By Paul Gable
A criminal trial in China added a clarifying chapter to the saga of Chinese investments in the Grand Strand area and the naivete of local officials who touted them here.
By 2014, the golf tourism business was in serious decline. Owners of golf courses, many still paying off mortgages, were stuck with assets on their books far exceeding their actual market value. Many were quietly trying to sell the courses with little success.
Jane Zheng was a native Chinese working as a realtor with a local company. Her niche market was other Chinese nationals with seemingly excess cash to invest in U.S. properties. At the time, the Chinese economy was growing at such a rate that many Chinese businesses and individuals had considerable excess cash to invest.
Zheng connected with Dan Liu, reportedly a managing partner in Yiqian Funding, a peer to peer lending company in China that received money from Chinese investors that it lent to business or other entrepreneurs or invested it. Investors and the company supposedly made money on the interest paid on the loans or on the rise in investment assets.
Over an approximate 18 month period, Zheng brokered the sale of 22 local golf courses and other development properties to, supposedly, three Chinese corporations for whom Liu was the exclusive U.S. representative.
While not being licensed to do business in South Carolina, according to records of the S.C. Secretary of State Office, the three corporations supposedly formed at least 16 LLCs locally, each holding some of the various golf course and development property assets. One or more of three Chinese corporations owned 90 percent of each LLC with Liu, as the exclusive agent, acting for the corporations. The LLC’s primarily conducted business locally under the name Founders Group International.
Everything looked great. Local owners got rid of golf course properties that had become toxic to them. Liu was playing the big money man locally and his partner in Yiqian Funding, Xiuli Xue, was bringing potential investors to Horry County to see investment opportunities.
Former Myrtle Beach Mayor John Rhodes, former Myrtle Beach Chamber CEO Brad Dean and, later, Horry County Council Chairman Mark Lazarus were attending conferences in China to promote tourism and investment opportunities in the Grand Strand. Chinese money was going to fuel the next wave of tourism and economic development, or so we were told.
In early 2016, Lazarus and Rhodes took an 18 day trip to China, including a visit to Yiqian Funding headquarters in Nanjing, to promote tourism and development. They came back claiming a $100 million investment in a Chinese Cultural Center and Theme Park would soon be announced with Chinese investors footing the bill.
Then, it all began to fall apart. The Chinese investors were delayed visiting the local area due to ‘visa problems.’ They never came.
Word began leaking from China that approximately $1.2 billion was missing from Yiqian Funding accounts and payments due investors were not being made. By early 2017, Chinese government officials were raiding Yiqian Funding offices and arrest warrants were issued by the Nanjing Prosecutor’s Office for Liu, Xue and officials of the three corporations originally holding the Founders Group International assets.
Liu, acting as exclusive agent for the Chinese corporations and as 90% owner of Founders Group International, established mortgages against all of the FGI properties and had the mortgages assigned to himself, personally, in a series of what can only be described as questionable, but apparently legal, transactions registered in Horry County.
Xue and the corporate officials were arrested and jailed in China. Liu remained free, supposedly still in Horry County, but wanted in China.
Fraud in excess of 3 million Yuan ($500,000) can earn you the death penalty in China.
The promise of Chinese tourism and investment fell apart.
Xue went on trial in China earlier this month. She testified Liu was in charge of Yiqian Funding when the money went missing and the company became insolvent. She, reportedly, blamed the problems on mismanagement, but it appears some of the missing money was used to purchase the FGI properties in Horry and Georgetown counties over which Liu now holds exclusive rights.
When local media reported the unravelling of Liu’s apparent schemes, Lazarus, Rhodes and other local leaders claimed to know nothing of the problems with Yiqian Funding and Founders Group International.
According to Horry County records, Robert ‘Shep’ Guyton, a former business associate of Lazarus, prepared all the documents establishing and assigning the mortgages to Liu. Another longtime friend and business associate of Lazarus, D.J. Karavan, was named with secondary power of attorney over all of Liu’s business interests should Liu and his wife, who holds primary power of attorney, be unable to perform.
One must question how our ‘local leaders’ continue to be fooled by these get investment and jobs quick scams, not only Liu, but also AvCraft, Project Blue and Greenwood Hall to name a few others.
They waste time and money with trips to China, for example, while ignoring important issues, such as first responder staffing, infrastructure needs and the interests of citizens at home.
Based on these experiences, any political candidate who touts business experience and leadership as attributes should be viewed with a ‘jaundiced eye.’