investors to back up now (Bhatt, 2015). Furthermore, the project created job places which are eligible for obtaining a green card. Dargey’s attorney said that the court ruling to freeze the bank accounts will have ramifications for the immigrant investors who are hoping to obtain EB-5 visas (Bhatt, 2015).
The case of fraud will have an impact that will touch upon many areas and involve many stakeholders. Firstly, the EB-5 visa program that attracts investment from overseas and creates jobs for U.S. citizens has been compromised due to the large-scale fraud. Many entrepreneurs contemplating launching businesses in the U.S. will become more cautious regarding their investments. Secondly, the asset freeze and the project halt resulted in the loss of jobs among the employees who had been working on the project.
Although it is undoubtedly a case of fraud, observers may be faced with a contradiction because Lobsang Dargey did not gamble the money away in casinos or put it in offshore bank accounts. This statement is backed up by Daniel Dunne, Dargey’s defense attorney who claimed that the money had been invested in a range of potentially successful projects that are likely to create jobs and yield positive results for the community.
Although the money was invested with a good cause in mind – building a number of real estate projects and a farmer’s market, it would be wrong to justify Dargey’s actions. To start with, it is not his money; secondly, he misled 250 Chinese investors who perhaps had to part with their last savings hoping to obtain a legal residency in the U.S. To put it into simple words, Dargey did cheat Chinese investors, took their money and used it for unrelated projects.
Dargey’s attorneys are doing everything possible to portray the defendant as a Robbin Hood, who had taken the money from affluent investors and invested it in socially-important projects. Despite that, Dargey should be prosecuted and punished according to the U.S. law, and no compromise should be offered.
Bhatt, S. (2015). SEC adds millions to developer’s alleged fraud in Seattle. Web.
United States District Court. (2015). Document 1. Web.
U.S. Securities and Exchange Commission. (2015). SEC Announces Asset Freeze Against Alleged EB-5 Fraudster in Seattle Area. [Press release]. Web.