Metropolis project in Downtown Los Angeles (Metropolis LA)
A Los Angeles lawyer and his one-person firm are being sued for allegedly tricking a financial services company that manages the EB-5 visa program of the $1 billion Metropolis project.
An entity tied to Metropolis’ mega-developer, Greenland USA, filed the suit Tuesday in federal district court in L.A.
The plaintiff, LA Metropolis Condo I LLC, claims James Krug convinced EB-5 investors and financial services firm A&J Capital that he had taken over management of the program at the Downtown Los Angeles project. In fact, he had not. Alhambra-based A&J Capital still manages the project’s federal EB-5 program.
Greenland USA, the American arm of the China-based Greenland Group, is developing the 3.5 million-square-foot project, which includes three massive condo towers, 70,000 square feet of retail and a 350-room hotel. The 38-story luxury Tower 1 was completed in April 2017, and opened as part of “Phase 1.”
LA Metropolis was created for the purpose of raising immigrant investor capital for the development of Phase 1, according to the suit. A $100 million investment would be made to an entity named Greenland LA Metropolis Development I, LLC.
Greenland LA shares a business address at 777 South Figueroa Street in Downtown with Greenland USA, according to corporation registration records.
Both Krug and A&J Capital declined to comment. A spokesperson for Greenland said the company is not involved in the lawsuit.
Under the EB-5 program, foreign investors can pour money into job-creating projects in exchange for legal U.S. residence, such as a green card. The program, which is set to expire Friday unless reauthorized by Congress, has come under increased scrutiny in recent years amid scandals and increased foreign investment.
Greenland USA was raising a total of $100 million in EB-5 financing for the condominium tower at Metropolis, and enlisted A&J Capital to oversee the day-to-day operations of the project in July 2014. So far, the developer has raised $65 million.
The Law Office of Krug sent a letter to A&J Capital on March 14, saying A&J Capital had been “terminated” from the project as a result of an alleged membership vote. The letter also required A&J Capital to provide “written assurance” of the termination, according to the suit, and ordered A&J Capital to halt its operations on the project.
LA Metropolis claims neither A&J Capital nor the 200 members received any notice of a vote, the suit said.
The defendant is accused of failing to provide proper evidence of the alleged vote, choosing to reveal a 105-page binder instead. The Law Office of Krug refused to reveal any of the alleged voting member names, nor allow LA Metropolis a copy of the vote notice, according to the filing.
LA Metropolis also claims the documents in the binders were not “wet-ink originals” and all of them appeared to have been signed in the same “thick-tipped black felt tip marker.”
The plaintiff is requesting the alleged termination of A&J Capital be disregarded, and is seeking to halt Krug’s firm from having any further contact with the project.
For Greenland, the massive Metropolis project has been mired in setbacks.
Earlier this year, the firm listed for sale one of the condominium towers in the complex, along with the 350-key Hotel Indigo. Sales at the development have been slow, and the Chinese government has since announced it would rein in overseas spending.
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