Securities and Exchange Commission v. Charles C. Liu et al

Filing 77

PRELIMINARY INJUNCTION Against All Defendants by Judge Cormac J. Carney. IT IS SO ORDERED, this date of July 11, 2016 at 11:00 a.m, Pacific Standard Time. (see document for details). (dro)

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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Southern Division

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SECURITIES AND EXCHANGE
COMMISSION,

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Plaintiff,

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vs.
CHARLES C. LIU;
XIN WANG a/k/a LISA WANG;
PACIFIC PROTON THERAPY
REGIONAL CENTER, LLC;
PACIFIC PROTON EB-5 FUND, LLC;
and BEVERLY PROTON CENTER,
LLC f/k/a LOS ANGELES COUNTY
PROTON THERAPY, LLC,
Defendants.

Case No. SACV16-00974-CJC (AGRx)
PRELIMINARY INJUNCTION
AGAINST ALL DEFENDANTS

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This matter came before the Court upon the Application of Plaintiff Securities

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and Exchange Commission (“SEC”) for a Temporary Restraining Order, Order to

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Show Cause Why a Preliminary Injunction Should Not Be Granted, and Orders

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(1) Freezing Assets; (2) Repatriating Assets; (3) Requiring Accountings; and

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(4) Prohibiting the Destruction of Documents (Dkt. No. 4, the “TRO Application”),

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and upon the SEC’s Motion for Orders Requiring the Repatriation of Assets and

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Accountings (Dkt. No. 15, the “Motion for Repatriation and Accountings”)

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The Court, having considered the SEC’s Complaint, the TRO Application, the
supporting Memorandum of Points and Authorities, the supporting declarations and

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exhibits, and the other evidence and argument presented to the Court, entered a

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Temporary Restraining Order, Order to Show Cause Why a Preliminary Injunction

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Should Not Be Granted, and Orders (1) Freezing Assets; and (2) Prohibiting the

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Destruction of Documents (Dkt. No. 14, the “TRO”);

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The Court, having considered the Defendants’ oppositions to the TRO and the

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Preliminary Injunction, the Defendants’ opposition to the SEC’s Motion for

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Repatriation and Accountings, and the SEC’s papers replying thereto, finds that:

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A.

this action.

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This Court has jurisdiction over the parties to, and the subject matter of,

B.

The SEC has made a sufficient and proper showing in support of the

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relief granted herein, as required by Section 20(b) of the Securities Act

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of 1933 (“Securities Act”) (15 U.S.C. s 77t(b)) and Section 21(d) of the

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Securities Exchange Act of 1934 (“Exchange Act”) (15 U.S.C. § 78u(b))

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by evidence establishing a prima facie case and reasonable likelihood

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that the Defendants have engaged in, are engaging in, are about to

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engage in, and will continue to engage in, unless restrained, transactions,

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acts, practices and courses of business that constitute violations of

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Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), and Section

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10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5
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thereunder, 17 C.F.R. § 240.10b-5.

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C.

Good cause exists to believe that, unless restrained and enjoined by

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order of this Court, Defendants will dissipate, conceal, or transfer assets

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which could be the subject to an order directing disgorgement or the

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payment of civil money penalties in this action. It is appropriate for the

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Court to issue this Preliminary Injunction to prevent the dissipation of

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assets.

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D.

Good cause exists to believe that the repatriation of assets held in foreign
locations is necessary.

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E.

Good cause exists to believe that an accounting of assets is necessary.

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F.

Good cause exists to believe that, unless restrained and enjoined by

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order of this Court, Defendants may alter or destroy documents relevant

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to this action.

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I.
IT IS HEREBY ORDERED that the SEC’s a Preliminary Injunction shall issue
and the SEC’s Motion for Repatriation and Accountings is GRANTED.

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II.

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IT IS FURTHER ORDERED that Defendants Charles C. Liu (“Liu”); Xin

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Wang a/k/a Lisa Wang (“Wang”); Pacific Proton Therapy Regional Center, LLC

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(“Pacific Proton”); Pacific Proton EB-5 Fund, LLC (“PPEB5 Fund”); and Beverly

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Proton Center, LLC f/k/a Los Angeles County Proton Therapy, LLC (“Beverly

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Proton”), and their officers, agents, servants, employees, attorneys, subsidiaries and

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affiliates, and those persons in active concert or participation with any of them, who

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receive actual notice of this Order, by personal service or otherwise, and each of

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them, be and hereby are preliminarily restrained and enjoined from, directly or

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indirectly, in the offer or sale of any securities, by the use of any means or

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instruments of transportation or communication in interstate commerce or by the use

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of the mails:
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A.

employing any device, scheme or artifice to defraud;

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B.

obtaining money or property by means of any untrue statement of a

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material fact or any omission to state a material fact necessary in order to

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make the statements made, in light of the circumstances under which

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they were made, not misleading; or

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C.

operates or would operate as a fraud or deceit upon the purchaser;

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engaging in any transaction, practice, or course of business which

in violation of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a).

