Tag: Dan Liu

Yiqian Investors Suing Dan Liu and Founders Group Entities

Investors bilked out of over $1.1 billion are pursuing a class action lawsuit in federal court against Founders Group International, its associated LLC’s and principal owner Dan Liu.

The lead plaintiffs in the case are Xunhui Cheng, a citizen of the Peoples Republic of China, and Kelan Cai, a citizen of the United States.

Background for this lawsuit is provided below:

Liu, a native of the Peoples Republic of China, first appeared in 2014 buying up golf courses with apparently unlimited amounts of cash. At the time, Liu was hailed as a potential savior of the golf tourism industry in Horry County.

In the 2014-15 timeframe, Liu and his Founders Group International LLC acquired a total of 22 golf courses, various potential development properties and homes. It is estimated his total expenditure in the Grand Strand area was approximately $140 million.

Liu’s wealth supposedly came from his ownership stake in Yiqian Funding, also marketed as “Easy Richness”, a peer to peer lending business in his native China.

By the time Liu staged his society style wedding at his newly acquired Pine Lakes Country Club clubhouse in April 2015, the event was hailed by local media as the Grand Strand’s “first major step into the overseas tourism market.”

But it was all a con.

Storm clouds began to block out this sunny picture in 2016 when Chinese police began raiding Yiqian Funding offices in China. The picture accompanying this article shows police carrying computers and records out of an “Easy Richness” office in China during one raid.

Liu’s principal partner in Yiqian Funding, Xiuli Xue, an attendee at the Liu wedding in Myrtle Beach, and 11 other high ranking associates in the Yiqian Funding organization were arrested in 2016, Xue in Hong Kong as she was attempting to leave the country.

All 12 were convicted at trial for an “illegal fundraising case” designated as a “Series of Yiqian Events.” by the Nanjing District Attorney for Jiangsu Province in China. They are currently serving prison sentences.

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I-73, Indian Wells Controversies Highlight Council Agenda

The agenda for Tuesday night’s regular meeting of Horry County Council has only two items of consequence on it.

Under Old and New Business, council will discuss the Financial Participation Agreement with the South Carolina Department of Transportation for the I-73 project.

The agreement has been in effect since December 2018 when it was signed by former administrator Chris Eldridge for the county after receiving council approval to do so. However, the real date for its beginning is the start of the new fiscal year on July 1, 2019.

Generally the agreement provides that Horry County will provide up to $25 million per year from Hospitality Fee revenues to fund the construction of I-73 within Horry County (the Project) and SCDOT will oversee the project from design through construction.

The written agreement states, “SCDOT shall provide an Annual Work Plan to the county on the activities proposed by March 31 that the county shall approve prior to June 30 before commencing work in the succeeding fiscal year.”

SCDOT provided a work plan for next fiscal year which allots $6 million for engineering services and $6.5 million for right of way acquisition. Council has yet to act on that work plan, but there is NO money in the upcoming budget to pay for it.

The plan was for Horry County to provide up to $25 million per year from 1.5% Hospitality Fee revenues collected countywide as funding. Since March 2019, the county has been sued by the cities over hospitality fee collections and there is no guarantee at this time how much, if any, of the countywide 1.5% fee revenue will be available to the county in the next or ensuing fiscal years.

However, Section V of the agreement, “Payments by the County”, states,  “The County shall maintain an account balance which shall be sufficient to cover the Project expenses for the relevant fiscal year including annual payments to the consultants, contractors or SCDOT…”

In addition, Section III D of the agreement states, “Nor shall the County’s prior approval be required for any right-of-way acquisition agreement or consultant agreement for work of the Project provided the cost thereof does not exceed the estimates provided in the Annual Work Plan.”

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Indian Wells Rezoning on Tonight’s County Council Agenda – Updated

(above picture Dan Liu, left, and Nick Dou)

UPDATE

Once again first reading of the rezoning ordinance was deferred. 

The same scenario played out as before – opponents of the rezoning showed up in force dressed in their now famous red shirts. Once again council member Tyler Servant blinked and asked for another deferral.

It appears there is no desire on Servant’s part to vote against the rezoning or else it would already been voted down. Council members will generally follow the will of the member in whose district the rezoning is located.

