SEC v. EDWARD CHEN; JEAN CHEN; HOME PARADISE INVESTMENT CENTER LLC; GH INVESTMENT LP; GH DESIGN GROUP, LLC; GOLDEN GALAXY LP, et al., No. 2:17-cv-06929, Central District of California (Sept. 27, 2017) — Complaint

ow
II
11
Case2:17-cv-06929-PA-JEMDocument
1
Filed09/20/17

Page
ID#:1
1
DONALD
W.
SEARLES,
Cal.BarNo.135705
ORIGINAL
Email:
searlesdgsec.gov
2
KRISTIN
S.
ESCALANTE
(Cal.
BarNo.
169635)
Email:
escalantekgsec.gov
3
JUNLING
MA
(Cal
Bar
No.213241)
Email:
rnaj(d,
sec.gov
FILED
4
BENJAMI_\FFACMKNER
(Cal.
BarNo.
282181)
CLERK,
U.S.DISTRICTCOURT
Email:
[email protected]
5
Attorneys
for
Plaintiff
9/20/17
6
Securities
and
Exchange
Commission
Michele
Wein
Layne,
Regional
Director
CENTRALDISTRICTOFCALIFORNIA
7
John
W.
Berry,
Associate
Regional
Director
BY:
ER
DEPUTY
Amy
Longo,
Regional
TrialCounsel
8
444S.Flower
Street,
Suite900
Los
Angeles,
California90071
Tele•hone:
(323)
965-3998
acsie:
(213)
443-1904
4=
0
lUNITED
STATESDISTRICTCOURT
ck,
t
c..
0
CENTRAL
DISTRICT
OFCALIFORNIA
1
Cy
17
-0
6
9
a
9
--tP/9-(
m
SECUITIESAND
EXCHANGECase
No.
COMMISSION,
16
Plaintiff,
COMPLAINT
17
18
VS.
(FILED
UNDER
SEAL)
EDWARD
CHEN,
JEAN
CHEN,
19
HOMEPARADISEINVESTMENT
CENTER
LLC,
GHINVESTMENT
20
LP,
GHDESIGN
GROUP,LLC,
GOLDENGALAXY
LP,
ANDMEGA
21
HOME,LLC,
22
23
Defendants.
24
25
26
27
?8
COMPLAINT

2:17-cv-06929-PA-JEMDocument
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Page
ID#:2
1
DONALD
W.
SEARLES,
Cal.
Bar
No.
135705
Email:
searlesdAsec.goy
2
KRISTIN
S.
ESCALANTE
(Cal.
Bar
No.
169635)
Email:
escalantek@seegov
3
JUNLING
MA
(Cal.
Bar
No.213241)
Email:
maj(cOec.gov
4
BENJAMINFMRKNER
(Cal.
Bar
No.
282181)
Email:
[email protected]
5
Attorneys
for
Plaintiff
6
Securities
and
Exchange
Commission
Michele
Wein
Layne,
Regional
Director
7
JohnW.
Berry,
Associate
Regional
Director
AmyLongo,
Regional
Trial
Counsel
8
444S.
Flower
Street,
Suite
900
Los
Angeles,
California
90071
9
Telephone:(323)
965-3998
213)
443-1904
LODGED
CLERK,
L
D1STRICTCOURT,
11
UNITED
STATES
DISTRICT
COURT
1
2SEP
2
0
2011
CENTRAL
DISTRICT
OFCALIFORNIA
3
T,
0TCA0
LhEpRuNTym
14
I
CV
17
-0
69
a
15
SECURITIES
AND
EXCHANGE
Case
No.
COMMISSION,
16
Plaintiff,
COMPLAINT
17
18
vs.
(FILED
UNDER
SEAL)
EDWARD
CHEN,
JEAN
CHEN,
19
HOME
PARADISE
INVESTMENT
CENTER
LLC,
GH
INVESTMENT
20
LP,
CH
DESIGN
GROUP,
LLC,
GOLDEN
GALAXY
LP,
AND
MEGA
21
HOME,
LLC,
22
23
Defendants.
24
25
26
27
28
COMPLAINT

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ID
#:3
PlaintiffSecurities
and
Exchange
Commission
("SEC")alleges:
2
JURISDICTION
AND
VENUE
3
1.TheCourt
has
jurisdiction
over
thisaction
pursuant
to
Sections
20(b),
4
20(d)(1)
and
22(a)
of
the
Securities
Act
of1933
("SecuritiesAct"),
15
U.S.C.
5
77t(b),
77t(d)(1)
&
77v(a),
and
Sections
21(d)(1),21(d)(3)(A),21(e)
and
27(a)
of
the
6
Securities
Exchange
Act
of1934
("Exchange
Act"),
15
U.S.C.
78u(d)(
I
7
78u(d)(3)(A),
78u(e)
&
78aa(a).
Defendants
have,
directly
or
indirectly,
made
use
of
8
the
meansor
instrumentalitiesofinterstate
commerce,
ofthe
mails,
or
ofthefacilities
9
of
a
nationalsecurities
exchange
inconnectionwiththe
transactions,
acts,
practices
10
and
courses
ofbusiness
alleged
inthis
Complaint.
11
2.Venue
is
proper
inthisdistrict
pursuant
to
Section
22(a)
oftheSecurities
12
Act,
15U.S.C.
77v(a),
andSection
27(a)
ofthe
Exchange
Act,
15
U.S.C.
78aa(a),
13
because
certainofthe
transactions,
acts,
practices
and
courses
ofconduct
constituting
14
violations
ofthefederalsecuritieslawsoccurredwithinthisdistrict.
In
addition,
15
venue
is
proper
in
thisdistrictbecauseallofthedefendantsreside
inthisdistrict.
16
SUMMARY
17
1.
This
matter
concerns
two
fraudulentsecurities
offerings
carried
out
by
18
Edward
Chen,
his
wife,
Jean
Chen,
andseveralentities
they
control.In
doing
so,
19
they
have
misappropriated
millionsofdollarsof
investor
money,
muchof
itin
cash
20,
and
cashier'schecks.
21
2.The
Chens
offeredandsold
securitiesin
two
projects
underthe
federal
22
EB-5
immigration
program
administered
by
the
United
States
Citizenship
and
23
Immigration
Services
("USCIS"),
whichallows
foreign
investors
to
apply
for
green
24
cards
as
long
as
theirinvestments
meet
certaincriteria
underthe
program.
Home
25
Paradise
Investment
CenterLLC
("Home
Paradise"),
an
entity
controlled
by
Edward
26
Chen,
isthe
"regional
center"
designated
by
USCIS
to
sponsor
theseEB-5
offerings.
27
3.
As
of
April
2017,
Home
Paradise
has
raised
over
$22.5
millionfrom
45
28
COMPLAINT
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ID#:4
1investorsin
two
offerings:(1)
a
$9.5
million
offering
by
GHInvestment
LP
("GH
2
Investment"),
which
was
supposed
to
investin
the
development,
renovationand
3
operation
of
an
interior
design
center
in
Ontario,California;
and
(2)
a
$13
million
4
offering
by
Golden
Galaxy
LP
("GoldenGalaxy"),
to
investin
a
five-floor,
80-unit
5
condominium
project
in
Los
Angeles,
California.
Home
Paradisecontinues
to
6
promote
these
two
projects
on
the
Chinese
language
websiteofitsChineseaffiliate
7
aimed
at
investorsinChina.
84.TheChens'
misappropriation
ofinvestor
money
hasbeen
staggering.
9OntheGHInvestment
offering
alone,
the
defendants
misappropriated
at
least
$8.6
10
million,
more
than
91%
of
the
approximately
$9.5
millionraised.
In
doing
so,
they:
11
(1)
divertedmillionsofdollars
to
fundtheChens'
purchase
ofresidentialreal
estate;
12
(2)
transferred
investor
money
to
Chen-controlled
entities;
and/or
(3)
withdrew
13
investorfundsin
cash
and
to
purchase
cashier'schecks
in
Jean
Chen's
name.
The
14
offering
proceeds
were
supposed
to
be
used
to
develop
and
operate
a
design
center,
15
but
no
center
is
being
renovated
or
operated;
in
fact,
Home
Paradisehasdone
little
16
more
than
rent
space
in
a
half
empty
warehouse.AndtheChensmisledinvestors
17
(and
the
USCIS)
aboutthesizeofthat
space,
the
square
footage
ofwhich
was
a
18critical
component
to
theestimatednumberof
new
jobs
the
project
would
support.
A
19
doctoredleaseforthe
warehouse,
signedby
Edward
Chen,
on
behalfofGH
Design,
20
as
the
lessee,
was
provided
to
investors
andsubmitted
to
theUSCIS.Thisfakelease
21
vastly
overstatedthewarehouse'ssize
and
monthly
rent,
and
replaced
the
name
ofthe
22
true
lessorwith
Four
Star
RealtyGroup,
an
entity
controlled
by
Jean
Chen,
which
23received
approximately
$3.7
millionof
investors'
money.
24
5.
TheChenshave
similarlymisappropriated
investorfunds
on
theGolden
25
Galaxyoffering.
Of
the
approximately
$13
millionraised
to
datefortheGolden
26
Galaxyoffering,
about
$3.5
million
was
diverted
to
theChens
in
theformof
cashier's
27
checks
to
Jean
Chen
that
shehasused
towardthe
purchase
of
residential
real
28
property,
taken
in
cash,
or
transferred
to
otherChen-controlledentities.
COMPLAINT
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I
Approximately
$2.7
millionofGolden
Galaxy
investorfundshas
not
been
spentyet.
26.Ofthefundsraised
to
datebetweenthe
two
EB-5
offerings,
the
Chens
3have
misused
and/or
misappropriated
approximately
$12.1
million.In
addition,
4
there
are
millionsofdollarsof
investor
funds
still
undertheChens'control.
Given
5their
past
conduct,
there
is
every
reason
to
believe
thatthe
Chens,
unless
immediately
6
enjoined,
willcontinue
to
misuse
and
misappropriate
investor
funds.
77.
By
engaging
inthis
conduct,
thedefendantshave
violated,
and
continue
8
to
violate,
the
antifraud
provisions
of
Sections
17(a)(1),(2)
&
(3)
of
the
Securities
9
Act,
15U.S.C.
77q(a),
and
Section
10(b)
ofthe
Exchange
Act,
15U.S.C.
78j(b),
10andRules
10b-5(a)
and
(c)
thereunder,
17C.F.R.
240.101D-5(a)
&
240.10b-5(c),
and
11defendantsEdward
Chen,
Home
Paradise,
GHInvestmentandGolden
Galaxy
have
12
violated,
and
continue
to
violate
Exchange
ActRule
lOb-5(b),
17C.F.R.
240.10b-
13
5(b).
14
THE
DEFENDANTS
15
8.
Edward
Chen,
ailda
Jianqiao
Chen,
Jian
Qiao
Chen,
andJian
Chen,
age
16
49,
is
a
residentof
Arcadia,
Californiaand
the
husbandofdefendant
Jean
Chen.
17
EdwardChenisthechiefexecutiveofficer
("CEO"),
sole
or
managing
memberand
18
president
ofdefendant
Home
Paradise
Investment
Center
LLC,
whichis
the
general
19
partner
ofdefendantsGH
Investment
LP
andGolden
Galaxy
LP.
20
9.
Jean
Chen,
a/k/a
Jing
Jiang
andJean
Jiang,
age
48,
is
a
resident
of
21
Arcadia,
Californiaandthewifeofdefendant
Edward
Chen.
Jean
Chenis
the
22
managing
memberofdefendant
Mega
Home,
LLC.
Jean
Chenalso
owns,
directly
23and
indirectlythrough
Four
Star
RealtyGroup
Inc.,
50%
of
Mega
Home.
24
10.HomeParadiseInvestmentCenterLLC
("Flome
Paradise")
is
a
25
Californialimited
liabilitycorporation
with
its
principalplace
ofbusinessin
26
Commerce,
California.HomeParadiseis
a
"Regional
Center"
designatedby
the
27
USCIS.EdwardChenisthe
CEO,
sole
member,
and
president/manager
ofHome
28
Paradise.
COMPLAINT
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11.GHInvestment
LP
("GH
Investment")
is
a
Californialimited
2
partnership
with
its
principal
place
ofbusiness
in
Ontario,
California.
Home
Paradise
3
isits
general
partner.
GHInvestment
istheissuer
thatloans
investor
proceeds
to
GH
4
DesignGroup,
LLC.
5
12.GH
Design
Group,
LLC
("GH
Design")
is
a
California
limited
liability
6
corporation
withits
principalplace
ofbusiness
in
Ontario,
California.GH
Design
is
7
theEB-5
project
company
purportedly
funded
by
GilInvestment
forthehome
design
8
center
project.
EdwardChenistheCEOand
president/manager
ofGH
Design.
9
13.Golden
Galaxy
LP
("Golden
Galaxy")
is
a
Californialimited
10
partnership
withits
principalplace
ofbusiness
inLos
Angeles,
California.
Home
11Paradise
isits
general
partner.
Golden
Galaxy
isthe
issuer
that
investstheinvestor
12
proceeds
with
Mega
Home,
LLC
in
theform
or
preferred
equity.
13
14.
Mega
Home,
LLC
("Mega
Home")
is
a
California
limited
liability
14
corporation
withits
principalplace
ofbusiness
in
Commerce,
California.
Mega
15Home
is
theEB-5
project
company,
purportedly
funded
by
Golden
Galaxy,
forthe
16
condominium
project.
Jean
Chen
owns,
directly
and
indirectlythrough
Four
Star
17
Realty
Group
Inc.,
50%of
Mega
Homeand
isits
managing
member.
18AFFLIATED
ENTITIES
I
915.
The
following
entities
are
controlled
by
either
EdwardChen
and/or
Jean
20
Chenandhavereceived
investor
fundsfrom
the
accounts
of
defendantsGH
Design
21
and/or
Mega
Home:
22
16.FourStar
Realty
Group
Inc.
("Four
Star")
is
a
California
corporation
23
withits
principal
place
of
businessin
Arcadia,
California.
It
is
purportedly
a
real
24
estate
development
company.
Jean
Chenisits
CEO,
Secretary,
CFO,
sole
director,
25
and
agent
forservice
of
process.
It
isthe"lessor"
in
GH
Design's
fabricated
lease
for
26
the
warehouse,
and
received
investor
money
fromtheGH
Investment
offering
27
17.
HomeParadises
LLCis
a
California
limited
liabilitycorporation
with
28its
principal
place
of
business
in
Commerce,
California.
It
is
purportedly
a
COMPLAINT
4

