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Securities And Exchange Commission v. San Francisco Regional Center LLC

United States District Court, N.D. California

March 23, 2017

SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
SAN FRANCISCO REGIONAL CENTER LLC, et al., Defendants.

          ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION AND TO APPOINT A RECEIVER

          RICHARD SEEBORG, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This action was initiated by the Securities Exchange Commission against defendant Thomas Henderson and a number of entities with which he was involved. The SEC contends Henderson engaged in a wide-ranging scheme to defraud at least 215 persons who have invested approximately $107 million in businesses under his control, along with an additional $8.9 million in fees. Certain of those businesses are already under the oversight of a receiver, appointed by the Alameda Superior Court in an action brought against Henderson by a former business partner. The SEC now seeks appointment of a receiver in this federal action over those and other businesses, as well as a preliminary injunction.

         As explained below, there is only limited opposition to the request for appointment of a receiver, and even less to the entry of a preliminary injunction. Good cause appearing, both requests will be granted.

         II. BACKGROUND

         A. The allegations

         As alluded to above, the SEC contends that beginning in September of 2010, Henderson and “his companies” have defrauded more than two hundred persons of approximately $107 million in investments in the businesses, plus an additional nearly $9 million charged as fees. The SEC asserts Henderson used his companies, including San Francisco Regional Center, LLC (“SFRC”), to entice foreign nationals to invest in specific enterprises that purportedly qualified under the Employment-Based Immigration Fifth Preference program (“the EB-5 program”), a federal program administered by the U.S. Citizenship and Immigration Services (“USCIS”). The EB-5 program provides a means for foreign nationals to qualify for U.S. residency by investing $500, 000 or more in a specified project determined to have created or preserved at least 10 jobs for United States workers.

         Over the past five years, Henderson, through SFRC, has sponsored a total of seven projects under the EB-5 program. He and the entities he controls solicit funds from investors using private placement memoranda and business plans unique to each project. Each investor contributes $500, 000 in exchange for a security interest in a limited partnership that represents it will use the funds to operate, or make loans to, a specific, job-creating business.

         The SEC alleges that rather than using each investor's funds in the manner investors were promised, Henderson siphoned off millions of dollars for his own use and to fund his non-EB-5 business ventures. Henderson also purportedly sent millions of investors' dollars to overseas marketing agents, in contravention of representations to the investors and to the law governing EB-5 projects. Finally, the SEC claims Henderson engaged in an elaborate “shell game” of using funds solicited for one EB-5 project to fund other EB-5 projects, which was contrary to representations to investors, who were told their investment would be used for a specific EB-5 project. According to the SEC, these actions have not only seriously jeopardized the investors' prospects for an economic return, but also their ability to obtain permanent residency through the EB-5 program.

         B. The parties and interested third parties

         1. Named defendants

         (a) Thomas M. Henderson-the sole individual defendant, and alleged principal behind the purported scheme.

         (b) SFRC -a company purportedly owned and/or controlled by Henderson at the time of the alleged wrongdoing. Henderson obtained authorization from USCIS to operate SFRC as an EB-5 “Regional Center” that would sponsor EB-5 projects in and around Oakland, California.

         (c) Immedia, LLC-another company owned and/or controlled by Henderson into which and/or through which some of the investor funds were allegedly funneled.

         (d) The seven limited partnerships formed to operate the EB-5 projects:

California Gold Medal, L.P CallSocket, L.P.
CallSocket II, L.P.
CallSocket III, L.P.
Comprehensive Care of Oakland, ...

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