Evidently the tactic is to attempt to wait out the ‘red shirts’ until their opposition wanes. However, that may not be the end result here.

There is a determined opposition and the current owner, Founders Group International, apparently needs the property to be rezoned to clinch its sale. It is not believed that the property can be profitably developed with the residential zoning it has now.

First reading of an ordinance for a proposed rezoning of Indian Wells Golf Club is again on the Horry County Council agenda for tonight.

This is the fourth time the issue has been before council for first reading. It was initially defeated late last year. After some tinkering with the proposal, removing the commercial areas and adding more townhomes in an attempt to appease adjacent property owners, the issue has been deferred twice.

There is considerable opposition from owners in three sub-divisions, who thought they were buying golf course view property over the past 20 years only to discover this is not necessarily the case in Horry County.

All but a few of the golf courses in Horry County have underlying zoning that allows for development of the golf course into residences of some type.

Many of properties in the golf course communities surrounding those golf courses were sold on the basis of ‘fairway views’ or ‘proximity to the course’ of the homes, often with premiums charged for properties directly adjacent to the golf course.

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Indian Wells Rezoning Again Up for Consideration by County Council – UPDATE

UPDATE

Horry County Council unanimously voted to defer the first reading of rezoning request for Indian Wells Golf Course until the June 6th regular council meeting. Council will request the Chinese owners of Founders Group International, Nick Dou and Dan Liu, to appear at that council meeting with their attorneys to answer questions about possible restrictions on the property with respect to the current litigation between Dou and Liu and, possibly, to address questions about Liu’s immigration status and Chinese legal problems.

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A third try at first reading approval for a rezoning of Indian Wells Golf Course will come before Horry County Council Tuesday night.

This time around, it appears commercial areas have been removed from the redevelopment plan with townhomes replacing commercial buildings.

This is all part of the game that is played throughout the county to basically give developers what they want while making it appear council is working in the interests of affected citizens.

One of the best kept secrets with respect to development is that virtually all of the golf courses in the county have underlying zoning that allows for future development. That house bought on a fairway in one of the many golf course communities in the area may not always look out on a fairway. In the case of Indian Wells, the fairway view may soon be replaced by townhomes.

The rezoning is being requested for reasons that apparently have to do with making the land more valuable to developers not for any benefit of the current homeowners in the surrounding community.

However, the Indian Wells rezoning has other interesting facets.

Indian Wells is one of the golf courses currently owned by Founders Group International with a mortgage in the amount of $4,769,496.00 payable to Founders majority owner Dan Liu.

Liu is a Chinese citizen in the U.S. on a work visa that appears to have expired in August 2018.

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Proposed Rezoning of Indian Wells Golf Club Raises Many Issues

(pictured above, Dan Liu, left, and Nick Dou)

Horry County Council will again consider first reading of a request to rezone Indian Wells Golf Club for development at its regular meeting next week.

Council has already denied the request once and deferred a changed plan at its last regular council meeting.

Council member Tyler Servant, in whose council District 5 the course is located, has reportedly been working with three homeowner’s associations who will be impacted by the rezoning to get agreement from them for a development plan that has no commercial structures and only townhomes and single family homes.

But, Servant may be missing the forest while concentrating on just one tree. There are more issues at Indian Wells than which development plan can get approval from council.

Indian Wells is one of the golf courses owned by the Founders Group International, a collective of multiple LLC’s with 90% ownership by Chinese companies for which Dan Liu claims to act as exclusive U.S. agent and 10% ownership by Nick Dou, according to documents provided in a lawsuit with Dou as plaintiff and Liu as defendant. According to Liu’s deposition, he met Dou in 2012.

Dou and Liu are currently locked in a legal battle over allegations by Dou that Liu is attempting to strip assets from their corporate interests.

In the 2014-15 timeframe, Founders Group International acquired 22 golf courses, homes and other properties in the Grand Strand area for the total sum of approximately $135 million.

In a deposition for the ongoing lawsuit, Liu claimed the money used for the purchases was taken from his personal funds. However, the deposition included a description from Liu of his work history from the time he left university in 1997. Nothing in that history gave any indication from where Liu would have accumulated such an amount of money.

