Investors sue over Greenland downtown LA hotel EB-5 raise

The math, the investors allege, was broken from the start. A March 2015 appraisal put the hotel’s “as stabilized” value at $202.2 million, below the $216.5 million the project was disclosed to cost. That gap, the filing says, made repayment from the asset alone “structurally implausible,” and the shortfall never made it into the offering documents handed to investors. 

The lawsuit also questions the sponsor’s integrity. The regional center that sponsored the offering – the entity licensed to pool EB-5 money – and its president were later sued by the Securities and Exchange Commission, the suit says, over allegations of “misappropriating” more than $12 million from investors in two companion EB-5 deals. According to the filing, a federal court entered a final judgment in that case in November 2018 ordering the return of $24,655,000 in investor money, and immigration authorities pulled the regional center’s license in April 2018. Investors say the fund’s manager, A&J Capital, still told them their money “had not been misappropriated” and “remained safe.” 

What followed, the investors claim, was kept from them. Court papers describe Greenland Holding Group’s credit ratings sliding toward default across 2021 and 2022, a request to push back a $488 million bond payment, and the “fire-sale” of a neighboring Metropolis apartment tower for $504 million – a loss the suit puts at more than $200 million against cost. During that stretch, the filing says, the hotel backing the loan was listed for sale without a clear heads-up to the people whose money was on the line. 

Years past the original five-year loan term, the investors say, none of their capital has come back – more than $4 million in total. Their claims run from federal and state racketeering laws to California securities violations and breach of fiduciary duty, and they are asking the court to undo the investment, or award damages, plus punitive damages of at least $11 million. 

For developers who raise EB-5 money, the takeaway sits with disclosure: what a sponsor must tell investors when both a project’s economics and a parent company’s finances turn south while the capital is still locked in.