B Group Capital Management submitted a $102 million stalking horse bid for nearly 20 acres in Miami Upper Eastside and El Portal that are tied to a lawsuit alleging EB-5 fraud.
The Miami-based real estate investment firm seeks to acquire the former U.S. immigration building site spanning 3.5 acres at 7880 Biscayne Boulevard, and a 15.9-acre former trailer park at 8500 Biscayne Boulevard, court records show.
B Group CEO Sebastian Barbagallo did not respond to an email requesting comment.
Both properties are now controlled by a court-appointed receiver, following a settlement agreement approved last month with the previous owners, Florida Fullview Immigration Building and several affiliates.
A lawsuit filed by an EB-5 investor three years ago in Miami-Dade Circuit Court accused Florida Fullview, its manager Leo Wu and the affiliates of defrauding more than $50 million from 99 EB-5 investors who believed they were financing the redevelopment of the immigration building into a mixed-use project.
The receiver, Michael Goldberg, is seeking court authorization to hold an auction, with B Group’s $102 million bid as the starting price, according to a Dec. 28 motion.
Avison Young is marketing the properties.
For agreeing to transfer the properties without a fight, Wu will receive up to $5 million from the sale proceeds, per the settlement agreement. Wu’s attorneys Irain Gonzalez and Mark Heise did not respond to requests for comment.
Alexis Read, a lawyer for Chun Liu, the Chinese investor living in Portland, Ore. who filed the suit, said her client and other EB-5 project participants are looking forward to being fully repaid. Liu sued Wu and Florida Fullview in 2020.
“Wu is getting $5 million, but it is a small price to pay,” Read said.
“This took two years. It was a difficult uphill battle to get to this settlement and eventual auction. We hope it exceeds $102 million.
The EB-5 visa program, which grants foreign investors and their immediate family members permanent U.S. residency if they invest in real estate projects or businesses that create a minimum of 10 full-time jobs, has been a source of rampant fraud for more than a decade.
Liu and 20 other investors were granted temporary green cards, but have not received permanent U.S. residency, Read said. The remaining investors never got to leave China, she added. “As long as they can get their principal back, there is a way to redeploy their capital [to other EB-5 projects] and perhaps still get a visa,” Read said.
In 2013, Liu and the other investors each placed $500,000 — plus paid a $50,000 administrative fee — with a Florida Fullview affiliate that raised more than $50 million, according to the lawsuit. The same year, the company paid $12.5 million for the immigration building, records show.
In addition to financing the real estate purchase, the investors’ funds were supposed to be used for redeveloping the immigration building into Triton Center, a mixed-use project with a hotel, apartments, 25,000 square feet of commercial space and about 585 parking spaces, the lawsuit states.
Last year, the city of Miami declared the immigration building’s gutted shell an unsafe structure.
Florida Fullview never provided any meaningful financial information or data to the EB-5 investors about the project’s progress, the complaint states.
A forensic analysis by the receiver found that Florida Fullview lent some of the investors’ funds to other Wu-controlled entities that paid $14.2 million in 2015 for the Little Farm Trailer Park in El Portal.
The receiver filed a separate lawsuit in April against Wu and his affiliates that bought the trailer park, alleging misappropriation of funds from Florida Fullview, along with other alleged misconduct, the settlement agreement states.
Wu “allegedly jeopardized the ability of the investors to be eligible for permanent residency under the EB-5 visa program,” the court document states.
“The Wu parties deny any wrongdoing and liability whatsoever and have indicated they would vigorously defend the receiver’s case.”
The settlement agreement also affirmed $13 million in mortgage debt on the immigration building from New Wave Loans, a North Miami Beach lender headed by Ryan Powers.
New Wave provided Florida Fullview with a $16.5 million loan in 2019, Powers said.
His company is currently offering a $3 million position in the loan to investors, Powers said.
“There are no issues with the loan,” he said.
“The receiver verified our first position in the settlement agreement, and the judge extended the life of the loan, which matured last year.”