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III.

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IT IS FURTHER ORDERED that Defendants Liu, Wang, Pacific Proton,

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PPEB5 Fund and Beverly Proton, and their officers, agents, servants, employees,

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attorneys, subsidiaries and affiliates, and those persons in active concert or

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participation with any of them, who receive actual notice of this Order, by personal

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service or otherwise, and each of them, be and hereby are preliminarily restrained and

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enjoined from, directly or indirectly, in connection with the purchase or sale of any

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security, by the use of any means or instrumentality of interstate commerce, or of the

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mails, or of any facility of any national securities exchange:

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A.

employing any device, scheme or artifice to defraud; or

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B.

engaging in any act, practice, or course of business which operates or

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would operate as a fraud or deceit upon any person;

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in violation of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b-

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5(a) and (c) thereunder, 17 C.F.R. §§ 240.10b-5(a) & (c).

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IV.

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IT IS FURTHER ORDERED that Defendants Liu, Pacific Proton, PPEB5

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Fund and Beverly Proton, and their officers, agents, servants, employees, attorneys,

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subsidiaries and affiliates, and those persons in active concert or participation with

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any of them, who receive actual notice of this Order, by personal service or

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otherwise, and each of them, be and hereby are preliminarily restrained and enjoined
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from, directly or indirectly, in connection with the purchase or sale of any security,

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by the use of any means or instrumentality of interstate commerce, or of the mails, or

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of any facility of any national securities exchange, making any untrue statement of a

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material fact or omitting to state a material fact necessary in order to make the

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statements made, in the light of the circumstances under which they were made, not

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misleading; in violation of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b),

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and Rule 10b-5(b) thereunder, 17 C.F.R. § 240.10b-5(b).

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V.

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IT IS FURTHER ORDERED that Defendants Liu, Wang, Pacific Proton,

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PPEB5 Fund and Beverly Proton, and their officers, agents, servants, employees,

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attorneys, subsidiaries and affiliates, and those persons in active concert or

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participation with any of them, who receive actual notice of this Order, by personal

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service or otherwise, and each of them, be and hereby are preliminarily restrained and

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enjoined from, directly or indirectly, participating in the offer or sale of any security

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which constitutes an investment in a “commercial enterprise” under the United States

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Government EB-5 visa program administered by the United States Citizenship and

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Immigration Service (“USCIS”), including engaging in activities with a broker,

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dealer, or issuer, or a Regional Center designated by the USCIS, for purposes of

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issuing, offering, trading, or inducing or attempting to induce the purchase or sale of

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any such EB-5 investment.

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VI.
IT IS FURTHER ORDERED that, except as otherwise ordered by this Court,

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Defendants Liu, Wang, Pacific Proton, PPEB5 Fund and Beverly Proton, and their

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officers, agents, servants, employees, attorneys, subsidiaries and affiliates, and those

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persons in active concert with them, who receive actual notice of this Order, by

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personal service or otherwise, and each of them, be and hereby are preliminarily

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restrained and enjoined from, directly or indirectly, transferring, assigning, selling,

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hypothecating, changing, wasting, dissipating, converting, concealing, encumbering,
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or otherwise disposing of, in any manner, any funds, assets, securities, claims or other

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real or personal property, including any notes or deeds of trust or other interest in real

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property, wherever located, of any one of the Defendants, or their subsidiaries or

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affiliates, owned by, controlled by, managed by or in the possession or custody of any

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of them and from transferring, encumbering dissipating, incurring charges or cash

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advances on any debit or credit card of the credit arrangement of any one of the

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Defendants, or their subsidiaries and affiliates.

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VII.
IT IS FURTHER ORDERED that, except as otherwise ordered by this Court,

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the freeze, previously ordered by the TRO, shall remain in place on all monies and

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assets (with an allowance for necessary and reasonable living expenses to be granted

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only upon good cause shown by application to the Court with notice to and an

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opportunity for the SEC to be heard) in all accounts at any bank, financial institution

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or brokerage firm, or third-payment payment processor, all certificates of deposit, and

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other funds or assets, held in the name of, for the benefit of, or over which account

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authority is held by Defendants Liu, Wang, Pacific Proton, PPEB5 Fund and Beverly

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Proton, or by United Damei Group, United Damei Investment Company, Ltd. and/or

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Beijing Pacific Damei Consulting Co. Ltd. (collectively, “UDG”), including but not

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limited to the accounts listed below:

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BANK NAME

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Bank of America, N.A. Charles Liu

unknown

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J.P. Morgan Chase
Bank, N.A.

Charles Liu

xxxxx3076

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J.P. Morgan Chase
Bank, N.A.

