Oyster Bay Residents Charged with $27 Million Investment Fraud Scheme and Selling Foreign Nationals Access to Prominent U.S. Politicians
Defendants Attended 2017 Campaign Fundraiser with Foreign Donors and Took Photographs with Then-President of The United States
A criminal complaint was unsealed today in Brooklyn federal court charging Sherry Xue Li and Lianbo Wang with wire fraud conspiracy, money laundering conspiracy and conspiracy to defraud the United States by obstructing the Federal Election Commission’s (FEC) administration of campaign finance laws. Li and Wang, both naturalized U.S. citizens, were arrested earlier today in Oyster Bay, New York, and their initial appearance is scheduled for this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr. at the United States Courthouse in Brooklyn, New York.
Breon Peace, United States Attorney for the Eastern District of New York; Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office; Ricky J. Patel, Acting Special Agent-in-Charge, Department of Homeland Security, Homeland Security Investigations (HSI), New York; and Thomas Fattorusso, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI) announced the arrests and charges.
“As alleged, the defendants enticed their victims to invest in a fraudulent scheme aided by misleadingly claiming that their fictitious project had the support of prominent politicians,” stated United States Attorney Peace. “The defendants were able to perpetrate this fraud by then selling access to U.S. politicians by unlawfully contributing foreign money to political campaigns in their own names and bringing foreign nationals as their guests to fundraising events. This Office is committed to protecting our democratic process from those who would expose it to unlawful foreign influence, and investors from the predatory fraudsters who would steal their money.”
United States Attorney Peace thanked the U.S. Citizenship and Immigration Services for its assistance in the investigation.
"We allege Li and Wang promised investors green cards, access to political figures, and dividends on their money. Tens of millions of dollars came in from investors and straw donors, who expected their money would bear fruit. However, only one promise came to fruition, the access to political power. Foreign money pollutes our immigration and democratic processes, and we must do all we can to protect them," stated FBI Assistant Director-in-Charge Driscoll.
Li and Wang are alleged to have perpetrated a massive, multi-layered fraud scheme targeting foreign nationals ranging from a sham real estate investment, promised benefits for payment, the solicitation for access to U.S. politicians, to making illegal donations for campaigns. The staggering scope of this alleged fraud was facilitated by an abuse in the investor visa process,” said HSI New York Acting Special Agent in Charge Patel. “In tandem with our partners, HSI continues to steadfastly monitor U.S. visa and travel systems for indicators of malign foreign actor abuse and will continue to aggressively investigate attacks on the integrity of the framework that allows access to the United States.”
“It’s alleged that Li and Wang defrauded their victim-investors out of millions, then used their ill-gotten gains to live luxuriously and ‘rub elbows’ with prominent politicians. It is through law enforcement partnerships and collaboration that we were able to break-down this multi-layered fraud scheme and ensure that the alleged culprits now face justice for their criminal behavior,” said Thomas M. Fattorusso, Special Agent in Charge of IRS:CI New York.
The Scheme to Defraud Investors
As alleged in the complaint, Li and Wang orchestrated a nearly decade-long scheme to defraud investors in a fictitious project to develop, build and operate a private educational institution in Sullivan County, New York, called the “Thompson Education Center” (the TEC Project). The defendants solicited victim-investors, many of them foreign nationals located outside of the United States, by falsely representing the progress they were making on the TEC Project and its support from government officials, including by sending investors and prospective investors promotional materials that included photographs of Li, the TEC Project’s President, with prominent U.S. politicians. Many foreign national victims were persuaded to invest in the TEC Project by, among other things, the defendants’ false assurances that their $500,000 investments would guarantee them lawful permanent residence in the United States through the EB-5 investment visa program administered by the Department of Homeland Security, U.S. Citizenship and Immigration Services (USCIS).
As alleged, instead Li, Wang and other members of the conspiracy siphoned off the money they fraudulently obtained from investors by transferring the funds through bank accounts held in the names of various companies that Li had created. Once the funds were in those accounts, Li and Wang used the funds to pay for numerous personal expenses including clothing and accessories, jewelry, housing, vacation travel, upscale dining, and political contributions to prominent politicians. The portion of the invested capital Li and Wang actually spent on the TEC Project was used merely to create and perpetuate the fiction that the TEC Project was a viable development project that was actually under construction. For example, Li and Wang hired contractors, engineers and other professionals to create architectural drawings and plans and perform minor work on or around the development site, which Li and Wang showed to potential investors to mislead them into believing the TEC Project had a realistic probability of completion and of delivering the returns on investment that the conspirators promised their investors.
As of July 2022, more than 150 investors have invested at least $27 million in the TEC Project, including approximately $16.5 million from EB-5 investors who were promised a green card in return for their investment, and approximately $11 million from stock investors who were promised that an IPO would take place. As of March 2022, Li, Wang, and their co-conspirators have misappropriated and laundered at least $2 million in TEC Project investor funds. During this same period, Li, Wang and their co-conspirators spent at least an additional $2.5 million dollars in investor funds on various personal expenses with no clear business purpose, none of which was reported as income to the Internal Revenue Service by Li or Wang. To date, no EB-5 investor in the TEC Project has received a temporary or permanent green card and the TEC Project has not made an IPO or been listed on any stock exchange.
Selling Access to U.S. Politicians
In furtherance of their scheme, Li and Wang also acted as “straw donors” for foreign nationals to unlawfully contribute to campaigns supporting U.S. politicians and political committees. Among other things, Li and Wang promised foreign nationals access to U.S. political events and politicians in exchange for a fee. Li and Wang used the money they received from foreign nationals to fund political contributions, and falsely identified themselves and other U.S. citizens as the contributors of the funds, in violation of the Federal Election Campaign Act (FECA) and FEC regulations. In some cases, Li and Wang used TEC investors’ investment funds to make the political contributions which they used to gain access to the political events, where Li and Wang took photographs with elected officials. Li and Wang would then use the photographs as a marketing tool in soliciting investments from foreign nationals in the TEC Project.
For example, as alleged in the complaint, Li and Wang charged twelve foreign nationals $93,000 per person for admission to a June 28, 2017 fundraising event (the June 28, 2017 Fundraiser) with the then-President of the United States. Li and Wang used the funds that they collected from the foreign nationals to unlawfully make $600,000 in political contributions in their own names—$270,500 from Li and $329,500 from Wang—to the joint fundraising committee hosting the June 28, 2017 Fundraiser. Li, Wang and their foreign national guests attended the June 28, 2017 Fundraiser and took photographs with the then-President of the United States. Li and Wang later used a photograph of Li and the President taken at the fundraiser to solicit investment in the TEC Project.
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'The FBI has established a hotline for potential victims. If you have information regarding the allegations in the complaint or believe you may have been a victim, please call 1-800-CALL-FBI or submit a tip online at tips.fbi.gov.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s National Security and Cybercrime Section and the Office’s Public Integrity Section. Assistant United States Attorneys Robert T. Polemeni, Ian C. Richardson, and Joshua Hafetz are in charge of the prosecution with assistance from Paralegal Specialist Magdalena St. Surin. Assistant United States Attorney Claire S. Kedeshian of the Office’s Asset Recovery Section is responsible for the forfeiture of assets.
SHERRY XUE LI
Oyster Bay, New York
Lianbo Wang, also known as “Mike Wang”
Oyster Bay, New York
E.D.N.Y. Docket No. 22-MJ-756