According to Liu’s statements in the deposition, he placed his personal funds in the above mentioned Chinese companies, with which he claims no association other than being the exclusive U.S. agent, in order to move the funds out of China.

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Chinese Trial Raises Questions About Local Leadership

A criminal trial in China added a clarifying chapter to the saga of Chinese investments in the Grand Strand area and the naivete of local officials who touted them here.

By 2014, the golf tourism business was in serious decline. Owners of golf courses, many still paying off mortgages, were stuck with assets on their books far exceeding their actual market value. Many were quietly trying to sell the courses with little success.

Jane Zheng was a native Chinese working as a realtor with a local company. Her niche market was other Chinese nationals with seemingly excess cash to invest in U.S. properties. At the time, the Chinese economy was growing at such a rate that many Chinese businesses and individuals had considerable excess cash to invest.

Zheng connected with Dan Liu, reportedly a managing partner in Yiqian Funding, a peer to peer lending company in China that received money from Chinese investors that it lent to business or other entrepreneurs or invested it. Investors and the company supposedly made money on the interest paid on the loans or on the rise in investment assets.

Over an approximate 18 month period, Zheng brokered the sale of 22 local golf courses and other development properties to, supposedly, three Chinese corporations for whom Liu was the exclusive U.S. representative.

While not being licensed to do business in South Carolina, according to records of the S.C. Secretary of State Office, the three corporations supposedly formed at least 16 LLCs locally, each holding some of the various golf course and development property assets. One or more of three Chinese corporations owned 90 percent of each LLC with Liu, as the exclusive agent, acting for the corporations. The LLC’s primarily conducted business locally under the name Founders Group International.

Everything looked great. Local owners got rid of golf course properties that had become toxic to them. Liu was playing the big money man locally and his partner in Yiqian Funding, Xiuli Xue, was bringing potential investors to Horry County to see investment opportunities.

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Dan Liu Fires Back at Founders Group International Partner

(Pictured above, Dan Liu (left) and Nick Dou in happier times)

Dan Liu, majority partner of the Founders Group International entities, fired back hard at minority partner Nick Dou in answering a complaint in a lawsuit filed by Dou against Liu, three Chinese corporations and the many limited liability companies that make up the Founders Group International holdings.

According to Dou’s complaint, the three Chinese corporations were 90 percent owners of the Founders Group properties and Dou was 10 percent owner. Liu was the exclusive authorized agent in the U.S. for the Chinese corporations.

In his lawsuit, Dou alleges Liu was stripping assets out of the corporation for personal and other uses. The suit alleges breach of contract, fraud and conversion by Liu.

Additionally, Dou asks for a full accounting of corporate assets as well as a temporary restraining order directing Liu “shall not divert, remove, alienate, convert, encumber or otherwise manipulate any corporate assets of FGI or any of the other FGI Entities for his personal use or benefit, until such time as the claims raised in this action have either been resolved by this Court, settled and/or withdrawn by the Parties to this action…”

The complaint also states, “Plaintiff Nick Dou is informed and believes that the assets and property of FGI and the affiliated FGI Entities are at grave risk and danger of loss, and of material injury and impairment, at the hands of Defendant Dan Liu, if such property and assets are left under the exclusive control of Defendant Dan Liu.”

Dou’s complaint also states, “Upon information and belief, on or about March 27, 2017, the Nanjing District Attorney’s office for the Jiangsu Province of the PRC issued public statements that it seeks the arrest of Defendant Dan Liu for suspicion of investment fraud and “absorbing public money.”

A copy of this public statement release was submitted as an exhibit with Dou’s complaint.

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New Insights Into Founders Group International Lawsuit

(Pictured above, Dan Liu (left) and Nick Dou)

Investigation into the lawsuit filed in the 15th Judicial Circuit by Nick Dou against Dan Liu and three Chinese corporations over properties held collectively by Founders Group International continues to bring new revelations to the surface.

According to a source familiar with the lawsuit, Dan Liu was served locally with the lawsuit in recent days.

Liu’s peer to peer lending company, which did business in the Peoples Republic of China (PRC) under both its Mandarin name “Yiqian Funding” and its English name “Easy Richness”, raised the money that was used to buy golf courses and other property in Horry and Georgetown counties.