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ID#:7
1
construction
company
andthe
general
contractor
for
Mega
Home.
EdwardChenis
2its
CEO,
manager
and
agent
for
service
of
process.
Home
ParadisesLLCreceived
3investor
money
fromboththeGI-IInvestmentand
Golden
Galaxyofferings.
4
18.US
Grandhood,
LLC
("USGrandhood")
is
a
California
limited
liability
5
corporation
withits
principal
place
ofbusinessin
Commerce,
California.
Jean
Chen
6
is
its
manager,
solememberand
agent
forserviceof
process.
US
Grandhood,
LLC
7
received
investor
money
fromboththeGHInvestment
andGolden
Galaxyofferings.
8
19.FirstFinancialInvestment
Group,
LLC
("FirstFinancial")
is
a
9
Californialimited
liabilitycorporation
withits
principalplace
ofbusiness
in
10
Commerce,
California.
EdwardChen
isits
managing
manager
and
agent
forservice
11of
process.
JeanChen
purchased
real
property
inFirstFinancial's
name
using
12
investor
money
from
boththeGHInvestment
andtheGolden
Galaxyofferings.
13
THE
ALLEGATIONS
1420.FromJune2014
through
the
present,
defendantsraised
at
least
$22.5
15
millionfrom
45
investors
participating
in
two
EB-5
projects
sponsoredby
theHome
16
Paradise
regional
center.
Thefirst
project,
financed
by
GH
Investment
and
operated
17
by
G1-1
DesignGroup,purportedly
involves
the
development
and
operation
of
an
18interior
design
center
in
Ontario,
California.
Thesecond
project,
financed
by
Golden
19
Galaxy
and
operated
by
Mega
Home,
involvesthe
development,
construction,
and
20
operation
of
an
80-unitcondominium
complex
inLos
Angeles,
California.
21
A.
TheEB-5
Immigrant
Investor
Program
22
21.Thefederal
EB-5
Immigrant
Investor
Program
sets
aside
EB-5
visasfor
23
participants
whoinvest
in
commercial
enterprises
associated
with
regional
centers
24
approvedby
theUSCISbased
on
proposals
for
promoting
economic
growth.
25
22_
Underthe
EB-5
Immigrant
Investor
Program,
foreign
investors
who
26invest
capital
in
a
"commercial
enterprise"
in
theUnitedStates
may
petition
the
27USCIS
(called
an
"I-526
Petition")
andreceiveconditional
permanent
residency
28
status
for
a
two-year
period.
USCISdefines
a
"commercial
enterprise"
as
any
for-
COMPLAINT
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Page
ID
#:8
I
profitactivity
formed
forthe
ongoing
conductoflawful
business.
223.The
regulations
governing
theEB-5
Immigrant
Investor
Program
require
3
a
showing
thatthe
foreign
investorhas
placed
the
required
amount
of
capital
at
risk
4for"the
purpose
of
generating
a
return"
on
the
capitalplaced
at
risk.C.F.R.
5
204.6(j)(2).
The
foreign
investor
must
invest
at
least
$500,
000
in
a
"Targeted
6
Employment
Area"and
thereby
createat
least
ten
full-time
jobs
forUnitedStates
7workers.Ifthe
foreign
investorsatisfies
theseandother
conditionswithinthe
two-
8
year
period,
the
foreign
investor
may
apply
to
havethe
conditionsremovedfromhis
9
or
her
visa
and
live
andwork
in
the
United
States
permanently.
1024.
Many
EB-5
investments
are
administered
by
entitiescalled
"regional
11centers."EB-5
regional
centers
are
designated
by
USCIS
to
administerthe
EB-5
12
investment
projects
based
on
proposals
for
promoting
economic
growth.
1325.
Regional
center
investmentvehicles
are
typically
offered
as
limited
14
partnership
interests
or
limited
liability
company
units,
which
are
managedby
a
15
person
or
entity
otherthanthe
foreign
investor,
who
acts
asa
general
partner
or
16
managing
memberoftheinvestmentvehicle.
To
become
a
regional
center,
the
entity
17
must
demonstrate,
with
supporting
economicandstatistical
studies,
howitwill
18
promote
economic
growth,
includingjob
creation.
1926.
As
of
September
23,2011,
theUSCIS
had
designated
Home
Paradise
as
20
an
approved"regional
center"
that
can
sponsor
EB-5
projects.
21
27.
For
eachoftheGH
Investment
andGolden
Galaxyprojects,
Home
22
Paradisesubmitted
an
application
on
Form
1-924
seeking
theUSCIS's
approval.
23These
applications
attachedvarious
documents,
including
offering
memoranda,
24
business
plans,
economic
impactanalyses,
limited
partnership
agreements,
and
25
subscription
agreements_
2628.
As
a
regional
center,
Home
Paradiseis
required
to
annually
certify
to
the
27USCISitscontinued
compliance
withtheEB-5
program,
including
its
compliance
28,
with
the
program's
requirementsregarding
the
use
of
proceeds
and
job
creation.
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1
B.The
G1-1
Design
Offering
2
29.
FromJune
2014
through
November
2015,
Edward
Chen,
Home
Paradise
3andGH
Investment
raised
at
least
$9.5
millionfrom
19Chinese
investors
through
the
4
saleoflimited
partnership
interests
in
GH
Investment
for
an
interior
design
center
5
project.
630.GH
Investment
lenttheinvestor
proceeds
to
GH
Design
at
an
annual
7
interest
rate
of1%
peryear
forGH
Design'sdevelopment
and
constructionof
the
8interior
design
center
project.
931.GH
1nvestment's
limited
partners
may,
inthe
partnership's
sole
10
discretion,
receivedistributionsbased
on
its
revenues,
which,
according
to
GH
11
Investment's
limited
partnership
agreement
andconfidential
private
offering
12
memorandum
("POM"),
are
derived
primarily
fromtheloan
to
GH
Design.
GH
13
Investment's
limited
partnership
agreement
provides
thatlimited
partners
are
to
be
14
paid
distributionsbefore
Home
Paradise,
the
general
partner.
1532.Eachinvestorwired
a
$500,
000
capital
contribution
asan
investment
16intoGHInvestment'sbank
account
in
the
United
States,
wherethe
monies
were
17
pooled
with
otherGHInvestment
investors'monies.
1833.
According
to
the
POM,
investorfunds
wouldbe
released
to
GH
Design
19
upon
the
filing
of
an
1-526
petition
with
USC1S
for
temporary
residency.
As
of
20
February
2016,
allofthoseinvestmentshadbeenreleased
to
GH
Design.
2134.GHInvestment
alsocollected
approximately
$45,
000
in
administrative
22
feesfrom
each
investor.UnderGH
Investment's
limited
partnership
agreement,
23Home
Paradise,
as
the
general
partner,
may
use
theadministrativefeesfor
24
compensation,organizational,operational
and
marketing
expenses.
2535.As
part
ofthe
offering,prospective
investors
were
provided
withthe
26
following
documents,
which
are
included
in
theinvestors'visa
applications
submitted
27
to
the
USCIS:
(a)
a
OH
Investment
POM;
(b)
a
business
plan
for
theinterior
design
28
center
project;
(c)
an
economic
impact
analysis
report;
(d)
a
subscription
booklet,
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including
a
subscription
agreement
signedby
eachinvestorandEdward
Chen;
(c)
the
2
GH
Investment
Limited
Partnership
Agreement;
and
(f)
theloan
agreement
between
3
GH
Investment
andGUI
Design.
4
36.TheGH
Investment
offering
materials,
including
the
POM,
the
5
subscription
agreements,
andthelimited
partnership
agreement,
reflectthatthe
6limited
partnership
interests
are
securities,
that
is,
an
investment
of
money,
in
a
7
common
enterprise,
with
the
expectation
of
profits
derived
solelythrough
the
effort
8ofothers.
Indeed,
thelimited
partnership
agreement
states
that
no
limited
partner
9wouldbeinvolved
inthe
day-to-day
management
ofthe
business.
10
37.
The
GH
Investment
offering
documents
state
thatthe
investor's
capital
11
contributionis
to
beused
to
develop,
renovate
and
operate
the
interior
design
center:
12
(a)
ThePOM
states
thatGHInvestment
was
established"for
the
13
purposes
of
making
a
loan
to
[GHDesign]
forthe
establishmentof
a
home
and
14commercial
design
center
thatwilloffer
interior
designsupplies
and
products,
design
15
advice,
and
contracts
for
installationservicesin
the
City
of
Ontario,California";
16
(b)
ThePOM
directs
thatGH
Design
canuse
theinvestor's
capital
17
contribution
only
towardsthe
building
lease,
employees
ofthe
center,
administrative
18
overhead,
marketing
and
promotion,
office
supplies,
renovation
costs,
services
and
19
maintenance,
and
inventory;
20
(c)
Thebusiness
plan
states
thatinvestorfunds
will
beused
to
"lease,
21
renovate
the
space,
and
operate
a
111,
513
[square
foot]
homeandcommercial
design
22
center";
23
(d)
The
limited
partnership
agreement
states
thatGHInvestment's
24
business"shall
be
to
make
a
loan
to
[GH
Design]
for
purposes
of
establishing
a
home
25andcommercial
design
center
and
funding
its
subsequentoperations";
and
26
(e)
The
loan
agreement
betweenGH
Investment
andGH
Design,
in
27thesection
"Mandatory
Use
of
Proceeds,
states
that01-1
Design
"agrees
thatthe
28
proceeds
of
theLoan
shall
only
be
usedforthe
development,
construction
and
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1
operation
of'
the"homeandcommercial
design
center."
2
38,GH
Design
leasedwarehouse
space
in
Ontario,
Californiaforits
3
purported
interior
design
center,
for
a
space
of
23,
842
square
feet
at
a
rent
of
between
4
$8,
583and
$9,
108
per
month,
according
to
the
true
lease
with
the
property's
owner.
5
39.
A
different,
doctored
version
ofGH
Design's
lease
forthis
space,
6
however,
was
given
to
investorsandtheUSCIS.Theleasethat
was
provided
to
7
investors,
whichin
turn
was
includedin
their
visa
applications
submitted
to
USCIS,
8
falsely
stated
thelessor
was
FourStar
Realty,
a
company
controlled
by
Jean
Chen.
9The
doctored
lease
also
statedthattheleased
space
was
fivetimes
larger:
111,
513
10
square
feet
at
a
rent
ofbetween
$10,
000and
$49,
400
per
month.
Thisinflated
square
11
footage
was
referencedinGHInvestment's
business
plan,
andused
asa
basis
to
12
support
theeconomic
impactanalysis
and
job
creation
numbers
forthe
project.
1340.EdwardChen
signed
boththe
fabricated
leaseand
reallease
on
behalfof
14GH
Design.
1541.intheannual
reports
on
FormI-924A
forthefiscal
years
ending
16
September
30,
2015and
September
30,2016,
Home
Paradise
represented
to
the
17
USCISthat
the
"111,
513
square
foot"
"home
andcommercial
design
center"
has
18been
in
full
operation
since
at
least
2015,
thatithascreated345
jobs,
and
thatit
"is
19
currently
in
operations
andthe
design
officeandretail
spacesquare
footage
was
built
20
as
originally
projected."
21
42.
Home
Paradise's
Form
I-924Afor
the
fiscal
year
endingSeptember
30,
22
2014statedthatthe
project
had"335
[jobs]
in
progress,
and
theannual
reports
for
232015and2016
state
that"345.3
jobs
in
totalhavebeencreated
through
renovation
24
and
operation"
of
the
homeandcommercial
design
center.
25
43.Theinterior
design
center
project,
however,
is
a
sham.Ratherthan
26
being
a
functioningdesign
center
of
over
111,
000
square
feetwith
nearly
350
27
employees,
it
is
a
less-than
25,
000
square
foot
undecorated,
half-empty
warehouse
28
with
some
scatteredrandomfloor
samples
and
one
apparent
employee,
a
receptionist.
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I44.
EdwardChen
controlsHome
Paradise,
GHInvestment
andGH
Design.
2
GHInvestment's
POM
states
that
it
was
preparedby
the
general
partner,
Home
3
Paradise,
of
whichEdwardChen
is
thesolememberand
control
person.
ThePOM
4
alsoidentifies
EdwardChen
as
thesole
contact
person
forthe
issuerandthelead
5
person
in
the
management
team.
Edward
Chen
signed
the
limited
partnership
6
agreement
and
theloan
agreement
as
the
president
of
Home
Paradise,
the
general
7
partner.
In
addition,
EdwardChen
signed
the
subscription
agreements,
which
8
identify
him
as
HomeParadises
president.
Further,
Edward
Chen
owns
andcontrols
9
GH
Design
and
signed
theloan
agreement
andlease
as
its
manager
or
CEO.
1045.EdwardandJeanChenalsocontrolledthebank
accounts
of
Home
11
Paradise,
GH
Investment,
GH
Design,
andFourStar
Realty,
as
authorized
signatories
12forsuch
accounts.
13
C.TheGolden
Galaxy
Offering
1446.FromNovember2015
through
April
2017,
Edwardand
Jean
Chen,
15Home
Paradise
andGolden
Galaxy
raised
$13
millionfrom26Chineseinvestors
for
16
a
condominium
project,
through
the
saleoflimited
partnership
interests
inGolden
17
Galaxy.
18
47.
Golden
Galaxy
provided
the
proceeds
of
the
offering
intheformof
a
19
preferredequity
investment
to
the
project
company,
Mega
Home,
to
partially
pay
for
20the
development,
construction,
and
operation
of
thecondominium
complex
project.
21
48.
According
to
the
Golden
Galaxyprivateplacement
memorandum
22
("PPM"),
Golden
Galaxy'spreferredequity
investment
entitles
it
to
receiveinterest
23from
Mega
Home
at
a
rate
of4%
annually
rate,
increasing
to
5%afterfive
years
and
24
to
6%aftersix
years.
25
49.
Golden
Galaxy's
limited
partners
may,
as
determined
by
the
general
26
partner,
Home
Paradise,
receive
net
cashflowdistributions.
According
to
the
PPM,
27thesedistributions
are
to
be
made
to
limited
partners
before
they
are
made
to
the
28
general
partner.
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150.Investorswiredtheir
$500,
000
investments
to
Golden
Galaxy's
account
2
in
theUnited
States,
wherethe
monies
were
pooled
withother
Golden
Galaxy
3
investors'
funds.Aninvestor's
funds
could
only
betransferred
to
Mega
Home
upon
4
an
investor'ssubmissionof
an
1-529
petition
to
theUSCISfor
temporary
residency.
5To
date,
allofthe
$13
millionraisedfrom
investors
hasbeentransferred
to
Mega
6Home.
751.
Separately,
each
investor
paid
Golden
Galaxy
an
administrative
feein
8the
amount
of
approximately
$50,
000.
Under
Golden
Galaxy's
limited
partnership
9
agreement,
Home
Paradise,
as
the
general
partner,
may
use
theadministrativefeesfor
10
compensation,organizational,
operational
and
marketing
expenses.
1152.
Although
theChenshaveraised
$13
million
forthe
Golden
Galaxy
12
project,
the
maximum
sizeofthe
offering,
Home
Paradise's
Chineseaffiliate's
13
websitecontinues
to
promote
the
project.
14
53.As
part
of
the
offering,prospective
investorsreceived
the
following
15
documents,
which
are
includedin
the
investors'visa
applications
to
theUSCIS:
(a)
a
16
PPM;
(b)
a
business
plan;
(c)
an
economic
impactanalysis
report;
(d)
a
subscription
17
booklet,
including
a
subscription
agreement
signedby
each
investorand
by
Edward
18
Chen;
(e)
theGolden
Galaxy
Investment
LP
limited
partnership
agreement;
and
(f)
19
the
administrative
agreement
among
Home
Paradise,
Golden
Galaxy
and
Mega
20
Home,
which
was
signedby
bothEdwardChenand
Jean
Chen.
2154.
TheGolden
Galaxyoffering
materials,
including
the
subscription
22
agreement,
the
PPM,
andthelimited
partnership
agreement,
reflectthatthelimited
23
partnership
interestssold
to
investors
are
securities,
that
is,
an
investmentof
money,
24
in
a
common
enterprise,
withthe
expectation
of
profits
derived
solelythrough
the
25effortof
others.
Indeed,
thelimited
partnership
agreement
states
that
no
limited
26
partner
wouldbeinvolved
inthe
day-to-day
management
ofthebusiness.
27
55.
Golden
Galaxy'soffering
documents
provide
thattheinvestment
28
proceeds
were
to
beused
to
develop,
construct,
and
operate
theGolden
Galaxy
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1
condominium
complex,
a
37,
156
square
feet
luxurybuilding
with
fivefloorsand80
2
apartment
units
in
downtown
Los
Angeles:
3
(a)
The
PPM
states
that"the
proceeds
shallbeused
by[Mega
4
Home]
to
develop,
construct
andthereaftersellthe
Project,
andthat
Mega
Home
5will
use
the
proceeds
it
receivesfromGolden
Galaxy
"for
the
sole
purpose
of
6
financing,
in
part,
the
development
andconstructionof
the
Golden
Galaxy
7
Condominium";
8
(b)
Thebusiness
plan
states
that
"EB-5
funds
will
be
utilized
forboth
9the
construction
phase
and
operationphase
ofthe
Project";
and
10
(c)
Theadministrative
agreement
between
Home
Paradise,
Mega
I1
Home
and
Golden
Galaxy
states
that
Mega
Home
seeks
to
borrow
up
to
$13
million
12
"to
use
to
partially
cover
the
cost
ofconstruction
andinitial
operation
of
the
Project."
1356.EdwardandJeanChen
controlled
each
of
theentitiesrelated
to
the
14Golden
Galaxyoffering.
ThePPMidentifiesHomeParadise
as
the
general
partner
of
15Golden
Galaxy
andEdwardChen
as
the
managing
memberofHomeParadise.Both
16theGolden
Galaxy
PPMand
subscription
agreement
direct
thatall
inquiries
bemade
17
to
EdwardChen.EdwardChen
signed
the
subscription
agreement,
limited
18
partnership
agreement,
and
administrative
agreement
as
the
president
of
Home
19Paradise.
Healso
signed
the
administrative
agreement
inhis
capacity
as
the
president
20ofGolden
Galaxy.
21
57.Jean
Chen
signed
the
administrative
agreement
as
the
manager
of
Mega
22
Home,
and
thePPM
states
thatshe
controls
Mega
Home's
day-to-day
management
23and
operations.
24
58.
EdwardandJean
Chenalsocontrolledthe
bank
accounts
of
Home
25
Paradise,
Golden
Galaxy
and
Mega
Home,
as
authorized
signatories
forthese
26
accounts.
2759.Constructionof
the
condominium
complex
appears
to
be
ongoing,
28
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D.The
Misappropriation
ofInvestorFunds
2
a.
The
GUI
Investment
offering
3
60.TheGHInvestment
offering
raised
$9.5
millionin
capital
contributions
4
frominvestors
(not
including
administrative
fees).
561.The
Chens
misappropriated
or
misused
at
least
$8.6
million,
or
91%,
of
6thosefunds.
Specifically:
7
(a)
Jean
Chenwithdrew
cash
in
the
amount
of
$2,
348,326,
which
8consistedof
almost25%
ofthe
offering
proceeds.
9
(b)
JeanChen
wrote
cashier's
checks
to
herself
totaling
$1.35
million,
10
or
approximately
14%
of
the
offering
proceeds.
Ofthat
amount,
JeanChenhasused
11
at
least
$1.24
million
to
purchase
residential
real
estate
in
southern
California.
Ofthe
12
three
properties
purchased
with
these
funds,
two
are
titled
to
GH
Design
and
one
is
13titled
to
FirstFinancial.
Nothing
in
any
of
the
offering
documents
informsinvestors
14that
their
proceedsmight
beused
to
purchase
residential
real
estate
in
the
name
of
15
Chen-controlledentities
or
otherwise.
16
(c)
TheChenstransferred
over
$4.93
million,
or
52%
ofthe
amount
17
raised,
to
Four
Star,
US
Grandhood,
and
Home
ParadisesLLC.Thisincludes
a
June
182015
transaction,
inwhich
theChenstransferred
$463,
470ofGH
Design
Investment
19
funds
to
FourStar
Realty,
then
to
Mega
Home,
fromwhich
theyapplied
thefunds
20towardsthe
purchase
oftitle
insuranceforthelandusedfor
the
Golden
Galaxy
21
project.
22
b.TheGolden
Galaxyoffering
2362.Asoftheend
of
April
2017,
Golden
Galaxy
hadraised
$13
millionfrom
24
investors
(not
including
administrative
fees).
2563.Ofthat
amount,
the
Chens
have
misappropriated
and
misused
over
$3.5
26
million
to
date.
Specifically:
27
(a)
Jean
Chen
wrote
at
least
$2.7
million
in
cashier'schecks
to
herself
28andusedthosechecks
to,
among
other
purposes,
purchase
foreclosedhouses
in
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I
southern
California.Title
to
seven
properties
was
held
in
the
name
ofGH
Design,
2
and
anotherisheld
in
the
name
ofFirstFinancial.
3
(b)
Mega
Home
transferred
$801,
000
to
Home
Paradises
LLC.Jean
4
Chenthen
applied
thosefundstoward
purchasing
real
properties
unrelated
to
the
5
Golden
Galaxy
offering.
664.
As
of
August
30,2017,
at
least
$2.7
millionremains
in
Mega
Home's
7
bank
account.
865.
Between
the
two
offerings,
theChenshave
misappropriated
at
least
9
$12.1
million—approximately
$8.6
millionfromtheOH
Investment
offering,
and
10
approximately
$3.5
millionfromtheGolden
Galaxyoffering.
11
E.The
Misrepresentations
andOmissions
12
66.Defendantsmade
materially
false
and
misleading
statements
and
13
omissions
to
theGH
Design
andGolden
Galaxy
investors,
andobtainedinvestor
14
proceedsby
means
ofthesemisstatements
andomissions.
1567.The
GH
Investment
offering
materials
(including
the
POM,
the
business
16
plan,
andthe
subscription
andlimited
partnership
agreements)
statedthat
investor
17
proceeds
wouldbeused
to
establish
the
interior
design
center,
while
the
Golden
18
Galaxyoffering
materials
(including
the
PPM,
the
business
plan,
andthe
subscription
19and
limited
partnership
agreements)
statedthat
investor
proceeds
wouldbeused
to
20
develop
and
construct
a
condominium
complex.
2168.
Instead,
more
than91%
of
the
fundsraisedin
the
GH
Designoffering
22and
more
than27%
of
the
fundsraisedin
the
Golden
Galaxyoffering
were
taken
by
23
the
Chens
through
cash
withdrawals,
the
issuanceofcashier'schecks
(in
many
cases,
24
used
to
purchase
residential
real
estate),
andthe
transferof
proceeds
to
Chen-
25controlled
entities.
2669.That
theirinvestmentfunds
were
being
usedfor
purposes
otherthan
27those
disclosedin
the
offering
materials
wouldhavebeen
important
to
investors,
as
28the
misuse
and
misappropriation
ofinvestorfundscould
jeopardize
investors'
COMPLAINT
1
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ID#:17
I
expected
returns
on
their
investment,
as
well
as
their
expectedimmigration
benefits.
2
70.The
GHInvestment
offering
materials
also
represented
thatthehome
3
design
warehouse
wouldbe
over
111,
000
square
feet,
suggesting
a
substantially
4
largerproject
capable
of
generating
the
necessary
jobs
underthe
EB-5
program
for
5
investors
to
obtain
residency.
Instead,
theactualleased
space
was
lessthan
24,
000
6
square
feet.Thedoctored
lease
alsoshowedthat
a
Chen
entity
was
the
lessor
and
7
was
to
be
paid
up
to
more
than
fivetimesthe
truerent
underthereal
lease.
8
71.
Thisinformation
wouldhavebeen
important
to
investors.Thefactthat
9the
actual
center
was
much
smallerthan
reported
madethe
project
less
likely
to
10
generate
the
necessary
income
to
provide
the
expected
return
on
their
investments,
as
11well
making
itless
likely
thatthe
required
numberof
jobs
wouldbe
created
by
the
12
project,
thereby
jeopardizing
investors'
EB-5
visa
applications.
1372.
Edward
Chen,
Home
Paradise,
GH
InvestmentandGolden
Galaxy
were
14the
makersofthesefalse
and
misleading
statements.
GH
Investmentand
Golden
15
Galaxy
are
the
issuers,
andboth
the
offering
memoranda
and
business
plans
were
16
prepared
intheir
names.
Home
Paradise,
as
the
general
partner,
hadultimate
17
authority
over
GH
Investment'sandGolden
Galaxy's
statements.
EdwardChenis
18the
president,
CEO,
andsolememberof
Home
Paradise,
andhadultimate
authority
19
over
the
statements
in
the
offering
documents
forboth
offerings.
20
73.TheChens
alsoreceived
money
fromthe
GH
InvestmentandGolden
21
Galaxy
offerings
by
means
ofthesefalse
and
misleading
statements.
The
Chens
22
directly
received
money
fromboth
offerings
in
theformof
cash,
cashier's
checksand
23
transfers
to
their
controlled
entitiesand
to
their
entities'
bank
accounts,
over
which
24the
Chens
had
joint
control.TheChens
also
indirectly
receivedmoniesfrom
both
25
offerings
through
their
controlledentities.
GHInvestmentand
Golden
Galaxy,
as
the
26
issuers,
receivedinvestor
fundswired
to
their
bank
accounts,
of
whichEdward
and/or
27
Jean
Chen
are
authorized
signatories.
GH
Design
and
Mega
Home,
as
the
project
28
companies,
receivedallof
theinvestorfundsin
theirbank
accounts,
which
were
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ID
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I
controlled
by
the
Chens,
whileHomeParadisereceivedthe
administrative
fees
2associatedwith
both
offerings.
3
F.AdditionalFraudulentConduct
474.Asthe
architects
oftheGH
Investment
andGolden
Galaxy
offerings,
the
5
Chens,
individually
and
through
their
controlled
entities,
have
engaged
in
and
are
6
continuing
to
engage
inadditional
fraudulentconduct
to
exploit
theEB-5
7
immigration
program
in
order
to
misleadanddefraudinvestors.
875.EdwardandJean
Chen,
andthe
entity
defendants
they
control,
have
9
misappropriated
at
least
$12.1
millionin
investorfundsfromboth
offerings,
10
including
as
recently
as
April
2017.
1176.
As
the
signatories
on
the
accounts
oftheircontrolled
entities
through
12
which
investor
money
was
expended,
theChens
misappropriated
investorfunds
by
13
transferring
them
to
affiliated
entities,
withdrawing
the
investor
funds,
or
writing
14
cashier's
checks
to
JeanChen.
Significant
amounts
of
thefunds
were
used
to
15
purchase
residential
real
estate
unrelated
to
theEB-5
offerings.
1677.In
addition
to
misappropriating
and
misusing
vast
sums
ofinvestor
17
money,
theChens
engaged
infurther
deceptive
conduct
through
the
use
ofthefake
18OH
Investmentlease.
ThedoctoredleaseforGH
Investment's
interior
design
center
19
project
was
provided
to
investorsand
in
turn
submitted
to
the
USCIS,
andtheinflated
20warehouse
square
footage
in
thelease
was
used
as
thebasisfor
the
economic
impact
21
analysis
ofhow
many
jobs
the
project
could
create
for
EB-5
investors
to
obtain
22
permanent
residency.
2378.EdwardChenalsosubmitteddocumentsand
reports
to
USCIS
that
24
falsely
represented
the
use
of
proceeds
forboth
offerings
and
falsely
certifiedthat
25
Home
Paradise
operated
a
large
commercial
design
center
thatcreated345
jobs.
26
Submitting
those
reports
createdthefalse
appearance
that
Home
ParadiseandtheGH
27
Investment
project
were
successfuland
in
compliance
with
EB-5
regulations.
28.
COM
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1
G.Defendants'
Rolesin
Carrying
Out
theFraud
2
79.
Atallrelevant
times,
the
Chens
knowingly,
recklessly
and/or
negligently
3
carried
out
theirfraud
in
the
GHInvestment
andGolden
Galaxy
offerings.
Their
4
scienter
and
negligence
is
imputed
to
the
entity
defendants
they
controlled.
580.
EdwardChenknew
orwas
reckless
in
not
knowing
thatheand
his
wife
6
were
misappropriating
and
misusing
investor
funds
to
purchase
residential
real
estate,
7
because
the
offering
documents
that
his
companies
issued
required
investor
proceeds
8
to
beused
fortheinterior
design
center
and
condominium
complex.
9
81.
EdwardChenalso
knew
or
was
reckless
in
not
knowing
thatthelease
10
provided
to
GH
Investment
investors
was
fabricatedbecause
he
signed
boththefake
II
lease
andthe
actual
warehouseleasefor
a
much
smaller
footprint
andrental
amount.
12
82.
Edward
Chen,
in
turn,
alsoknew
or
was
recklessin
not
knowing
thatthe
13
offering
materials
falsely
misrepresented
howthe
investor
proceeds
were
going
to
be
14
used
(and,
inthe
case
oftheGH
Investment
offering,
misrepresented
the
truenature
15
ofthe
design
center
lease)
because,
as
alleged
above,
thesematerials
were
submitted
16
and
created
on
behalf
ofentitieshe
and
hiswife
controlled,
the
money
was
being
17
diverted
to
them
or
their
controlledentities
andhe
signed
boththe
realandfake
18
leases.
19
83.
JeanChenalso
haddirect
knowledge,
orwas
reckless
in
not
knowing
of
20the
fraud.With
respect
to
the
GH
Investment
offering,
shecontrolled
GH
Design's
21bank
account,
withdrew
thecash
and
wrote
thecashier's
checks
to
herself.Sheisthe
22sole
control
person
ofthefake
lessor
Four
Star
Realty,
andmade
rent
payments
for
23GH
Design
from
FourStar
Realty's
accountto
thereallessor.She
thus
knew
orwas
24
reckless
or
negligent
in
not
knowing
thatshe
misappropriated
investor
money
from
25the
interior
design
center
project.
26
84.
JeanChen
was
directly
involved
in
theGolden
Galaxy
condominium
27
project
and
knew
orwas
reckless
in
not
knowing
thatshe
was
misappropriating
and
28
misusing
investor
fundsin
Mega
Home's
bank
accountsto
purchase
residential
real
COMPLAIN
I.
I
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ID
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1
estate.
Jean
Chen
was
specifically
named
as
the
"manager"
ofthe
condominium
2
project,
and
signed
the
administrative
agreement
on
behalfof
Mega
Homes
which
3
was
provided
to
investors
andwhich
states
thatsuchfunds
were
to
beused
for
the
4
constructionand
operation
ofthe
condominium
complex.
5
85.The
proposed
defendantsalsoacted
negligently
in
committing
thisfraud.
6
By
taking
millionsof
dollarsof
investor
money
fortheir
own
use,
Edward
and
Jean
7
Chendid
notact
with
reasonable
care.
EdwardChenalso
acted
unreasonably
in
8
submitting
a
doctored
leasethat
was
materially
differentthan
theactualleasethathe
9
signed
fortheGH
Design
space.
10
FIRSTCLAIMFORRELIEF
11
FraudintheOffer
or
SaleofSecurities
12
Violationsof
Section
17(a)(1)
and
(3)
of
the
Securities
Act
13
(against
all
Defendants)
14
86.TheSEC
realleges
and
incorporates
by
reference
paragraphs
1
through
1585
above.
16
87.Defendants
engaged
in
a
fraudulentEB-5
offering
scheme.
In
two
17
separate
projects,
defendantsraised
at
least
$22.5
millioninfunds
from
investors,
18
representing
their
fundswouldbeusedfor
purposes
of
an
interior
design
center
and
a
19condominium
complex,
and
create
necessary
jobs
undertheEB-5
program.
In
20
reality,
defendants
misappropriated
over
$12.1
million
ofthose
funds,
andusedthem
21
for
transfers
to
their
related
entities,
cashier's
checks,cash,
andresidentialreal
estate
22
purchases.
Defendantscreatedthefalse
appearance
that
they
were
carrying
out
the
23investment
projects
described
in
the
offering
materials,
whereas
they
were
24
misappropriating
investors'funds.Defendants
also
submitted
falsedocumentation
to
25the
USCISand
to
investors,
including
a
doctored
lease
fortheir
design
center.
26
88.
Byengaging
in
theconductdescribed
above,
DefendantsEdward
Chen,
27
Jean
Chen,
Home
Paradise,
GH
Investment,
GH
Design,
Golden
Galaxy
and
Mega
28
Home,
andeachof
them,
directly
or
indirectly,
in
the
offer
or
saleof
securities,
and
COMPLAINT
18

