Alleged Hotel Scam Transferees Face Fraudulent Conveyance Clawbacks
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June 14, 2022, US Bankruptcy Court for the Southern District of Florida – Sonya Salkin Slott, as Chapter 7 trustee (“Trustee”) for United States Regional Economic Development Authority, LLC (“Debtor”), alleges “fraudulent transfers” and seeks to avoid and recover approximately $2 million from seven Defendants.
The complaint states the background of the case by referring to a hotel construction project which was being carried out by 160 Royal. Robert V. Matthews was allegedly in control of 160 Royal since 2013.
In 2018, the Securities and Exchange Commission (SEC) filed a complaint against the United States Regional Economic Development Authority, LLC (Debtor), Joseph J. Walsh and Robert V. Matthews. The SEC complaint claimed that Mr. Walsh, Mr. Matthews and their affiliate entities including the Debtor were allegedly involved in a massive “EB-5 investment fraudulent scheme”. The alleged “fraudulent scheme” allegedly deceived foreign investors out of millions of dollars who believed they were investing in a job creating project in an effort to obtain residency status in the United States.
The Trustee repeats the allegations made in the SEC complaint by contending that Mr. Walsh and his entities, including the Debtor, allegedly made numerous “false and fraudulent misrepresentations” to the foreign investors. The Trustee argues that the investor funds were allegedly “misappropriated and misdirected” to, among other things, support the lifestyles of the Debtor’s insiders and continue the “illicit” operations.
The Trustee alleges that the Debtor transferred an amount of $2,041,668.69 to the Defendants during the period when the alleged “fraudulent scheme” was being allegedly carried out. The alleged transfers allegedly neither benefited the Debtor or its creditors; nor was there allegedly any reasonably equivalent value received in exchange for these alleged transfers.
The Trustee seeks to avoid and recover these alleged “fraudulent transfers” by making counts under 11 U.S.C. §544(b), §550, Florida Statutes §726.105(1)(a), §726.105(1)(b) and §726.106(1).
In re United States Regional Economic Development Authority, LLC, Case No. 19-25780-BKC-EPK, United States Bankruptcy Court Southern District of Florida.