According to records in Horry County, Liu and Dou established approximately 16 limited liability corporations to hold the various properties purchased in Horry and Georgetown counties. Collectively, the llc’s are known locally as Founders Group International.

According to court documents, Dou holds 10 percent interest in Founders Group International and the associated llc’s. The three Chinese corporations, for which Liu acts as exclusive U.S. agent, hold the remaining 90 percent of the llc’s.

According to sources familiar with Yiqian Funding, the company raised a total of approximately 10 billion Yuan ($1.5 billion) from approximately 60,000 investors over a six year period. Estimates are that at least $300 million was taken out of the PRC for investment in the U.S.

Sources with knowledge of Yiqian said what was purchased was not really important to Liu. His main goal was getting the money beyond the borders of the PRC.

For that purpose, Liu established the three Chinese corporations, apparently nothing more than shell corporations, to receive the investor money from Yiqian Funding to use for purchases in the U.S.

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Records Reveal Different Picture of Founders Group International

When Nick Dou filed a lawsuit against Dan Liu and three Chinese corporations last week, he brought to light much more than one Chinese partner of Founders Group International, LLC suing other Chinese partners.

According to the lawsuit, Dou owns 10 percent of approximately 16 LLCs with one or more of three Chinese corporations owning the other 90 percent of each LLC. The parties primarily conducted business locally as Founders Group International, LLC.

Dan Liu appears not to have a direct ownership interest in any of the 16 LLCs, but rather acts as exclusive U.S. business agent for the three Chinese Corporations.

However, further research on business transactions involving one or more of the LLCs as well as the three Chinese corporations revealed that Liu now appears to hold mortgages on virtually all of the collective Founders Group International, LLC golf courses and development property in Horry and Georgetown counties.

Between February 2017 and May 2017, well over $100 million in promissory notes and mortgages were transferred to Dan Liu in a series of approximately 25 transactions recorded in Horry County.

Seventeen of the recorded transactions assigned promissory notes and mortgages from one or more of the three Chinese corporations for which Liu allegedly acted as exclusive U.S. agent to Liu. Papers for eleven of the transfers to Liu were signed on February 3, 2017 and recorded on February 10, 2017 and papers for the remaining six transfers were signed on April 28, 2017 and recorded on May 25, 2017.

The remaining transactions were preliminary assignment of promissory notes and mortgages so they could ultimately be assigned to Liu.

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Chinese Fireworks Erupt Over Founders Group International, LLC

Fireworks have erupted between the two Chinese principal owners of Founders Group International, LLC (FGI) as Nick Dou, one owner of the corporation, filed suit against Dan Liu, the other owner of the corporation, and three Chinese corporations Liu allegedly acts as exclusive agent for, in 15th Judicial Circuit Court on June 22, 2017.

According to the complaint, case number 2017-CP-2603932, Dou alleges Liu was stripping assets out of the corporation for personal and other uses. The suit alleges breach of contract, fraud and conversion by Liu.

Additionally, Dou asks for a full accounting of corporate assets as well as a temporary restraining order directing Liu “shall not divert, remove, alienate, convert, encumber or otherwise manipulate any corporate assets of FGI or any of the other FGI Entities for his personal use or benefit, until such time as the claims raised in this action have either been resolved by this Court, settled and/or withdrawn by the Parties to this action…”

The filing also states, “Plaintiff Nick Dou is informed and believes that the assets and property of FGI and the affiliated FGI Entities are at grave risk and danger of loss, and of material injury and impairment, at the hands of Defendant Dan Liu, if such property and assets are left under the exclusive control of Defendant Dan Liu.”

Dou asks the Court to “exercise its authority pursuant to S.C. Code Section 15-65-10, et seq., and immediately appoint a receiver over the property, assets, and operation of FGI and the affiliated FGI Entities.”

The three Chinese corporations named as co-defendants with Liu are: Jiangsu Tianru Danfo Commerce and Industry Co., Ltd., Nanjing Shuojun Trade and Industry Co. and Nanjing Xinyuanyuan Commerce and Trade Co., Ltd.

According to the complaint, all three corporations are organized and existing under the laws of the Peoples Republic of China and none of the three corporations have been “admitted to or authorized to conduct business in South Carolina.”

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