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ID#:21
1
by
the
use
of
meansor
instrumentsof
transportation
or
communicationininterstate
2
commerceor
by
use
ofthemails
directly
or
indirectly,employed
devices,schemes,
or
3artifices
to
defraudand
engaged
in
transactions,
practices,
orcourses
ofbusiness
4
which
operated
or
would
operate
asa
fraud
or
deceit
upon
the
purchaser.
5
89.DefendantsEdward
Chen,
Jean
Chen,
Home
Paradise,
GH
Investment,
6GH
Design,
Golden
Galaxy
and
Mega
Home,
employed
devices,
schemes
and
7
artifices
to
defraudwithscienter
and,
with
scienter
or
negligence,engaged
in
8
transactions,
practices,
orcourses
ofbusiness
which
operated
or
would
operate
asa
9
fraud
or
deceit
upon
the
purchaser.
1090.
By
engaging
in
theconduct
described
above,
Defendants
Edward
Chen,
11
Jean
Chen,
Home
Paradise,
GH
Investment,
GH
Design,
Golden
Galaxy
and
Mega
12
Home
violated,
andunlessrestrained
and
enjoined
will
continue
to
violate,
Sections
13
170)(1)
and
17(0(3)
oftheSecurities
Act,
15U.S.C.
7740(1)
&
77q(a)(3).
14
SECONDCLAIMFORRELIEF
15
FraudintheOffer
or
SaleofSecurities
16
ViolationsofSection
17(a)(2)
of
the
Securities
Act
17
(against
all
Defendants)
1891.TheSEC
realleges
and
incorporates
by
reference
paragraphs
1
through
1985above.
2092.
Defendants,
withscienter
or
negligence,
alsoobtained
money
by
means
21of
untruestatements
of
materialfactand
by
omissions
tostate
material
facts
22
necessary
inorder
to
makethe
statements
made,
in
light
ofthecircumstances
under
23
which
they
were
made,
not
misleading.
Specifically,
they
obtained
investorfunds
by
24
means
of
materially
falseand
misleading
representations
to
investors
inthe
offering
25materialsfortheGHInvestment
andGolden
Galaxy
projects,
which
misrepresented
26the
uses
of
proceeds
andthesham
design
center.
The
purported
design
center
was
in
27
reality
a
half
empty
warehouse
a
fifthofthesizeit
was
represented
to
be,
with
lower
28
rent
andfewer
potentialjobs
that
itcould
or
did
create.
COMPLAINT
19

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ID#:22
193.
Both
EdwardandJean
Chen,
as
well
as
the
entity
defendants,
directly
2and
indirectly,
obtained
money
by
means
of
materially
falseand
misleading
3
representations
and
omissions.
The
entity
defendantsreceived
investor
funds,
either
4
directly
through
deposits
from
investors,
or
through
transfers
ofinvestorfunds
to
and
5
among
the
entity
defendants'
bank
accounts.
Through
the
entity
defendants'bank
6
accounts,
which
theChens
controlled,
EdwardandJeanChen
alsoobtainedmillions
7ofdollarsfrom
investors,
both
in
theformof
capital
contributions
as
well
as
in
8administrativefees.In
addition,
through
theirmisuse
and
misappropriation
of
9
investor
funds,
EdwardandJeanChen
obtainedinvestor
funds,
in
the
formof
cash,
10cashier's
checks,
and
residential
real
estate
purchases,
includingthrough
theirother
11
affiliatedentities.
1294.
By
engaging
in
theconduct
described
above,
DefendantsEdward
Chen,
13Jean
Chen,
Home
Paradise,
GH
Investment,
GH
Design,
Golden
Galaxy
and
Mega
14Home
violated,
andunless
restrained
and
enjoined
willcontinue
to
violate,
Sections
15
17(0(2)
ofthe
Securities
Act,
15U.S.C.
7740(2).
16
THIRD
CLAIMFOR
RELIEF
17
Fraudinthe
Connection
withthePurchaseand
SaleofSecurities
18
Violations
of
Section
I0(b)
of
the
Exchange
ActandRule
10b-5(a)
and
(c)
19
(against
all
Defendants)
2095.TheSEC
realleges
and
incorporatesby
reference
paragraphs
1
through
21
85above.
22
96.Defendants
engaged
in
a
fraudulent
EB-5
offering
scheme.
In
two
23
separate
projects,
defendantsraised
at
least
$22.5
millionin
fundsfrom
investors,
24
representing
theirfundswouldbeusedfor
purposes
of
an
interior
design
center
and
a
25
condominium
complex,
andwould
create
the
necessary
numberof
jobs
undertheEB-
26
5
program.
ln
reality,
defendants
misappropriated
over
$12.1
million
ofthose
funds,
27andused
them
fortransfers
to
theirrelated
entities,
cashier's
checks,cash,
and
28
residentialreal
estate
purchases.
Defendantscreated
the
false
appearance
that
they
COMPLAINT
20

