Nearly 80 investors have signed on as plaintiffs in a suit filed this week in
“We think it was a fraud from the beginning,” said
In all, 199 foreign investors put
The loan was made through the EB-5 visa program, which grants
The suit says Mastroianni took pains to structure the financing in a way that left foreign investors unable to foreclose on the loan to get their money back.
“They were stepping into a carefully planned fraud designed to yield Mastroianni unfettered access to their money to finance his project,” the suit alleges.
The suit says Mastroianni converted the EB-5 investors' money from debt to “powerless, non-voting equity.”
Mastroianni couldn't be reached for comment Friday afternoon.
It's not the first time Mastroianni has been criticized for his handling of EB-5 money. In 2015, Mastroianni's former chief financial officer accused the developer of fraudulently using money raised from foreign investors.
In court papers,
“Mastroianni, who is in control of the company, has acted, is acting, and is … expected to act in a manner that is illegal or fraudulent,” Finkelstein's court filing said.
That dispute later was settled.
The EB-5 program was created by
In another high-profile dispute over EB-5 financing, Chinese and Iranian investors in 2016 sued the developer of the Palm House in
Schneider, an attorney at Levine Kellogg Lehman Schneider + Grossman, said EB-5 investors are making big bets in a country where they're unfamiliar with the legal system and financial customs.
“It's a recipe for disaster,” he said.
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