OYSTER BAY — Two Oyster Bay residents and promoters of the Thompson Education Center project in Sullivan County were charged in federal court with perpetrating a $27 million investment fraud that included selling foreign nationals access to prominent U.S. politicians.

Sherry Xue Li and Lianbo “Michael” Wang, both naturalized United States Citizens, were arrested and charged with wire fraud conspiracy, money laundering and conspiracy to defraud the United States by obstructing the Federal Election Commission’s (FEC) administration of campaign finance laws.

The criminal complaint, filed in federal court in the Eastern District of New York and unsealed on July 18, alleges that Li and Wang orchestrated a nearly decade long scheme to defraud investors in their “fictitious” project to develop, build and operate a private educational institution known as the Thompson Education Center (TEC).

“As alleged, the defendants enticed their victims to invest in a fraudulent scheme aided by misleadingly claiming that their fictitious project had the support of prominent politicians,” says United States Attorney Breon Peace. “The defendants were able to perpetrate this fraud by then selling access to U.S. politicians by unlawfully contributing foreign money to political campaigns in their own names and bringing foreign nationals as their guests to fundraising events.”

Peace goes on to say, “This Office is committed to protecting our democratic process from those who would expose it to unlawful foreign influence, and investors from the predatory fraudsters who would steal their money.”

Beginning around 2011, Li and Wang first announced plans to construct China City of America (CCOA), a cultural center and theme park that was marketed at the time as a “Chinese Disneyland.”   

Li gave a presentation at a public meeting in Mamakating in May of 2013 where residents expressed skepticism about the project and concerns for how it would negatively impact the area’s environment. After Li made the same presentation in the Town of Thompson in 2013, she learned that CCOA couldn’t be built because the land was not zoned for the proposed use.

“Almost immediately thereafter, and after viewing a list of the permissible land uses on the proposed project site - which included educational centers - Li abandoned the proposed CCOA project and instead proposed constructing and operating a for-profit university that she would eventually name Thompson Education Center,” the criminal complaint reads.

By February of 2015, however, the Thompson Town Board declined to extend sewer service for the proposed project site. Despite this news, prosecutors say that Li and Wang continued to solicit new investors, assuring them that the project was moving forward.

“The Town of Thompson is pleased that the federal authorities took the necessary steps to investigate and prosecute this fraud,” said Thompson Supervisor Bill Rieber in a statement on Tuesday. “These individuals had a preposterous scheme for a large-scale development in our town. Thankfully we did not take the bait and held their feet to the fire to back up their application with facts.  They couldn't do that and their development never got to the approval stage.  It is my belief that this fraud might have well exceeded the $27 million in the indictment if not for the fact that our planning board and legal and other professional staff handled it diligently. We hope the innocent people who lost funds will get some of their money back and that justice will be served.”

Defrauding investors

Federal prosecutors say that Li and Wang induced their victim investors, in part, with the promise of immigration benefits. 

Under the EB-5 Visa program, which is administered through the United States Citizenship and Immigration Services (USCIS), foreign nationals are eligible to petition for lawful permanent resident status if they’ve invested at least $500,000 in a commercial enterprise located in a high-unemployment or rural area.

As of July, 2022, prosecutors say that Li, Wang and their co-conspirators had raised at least $27 million from more than 150 investors. Approximately $16.5 million came from EB-5 investors who were promised a green card in return for their money, as well as $11 million from stock investors who were promised that an Initial Public Offering (IPO) would take place.

No EB-5 investor ever received a visa.

Prosecutors say any capital that Li and Wang actually invested in the TEC was used “merely to create and perpetuate the fiction” that the project was a viable development.

Federal prosecutors allege that Li, Wang and their co-conspirators filtered money into political campaigns while skimming funds to finance their own extravagant lifestyles.

“Li, Wang and other members of the conspiracy siphoned off the money they fraudulently obtained from investors by transferring the funds through bank accounts held in the names of various companies that Li had created,” reads a statement from the Justice Department. “Once the funds were in those accounts, Li and Wang used the funds to pay for numerous personal expenses including clothing and accessories, jewelry, housing, vacation travel, upscale dining and political contributions to prominent politicians.”

Political Access

Prosecutors allege that Li and Wang acted as “straw donors” for foreign nationals to unlawfully contribute to American politicians and committees.

Li and Wang allegedly used the money they scammed from foreign nationals to fund political contributions, falsely identifying themselves and other U.S. citizens as the contributors of the funds, in violation of the Federal Election Campaign Act (FECA) and FEC regulations. 

In some cases, prosecutors say Li and Wang used investment funds to make the political contributions and gain access to the political events, where they posed for photographs with elected officials. 

Prosecutors say Li and Wang would then use such photographs in marketing materials to entice new investors.

The Justice Department alleges that in one instance the pair collected $93,000 per person from 12 foreign nationals for admission to a June 28, 2017 fundraising event with then-President Donald Trump.

Prosecutors allege that Li and Wang collectively made $600,000 in illegal political contributions in their own names to the joint fundraising committee hosting the event.

A photograph of Li posing with then President Trump and first lady Melania Trump was used to solicit more investors.

The Democrat reached out to the attorney representing Li, but they declined to comment.

The Democrat also reached out to the attorney representing Wang, but did not immediately receive a response by presstime.