NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS OCT 25 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT SECURITIES AND EXCHANGE No. 17-55849 COMMISSION, D.C. No. Plaintiff-Appellee, 8:16-cv-00974-CJC-AGR v. MEMORANDUM* CHARLES C. LIU, XIN WANG a/k/a LISA WANG, Defendants-Appellants, and PACIFIC PROTON THERAPY REGIONAL CENTER LLC; et al., Defendants. Appeal from the United States District Court for the Central District of California Cormac J. Carney, District Judge, Presiding Argued and Submitted October 11, 2018 Pasadena, California Before: WATFORD and OWENS, Circuit Judges, and PRESNELL,** District Judge. * This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Gregory A. Presnell, United States District Judge for the Middle District of Florida, sitting by designation. Charles Liu (“Liu”) and his wife, Xin Wang (“Wang”), appeal the district court’s entry of summary judgment in favor of the SEC, finding that the couple violated Section 17(a)(2) of the Securities Act of 1933. Liu and Wang raised approximately $27 million from Chinese investors under the EB-5 Immigrant Investor Program (the “EB-5 Program”), which is administered by United States Citizenship and Immigration Services and which allows foreign citizens to obtain visas in exchange for investments in job-creating projects in the United States. The Appellants’ project involved selling membership interests in an LLC, which would then lend the proceeds of those sales to a second LLC; the second LLC was supposed to use the lent funds to construct and operate a cancer treatment center in California. Each investor was required to put up a $500,000 “Capital Contribution” and a $45,000 “Administrative Fee.” According to the Private Offering Memorandum (henceforth, the “POM”) provided to investors, the Capital Contribution would be used for construction costs, equipment purchases, and other items needed to build and operate the cancer treatment center, while the Administrative Fee would be used to pay “legal, accounting and administration expenses” related to the offering. Moreover, “[o]ffering expenses, commissions, and fees incurred in connection with [the] [o]ffering” would be paid only from the Administrative Fee, not from the Capital Contribution. The district court found that the Appellants misappropriated most of the money raised, paying $12.9 2 million to marketing firms to solicit new investors, and paying themselves approximately $8.2 million in salaries, although there was no mention of such exorbitant salaries in the POM.1 Despite these expenditures, the Appellants never even obtained the required permits to break ground for the cancer center. In granting summary judgment, the district court ordered disgorgement of the entire amount that had been raised from investors, imposed civil penalties equal to the $8.2 million the Appellants had personally received from the project, and permanently enjoined the Appellants from future solicitation of EB-5 Program investors. We have jurisdiction under 28 U.S.C. § 1291. A grant of summary judgment is reviewed de novo. Padfield v. AIG Life Ins. Co., 290 F.3d 1121, 1124 (9th Cir. 2002). We affirm. The Appellants seek reversal of the summary judgment ...
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