BEVERLY HILLS- 36 year old Beverly Hills CEO, Ruixue “Serena” Shi, was arrested on Friday, June 19 on a criminal complaint alleging she fraudulently solicited $21.6 million in funds for a condominium and hotel complex in the Coachella Valley. The complaint alleges that the defendant spent a significant portion of her victims’ money on her own expenses including luxury cars, travel, and designer clothing.
Shi has been charged with one count of wire fraud for soliciting investments from November 2015 and July 2018. The defendant solicited investments for a project named Hyde Resorts that was to be a 207-unit luxury condominium and hotel complex with a total of 95,000 square feet of on-site conference facilities, a pool, spa, fitness centers and other amenities.
The defendant was the president and owner of China-based real estate development company, Global House Buyer (GHB), and was also the CEO of the Beverly Hills-based company, Hyde Morgan Development, LLC,. The Hyde complex was to be developed by GHB while Hyde Morgan solicited investments.
Shi contacted prospective investors for the Hyde complex who were mostly based in China through sales presentations she gave at hotels, through radio advertisements, and through the solicitation of investments over forums on WeChat. WeChat is a Chinese messaging, social media, and mobile payment application. Among the false representations Shi allegedly made to her victims to induce them 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.
According to court documents, investors were required to pay 40 percent of the total purchase price upfront as a down payment. The defendant promised that GHB would help them finance the remaining balance with loans from U.S. based banks when the project was completed. Additionally, Chinese investors involved in the Hyde project were falsely promised that their investments with Shi would enable them to obtain visas through the United States EB-5 Immigrant Investor Program.
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 law enforcement that the defendant told her that she could procure a long-term visa for her through the EB-5 Program if she invested $500,000 in the Hyde project. Shi also allegedly told investors that GHB had purchased a 47-acre lot of land in Coachella Valley where the Hyde development was to be built. According to court documents, the purchase that GHB made only included 20 acres of that property.
The defendant told investors that GHB had obtained the required city development approvals for the Hyde development, which included the re-zoning of the land she allegedly purchased when no such approvals had been given. When victim-investors began demanding refunds after hearing GHB was no longer in operation in the United States, the defendant allegedly offered them partial refunds if they signed a contract to prevent them from disclosing they had received the refund.
The defendant also sent investors doctored photographs at the sites where construction had allegedly begun. According to court documents, GHB never began construction on the Hyde development and never purchased the entire plot of land where the development was to be built. Bank records allegedly show that Shi transferred the victims’ funds to her personal accounts, then misappropriated a significant portion of victims’ money for her own expenses.
The defendant used the stolen $2.2 million of investor money to:
- Pay a company that provided luxury travel and concierge services
- Pay nearly $295,000 to purchase two Mercedes-Benz automobiles
- Purchase hundreds of thousands of dollars in designer clothing
- Purchase restaurant meals,
- Purchase hotel stays in Beverly Hills, France, Thailand and China.
If convicted, Shi would face a statutory maximum sentence of 20 years in federal prison. This case is being prosecuted by Assistant United States Attorney, Alexander C.K. Wyman of the Major Frauds Section.