Palm House Robert Matthews EB-5 Clintons Trump Tony Bennett https://therealdeal.com/miami/issues_articles/lost-paradise-at-th... MHy @o in| Q SUBSCRIBE MY ACCOUNT in EB-5 funding for personal expenses, including the purchase of a 151-foot yacht named “Alibi” and his own debt payments. Matthews and the project’s general contractor, Nicholas Laudano, recently pleaded guilty to fraud charges in federal court, while the 91 EB-5 backers lost their $500,000 investments and never received their green cards. The EB-5 regional center in charge of marketing the Palm House project and soliciting the investments, however, has not been criminally charged. The South Atlantic Regional Center (SARC) and its director, Joseph Walsh Sr., were allegedly able to siphon nearly $9.5 million of the foreign investors’ money, according to a civil complaint filed by the SEC in federal court. To date, Walsh has only been charged civilly. He was allegedly even found recently trying to solicit other EB-5 investors for another hotel project in Miami Beach, pera lawsuit filed in Palm Beach County. “This is the most egregious fraud case I have ever seen,” said attorney David George, of George Gesten McDonald PLLC, who's representing EB-5 investors in the Palm House lawsuit. Regional centers like SARC function as middlemen between —— developers and their foreign investors. But despite the key role = A they play in the EB-5 process, there’s minimal regulation over — ie |) how they operate and few safeguards to protect investors. a The current system, critics say, is a petri dish for fraud that allows bad actors to come and go — in many cases with no criminal prosecutions. At the same time, lobbyists for the real estate industry have pushed to ensure these rules remain in place. “No one is watching the regional centers,’ said Doug Litowitz, a Chicago attorney who was not involved in the Palm House lawsuit but represents Chinese clients in other 2 of 10 6/26/19, 11:57 AM HOUSE_OVERSIGHT_029521