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ID
#:23
1
were
carrying
out
the
investment
projects
describedin
the
offering
materials,
whereas
2
they
were
misappropriating
investors'funds.Defendants
alsosubmittedfalse
3
documentation
to
the
USCISand
to
investors,
including
a
doctoredleasefortheir
4
design
center.
5
97.
Byengaging
inthe
conductdescribed
above,
Defendants
Edward
Chen,
6
Jean
Chen,
Home
Paradise,
GH
Investment,
GH
Design,
Golden
Galaxy
and
Mega
7
Home,
and
eachof
them,
directly
or
indirectly,
in
connectionwith
the
purchase
or
8
saleof
a
security,
by
the
use
of
meansor
instrumentalitiesofinterstate
commerce,
of
9
the
mails,
or
of
the
facilitiesof
a
nationalsecurities
exchange:(a)employed
devices,
10
schemes,
or
artifices
to
defraud;
and
(c)engaged
in
acts,
practices,
orcourses
of
11
businesswhich
operated
or
would
operate
asa
fraud
or
deceit
upon
other
persons.
12
98.Defendants
Edward
Chen,
Jean
Chen,
Home
Paradise,
GH
Investment,
13GH
Design,
Golden
Galaxy
and
Mega
Home,
with
scienter,
(a)
employed
devices,
14
schemes,
or
artifices
to
defraud;
and
(c)engaged
in
acts,
practices,
orcourses
of
15
businesswhich
operated
or
would
operate
as
a
fraud
or
deceit
upon
other
persons,
by
16the
conductdescribedindetail
above.
1799.
By
engaging
in
theconductdescribed
above,
DefendantsEdward
Chen,
18Jean
Chen,
Home
Paradise,
GH
Investment,
GH
Design,
Golden
Galaxy
and
Mega
19
Home
violated,
andunlessrestrained
and
enjoined
willcontinue
to
violate,
Section
20
10(b)
ofthe
Exchange
Act,
15U.S.C.
78j(b),
andRules
10b-5(a)
and
101D-5(c)
21
thereunder,
17
C.F.R.
240.10b-5(a)
&
240.1013-5(c).
22
FOURTHCLAIM
FORRELIEF
23
FraudinConnection
with
thePurchase
or
SaleofSecurities
24
Violationsof
Section
10(b)
ofthe
Exchange
Act
25
andRule
10b-5(b)
Thereunder
26
(against
Defendants
Edward
Chen,
Home
Paradise,
GHInvestment
27
and
Golden
Galaxy)
28
100.The
SEC
realleges
and
incorporates
by
reference
paragraphs
1
through
COMPLAINT
21

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ID#:24
1
85above.
2
101.Defendants
made
materially
false
and
misleading
representations
to
3
investorsinthe
offering
materialsfortheir
two
EB-5
offerings,misrepresenting
the
4
use
of
proceeds
andthesham
design
center.
In
reality,
defendants
misappropriated
5
over
$12.1
million
ofthe
investors'
funds,
and
used
themfor
transfers
to
their
related
6
entities,
cashier's
checks,
cash,
andresidentialreal
estate
purchases.
The
design
7
center
was
in
reality
a
half
empty
warehouse
a
fifthof
the
sizeit
was
represented
to
8
be,
withlower
rent
andfewer
potentialjobs
thatit
could
or
did
create.
9102.
By
engaging
inthe
conductdescribed
above,
DefendantsEdward
Chen,
10
Home
Paradise,
GH
Investment,
andGolden
Galaxy,
andeachof
them,
directly
or
11
indirectly,
inconnection
withthe
purchase
or
saleof
a
security,
by
the
use
of
means
12
or
instrumentalities
of
interstate
commerce,
ofthe
mails,
or
of
the
facilities
of
a
13
nationalsecurities
exchange,
made
untrue
statements
of
a
material
fact
or
omitted
to
14
state
a
materialfact
necessary
inorder
to
makethe
statements
made,
in
the
light
of
15the
circumstancesunderwhich
they
were
made,
not
misleading.
16
103.
By
engaging
in
theconduct
described
above,
DefendantsEdwards
Chen,
17Home
Paradise,
GH
InvestmentandGolden
Galaxy
violated,
andunlessrestrained
18and
enjoined
will
continue
to
violate,
Section
10(b)
ofthe
Exchange
Act,
15
U.S.C.
19
78j(b),
and
Rules
10b-5(b)
thereunder,
17C.F.R.
240.10b-5(b).
20
PRAYER
FORRELIEF
21
WHEREFORE,
theSEC
respectfully
requests
that
theCourt:
22
1.
23Issue
findings
offact
and
conclusions
oflawthat
defendantscommittedthe
24
alleged
violations.
25
H.
26
Issue
orders,
in
formsconsistentwith
Rule
65(d)
of
the
Federal
RulesofCivil
27
Procedure,
temporarily,
preliminarily
and
permanentlyenjoining:(I)
defendants
28Edward
Chen,
Jean
Chen,
Home
Paradise,
Gil
Investment,
GH
Design,
Golden
COMPLAINT
22

2:17-cv-06929-PA-JEMDocument
1
Filed09/20/17

Page
ID
#:25
1
Galaxy
and
MegaHome,
and
their
officers,
agents,servants,
employees,
and
2
attorneys,
and
those
persons
in
active
concert
or
participation
with
any
of
them,
who
3
receive
actual
noticeof
the
orders
by
personal
service
or
otherwise,
andeach
of
them,
4
from
violating
Section
17(a)
ofthe
Securities
Act,
15U.S.C.
§77q(a),
andSection
5
10(b)
of
the
Exchange
Act,
15
U.S.C.
78j(b),
and
RuleI
Ob-5(a)
and
(c)
6
thereunder,
17
C.F.R.
240.10b-5(a)
and
(e);
and
(2)
defendants
Edward
Chen,
7
Home
Paradise,
GH
Investment,
and
Golden
Galaxy,
and
their
officers,
agents,
8
servants,
employees,
and
attorneys,
and
those
persons
inactive
concert
or
9
participation
with
any
of
them,
who
receive
actualnotice
ofthe
orders
by
personal
10
service
or
otherwise,
andeach
of
them,
from
violating
Section
10(b)
ofthe
Exchange
11
Act,
15U.S.C.
78j(b),
and
Rule
10b-5(b)thereunder,
17
C.F.R.
240.10b-5(b).
12
HI.
13
Issue
orders,
in
fbrms
consistentwith
Rule
65(d)
of
the
FederalRulesofCivil
14
Procedure,
permanently
enjoining
defendants
Edward
Chen,
Jean
Chen,
Home
15
Paradise,
GH
Investment,
GH
Design
Group,
Golden
Galaxy,
and
Mega
Home,
and
16their
officers,
agents,servants,
employees,
attorneys,
andthose
persons
in
active
17
concert
or
participation
with
any
of
them,
whoreceive
actualnotice
of
this
Order,
by
18
personal
service
or
otherwise,
and
eachof
them,
beand
hereby
are
permanently
19
restrained
and
enjoined
from,
directly
or
indirectly,
participating
in
theoffer
or
sale
20
of
any
security
which
constitutes
an
investmentin
a
"commercial
enterprise"
under
21
the
UnitedStates
Government
EB-5
visa
program
administered
by
USCIS,
including
22
engaging
in
activities
with
a
broker,dealer,
or
issuer,
ora
Regional
Center
designated
23
by
the
USCIS,
for
purposes
of
issuing,
offering,trading,
or
inducing
or
attempting
to
24
induce
the
purchase
or
saleof
any
such
EB-5
investment.
25
IV.
26
Issue
in
a
form
consistent
with
Fed.
R.
Civ.
P.
65,
a
temporary
restraining
order
27
and
a
preliminary
injunction
freezing
the
funds
and
assets
ofdefendants
andtheir
28
affiliates;
appointing
a
receiver
over
the
entity
defendants
andtheindividual
COMPLAINT
23

2:17-cv-06929-PA-JEMDocument
1
Filed09/20/17

Page
ID
#:26
1
defendants'
affiliated
entities;
prohibiting
eachofthe
defendantsfrom
destroying
2
documents;
orderingaccountings
by
each
ofthe
defendants;
and
orderingexpedited
3
discovery.
4
V.
5Order
defendants
to
disgorge
all
fundsreceivedfromtheir
illegal
conduct,
6
together
with
prejudgment
interest
thereon.
7
VI.
8
Order
defendants
to
pay
civil
penalties
underSection
20(d)
ofthe
Securities
9
Act,
15U.S.C.
770),
and
Section
21(d)(3)
ofthe
Exchange
Act,
15U.S.C.
10
78u(d)(3).
11
VII.
12
Retain
jurisdiction
ofthis
actionin
accordancewiththe
principles
of
equity
and
13the
Federal
RulesofCivil
Procedureinorder
to
implement
and
carry
out
the
terms
of
14
all
ordersand
decreesthat
may
be
entered,
or
to
entertain
any
suitable
application
or
15
motionfor
additional
reliefwithin
the
jurisdiction
ofthisCourt.
16
VIII.
17
Grant
suchother
andfurtherrelief
as
this
Court
may
determine
to
be
just
and
18
necessary.
19
20
21
Dated:
September
20,
2017
Is/Donald
WSarles
22
Donald
W.
Searles
23
Attorney
forPlaintiff
Securitiesand
Exchange
Commission
24
25
26
27
28
COMPLAINT
24

UNITED
STATES DISTRICT COURT,
CENTRAL DISTRICT OF
CALIFORNIA
CIVIL COVER SHEET
I. (a)
PLAINTIFFS
(Check box if you are
representing yourself ~)
DEFENDANTS
(Check box if
you are representing
yourself ~ )
EDWARD CHEN, JEAN CHEN, HOME
PARADISE INVESTMENT CENTER
LLC, GH
SECURITIES AND
EXCHANGE COMMISSION
INVESTMENT LP, GH DESIGN GROUP
LLC,
GOLDEN GALAXY
LP, AND
MEGA HOME
L
LC
(b) County of
Residence of First Listed Plaintiff
(County of Residence of First
Listed Defendant
Los Angeles
(EXCEPT IN U.S. PLAINTIFF
CASES) ~
(IN
U.S.
PLAINTIFF
CASES ONLY)
(C) Attorneys (Firm Name,
Address
and
Telephone Number) If you
are
Attorneys
(Firm
Name, Address and Telephone Number) If
you are
representing yourself,
provide the
same
information.
representing yourself,
provide the same information.
Donald W. Searles
/
Kristin
S. Escalante
/
Junling
Ma
(323) 965-3998
Securities and Exchange Commission
444 S. Flower Street,
Suite 900
Los Angeles, CA 90071
I
I. BASIS OF
JURISDICTION (Place an X in
one
box only.)
1. U.S.
Government ~
3.
Federal
Question (U.S.
Plaintiff
Government Not a Party)
2. U.S.
Government ~4.
Diversity (Indicate Citizenship
D
efendant of
Parties in Item III)
III. CITIZENSHIP OF PRINCIPAL
PARTIES-For Diversity
Cases Only
(
Place
an
X in one box for plaintiff and
one
for
defendant)
PTF DEF
Incorporated
or Principal
Place
Citizen of
This State
q
1  ~ 1
PTF
~
4
DEF
~
4
o
f
Business in this State
Citizen of Another
State
~
2
~
2
Incorporated and Principal
Place
q
5 ~
S
of
Business
in
Another State
C
itizen or
Subject of a
q
3
~
3
Foreign Nation
Foreign
Country
~
6 ~
6
IV.
ORIGIN (Place an X
in one box only.)
1.Original 2. Removed from
3. Remanded from 4.
Reinstated or 5. Transferred from Another
6. Multidistrict 8.
Multidistrict
Litigation - ~
Litigation -
Proceeding
State Court Appellate Court
Reopened District (Specify)
Transfer
Direct File
V.
REQUESTED IN
COMPLAINT: JURY DEMAND: ~
Yes
~X
No
(Check "Yes" only if
demanded in complaint.)
CLASS ACTION
under F.R.Cv.P. 23:
~
Yes
~X
No ~ MONEY
DEMANDED IN COMPLAINT: $
VI. CAUSE OF
ACTION
(Cite the U.S. Civil Statute under which
you are filing and
write
a brief
statement
of
cause. Do not cite jurisdictional
statutes unless diversity.)
The Complaint
alleges violations ofthe federal
securities laws. 15 U.S.C. ~
77q(a); 75 U.S.C.
§
78j(b) and 17 C.F.R.240.1
Ob-5
thereunder.
VII. NATURE OF SUIT
(Place an X in
one
box
only).
OTHER
STATUTESCONTRACT
REAL PROPERTY CONL
IMMIGRATION
PRISONER PETITIONS
PROPERTY RIGHTS
375
False Claims Act
q
110
Insurance
~
240 Torts to Land~
462 Naturalization
Habeas Corpus:~
820 Copyrights
376
Qui
Tam
q
120 Marineq
245 Tort
Product
Application
~ 463
Alien
Detainee
~
g30 Patent
(
31
USC 3729(a))
~
~
30 Miller Act
Liability
~ 290 All Other Real
465 Other
~
Immigration
Actions
S70
Motions to Vacate
~
Sentence
835 Patent -Abbreviated
~
T
ORTS
4
00 State
~40Negotiable
Property
~
530 General
New
Drug Application
7
0R75
R
eapportionment
~
Instrument
PERSONAL
PROPERTY~
535 Death
Penalty
~
840 Trademark
q
410
Antitrust
150 Recovery of
PERSONAL INJURY
Other•
~
370 Other Fraud
SOCIAL
SECURITY
~
310
Airplane
q
861
HIA (1395ff)
430
Banks
and
Bankin
9
overpayment &
~ Enforcement of~
371 Truth in Lending
~
540 Mandamus/Other
4
50 Commerce/ICC
R
ates/Etc.
Judgment
~
315
Airplane
Product
Liability
380 Other
Personal
q
550 Civil Rights
~
g62 Black Lung (923)
460 Deportation
q
151 Medicare
Act~
320 Assault, Libel
&  ~
Property Damage
~
555
Prison
Condition
q
863 DIWC/DIWW (405 (g))
4
70 Racketeerinflu-
&Corrupt Org.
152 Recovery
of
q
Defaulted
Student
Slander
330 Fed.
Employers'
q
385 Pro
ert  Dama e
P Y 9
q
product
Liabilit
Y
560 Civil
Detainee
q
Conditions
of
q
864 SSID Title XVI
enced
480 Consumer
Credit
Loan (Excl. Vet.)
Liability
Confinement
~
865 RSI (405 (g))
BANKRUPTCY
4
90 Cable/Sat N
153 Recovery of
340
Marine
3
45 Marine Product
q2z A  eal 28
q Pp
FORFEITURE/PENALTY
FEDERAL TAX SUITS
6
25 Drug Related
~
Seizure of Property 21
870 Taxes (U.S. Plaintiff or
q
8
50 Securities/Com-
Q
Overpayment of
V
et. Benefits
q
Liability
USC
158
423 Withdrawal
28
m
odifies/Exchange
160
Stockholders'
~
350 Motor Vehicle
q
USC 157
USC 881
Defendant)
g
71
IRS-Third Party 26
USC
890 Other
Statutory~ Suits
~
355 Motor Vehicle
CIVIL RIGHTS
q
690
Other
q
7609
A
ctions
891 Agricultural
Acts
~
190
Other
Contract
Product Liability
360 Other Personal
q
~
440 Other Civil
Rights
LABOR
I
njury
~
441
Voting
~
710 Fair Labor Standards
8
93 Environmental
Matters
195 Contract
P
roduct
Liability
362 Personal
Injury-
~
Med
Malpratice
q
442 Employment
Act
~
720 Labor/Mgmt.
895 Freedom of Info.
Act
q
196
Franchise
~
365 Personal Injury-
443 Housing/
A
ccommodations
Relations
P
roduct Liability
~
740 Railway Labor Act
``"
REAL PROPERI"Y
q
896 Arbitration
367 Health
Care/
445 American with
~ Pharmaceutical
q
Disabilities-
and
Medical
q
Lea
210 Land
899
Admin.
Procedures
Condemnation
Personal Injury
Employment
eaAdY
Act/Review of Appeal
of
Agency Decision
q
220
Foreclosure
Product Liabilit
y
446 American with
~
790
Other
Labor
~
368 Asbestos
Disabilities-Other
Liti  ation
9
950
Constitutionality of ~
230 Rent Lease &
~
personal
Injury
~
448 Education
791
Employee Ret. Inc.
S
tate Statutes
Ejectment
Pro
ill
Security Act
--- --- — -- -
~
v~l V~~ItC
VJC V1YL ~.
LO~C IV UIIIUCI.
C
V
-71 (05/17)
CIVIL COVER SHEET

