By Paul Gable
When Nick Dou filed a lawsuit against Dan Liu and three Chinese corporations last week, he brought to light much more than one Chinese partner of Founders Group International, LLC suing other Chinese partners.
According to the lawsuit, Dou owns 10 percent of approximately 16 LLCs with one or more of three Chinese corporations owning the other 90 percent of each LLC. The parties primarily conducted business locally as Founders Group International, LLC.
Dan Liu appears not to have a direct ownership interest in any of the 16 LLCs, but rather acts as exclusive U.S. business agent for the three Chinese Corporations.
However, further research on business transactions involving one or more of the LLCs as well as the three Chinese corporations revealed that Liu now appears to hold mortgages on virtually all of the collective Founders Group International, LLC golf courses and development property in Horry and Georgetown counties.
Between February 2017 and May 2017, well over $100 million in promissory notes and mortgages were transferred to Dan Liu in a series of approximately 25 transactions recorded in Horry County.
Seventeen of the recorded transactions assigned promissory notes and mortgages from one or more of the three Chinese corporations for which Liu allegedly acted as exclusive U.S. agent to Liu. Papers for eleven of the transfers to Liu were signed on February 3, 2017 and recorded on February 10, 2017 and papers for the remaining six transfers were signed on April 28, 2017 and recorded on May 25, 2017.
The remaining transactions were preliminary assignment of promissory notes and mortgages so they could ultimately be assigned to Liu.
One example of how convoluted these transactions are follows with all transactions dated February 3, 2017 and recorded on February 10, 2017:
A promissory note in the amount of $45,884,421, backed by mortgages on Myrtle Beach National, Long Bay, Myrtlewood, Pine Lakes, Grande Dunes Resort, Litchfield, River Club, Willbrook and Pawleys Plantation golf clubs, was signed by Founders National Golf, LLC as the borrower and Founders Group International, LLC and Founders Development, LLC collectively as the lenders.
Dan Liu, as agent for Jiangsu Tianru Danfo Commerce and Industry Co. Ltd, and Xian Dou signed the note for Founders National Golf, LLC.
Immediately thereafter, again on February 3, 2017, Founders Group International, LLC and Founders Development, LLC assigned the note and mortgage to Jiangsu Tianru Danfo Commerce and Industry Co. Ltd. Liu and Dou signed the assignment for the two LLCs and Liu alone signed the assignment as agent for the Chinese Company.
To complete the cycle, Jiangsu Tianru Danfo Commerce and Industry Co. Ltd., on February 3, 2017, assigned the note and mortgage to Liu exclusively with Liu signing for both the Chinese company assignor and himself as assignee.
All of the above transactions were recorded on February 10, 2017 leaving Liu alone as the person to whom all nine golf courses listed above are indebted.
Other transactions leaving Liu as the holder of promissory notes and mortgages, recorded on either February 10, 2017 or May 25, 2017, include the remaining Founders Group International, LLC golf courses and development property, including 29 acres of oceanfront property near the Dunes Club.
Liu is now owed well in excess of $100 million by one or more of the Founders Group International entities, apparently without ever investing even one cent of his own money in any of the transactions that initially brought the property under the ownership of Founders Group International and its associated entities.
The initial money to purchase the properties appears to have come from individual Chinese investing with Yiqian Funding, of which Liu was president, in a peer to peer lending scheme.
Yiqian Funding is now, reportedly, under investigation by government authorities of the Peoples Republic of China. According to the lawsuit, an arrest warrant for Liu was announced by the Nanjing District Attorney of Jiangsu Province of the PRC for investment fraud.
Since the first golf course purchases in Horry County by Founders Group International in 2014, Liu has been portrayed as the big money man in the operation. That does not now appear to be the case.
Founders Group International and the great Chinese investment in Horry County golf courses and development properties now appears to be mostly smoke and mirrors, much to the chagrin of local elected officials who were apparently duped by the entire scheme.