Tag: Fraud

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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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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New Filings Coming in Southern Holdings Case

New court filings in the Southern Holdings case next week are expected to fully reveal a wide ranging conspiracy to keep details of the case from ever being heard in open court.

According to sources familiar with the new information, it will detail why the Federal Bureau of Investigation provided experts to testify in depositions about key pieces of evidence in the case.

The FBI is specifically prohibited by federal law from becoming involved in civil lawsuits where the federal government is not a party. The federal government is not a party in Southern Holdings yet the FBI became involved.

The original Southern Holdings case began with the attempt of former Myrtle Beach resident Ancil Garvin, III and several co-conspirators attempting to take over the shares and contracts of Southern Holdings Inc.

The name Ancil Garvin III may be familiar to some readers with the fraudulent financing and ultimate failure of the Bahama Island and Crystal Palace projects in North Myrtle Beach.

A company called Atlewa Trust, of which Garvin was a co-founder in 2004 with Rufus Paul Harris and DuWayne Woods, was supposed to provide the financing for the projects. Instead, approximately $6 million of down payments went missing from escrow accounts.

Harris and Woods are currently serving time in federal prison for this and other scams they were involved with. Garvin remains free and allegedly living on Mindanao in the southern Philippines.

The real asset of Southern Holdings that Garvin wanted was exclusive contracts to import cigarettes into Venezuela, worth approximately $20 million. However, the company Southern Holdings took over to obtain the contracts, Ivestra, was also involved in the cigarette black market operating over the Venezuela/Columbia border.

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Chad Connelly and the SCGOP

A heated battle for the chairmanship of the South Carolina Republican Party has brought some interesting details to light as the contest enters its final days.

Last week, current SCGOP chairman Chad Connelly and the party were named defendants in a lawsuit alleging Connelly slandered Cherokee County GOP member Brian Frank in an e-mail and during a speech to upstate party members. Frank has been active in supporting Sam Harms, Connelly’s challenger in the upcoming chairman’s election at the SCGOP convention Saturday.

An e-mail from Harms claimed he was denied access, by SCGOP headquarters, to the list of county delegates to the state convention from 44 of the state’s 46 counties. Apparently this denial was in the hope that Harms’ campaign for chairman would be hurt by this denial.

An e-mail from Connelly, allegedly endorsed by 90 county party officials and members, claimed to “set the record straight” on Connelly’s record in his two years as chairman. However, while claiming facts about Connelly’s actions while chairman have been distorted by his opponents, Connelly’s e-mail contains its own distortions.

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Awendaw’s Missing Money Partie Deux

According to a source with significant knowledge of the town’s finances who spoke on conditions of anonymity, Nichols had done audits of four prior years, all at the same time, after the S.C. Municipal Association had gotten the town’s financial records in order. The town, reportedly, had not had audits performed on an annual basis since the 2002-03 time frame.

Mr. Nichols reported nine significant deficiencies with town records. The lack of documentation and the lack of internal controls led Nichols to issue an adverse opinion on the audit.

According to the source, 41 percent of the town’s transactions were not approved with 30 percent of the funds spent not approved, a sum of over $200,000, according to our source.

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MBIA

A Lesson in Government Folly

It was interesting to note, earlier this week, a media story that passenger arrivals at Myrtle Beach International Airport were down approximately 13 percent for the current year. The downturn in passenger numbers occurs while the airport is in the midst of an approximately $120 million expansion of its terminal facilities.

Horry County Council member Carl Schwartzkopf called me up to ask if I had read the story and asked my reaction.

I told him my reaction was limited to four words, “I told you so.”

The reason for the conversation is Schwartzkopf was elected to council in a special election in district 8 in late 2003 to fill the unexpired term of member Liz Gilland after Gilland was elected council chairman in a special election earlier in the year.

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