` UNITED STATES'DTSTRICTCOUF3T; CENTRAL DISTRICT OF CALIFORNIA . ~'"
CIVIL COVER SHEET
VIII.
VENUE:
Your
answers to the questions
below
wilt determine the division
of
the Court to which this case will be
initially assigned. This initial
assignment is subject
to change,
in
accordance with the Court's
General
Orders, upon
review
by the Court
of your
Complaint
or
Notice
of Removal. ~
QUESTION A: Was this case removed
from state court?
STATE CASE WAS PENDING IN THE COUNTYOP.INITIAL DIVISION W CACD IS:
Yes  ~x   No
Los Angeles,
Ventura,
Santa
Barbara, or San
Luis Obispo
Western
If "no, "
skip
to Question B. If "yes," check the
q
Orange
Southern
box to the right that applies, enter the
corresponding
division
in response to
Q
uestion
E, below, and continue from there.
q
Riverside
or San
Bernardino
Eastern
QUESTION B: Is the United
States,
or
8.1.
Do SO%
or
more
of
the defendants who reside
in
YES. Your case
will initially
be
assigned
to the Southern Division.
o
ne
of its agencies or
employees, a
the district reside
in
Orange Co.?
~
Enter
"Southern" in
response
to Question
E, below, and continue
PLAINTIFF in this action?
~~
from there.
c
heck
one
of
the boxes to the
right
0NO. Continue to
Question B.2.
Q Yes ~
No
B.2. Do 50% or more of the defendants who reside in
YES.
Your case will initially be assigned to the Eastern Division.
If "no, " skip
to
Question
C.
If
"yes,"
answer
the district reside in Riverside and/or San Bernardino
~
Enter "Eastern" in response to Question E, below,
and continue
Question B.t,
at
right.
Counties? (Consider the two counties together.)
from
there.
check one of the boxes to the right ~,
NO.
Your case will initially be assigned to the Western Division.
"Western"Enter in response to Question E, below, and
continue
from
there.
QUESTION
C: Is
the United
States,
or
C.1.
Do SO%
or
more
of
the plaintiffs who reside
in
the
YES. Your case
will initially
be
assigned
to the Southern Division.
one of its agencies or
employees,
a
district reside
in
Orange Co.?
~
Enter "Southern" in
response
to Question E, below,
and continue
DEFENDANT in this action?
~~
from there.
c
heck
one
of
the boxes to the sight
~
NO. Continue to
Question C.2.
Yes  ~ No
"no,
C.2. Do 50% or more of the plaintiffs who reside in the
YES. Your case will
initially
be assigned to the Eastern Division.
If " skip to Question D. If "yes," answer
district reside in Riverside and/or San Bernardino
~
Enter "Eastern" in response to Question E,
below,
and continue
Question C.1, at right.
Counties? (Consider the two counties
together.)
from there.
check one ofthe boxes to the right ~~
NO. Your case
will initially
be
assigned
to the
Western Division.
Enter "Western"
in
response to
Question E, below,
and continue
f
rom
there.
A.
B.G
QUE5TION
D: Location
of
plaintiffs and defendants?
Riverside or SanLos
Angeles,
Ventura,
Orange
CountyBernardino CountySanta Barbara, or San
L
uis
Obispo
County
I
ndicate the locations)
in which
50%
or
more
of
plaintiffs who reside in this district
r
eside. (Check up to two boxes, or leave blank if none of
these
choices apply.)
Indicate
the locations)
in which
50%
or
more
of
defendants who reside
in
this
district
reside.
(Check up
to two boxes,
or
leave
blank if
none
of
these choices~~0
apply.)
D.1. Is there at least one answer in Column A?
D.2.
Is there at least one
answer in Column B?
Yes 0 No~ Yes ~ No
I
f "yes," your case will initially be assigned to the
If
"yes,"
your
case
will initially
be assigned to the
SOUTHERN DIVISION.EASTERN DIVISION.
Enter
"Southern" in response to Question E, below, and continue from there.
Enter "Eastern" in
response
to Question E, below.
If "no,"
go to
question D2
to the right. ~~
If "no,"yourcase will be assigned to the WESTERN
DIVISION.
Enter"Western" in
response
to Question E, below. j.
QUESTION E: Initial
Division?
INITIAL DIVISION W CACD
E
nter
the initial division
determined by
Question A,
B, C,
or
D above: ~~
WESTERN
QUESTION
F: Northern Counties?
Do
50% or more of plaintiffs or
defendants
in
this district reside
in Ventura,
Santa
Barbara, or San Luis Obispo counties? ~
Yes ❑X
No
CV
-71 (05/17) CIVIL COVER SHEET

UNITED 57'ATES'D15TRICT000RT~Ei~ITRAL
Q15TRICT OF CALIFORNIA
CIVIL COVER SHEET
I
X(a). IDENTICAL CASES: Has
this
action
been previously filed in this court?
~X
NO ~ YES
If
yes, list case number(s):
IX(b). RELATED CASES: Is
this case related (as defined below) to any civil or criminal
cases) previously filed in this court?
~X
NO ~ YES
I
f yes, list case number(s):
Civil cases
are
related
when they (check all
that
apply):
A.
Arise from the same or a closely
related
transaction, happening,
or event;
B. Call
for determination of
the same or
substantially
related or similar questions of law and
fact;
or
C.
For other
reasons would entail substantial duplication
of
labor
if heard by
differentjudges.
N
ote: That cases may involve
the same patent,
trademark,
or copyright is not, in itself,
sufficient
to deem
cases
related.
A civil
forfeiture case and a criminal
case are related
when
they (check all that apply):
A.
Arise from the
same
or
a
closely
related
transaction, happening,
or event;
B.
Call for determination of
the same
or substantially
related
or
similar questions of law and fact; or
C. Involve one or more
defendants
from
the
criminal
casein common and would entail substantial duplication of
labor if
heard by
differentjudges.
X.
SIGNATURE OF ATTORNEY
(
ORSELF-REPRESENTED LITIGANT):
~s/
Donald W. SearlesDATE:
September 20, 2017
N
otice
to
Counsel/Parties: The submission of
this
Civil Cover
Sheet is required by Local Rule 3-1. This Form CV-71 and
the
information
contained
herein
neither
replaces
nor
supplements the filing and
service
of
pleadings
or
other papers as required by law, except as provided by local rules of court. For
more detailed
instructions, see separate instruction
sheet
(CV-071 A).
Key to Statistical
codes relating to Social
Security Cases:
Nature of Suit
Code Abbreviation Substantive
Statement
of
Cause of Action
All claims for health
insurance benefits (Medicare) under Title 18, Part
A, of
the Social Security Act, as amended. Also,
861
HIA
include claims by hospitals, skilled nursing facilities, etc., for certification as
providers
of
services
under
the
program.
(42
U.S.G 1935FF(b))
862 BL
All claims for "Black Lung"
benefits
under
Title
4,
Part
B, of
the
Federal Coal
Mine Health and Safety Act of 1969. (30 U.S.C.
923)
863
DIWC
All
claims filed by insured workers for disability insurance benefits under Title 2 of the Social
Security Act, as amended; plus
all claims filed for child's
insurance benefits based
on
disability. (42 U.S.C. 405 (g))
863 DIWW
All claims filed for
widows
or
widowers insurance benefits based
on
disability
under
Title 2 of the Social Security Act, as
amended. (42 U.S.C. 405 (g))
8
64
SSID
All claims for supplemental
security income payments based
upon
disability filed under Title 16 of the Social Security Act, as
amended.
865 RSI All
claims
for
retirement (old age) and survivors benefits under Title 2 of the Social Security Act,
as
amended.
(42 U.S.C. 405 (g))
C
V
-71 (05/17)
CIVIL COVER SHEET

ow

I I

11

Case 2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 1 of 26 Page ID #:1

1 DONALD W. SEARLES, Cal. Bar No. 135705 ORIGINALEmail: searlesdgsec.gov
2 KRISTIN S. ESCALANTE (Cal. Bar No. 169635)

Email: escalantekgsec.gov
3 JUNLING MA (Cal Bar No.213241)

Email: rnaj(d,sec.gov FILED
4 BENJAMI_\FFACMKNER (Cal. Bar No. 282181) CLERK, U.S. DISTRICT COURT

Email: [email protected]
5

Attorneys for Plaintiff 9/20/17

6 Securities and Exchange Commission
Michele Wein Layne, Regional Director CENTRAL DISTRICT OF CALIFORNIA

7 John W. Berry, Associate Regional Director BY: ER DEPUTY

Amy Longo, Regional Trial Counsel
8 444 S. Flower Street, Suite 900

Los Angeles, California 90071
Tele•hone: (323) 965-3998

acsi e: (213) 443-1904

4= 0lUNITED STATES DISTRICT COURT
ck,t

c..

0

CENTRAL DISTRICT OF CALIFORNIA

1

Cy 17 -0 6 9 a 9 --tP/9-( m

SECU ITIES AND EXCHANGE Case No.
COMMISSION,

16
Plaintiff, COMPLAINT

17

18
VS. (FILED UNDER SEAL)

EDWARD CHEN, JEAN CHEN,19 HOME PARADISE INVESTMENT
CENTER LLC, GH INVESTMENT

20 LP, GH DESIGN GROUP, LLC,
GOLDEN GALAXY LP, AND MEGA

21 HOME, LLC,
22

23
Defendants.

24

25

26

27

?8

COMPLAINT



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 2 of 26 Page ID #:2

1 DONALD W. SEARLES, Cal. Bar No. 135705
Email: searlesdAsec.goy

2 KRISTIN S. ESCALANTE (Cal. Bar No. 169635)
Email: escalantek@seegov

3 JUNLING MA (Cal. Bar No.213241)
Email: maj(cOec.gov

4 BENJAMINFMRKNER (Cal. Bar No. 282181)
Email: [email protected]

5
Attorneys for Plaintiff

6 Securities and Exchange Commission
Michele Wein Layne, Regional Director

7 John W. Berry, Associate Regional Director
Amy Longo, Regional Trial Counsel

8 444 S. Flower Street, Suite 900
Los Angeles, California 90071

9 Telephone: (323) 965-3998
213) 443-1904

LODGED
CLERK, L D1STRICTCOURT,

11 UNITED STATES DISTRICT COURT
1 2SEP 2 0 2011

CENTRAL DISTRICT OF CALIFORNIA
3 T,0TCA0LhEpRuNTym

14 I CV 17 -0 6 9 a
15 SECURITIES AND EXCHANGE Case No.

COMMISSION,
16

Plaintiff, COMPLAINT
17

18
vs. (FILED UNDER SEAL)

EDWARD CHEN, JEAN CHEN,19 HOME PARADISE INVESTMENT
CENTER LLC, GH INVESTMENT

20 LP, CH DESIGN GROUP, LLC,
GOLDEN GALAXY LP, AND MEGA

21 HOME, LLC,
22

23
Defendants.

24

25

26

27

28

COMPLAINT



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 3 of 26 Page ID #:3

Plaintiff Securities and Exchange Commission ("SEC") alleges:
2 JURISDICTION AND VENUE
3 1. The Court has jurisdiction over this action pursuant to Sections 20(b),
4 20(d)(1) and 22(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C.
5 77t(b), 77t(d)(1) & 77v(a), and Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the

6 Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. 78u(d)( I

7 78u(d)(3)(A), 78u(e) & 78aa(a). Defendants have, directly or indirectly, made use of
8 the means or instrumentalities of interstate commerce, of the mails, or of the facilities
9 of a national securities exchange in connection with the transactions, acts, practices

10 and courses of business alleged in this Complaint.
11 2. Venue is proper in this district pursuant to Section 22(a) of the Securities
12 Act, 15 U.S.C. 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. 78aa(a),
13 because certain of the transactions, acts, practices and courses of conduct constituting
14 violations of the federal securities laws occurred within this district. In addition,
15

venue is proper in this district because all of the defendants reside in this district.

16 SUMMARY

17 1. This matter concerns two fraudulent securities offerings carried out by
18 Edward Chen, his wife, Jean Chen, and several entities they control. In doing so,

19 they have misappropriated millions of dollars of investor money, much of it in cash

20, and cashier's checks.
21 2. The Chens offered and sold securities in two projects under the federal
22 EB-5 immigration program administered by the United States Citizenship and

23 Immigration Services ("USCIS"), which allows foreign investors to apply for green
24 cards as long as their investments meet certain criteria under the program. Home

25 Paradise Investment Center LLC ("Home Paradise"), an entity controlled by Edward

26 Chen, is the "regional center" designated by USCIS to sponsor these EB-5 offerings.
27 3. As of April 2017, Home Paradise has raised over $22.5 million from 45

28

COMPLAINT 1



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 4 of 26 Page ID #:4

1 investors in two offerings: (1) a $9.5 million offering by GH Investment LP ("GH
2 Investment"), which was supposed to invest in the development, renovation and

3 operation of an interior design center in Ontario, California; and (2) a $13 million

4 offering by Golden Galaxy LP ("Golden Galaxy"), to invest in a five-floor, 80-unit

5 condominium project in Los Angeles, California. Home Paradise continues to

6 promote these two projects on the Chinese language website of its Chinese affiliate

7 aimed at investors in China.

8 4. The Chens' misappropriation of investor money has been staggering.
9 On the GH Investment offering alone, the defendants misappropriated at least $8.6

10 million, more than 91% of the approximately $9.5 million raised. In doing so, they:
11 (1) diverted millions of dollars to fund the Chens' purchase of residential real estate;

12 (2) transferred investor money to Chen-controlled entities; and/or (3) withdrew

13 investor funds in cash and to purchase cashier's checks in Jean Chen's name. The

14 offering proceeds were supposed to be used to develop and operate a design center,

15 but no center is being renovated or operated; in fact, Home Paradise has done little

16 more than rent space in a half empty warehouse. And the Chens misled investors

17 (and the USCIS) about the size of that space, the square footage of which was a

18 critical component to the estimated number of new jobs the project would support. A

19 doctored lease for the warehouse, signed by Edward Chen, on behalf of GH Design,
20 as the lessee, was provided to investors and submitted to the USCIS. This fake lease

21 vastly overstated the warehouse's size and monthly rent, and replaced the name of the

22 true lessor with Four Star Realty Group, an entity controlled by Jean Chen, which

23 received approximately $3.7 million of investors' money.

24 5. The Chens have similarly misappropriated investor funds on the Golden

25 Galaxy offering. Of the approximately $13 million raised to date for the Golden

26 Galaxy offering, about $3.5 million was diverted to the Chens in the form of cashier's

27 checks to Jean Chen that she has used toward the purchase of residential real

28 property, taken in cash, or transferred to other Chen-controlled entities.

COMPLAINT 2



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 5 of 26 Page ID #:5

I Approximately $2.7 million of Golden Galaxy investor funds has not been spent yet.

2 6. Of the funds raised to date between the two EB-5 offerings, the Chens

3 have misused and/or misappropriated approximately $12.1 million. In addition,
4 there are millions of dollars of investor funds still under the Chens' control. Given

5 their past conduct, there is every reason to believe that the Chens, unless immediately
6 enjoined, will continue to misuse and misappropriate investor funds.

7 7. By engaging in this conduct, the defendants have violated, and continue

8 to violate, the antifraud provisions of Sections 17(a)(1), (2) & (3) of the Securities

9 Act, 15 U.S.C. 77q(a), and Section 10(b) of the Exchange Act, 15 U.S.C. 78j(b),
10 and Rules 10b-5(a) and (c) thereunder, 17 C.F.R. 240.101D-5(a) & 240.10b-5(c), and

11 defendants Edward Chen, Home Paradise, GH Investment and Golden Galaxy have

12 violated, and continue to violate Exchange Act Rule lOb-5(b), 17 C.F.R. 240.10b-

13 5(b).
14 THE DEFENDANTS

15 8. Edward Chen, ailda Jianqiao Chen, Jian Qiao Chen, and Jian Chen, age

16 49, is a resident of Arcadia, California and the husband of defendant Jean Chen.

17 Edward Chen is the chief executive officer ("CEO"), sole or managing member and

18 president of defendant Home Paradise Investment Center LLC, which is the general
19 partner of defendants GH Investment LP and Golden Galaxy LP.

20 9. Jean Chen, a/k/a Jing Jiang and Jean Jiang, age 48, is a resident of

21 Arcadia, California and the wife of defendant Edward Chen. Jean Chen is the

22 managing member of defendant Mega Home, LLC. Jean Chen also owns, directly
23 and indirectly through Four Star Realty Group Inc., 50% of Mega Home.

