Two thirds of the 160 Chinese investors who funded a condo development in Vail, Colorado, have signed a letter seeking to remove the general partner, Colorado Regional Center. Their filing state, “This removal is for cause due to fraud, breach of fiduciary duty, and self dealing.” Investor lawyer Doug Litowitz says the loan terms stipulate that 66% of the limited partners can remove the general partner. While the investors do not have their capital back, they have received Green Cards.
The history
The $375 luxury condominium project was partially built with the $80 million in capital from 160 Chinese EB-5 investors. Two separate lawsuits in the summer of 2019 were filed claiming the investors were defrauded of their money. The first personally named the developer Peter Knobel as a defendant while the second did not and held the regional center culpable as well.The counter to the investor accusations last September was this: “Solaris’ response to the latest lawsuit is the same as with respect to the previous one: The lawsuit’s allegations of wrongdoing are legally and factually incorrect. We will respond vigorously to this meritless lawsuit.”
Chinese investors claim they couldn’t understand contract
Doug Litowitz, representing the investors in the first lawsuit, claims his Chinese clients could not understand the legal language in a 200-page contract. They believed that their loans would earn 5% interest over five years and that the 79 condominium units secured their loans. That lawsuit also alleges that the developer could give the investors 19 units, worth roughly $40 million or half the loan amount, and then be done.16 of those 19 units still remain. A deal to sell those units last summer for $50 million never finalized. Litowitz says his clients are contemplating foreclosure proceedings on the remaining 16 units.
Investors’ lawyer compares regional center to vermin
Litowitz, who has been in the press before for other Chinese EB-5 investor lawsuits, offers this colorful commentary on the Colorado Regional Center: “They are acting like cockroaches that refuse to be driven out of the kitchen.”Read the BusinessDen story
