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View Winners → Arcadia woman to plead guilty to $22M fraud scheme
San Gabriel Valley Oct 26, 2021
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An Arcadia woman is expected to plead guilty Tuesday to soliciting over $22.8 million in funds for a condominium and hotel complex in the Coachella Valley, then spending part of the money on luxury cars, travel and designer clothing.
Ruixue “Serena” Shi, 37, has agreed to enter her plea to one federal count of wire fraud, which carries a sentence of up to 20 years in federal prison, according to the U.S. Attorney’s Office.
Her plea agreement states that she will be required to pay over $22.8 million in restitution to victims of the scheme.
Shi admitted that between November 2015 and July 2018, she solicited investments for the Hyde Resorts and Residences Coachella Valley, a 207-unit luxury condominium and hotel complex that was supposed to have a total of 95,000 square feet of on-site conference facilities, a pool, spa, fitness center and other amenities.
Shi was the president and owner of Global House Buyer, a China-based real estate development company, and also was CEO of the Beverly Hills-based company Hyde Morgan Development. The Hyde complex was to be developed by GHB while Hyde Morgan solicited investments.
Shi contacted prospective investors in the Hyde complex — who mostly were based in China — through sales presentations she gave at hotels, radio advertisements, and through the solicitation of investments over forums on WeChat, a Chinese messaging, social media and mobile payment application, according to the agreement.
Among the alleged false representations Shi made to induce victims to invest was that the Hyde development was scheduled to begin construction in 2017. Investors were told they would be purchasing condos ranging in price from $400,000 to $700,000, court papers show.
Investors were required to pay 40% of the total purchase price up front as a down payment, but Shi promised that GHB would help them finance the remaining balance with loans from U.S.-based banks when the project was completed, the criminal indictment alleges.
Chinese investors in the Hyde project were falsely told that their investments with Shi would enable them to obtain visas through the EB-5 Immigrant Investor Program, the agreement states. EB-5 is a federal program that allows foreign investors to secure a U.S. visa by investing a large sum of money to finance a business in the United States that employs American workers.
One victim told investigators that she was told that Shi would procure a long-term visa for her through the EB-5 Program if she invested $500,000 in the Hyde project, according to court papers.
Shi also told investors that GHB had purchased a 47-acre lot of land in Coachella Valley where the Hyde development was to be built. In reality, Shi purchased only 20 acres of that property, documents state.
The defendant falsely told investors that GHB had obtained the required city development approvals for the Hyde development, which included the re-zoning of the land she purportedly had purchased, when no such approvals had been given, prosecutors allege.
When some victim-investors began demanding refunds after hearing GHB no longer was in operation in the United States, Shi offered them partial refunds if they signed a contract purporting to prevent them from disclosing they had received the refund, her plea agreement says.
She also allegedly sent investors phony photographs purporting to be of construction that was underway. In truth, GHB never began construction on the Hyde development and never purchased the entire plot of land where the development was to be built, according to the indictment.
Bank records show that Shi transferred her investors’ funds to her personal accounts and then misappropriated a significant portion of the money for her own expenses. Prosecutors allege she used $2.2 million of investor money to pay a company that provided luxury travel and concierge services, nearly $295,000 to purchase two Mercedes-Benz automobiles, and hundreds of thousands of dollars for designer clothes purchases, restaurant meals and hotel stays in Beverly Hills, France, Thailand and China.