24 10. Home Paradise Investment Center LLC ("Flome Paradise") is a

25 California limited liability corporation with its principal place of business in

26 Commerce, California. Home Paradise is a "Regional Center" designated by the

27 USCIS. Edward Chen is the CEO, sole member, and president/manager of Home

28 Paradise.

COMPLAINT 3



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 6 of 26 Page ID #:6

11. GH Investment LP ("GH Investment") is a California limited

2 partnership with its principal place of business in Ontario, California. Home Paradise

3 is its general partner. GH Investment is the issuer that loans investor proceeds to GH

4 Design Group, LLC.

5 12. GH Design Group, LLC ("GH Design") is a California limited liability
6 corporation with its principal place of business in Ontario, California. GH Design is

7 the EB-5 project company purportedly funded by Gil Investment for the home design
8 center project. Edward Chen is the CEO and president/manager of GH Design.
9 13. Golden Galaxy LP ("Golden Galaxy") is a California limited

10 partnership with its principal place of business in Los Angeles, California. Home

11 Paradise is its general partner. Golden Galaxy is the issuer that invests the investor

12 proceeds with Mega Home, LLC in the form or preferred equity.
13 14. Mega Home, LLC ("Mega Home") is a California limited liability
14 corporation with its principal place of business in Commerce, California. Mega

15 Home is the EB-5 project company, purportedly funded by Golden Galaxy, for the

16 condominium project. Jean Chen owns, directly and indirectly through Four Star

17 Realty Group Inc., 50% of Mega Home and is its managing member.

18 AFFLIATED ENTITIES

I 9 15. The following entities are controlled by either Edward Chen and/or Jean

20 Chen and have received investor funds from the accounts of defendants GH Design
21 and/or Mega Home:

22 16. Four Star Realty Group Inc. ("Four Star") is a California corporation
23 with its principal place of business in Arcadia, California. It is purportedly a real

24 estate development company. Jean Chen is its CEO, Secretary, CFO, sole director,

25 and agent for service of process. It is the "lessor" in GH Design's fabricated lease for

26 the warehouse, and received investor money from the GH Investment offering
27 17. Home Paradises LLC is a California limited liability corporation with

28 its principal place of business in Commerce, California. It is purportedly a

COMPLAINT 4



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 7 of 26 Page ID #:7

1 construction company and the general contractor for Mega Home. Edward Chen is

2 its CEO, manager and agent for service of process. Home Paradises LLC received

3 investor money from both the GI-I Investment and Golden Galaxy offerings.
4 18. US Grandhood, LLC ("US Grandhood") is a California limited liability
5 corporation with its principal place of business in Commerce, California. Jean Chen

6 is its manager, sole member and agent for service of process. US Grandhood, LLC

7 received investor money from both the GH Investment and Golden Galaxy offerings.
8 19. First Financial Investment Group, LLC ("First Financial") is a

9 California limited liability corporation with its principal place of business in

10 Commerce, California. Edward Chen is its managing manager and agent for service

11 of process. Jean Chen purchased real property in First Financial's name using
12 investor money from both the GH Investment and the Golden Galaxy offerings.
13 THE ALLEGATIONS

14 20. From June 2014 through the present, defendants raised at least $22.5

15 million from 45 investors participating in two EB-5 projects sponsored by the Home

16 Paradise regional center. The first project, financed by GH Investment and operated
17 by G1-1 Design Group, purportedly involves the development and operation of an

18 interior design center in Ontario, California. The second project, financed by Golden

19 Galaxy and operated by Mega Home, involves the development, construction, and

20 operation of an 80-unit condominium complex in Los Angeles, California.

21 A. The EB-5 Immigrant Investor Program
22 21. The federal EB-5 Immigrant Investor Program sets aside EB-5 visas for

23 participants who invest in commercial enterprises associated with regional centers

24 approved by the USCIS based on proposals for promoting economic growth.
25 22_ Under the EB-5 Immigrant Investor Program, foreign investors who

26 invest capital in a "commercial enterprise" in the United States may petition the

27 USCIS (called an "I-526 Petition") and receive conditional permanent residency
28 status for a two-year period. USCIS defines a "commercial enterprise" as any for-

COMPLAINT 5



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 8 of 26 Page ID #:8

I profit activity formed for the ongoing conduct of lawful business.

2 23. The regulations governing the EB-5 Immigrant Investor Program require
3 a showing that the foreign investor has placed the required amount of capital at risk

4 for "the purpose of generating a return" on the capital placed at risk. C.F.R.

5 204.6(j)(2). The foreign investor must invest at least $500,000 in a "Targeted
6 Employment Area" and thereby create at least ten full-time jobs for United States

7 workers. If the foreign investor satisfies these and other conditions within the two-

8 year period, the foreign investor may apply to have the conditions removed from his

9 or her visa and live and work in the United States permanently.
10 24. Many EB-5 investments are administered by entities called "regional
11 centers." EB-5 regional centers are designated by USCIS to administer the EB-5

12 investment projects based on proposals for promoting economic growth.
13 25. Regional center investment vehicles are typically offered as limited

14 partnership interests or limited liability company units, which are managed by a

15 person or entity other than the foreign investor, who acts as a general partner or

16 managing member of the investment vehicle. To become a regional center, the entity
17 must demonstrate, with supporting economic and statistical studies, how it will

18 promote economic growth, including job creation.

19 26. As of September 23, 2011, the USCIS had designated Home Paradise as

20 an approved "regional center" that can sponsor EB-5 projects.
21 27. For each of the GH Investment and Golden Galaxy projects, Home

22 Paradise submitted an application on Form 1-924 seeking the USCIS's approval.
23 These applications attached various documents, including offering memoranda,

24 business plans, economic impact analyses, limited partnership agreements, and

25 subscription agreements_

26 28. As a regional center, Home Paradise is required to annually certify to the

27 USCIS its continued compliance with the EB-5 program, including its compliance

28, with the program's requirements regarding the use ofproceeds and job creation.

COMPLAINT 6



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 9 of 26 Page ID #:9

1 B. The G1-1 Design Offering
2 29. From June 2014 through November 2015, Edward Chen, Home Paradise

3 and GH Investment raised at least $9.5 million from 19 Chinese investors through the

4 sale of limited partnership interests in GH Investment for an interior design center

5 project.
6 30. GH Investment lent the investor proceeds to GH Design at an annual

7 interest rate of 1% per year for GH Design's development and construction of the

8 interior design center project.
9 31. GH 1nvestment's limited partners may, in the partnership's sole

10 discretion, receive distributions based on its revenues, which, according to GH

11 Investment's limited partnership agreement and confidential private offering
12 memorandum ("POM"), are derived primarily from the loan to GH Design. GH

13 Investment's limited partnership agreement provides that limited partners are to be

14 paid distributions before Home Paradise, the general partner.

15 32. Each investor wired a $500,000 capital contribution as an investment

16 into GH Investment's bank account in the United States, where the monies were

17 pooled with other GH Investment investors' monies.

18 33. According to the POM, investor funds would be released to GH Design
19 upon the filing of an 1-526 petition with USC1S for temporary residency. As of

20 February 2016, all of those investments had been released to GH Design.
21 34. GH Investment also collected approximately $45,000 in administrative

22 fees from each investor. Under GH Investment's limited partnership agreement,

23 Home Paradise, as the general partner, may use the administrative fees for

24 compensation, organizational, operational and marketing expenses.

25 35. As part of the offering, prospective investors were provided with the

26 following documents, which are included in the investors' visa applications submitted

27 to the USCIS: (a) a OH Investment POM; (b) a business plan for the interior design
28 center project; (c) an economic impact analysis report; (d) a subscription booklet,

COMPLAINT 7



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 10 of 26 Page ID #:10

1 including a subscription agreement signed by each investor and Edward Chen; (c) the

2 GH Investment Limited Partnership Agreement; and (f) the loan agreement between

3 GH Investment and GUI Design.
4 36. The GH Investment offering materials, including the POM, the

5 subscription agreements, and the limited partnership agreement, reflect that the

6 limited partnership interests are securities, that is, an investment of money, in a

7 common enterprise, with the expectation of profits derived solely through the effort

8 of others. Indeed, the limited partnership agreement states that no limited partner

9 would be involved in the day-to-day management of the business.

10 37. The GH Investment offering documents state that the investor's capital
11 contribution is to be used to develop, renovate and operate the interior design center:

12 (a) The POM states that GH Investment was established "for the

13 purposes of making a loan to [GH Design] for the establishment of a home and

14 commercial design center that will offer interior design supplies and products, design
15 advice, and contracts for installation services in the City of Ontario, California";

16 (b) The POM directs that GH Design can use the investor's capital
17 contribution only towards the building lease, employees of the center, administrative

18 overhead, marketing and promotion, office supplies, renovation costs, services and

19 maintenance, and inventory;
20 (c) The business plan states that investor funds will be used to "lease,
21 renovate the space, and operate a 111, 513 [square foot] home and commercial design
22 center";

23 (d) The limited partnership agreement states that GH Investment's

24 business "shall be to make a loan to [GH Design] for purposes of establishing a home

25 and commercial design center and funding its subsequent operations"; and

26 (e) The loan agreement between GH Investment and GH Design, in

27 the section "Mandatory Use of Proceeds, states that 01-1 Design "agrees that the

28 proceeds of the Loan shall only be used for the development, construction and

COMPLAINT 8



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 11 of 26 Page ID #:11

1 operation of' the "home and commercial design center."

2 38, GH Design leased warehouse space in Ontario, California for its

3 purported interior design center, for a space of 23,842 square feet at a rent of between

4 $8,583 and $9, 108 per month, according to the true lease with the property's owner.

5 39. A different, doctored version of GH Design's lease for this space,

6 however, was given to investors and the USCIS. The lease that was provided to

7 investors, which in turn was included in their visa applications submitted to USCIS,

8 falsely stated the lessor was Four Star Realty, a company controlled by Jean Chen.

9 The doctored lease also stated that the leased space was five times larger: 111, 513

10 square feet at a rent of between $10,000 and $49,400 per month. This inflated square

11 footage was referenced in GH Investment's business plan, and used as a basis to

12 support the economic impact analysis and job creation numbers for the project.
13 40. Edward Chen signed both the fabricated lease and real lease on behalf of

14 GH Design.
15 41. in the annual reports on Form I-924A for the fiscal years ending
16 September 30, 2015 and September 30, 2016, Home Paradise represented to the

17 USCIS that the "111,513 square foot" "home and commercial design center" has

18 been in full operation since at least 2015, that it has created 345 jobs, and that it "is

19 currently in operations and the design office and retail space square footage was built

20 as originally projected."
21 42. Home Paradise's Form I-924A for the fiscal year ending September 30,
22 2014 stated that the project had "335 [jobs] in progress, and the annual reports for

23 2015 and 2016 state that "345.3 jobs in total have been created through renovation

24 and operation" of the home and commercial design center.

25 43. The interior design center project, however, is a sham. Rather than

26 being a functioning design center of over 111,000 square feet with nearly 350

27 employees, it is a less-than 25,000 square foot undecorated, half-empty warehouse

28 with some scattered random floor samples and one apparent employee, a receptionist.

COMPLAINT 9



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 12 of 26 Page ID #:12

I 44. Edward Chen controls Home Paradise, GH Investment and GH Design.
2 GH Investment's POM states that it was prepared by the general partner, Home

3 Paradise, of which Edward Chen is the sole member and control person. The POM

4 also identifies Edward Chen as the sole contact person for the issuer and the lead

5 person in the management team. Edward Chen signed the limited partnership
6 agreement and the loan agreement as the president of Home Paradise, the general
7 partner. In addition, Edward Chen signed the subscription agreements, which

8 identify him as Home Paradises president. Further, Edward Chen owns and controls

9 GH Design and signed the loan agreement and lease as its manager or CEO.

10 45. Edward and Jean Chen also controlled the bank accounts of Home

11 Paradise, GH Investment, GH Design, and Four Star Realty, as authorized signatories
12 for such accounts.

13 C. The Golden Galaxy Offering
14 46. From November 2015 through April 2017, Edward and Jean Chen,

15 Home Paradise and Golden Galaxy raised $13 million from 26 Chinese investors for

16 a condominium project, through the sale of limited partnership interests in Golden

17 Galaxy.
18 47. Golden Galaxy provided the proceeds of the offering in the form of a

19 preferred equity investment to the project company, Mega Home, to partially pay for

20 the development, construction, and operation of the condominium complex project.
21 48. According to the Golden Galaxy private placement memorandum

22 ("PPM"), Golden Galaxy's preferred equity investment entitles it to receive interest

23 from Mega Home at a rate of 4% annually rate, increasing to 5% after five years and

24 to 6% after six years.

25 49. Golden Galaxy's limited partners may, as determined by the general
26 partner, Home Paradise, receive net cash flow distributions. According to the PPM,

27 these distributions are to be made to limited partners before they are made to the

28 general partner.

COMPLAINT



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 13 of 26 Page ID #:13

1 50. Investors wired their $500,000 investments to Golden Galaxy's account

2 in the United States, where the monies were pooled with other Golden Galaxy
3 investors' funds. An investor's funds could only be transferred to Mega Home upon

4 an investor's submission of an 1-529 petition to the USCIS for temporary residency.
5 To date, all of the $13 million raised from investors has been transferred to Mega
6 Home.

7 51. Separately, each investor paid Golden Galaxy an administrative fee in

8 the amount of approximately $50,000. Under Golden Galaxy's limited partnership
9 agreement, Home Paradise, as the general partner, may use the administrative fees for

10 compensation, organizational, operational and marketing expenses.

11 52. Although the Chens have raised $13 million for the Golden Galaxy
12 project, the maximum size of the offering, Home Paradise's Chinese affiliate's

13 website continues to promote the project.
14 53. As part of the offering, prospective investors received the following
15 documents, which are included in the investors' visa applications to the USCIS: (a) a

16 PPM; (b) a business plan; (c) an economic impact analysis report; (d) a subscription
17 booklet, including a subscription agreement signed by each investor and by Edward

18 Chen; (e) the Golden Galaxy Investment LP limited partnership agreement; and (f)
19 the administrative agreement among Home Paradise, Golden Galaxy and Mega
20 Home, which was signed by both Edward Chen and Jean Chen.

21 54. The Golden Galaxy offering materials, including the subscription
22 agreement, the PPM, and the limited partnership agreement, reflect that the limited

23 partnership interests sold to investors are securities, that is, an investment of money,

24 in a common enterprise, with the expectation of profits derived solely through the

25 effort of others. Indeed, the limited partnership agreement states that no limited

26 partner would be involved in the day-to-day management of the business.

27 55. Golden Galaxy's offering documents provide that the investment

28 proceeds were to be used to develop, construct, and operate the Golden Galaxy

COM PLA INT 11



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 14 of 26 Page ID #:14

1 condominium complex, a 37, 156 square feet luxury building with five floors and 80

2 apartment units in downtown Los Angeles:
3 (a) The PPM states that "the proceeds shall be used by [Mega
4 Home] to develop, construct and thereafter sell the Project, and that Mega Home

5 will use the proceeds it receives from Golden Galaxy "for the sole purpose of

6 financing, in part, the development and construction of the Golden Galaxy
7 Condominium";
8 (b) The business plan states that "EB-5 funds will be utilized for both

9 the construction phase and operation phase of the Project"; and

10 (c) The administrative agreement between Home Paradise, Mega
I 1 Home and Golden Galaxy states that Mega Home seeks to borrow up to $13 million

12 "to use to partially cover the cost of construction and initial operation of the Project."
13 56. Edward and Jean Chen controlled each of the entities related to the

14 Golden Galaxy offering. The PPM identifies Home Paradise as the general partner of

15 Golden Galaxy and Edward Chen as the managing member of Home Paradise. Both

16 the Golden Galaxy PPM and subscription agreement direct that all inquiries be made

17 to Edward Chen. Edward Chen signed the subscription agreement, limited

18 partnership agreement, and administrative agreement as the president of Home

19 Paradise. He also signed the administrative agreement in his capacity as the president
20 of Golden Galaxy.
21 57. Jean Chen signed the administrative agreement as the manager of Mega
22 Home, and the PPM states that she controls Mega Home's day-to-day management

23 and operations.
24 58. Edward and Jean Chen also controlled the bank accounts of Home

25 Paradise, Golden Galaxy and Mega Home, as authorized signatories for these

26 accounts.

27 59. Construction of the condominium complex appears to be ongoing,
28

COMPLAINT



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 15 of 26 Page ID #:15

1 D. The Misappropriation of Investor Funds

2 a. The GUI Investment offering
3 60. The GH Investment offering raised $9.5 million in capital contributions

4 from investors (not including administrative fees).
5 61. The Chens misappropriated or misused at least $8.6 million, or 91%, of

6 those funds. Specifically:
7 (a) Jean Chen withdrew cash in the amount of $2,348,326, which

8 consisted of almost 25% of the offering proceeds.
9 (b) Jean Chen wrote cashier's checks to herself totaling $1.35 million,

10 or approximately 14% of the offering proceeds. Of that amount, Jean Chen has used

11 at least $1.24 million to purchase residential real estate in southern California. Of the

12 three properties purchased with these funds, two are titled to GH Design and one is

13 titled to First Financial. Nothing in any of the offering documents informs investors

14 that their proceeds might be used to purchase residential real estate in the name of

15 Chen-controlled entities or otherwise.

16 (c) The Chens transferred over $4.93 million, or 52% of the amount

17 raised, to Four Star, US Grandhood, and Home Paradises LLC. This includes a June

18 2015 transaction, in which the Chens transferred $463,470 of GH Design Investment

19 funds to Four Star Realty, then to Mega Home, from which they applied the funds

20 towards the purchase of title insurance for the land used for the Golden Galaxy
21 project.
22 b. The Golden Galaxy offering
23 62. As of the end of April 2017, Golden Galaxy had raised $13 million from

24 investors (not including administrative fees).
25 63. Of that amount, the Chens have misappropriated and misused over $3.5

26 million to date. Specifically:
27 (a) Jean Chen wrote at least $2.7 million in cashier's checks to herself

28 and used those checks to, among other purposes, purchase foreclosed houses in

COMPLAINT 13



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 16 of 26 Page ID #:16

I southern California. Title to seven properties was held in the name of GH Design,
2 and another is held in the name of First Financial.

