New York City developer accused of using investor money to buy mansions

Their money was meant to help create jobs – instead it seems to have gone to one man’s purchase of three mansions.

So claims the Securities and Exchange Commission in a case brought against Queens developer Richard Shea.

According to documents filed by the government agency in federal court in the Eastern District of New York earlier this month, Shea allegedly defrauded a group of investors by using their money not to develop two real estate projects in Queens, but to buy three on Long Island. Manors, Crane reported.

Xia used assets from its investors — who were part of the federal EB-5 visa program, which provides investors in US real estate projects that create green card jobs — as collateral for more than $30 million in loans, which went largely toward acquisitions from Two properties in Great Neck and one in Sands Point. Meanwhile, one of the Queens projects that investors thought they were financing — a 498-room luxury hotel, conference center, retail space and performing arts center called the Eastern Emerald — remains undeveloped.

Tony’s Long Island property, on the other hand, is a large built property, and Shea and his wife currently live in one home: a 13,000-square-foot Kings Point Road home that includes seven bedrooms, seven fireplaces, and 13 bathrooms spread throughout. 3 acres overlooking the Manhattan skyline and Long Island Sound.

In an affidavit defending his purchase of the property (which bears his wife’s name), Shea claimed it was a business deal because he uses it as an office, Crane reported.

The project is intended to become a 498-room luxury hotel, conference center, retail space, and a performing arts center.
SEC . complaint
Second complaint against Richard Shea
It appears that investor money has funded Xia’s luxury lifestyle and not the job creation projects it was meant to undertake.
SEC . complaint
Second complaint against Richard Shea
The Securities and Exchange Commission is now investigating Shea over the fraudulent use of funds in two Coins development projects.
SEC . complaint
Second complaint against Richard Shea
Shea is currently living in one of the mansions while the Eastern Emerald Project is still barely developed.
SEC . complaint

The other two properties, respectively over 10,000 square feet, consist of nine bedrooms on Middle Neck Road with tennis court, cottage, and beach access purchased by one of Xia’s contractors; and a 12-room, 12,000-square-foot home with a garage for four cars, an indoor pool, and a tennis court in Sands Point. Shea claims that he purchased the latter drug with the intention of using it as a soil contamination area.

“We still have a lot of dirt at the Eastern Emerald project site. In order, you know, to do the work — the construction — we have to dig up all of that dirt and dump it in a different landfill,” Shea previously tried to explain, Crane said. “And here, this is an ideal dumping site because the different great elevations are here. If you just level it, the property value can increase and… the soil can be reused.”

The recent SEC filings against Shea are just the latest development in the deep legal pit his development projects have thrown him.

As of early 2021, he has been named as a defendant in more than 20 lawsuits related to the project, with allegations going back to 2010.

“Since 2018, many investors have been asking for their money back, including through lawsuits,” according to a 2021 SEC filing. So far, no investor has redeemed his capital contribution. Given that the projects consist of an unfinished building and a hole in the ground with not enough funds to complete either project, the prospects for investors to receive their capital contributions are remote at best.”

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