By Paul Gable
Investors bilked out of over $1.1 billion are pursuing a class action lawsuit in federal court against Founders Group International, its associated LLC’s and principal owner Dan Liu.
The lead plaintiffs in the case are Xunhui Cheng, a citizen of the Peoples Republic of China, and Kelan Cai, a citizen of the United States.
Background for this lawsuit is provided below:
Liu, a native of the Peoples Republic of China, first appeared in 2014 buying up golf courses with apparently unlimited amounts of cash. At the time, Liu was hailed as a potential savior of the golf tourism industry in Horry County.
In the 2014-15 timeframe, Liu and his Founders Group International LLC acquired a total of 22 golf courses, various potential development properties and homes. It is estimated his total expenditure in the Grand Strand area was approximately $140 million.
Liu’s wealth supposedly came from his ownership stake in Yiqian Funding, also marketed as “Easy Richness”, a peer to peer lending business in his native China.
By the time Liu staged his society style wedding at his newly acquired Pine Lakes Country Club clubhouse in April 2015, the event was hailed by local media as the Grand Strand’s “first major step into the overseas tourism market.”
But it was all a con.
Storm clouds began to block out this sunny picture in 2016 when Chinese police began raiding Yiqian Funding offices in China. The picture accompanying this article shows police carrying computers and records out of an “Easy Richness” office in China during one raid.
Liu’s principal partner in Yiqian Funding, Xiuli Xue, an attendee at the Liu wedding in Myrtle Beach, and 11 other high ranking associates in the Yiqian Funding organization were arrested in 2016, Xue in Hong Kong as she was attempting to leave the country.
All 12 were convicted at trial for an “illegal fundraising case” designated as a “Series of Yiqian Events.” by the Nanjing District Attorney for Jiangsu Province in China. They are currently serving prison sentences.
An arrest warrant was issued by the Nanjing District Attorney for Liu in 2016, but he remains a fugitive in the U.S., reportedly at the Grande Dunes home he has occupied since his wedding in 2015.
Since the arrests and convictions of his associates in China, Liu has consistently maintained the money used to purchase the Grand Strand properties came from his personal funds.
However, testimony and evidence presented at the criminal trial of Xue contradicts these claims.
According to evidence and testimony at the criminal trial, Liu, Xiuli Xue and Xiang Fei established a peer to peer financing business called Yiqian Funding in 2010. The business split into two divisions, Nanjing Yiqian and Jiangsu Yiqian, in 2013. Xue was in charge of Nanjing Yiqian, which was the fundraising half of Yiqian Funding. Liu was the managing partner of the entire operation and also managed Jiangsu Yiqian, which invested the funds raised by Xue’s division.
Yiqian Funding is described as a “Ponzi scheme” and “criminal enterprise” in the lawsuit complaint.
According to evidence and testimony in the Xue criminal trial, Liu transferred a large amount of funds from Jiangsu Yiqian overseas in 2014-15. That is the exact timeframe during which Liu was purchasing the golf courses and other properties along the Grand Strand.
According to trial records, Yiqian Funding raised a total of 18,567,856,400 Chinese Yuan (approximately $2,652,550,914 U.S.) from nearly 100,000 Chinese investors during its existence. Of that amount, 9,271,568,000 Yuan ($1,324,509,714 U.S.) could not be accounted for when Chinese authorities raided the Yiqian offices.
Prosecutor’s records show Liu and Xue repaid 1,822,916,100 Yuan of the missing amount in 2016. The remainder, the equivalent of $1,111,739,089 US Dollars, is still unaccounted for.
Among other claims, Cheng and Cai are seeking seizure of all property and other assets of Liu in the Grand Strand area as partial restitution for the money they lost by “investing” in Yiqian Funding.
(Ed. Note – A translated copy of the Xue trial record from the Nanjing District Attorney Office was used as source material for this article.)