3 (b) Mega Home transferred $801,000 to Home Paradises LLC. Jean

4 Chen then applied those funds toward purchasing real properties unrelated to the

5 Golden Galaxy offering.
6 64. As of August 30, 2017, at least $2.7 million remains in Mega Home's

7 bank account.

8 65. Between the two offerings, the Chens have misappropriated at least

9 $12.1 million—approximately $8.6 million from the OH Investment offering, and

10 approximately $3.5 million from the Golden Galaxy offering.
11 E. The Misrepresentations and Omissions

12 66. Defendants made materially false and misleading statements and

13 omissions to the GH Design and Golden Galaxy investors, and obtained investor

14 proceeds by means of these misstatements and omissions.

15 67. The GH Investment offering materials (including the POM, the business

16 plan, and the subscription and limited partnership agreements) stated that investor

17 proceeds would be used to establish the interior design center, while the Golden

18 Galaxy offering materials (including the PPM, the business plan, and the subscription
19 and limited partnership agreements) stated that investor proceeds would be used to

20 develop and construct a condominium complex.
21 68. Instead, more than 91% of the funds raised in the GH Design offering
22 and more than 27% of the funds raised in the Golden Galaxy offering were taken by
23 the Chens through cash withdrawals, the issuance of cashier's checks (in many cases,

24 used to purchase residential real estate), and the transfer of proceeds to Chen-

25 controlled entities.

26 69. That their investment funds were being used for purposes other than

27 those disclosed in the offering materials would have been important to investors, as

28 the misuse and misappropriation of investor funds could jeopardize investors'

COMPLAINT 1 4



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 17 of 26 Page ID #:17

I expected returns on their investment, as well as their expected immigration benefits.

2 70. The GH Investment offering materials also represented that the home

3 design warehouse would be over 111,000 square feet, suggesting a substantially
4 larger project capable of generating the necessary jobs under the EB-5 program for

5 investors to obtain residency. Instead, the actual leased space was less than 24,000

6 square feet. The doctored lease also showed that a Chen entity was the lessor and

7 was to be paid up to more than five times the true rent under the real lease.

8 71. This information would have been important to investors. The fact that

9 the actual center was much smaller than reported made the project less likely to

10 generate the necessary income to provide the expected return on their investments, as

11 well making it less likely that the required number ofjobs would be created by the

12 project, thereby jeopardizing investors' EB-5 visa applications.
13 72. Edward Chen, Home Paradise, GH Investment and Golden Galaxy were

14 the makers of these false and misleading statements. GH Investment and Golden

15 Galaxy are the issuers, and both the offering memoranda and business plans were

16 prepared in their names. Home Paradise, as the general partner, had ultimate

17 authority over GH Investment's and Golden Galaxy's statements. Edward Chen is

18 the president, CEO, and sole member of Home Paradise, and had ultimate authority
19 over the statements in the offering documents for both offerings.
20 73. The Chens also received money from the GH Investment and Golden

21 Galaxy offerings by means of these false and misleading statements. The Chens

22 directly received money from both offerings in the form of cash, cashier's checks and

23 transfers to their controlled entities and to their entities' bank accounts, over which

24 the Chens had joint control. The Chens also indirectly received monies from both

25 offerings through their controlled entities. GH Investment and Golden Galaxy, as the

26 issuers, received investor funds wired to their bank accounts, of which Edward and/or

27 Jean Chen are authorized signatories. GH Design and Mega Home, as the project
28 companies, received all of the investor funds in their bank accounts, which were

COMPLAINT 15



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 18 of 26 Page ID #:18

I controlled by the Chens, while Home Paradise received the administrative fees

2 associated with both offerings.
3 F. Additional Fraudulent Conduct

4 74. As the architects of the GH Investment and Golden Galaxy offerings, the

5 Chens, individually and through their controlled entities, have engaged in and are

6 continuing to engage in additional fraudulent conduct to exploit the EB-5

7 immigration program in order to mislead and defraud investors.

8 75. Edward and Jean Chen, and the entity defendants they control, have

9 misappropriated at least $12.1 million in investor funds from both offerings,
10 including as recently as April 2017.

11 76. As the signatories on the accounts of their controlled entities through
12 which investor money was expended, the Chens misappropriated investor funds by
13 transferring them to affiliated entities, withdrawing the investor funds, or writing
14 cashier's checks to Jean Chen. Significant amounts of the funds were used to

15 purchase residential real estate unrelated to the EB-5 offerings.
16 77. In addition to misappropriating and misusing vast sums of investor

17 money, the Chens engaged in further deceptive conduct through the use of the fake

18 OH Investment lease. The doctored lease for GH Investment's interior design center

19 project was provided to investors and in turn submitted to the USCIS, and the inflated

20 warehouse square footage in the lease was used as the basis for the economic impact
21 analysis of how many jobs the project could create for EB-5 investors to obtain

22 permanent residency.
23 78. Edward Chen also submitted documents and reports to USCIS that

24 falsely represented the use ofproceeds for both offerings and falsely certified that

25 Home Paradise operated a large commercial design center that created 345 jobs.
26 Submitting those reports created the false appearance that Home Paradise and the GH

27 Investment project were successful and in compliance with EB-5 regulations.
28.

COM PLAINT 16



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 19 of 26 Page ID #:19

1 G. Defendants' Roles in Carrying Out the Fraud

2 79. At all relevant times, the Chens knowingly, recklessly and/or negligently
3 carried out their fraud in the GH Investment and Golden Galaxy offerings. Their

4 scienter and negligence is imputed to the entity defendants they controlled.

5 80. Edward Chen knew or was reckless in not knowing that he and his wife

6 were misappropriating and misusing investor funds to purchase residential real estate,

7 because the offering documents that his companies issued required investor proceeds
8 to be used for the interior design center and condominium complex.
9 81. Edward Chen also knew or was reckless in not knowing that the lease

10 provided to GH Investment investors was fabricated because he signed both the fake

I I lease and the actual warehouse lease for a much smaller footprint and rental amount.

12 82. Edward Chen, in turn, also knew or was reckless in not knowing that the

13 offering materials falsely misrepresented how the investor proceeds were going to be

14 used (and, in the case of the GH Investment offering, misrepresented the true nature

15 of the design center lease) because, as alleged above, these materials were submitted

16 and created on behalf of entities he and his wife controlled, the money was being
17 diverted to them or their controlled entities and he signed both the real and fake

18 leases.

19 83. Jean Chen also had direct knowledge, or was reckless in not knowing of

20 the fraud. With respect to the GH Investment offering, she controlled GH Design's
21 bank account, withdrew the cash and wrote the cashier's checks to herself. She is the

22 sole control person of the fake lessor Four Star Realty, and made rent payments for

23 GH Design from Four Star Realty's account to the real lessor. She thus knew or was

24 reckless or negligent in not knowing that she misappropriated investor money from

25 the interior design center project.
26 84. Jean Chen was directly involved in the Golden Galaxy condominium

27 project and knew or was reckless in not knowing that she was misappropriating and

28 misusing investor funds in Mega Home's bank accounts to purchase residential real

COMPLAIN I. I 7



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 20 of 26 Page ID #:20

1 estate. Jean Chen was specifically named as the "manager" of the condominium

2 project, and signed the administrative agreement on behalfof Mega Homes which

3 was provided to investors and which states that such funds were to be used for the

4 construction and operation of the condominium complex.
5 85. The proposed defendants also acted negligently in committing this fraud.

6 By taking millions of dollars of investor money for their own use, Edward and Jean

7 Chen did not act with reasonable care. Edward Chen also acted unreasonably in

8 submitting a doctored lease that was materially different than the actual lease that he

9 signed for the GH Design space.

10 FIRST CLAIM FOR RELIEF

11 Fraud in the Offer or Sale of Securities

12 Violations of Section 17(a)(1) and (3) of the Securities Act

13 (against all Defendants)
14 86. The SEC realleges and incorporates by reference paragraphs 1 through
15 85 above.

16 87. Defendants engaged in a fraudulent EB-5 offering scheme. In two

17 separate projects, defendants raised at least $22.5 million in funds from investors,
18 representing their funds would be used for purposes of an interior design center and a

19 condominium complex, and create necessary jobs under the EB-5 program. In

20 reality, defendants misappropriated over $12.1 million of those funds, and used them

21 for transfers to their related entities, cashier's checks, cash, and residential real estate

22 purchases. Defendants created the false appearance that they were carrying out the

23 investment projects described in the offering materials, whereas they were

24 misappropriating investors' funds. Defendants also submitted false documentation to

25 the USCIS and to investors, including a doctored lease for their design center.

26 88. By engaging in the conduct described above, Defendants Edward Chen,

27 Jean Chen, Home Paradise, GH Investment, GH Design, Golden Galaxy and Mega
28 Home, and each of them, directly or indirectly, in the offer or sale of securities, and

COMPLAINT 182:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 21 of 26 Page ID #:21

1 by the use of means or instruments of transportation or communication in interstate

2 commerce or by use of the mails directly or indirectly, employed devices, schemes, or

3 artifices to defraud and engaged in transactions, practices, or courses of business

4 which operated or would operate as a fraud or deceit upon the purchaser.
5 89. Defendants Edward Chen, Jean Chen, Home Paradise, GH Investment,

6 GH Design, Golden Galaxy and Mega Home, employed devices, schemes and

7 artifices to defraud with scienter and, with scienter or negligence, engaged in

8 transactions, practices, or courses of business which operated or would operate as a

9 fraud or deceit upon the purchaser.
10 90. By engaging in the conduct described above, Defendants Edward Chen,

11 Jean Chen, Home Paradise, GH Investment, GH Design, Golden Galaxy and Mega
12 Home violated, and unless restrained and enjoined will continue to violate, Sections

13 170)(1) and 17(0(3) of the Securities Act, 15 U.S.C. 7740(1) & 77q(a)(3).
14 SECOND CLAIM FOR RELIEF

15 Fraud in the Offer or Sale of Securities

16 Violations of Section 17(a)(2) of the Securities Act

17 (against all Defendants)
18 91. The SEC realleges and incorporates by reference paragraphs 1 through
19 85 above.

20 92. Defendants, with scienter or negligence, also obtained money by means

21 of untrue statements of material fact and by omissions to state material facts

22 necessary in order to make the statements made, in light of the circumstances under

23 which they were made, not misleading. Specifically, they obtained investor funds by
24 means of materially false and misleading representations to investors in the offering
25 materials for the GH Investment and Golden Galaxy projects, which misrepresented
26 the uses of proceeds and the sham design center. The purported design center was in

27 reality a half empty warehouse a fifth of the size it was represented to be, with lower

28 rent and fewer potential jobs that it could or did create.

COMPLAINT 19



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 22 of 26 Page ID #:22

1 93. Both Edward and Jean Chen, as well as the entity defendants, directly
2 and indirectly, obtained money by means of materially false and misleading
3 representations and omissions. The entity defendants received investor funds, either

4 directly through deposits from investors, or through transfers of investor funds to and

5 among the entity defendants' bank accounts. Through the entity defendants' bank

6 accounts, which the Chens controlled, Edward and Jean Chen also obtained millions

7 of dollars from investors, both in the form of capital contributions as well as in

8 administrative fees. In addition, through their misuse and misappropriation of

9 investor funds, Edward and Jean Chen obtained investor funds, in the form of cash,

10 cashier's checks, and residential real estate purchases, including through their other

11 affiliated entities.

12 94. By engaging in the conduct described above, Defendants Edward Chen,

13 Jean Chen, Home Paradise, GH Investment, GH Design, Golden Galaxy and Mega
14 Home violated, and unless restrained and enjoined will continue to violate, Sections

15 17(0(2) of the Securities Act, 15 U.S.C. 7740(2).
16 THIRD CLAIM FOR RELIEF

17 Fraud in the Connection with the Purchase and Sale of Securities

18 Violations of Section I0(b) of the Exchange Act and Rule 10b-5(a) and (c)
19 (against all Defendants)
20 95. The SEC realleges and incorporates by reference paragraphs 1 through
21 85 above.

22 96. Defendants engaged in a fraudulent EB-5 offering scheme. In two

23 separate projects, defendants raised at least $22.5 million in funds from investors,

24 representing their funds would be used for purposes of an interior design center and a

25 condominium complex, and would create the necessary number ofjobs under the EB-

26 5 program. ln reality, defendants misappropriated over $12.1 million of those funds,

27 and used them for transfers to their related entities, cashier's checks, cash, and

28 residential real estate purchases. Defendants created the false appearance that they

COMPLAINT 20



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 23 of 26 Page ID #:23

1 were carrying out the investment projects described in the offering materials, whereas

2 they were misappropriating investors' funds. Defendants also submitted false

3 documentation to the USCIS and to investors, including a doctored lease for their

4 design center.

5 97. By engaging in the conduct described above, Defendants Edward Chen,
6 Jean Chen, Home Paradise, GH Investment, GH Design, Golden Galaxy and Mega
7 Home, and each of them, directly or indirectly, in connection with the purchase or

8 sale of a security, by the use of means or instrumentalities of interstate commerce, of

9 the mails, or of the facilities of a national securities exchange: (a) employed devices,
10 schemes, or artifices to defraud; and (c) engaged in acts, practices, or courses of

11 business which operated or would operate as a fraud or deceit upon other persons.

12 98. Defendants Edward Chen, Jean Chen, Home Paradise, GH Investment,
13 GH Design, Golden Galaxy and Mega Home, with scienter, (a) employed devices,
14 schemes, or artifices to defraud; and (c) engaged in acts, practices, or courses of

15 business which operated or would operate as a fraud or deceit upon other persons, by
16 the conduct described in detail above.

17 99. By engaging in the conduct described above, Defendants Edward Chen,
18 Jean Chen, Home Paradise, GH Investment, GH Design, Golden Galaxy and Mega
19 Home violated, and unless restrained and enjoined will continue to violate, Section

20 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and Rules 10b-5(a) and 101D-5(c)
21 thereunder, 17 C.F.R. 240.10b-5(a) & 240.1013-5(c).
22 FOURTH CLAIM FOR RELIEF

23 Fraud in Connection with the Purchase or Sale of Securities

24 Violations of Section 10(b) of the Exchange Act

25 and Rule 10b-5(b) Thereunder

26 (against Defendants Edward Chen, Home Paradise, GH Investment

27 and Golden Galaxy)
28 100. The SEC realleges and incorporates by reference paragraphs 1 through

COMPLAINT 21



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 24 of 26 Page ID #:24

1 85 above.

2 101. Defendants made materially false and misleading representations to

3 investors in the offering materials for their two EB-5 offerings, misrepresenting the

4 use of proceeds and the sham design center. In reality, defendants misappropriated
5 over $12.1 million of the investors' funds, and used them for transfers to their related

6 entities, cashier's checks, cash, and residential real estate purchases. The design
7 center was in reality a half empty warehouse a fifth of the size it was represented to

8 be, with lower rent and fewer potential jobs that it could or did create.

9 102. By engaging in the conduct described above, Defendants Edward Chen,
10 Home Paradise, GH Investment, and Golden Galaxy, and each of them, directly or

11 indirectly, in connection with the purchase or sale of a security, by the use of means

12 or instrumentalities of interstate commerce, of the mails, or of the facilities of a

13 national securities exchange, made untrue statements of a material fact or omitted to

14 state a material fact necessary in order to make the statements made, in the light of

15 the circumstances under which they were made, not misleading.
16 103. By engaging in the conduct described above, Defendants Edwards Chen,

17 Home Paradise, GH Investment and Golden Galaxy violated, and unless restrained

18 and enjoined will continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C.

19 78j(b), and Rules 10b-5(b) thereunder, 17 C.F.R. 240.10b-5(b).
20 PRAYER FOR RELIEF

21 WHEREFORE, the SEC respectfully requests that the Court:

22 1.

23 Issue findings of fact and conclusions of law that defendants committed the

24 alleged violations.

25 H.

26 Issue orders, in forms consistent with Rule 65(d) of the Federal Rules of Civil

27 Procedure, temporarily, preliminarily and permanently enjoining: (I) defendants

28 Edward Chen, Jean Chen, Home Paradise, Gil Investment, GH Design, Golden

COMPLAINT 22



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 25 of 26 Page ID #:25

1 Galaxy and Mega Home, and their officers, agents, servants, employees, and

2 attorneys, and those persons in active concert or participation with any of them, who

3 receive actual notice of the orders by personal service or otherwise, and each of them,
4 from violating Section 17(a) of the Securities Act, 15 U.S.C. §77q(a), and Section

5 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and Rule I Ob-5(a) and (c)
6 thereunder, 17 C.F.R. 240.10b-5(a) and (e); and (2) defendants Edward Chen,
7 Home Paradise, GH Investment, and Golden Galaxy, and their officers, agents,
8 servants, employees, and attorneys, and those persons in active concert or

9 participation with any of them, who receive actual notice of the orders by personal
10 service or otherwise, and each of them, from violating Section 10(b) of the Exchange
11 Act, 15 U.S.C. 78j(b), and Rule 10b-5(b) thereunder, 17 C.F.R. 240.10b-5(b).
12 HI.

13 Issue orders, in fbrms consistent with Rule 65(d) of the Federal Rules of Civil

14 Procedure, permanently enjoining defendants Edward Chen, Jean Chen, Home

15 Paradise, GH Investment, GH Design Group, Golden Galaxy, and Mega Home, and

16 their officers, agents, servants, employees, attorneys, and those persons in active

17 concert or participation with any of them, who receive actual notice of this Order, by
18 personal service or otherwise, and each of them, be and hereby are permanently
19 restrained and enjoined from, directly or indirectly, participating in the offer or sale

20 of any security which constitutes an investment in a "commercial enterprise" under

21 the United States Government EB-5 visa program administered by USCIS, including
22 engaging in activities with a broker, dealer, or issuer, or a Regional Center designated
23 by the USCIS, for purposes of issuing, offering, trading, or inducing or attempting to

24 induce the purchase or sale of any such EB-5 investment.

25 IV.

26 Issue in a form consistent with Fed. R. Civ. P. 65, a temporary restraining order

27 and a preliminary injunction freezing the funds and assets of defendants and their

28 affiliates; appointing a receiver over the entity defendants and the individual

COMPLAINT 23



2:17-cv-06929-PA-JEM Document 1 Filed 09/20/17 Page 26 of 26 Page ID #:26

1 defendants' affiliated entities; prohibiting each of the defendants from destroying
2 documents; ordering accountings by each of the defendants; and ordering expedited
3 discovery.
4 V.

5 Order defendants to disgorge all funds received from their illegal conduct,
6 together with prejudgment interest thereon.

7 VI.

8 Order defendants to pay civil penalties under Section 20(d) of the Securities

9 Act, 15 U.S.C. 770), and Section 21(d)(3) of the Exchange Act, 15 U.S.C.

10 78u(d)(3).
11 VII.

12 Retain jurisdiction of this action in accordance with the principles of equity and

13 the Federal Rules ofCivil Procedure in order to implement and carry out the terms of

14 all orders and decrees that may be entered, or to entertain any suitable application or

15 motion for additional relief within the jurisdiction of this Court.

16 VIII.

17 Grant such other and further relief as this Court may determine to be just and

18 necessary.

19

20

21 Dated: September 20, 2017
Is/Donald W S arles

22 Donald W. Searles
23 Attorney for Plaintiff

Securities and Exchange Commission
24

25

26

27

28

COMPLAINT 24



UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
CIVIL COVER SHEET

I. (a) PLAINTIFFS (Check box if you are representing yourself ~) DEFENDANTS (Check box if you are representing yourself ~ )

EDWARD CHEN, JEAN CHEN, HOME PARADISE INVESTMENT CENTER LLC, GH
SECURITIES AND EXCHANGE COMMISSION INVESTMENT LP, GH DESIGN GROUP LLC, GOLDEN GALAXY LP, AND MEGA HOME

LLC

(b) County of Residence of First Listed Plaintiff (County of Residence of First Listed Defendant Los Angeles

(EXCEPT IN U.S. PLAINTIFF CASES) ~ (IN U.S. PLAINTIFF CASES ONLY)

(C) Attorneys (Firm Name, Address and Telephone Number) If you are Attorneys (Firm Name, Address and Telephone Number) If you are

representing yourself, provide the same information. representing yourself, provide the same information.

Donald W. Searles / Kristin S. Escalante / Junling Ma (323) 965-3998
Securities and Exchange Commission
444 S. Flower Street, Suite 900
Los Angeles, CA 90071

II. BASIS OF JURISDICTION (Place an X in one box only.)

1. U.S. Government ~ 3. Federal Question (U.S.

Plaintiff Government Not a Party)

2. U.S. Government ~4. Diversity (Indicate Citizenship

Defendant of Parties in Item III)

III. CITIZENSHIP OF PRINCIPAL PARTIES-For Diversity Cases Only
(Place an X in one box for plaintiff and one for defendant)

PTF DEF 
Incorporated or Principal Place

Citizen of This State ❑ 1 ~ 1
PTF
~ 4

DEF
~ 4

of Business in this State

Citizen of Another State ~ 2 ~ 2 Incorporated and Principal Place ❑ 5 ~ S
of Business in Another State

Citizen or Subject of a ❑ 3 ~ 3 Foreign Nation
Foreign Country

~ 6 ~ 6

IV. ORIGIN (Place an X in one box only.)
1.Original 2. Removed from 3. Remanded from 4. Reinstated or 5. Transferred from Another 

6. Multidistrict 8. Multidistrict
Litigation - ~ Litigation -

Proceeding State Court Appellate Court Reopened District (Specify) Transfer Direct File

V. REQUESTED IN COMPLAINT: JURY DEMAND: ~ Yes ~X No (Check "Yes" only if demanded in complaint.)

CLASS ACTION under F.R.Cv.P. 23: ~ Yes ~X No ~ MONEY DEMANDED IN COMPLAINT: $

VI. CAUSE OF ACTION (Cite the U.S. Civil Statute under which you are filing and write a brief statement of cause. Do not cite jurisdictional statutes unless diversity.)

The Complaint alleges violations ofthe federal securities laws. 15 U.S.C. ~ 77q(a); 75 U.S.C. § 78j(b) and 17 C.F.R.240.1 Ob-5 thereunder.

VII. NATURE OF SUIT (Place an X in one box only).

OTHER STATUTES CONTRACT REAL PROPERTY CONL IMMIGRATION PRISONER PETITIONS PROPERTY RIGHTS

375 False Claims Act ❑ 110 Insurance ~ 240 Torts to Land ~ 462 Naturalization Habeas Corpus: ~ 820 Copyrights

376 Qui Tam ❑ 120 Marine ❑ 245 Tort Product
Application

~ 463 Alien Detainee ~ g30 Patent

(31 USC 3729(a)) ~ ~ 30 Miller Act

Liability

~ 290 All Other Real
465 Other

~ Immigration Actions
S70 Motions to Vacate

~ Sentence 835 Patent -Abbreviated

~TORTS400 State ~40Negotiable
Property ~ 530 General New Drug Application

70R75Reapportionment ~ 
Instrument PERSONAL PROPERTY ~ 535 Death Penalty ~ 840 Trademark

❑ 410 Antitrust 150 Recovery of PERSONAL INJURY
Other•~ 370 Other Fraud SOCIAL SECURITY

~ 310 Airplane
❑ 861 HIA (1395ff)430 Banks and Bankin 

9
overpayment &

~ Enforcement of ~ 371 Truth in Lending ~ 540 Mandamus/Other
450 Commerce/ICC
Rates/Etc.

Judgment ~ 315 Airplane
Product Liability 380 Other Personal ❑ 550 Civil Rights

~ g62 Black Lung (923)

460 Deportation ❑ 151 Medicare Act ~ 320 Assault, Libel & ~ Property Damage ~ 555 Prison Condition ❑ 863 DIWC/DIWW (405 (g))

470 Racketeerinflu-
&Corrupt Org.

152 Recovery of
❑ Defaulted Student

Slander

330 Fed. Employers'
❑

385 Pro ert Dama eP Y 9
❑ product Liabilit Y

560 Civil Detainee
❑ Conditions of

❑ 864 SSID Title XVI

enced

480 Consumer Credit
Loan (Excl. Vet.)

Liability Confinement ~ 865 RSI (405 (g))BANKRUPTCY

490 Cable/Sat N 153 Recovery of
340 Marine

345 Marine Product
q2z A eal 28

❑ Pp
FORFEITURE/PENALTY FEDERAL TAX SUITS
625 Drug Related

~ Seizure of Property 21
870 Taxes (U.S. Plaintiff or

❑850 Securities/Com-Q

Overpayment of
Vet. Benefits

❑ Liability
USC 158

423 Withdrawal 28modifies/Exchange
160 Stockholders'

~ 350 Motor Vehicle ❑ USC 157 USC 881
Defendant)
g71 IRS-Third Party 26 USC

890 Other Statutory ~ Suits ~ 355 Motor Vehicle CIVIL RIGHTS ❑ 690 Other ❑ 7609
Actions

891 Agricultural Acts ~ 190 Other
Contract

Product Liability

360 Other Personal
❑

~ 440 Other Civil Rights LABOR

Injury ~ 441 Voting ~ 710 Fair Labor Standards
893 Environmental
Matters 195 Contract

Product Liability
362 Personal Injury-

~ Med Malpratice ❑ 442 Employment
Act

~ 720 Labor/Mgmt.
895 Freedom of Info.
Act ❑ 196 Franchise ~ 365 Personal Injury-

443 Housing/
Accommodations

Relations

Product Liability ~ 740 Railway Labor Act
`̀ " REAL PROPERI"Y

❑ 896 Arbitration 367 Health Care/ 445 American with

~ Pharmaceutical ❑ Disabilities- and Medical
❑ Lea210 Land

899 Admin. Procedures Condemnation Personal Injury Employment eaAdY
Act/Review of Appeal of
Agency Decision ❑ 220 Foreclosure Product Liabilit y 446 American with

~
790 Other Labor

~
368 Asbestos Disabilities-Other Liti ation9

950 Constitutionality of ~ 230 Rent Lease & ~ personal Injury ~ 448 Education
791 Employee Ret. Inc.

State Statutes Ejectment Pro ill Security Act

--- --- — -- -
~ v~l V~~ItC VJC V1YL ~. LO~C IV UIIIUCI.

CV-71 (05/17) CIVIL COVER SHEET Page 1 of 3

Case 2:17-cv-06929-PA-JEM   Document 1-1   Filed 09/20/17   Page 1 of 3   Page ID #:27



` UNITED STATES'DTSTRICTCOUF3T; CENTRAL DISTRICT OF CALIFORNIA . ~'"

CIVIL COVER SHEET

VIII. VENUE: Your answers to the questions below wilt determine the division of the Court to which this case will be initially assigned. This initial assignment is subject

to change, in accordance with the Court's General Orders, upon review by the Court of your Complaint or Notice of Removal. ~

QUESTION A: Was this case removed

from state court? STATE CASE WAS PENDING IN THE COUNTY OP. INITIAL DIVISION W CACD IS:

Yes ~x No
Los Angeles, Ventura, Santa Barbara, or San Luis Obispo Western

If "no, " skip to Question B. If "yes," check the
❑ Orange Southernbox to the right that applies, enter the

corresponding division in response to
Question E, below, and continue from there. ❑ Riverside or San Bernardino Eastern

QUESTION B: Is the United States, or 8.1. Do SO% or more of the defendants who reside in YES. Your case will initially be assigned to the Southern Division.
one of its agencies or employees, a the district reside in Orange Co.? ~ Enter "Southern" in response to Question E, below, and continue
PLAINTIFF in this action?

~~
from there.

check one of the boxes to the right

0 NO. Continue to Question B.2.
Q Yes ~ No

B.2. Do 50% or more of the defendants who reside in YES. Your case will initially be assigned to the Eastern Division.
If "no, " skip to Question C. If "yes," answer the district reside in Riverside and/or San Bernardino ~ Enter "Eastern" in response to Question E, below, and continue
Question B.t, at right. Counties? (Consider the two counties together.) from there.

check one of the boxes to the right ~, NO. Your case will initially be assigned to the Western Division.
"Western"Enter in response to Question E, below, and continue

from there.

QUESTION C: Is the United States, or C.1. Do SO% or more of the plaintiffs who reside in the YES. Your case will initially be assigned to the Southern Division.
one of its agencies or employees, a district reside in Orange Co.? ~ Enter "Southern" in response to Question E, below, and continue
DEFENDANT in this action?

~~
from there.

check one of the boxes to the sight

~ NO. Continue to Question C.2.
Yes ~ No

"no,
C.2. Do 50% or more of the plaintiffs who reside in the YES. Your case will initially be assigned to the Eastern Division.

If " skip to Question D. If "yes," answer district reside in Riverside and/or San Bernardino ~ Enter "Eastern" in response to Question E, below, and continue
Question C.1, at right. Counties? (Consider the two counties together.) from there.

check one ofthe boxes to the right ~~ NO. Your case will initially be assigned to the Western Division.

Enter "Western" in response to Question E, below, and continue
from there.

A. B. G

QUE5TION D: Location of plaintiffs and defendants?
Riverside or San Los Angeles, Ventura,

Orange County Bernardino County Santa Barbara, or San

Luis Obispo County

Indicate the locations) in which 50% or more of plaintiffs who reside in this district
reside. (Check up to two boxes, or leave blank if none of these choices apply.)

Indicate the locations) in which 50% or more of defendants who reside in this
district reside. (Check up to two boxes, or leave blank if none of these choices ~ ~ 0
apply.)

D.1. Is there at least one answer in Column A? D.2. Is there at least one answer in Column B?

Yes 0 No ~ Yes ~ No

If "yes," your case will initially be assigned to the If"yes," your case will initially be assigned to the

SOUTHERN DIVISION. EASTERN DIVISION.

Enter "Southern" in response to Question E, below, and continue from there. Enter "Eastern" in response to Question E, below.

If "no," go to question D2 to the right. ~~ If "no,"your case will be assigned to the WESTERN DIVISION.

Enter"Western" in response to Question E, below. j.

QUESTION E: Initial Division? INITIAL DIVISION W CACD

Enter the initial division determined by Question A, B, C, or D above: ~~ WESTERN

QUESTION F: Northern Counties?

Do 50% or more of plaintiffs or defendants in this district reside in Ventura, Santa Barbara, or San Luis Obispo counties? ~ Yes ❑X  No

CV-71 (05/17) CIVIL COVER SHEET Page 2 of 3

Case 2:17-cv-06929-PA-JEM   Document 1-1   Filed 09/20/17   Page 2 of 3   Page ID #:28



UNITED 57'ATES'D15TRICT000RT~Ei~ITRAL Q15TRICT OF CALIFORNIA

CIVIL COVER SHEET

IX(a). IDENTICAL CASES: Has this action been previously filed in this court? ~X NO ~ YES

If yes, list case number(s):

IX(b). RELATED CASES: Is this case related (as defined below) to any civil or criminal cases) previously filed in this court?

~X NO ~ YES

If yes, list case number(s):

Civil cases are related when they (check all that apply):

A. Arise from the same or a closely related transaction, happening, or event;

B. Call for determination of the same or substantially related or similar questions of law and fact; or

C. For other reasons would entail substantial duplication of labor if heard by differentjudges.

Note: That cases may involve the same patent, trademark, or copyright is not, in itself, sufficient to deem cases related.

A civil forfeiture case and a criminal case are related when they (check all that apply):

A. Arise from the same or a closely related transaction, happening, or event;

B. Call for determination of the same or substantially related or similar questions of law and fact; or

C. Involve one or more defendants from the criminal casein common and would entail substantial duplication of
labor if heard by differentjudges.

X. SIGNATURE OF ATTORNEY

(ORSELF-REPRESENTED LITIGANT): ~s/ Donald W. Searles DATE: September 20, 2017

Notice to Counsel/Parties: The submission of this Civil Cover Sheet is required by Local Rule 3-1. This Form CV-71 and the information contained herein
neither replaces nor supplements the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. For
more detailed instructions, see separate instruction sheet (CV-071 A).

Key to Statistical codes relating to Social Security Cases:

Nature of Suit Code Abbreviation Substantive Statement of Cause of Action

All claims for health insurance benefits (Medicare) under Title 18, Part A, of the Social Security Act, as amended. Also,
861 HIA include claims by hospitals, skilled nursing facilities, etc., for certification as providers of services under the program.

(42 U.S.G 1935FF(b))

862 BL All claims for "Black Lung" benefits under Title 4, Part B, of the Federal Coal Mine Health and Safety Act of 1969. (30 U.S.C.
923)

863 DIWC 
All claims filed by insured workers for disability insurance benefits under Title 2 of the Social Security Act, as amended; plus
all claims filed for child's insurance benefits based on disability. (42 U.S.C. 405 (g))

863 DIWW All claims filed for widows or widowers insurance benefits based on disability under Title 2 of the Social Security Act, as
amended. (42 U.S.C. 405 (g))

864 SSID All claims for supplemental security income payments based upon disability filed under Title 16 of the Social Security Act, as
amended.

865 RSI All claims for retirement (old age) and survivors benefits under Title 2 of the Social Security Act, as amended.
(42 U.S.C. 405 (g))

CV-71 (05/17) CIVIL COVER SHEET Page 3 of 3

Case 2:17-cv-06929-PA-JEM   Document 1-1   Filed 09/20/17   Page 3 of 3   Page ID #:29