Charles Liu

xxxxx1055

J.P. Morgan Chase
Bank, N.A.

Xin Wang

xxxxx3983

J.P. Morgan Chase
Bank, N.A.

Pacific Proton Therapy Regional
Center, LLC

xxxxx6428

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ACCOUNT NAME

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ACCOUNT NO.

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BANK NAME

ACCOUNT NAME

ACCOUNT NO.

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J.P. Morgan Chase
Bank, N.A.

Pacific Proton EB-5 Fund, LLC

xxxxx1028

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J.P. Morgan Chase
Bank, N.A.

Los Angeles County Proton
Therapy, LLC

xxxxx5152

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J.P. Morgan Chase
Bank, N.A.

United MPH Ventures, LLC

xxxxx7035

J.P. Morgan Chase
Bank, N.A.

MP Medical Hotel, Inc.

xxxxx9018

J.P. Morgan Chase
Bank, N.A.

SC MPH Fund, LP

xxxxx2522

J.P. Morgan Chase
Bank, N.A.

SC MPH Management, LLC

xxxxx2978

Citibank, N.A.

Charles Liu

xxxxxxx0486

East West Bank

Pacific Proton Regional Center
LLC by Atlantic Escrow
Corporation as escrow agent

xxxx9509

Industrial and
Commercial Bank of
China

United Damei Group

unknown

Industrial and
Commercial Bank of
China

Beijing Pacific Damei Consulting
Co., Ltd.

unknown

Wells Fargo Bank,
N.A.

Xin Wang

xxxxxx9793

China Merchants Bank
Co. Ltd., Hong Kong

unknown

unknown

Bank of America N.A.
/0959 A/C:
Grenada Co-operative
Bank Limited, St.
Georges, Grenada

unknown

unknown

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Any bank, financial institution or brokerage firm, or third-party payment
processor holding such monies and assets described above shall hold and retain
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within their control and prohibit the withdrawal, removal, transfer or other disposal of

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any such funds or other assets except as otherwise ordered by this Court.

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VIII.
IT IS FURTHER ORDERED that, within ten days from the date of this Order,

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Defendants Liu and Wang, any bank, financial institution or brokerage firm, and each

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of them, shall transfer to the accounts of the Court-appointed Monitor, funds and

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other property held in foreign locations in the name of any Defendant or UDG, or for

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the benefit or under the direct or indirect control of any of them, or over which any of

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them exercises control or signatory authority, that is equal to the value of all funds

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transferred by investors, whether by wire transfer, third-party payment processor or

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otherwise, at the direction of Defendants Liu or Wang, or any of their agents,

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representatives or accredited advisors.

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IX.
IT IS FURTHER ORDERED that Defendants, within five days of the issuance

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of this Order, shall prepare and deliver to the SEC a detailed and complete schedule

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of all of their respective assets, including all real and personal property exceeding

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$5,000 in value, and all bank, securities, and other accounts identified by institution,

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branch address and account number. The accounting shall include a description of

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the sources of all such assets. Such accounting shall be filed with the Court-

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appointed Monitor and a copy shall be delivered to the SEC to the attention of John

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Berry, counsel for the SEC. After completion of the accounting, each of the

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Defendants shall produce to the SEC, at a time agreeable to the SEC, all books,

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records and other documents supporting or underlying their accounting.

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X.
IT IS FURTHER ORDERED that any person who receives actual notice of this

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Order by personal service or otherwise, and who holds, possesses or controls assets

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exceeding $5,000 for the account or benefit of any one of the Defendants, shall within

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five days of receiving actual notice of this Order provide the Court-appointed
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Monitor and counsel for the SEC with a written statement identifying all such assets,

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the value of such assets, or best approximation thereof, and any account numbers or

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account names in which the assets are held.

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XI.
IT IS FURTHER ORDERED that, except as otherwise ordered by this Court,

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each of the Defendants Liu, Wang, Pacific Proton, PPEB5 Fund and Beverly Proton,

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and their officers, agents, servants, employees, attorneys, subsidiaries and affiliates,

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and those persons in active concert or participation with any of them, who receive

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actual notice of this Order, by personal service or otherwise, and each of them, be and

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hereby are preliminarily restrained and enjoined from, directly or indirectly:

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destroying, mutilating, concealing, transferring, altering, or otherwise disposing of, in

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any manner, any documents, which includes all books, records, computer programs,

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computer files, computer printouts, contracts, emails, correspondence, memoranda,

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brochures, or any other documents of any kind in their possession, custody or control,

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however created, produced, or stored (manually, mechanically, electronically, or

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otherwise), pertaining in any manner to Defendants Liu, Wang, Pacific Proton,

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PPEB5 Fund and Beverly Proton.

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XII.

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IT IS FURTHER ORDERED that copies of this Order may be served by

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facsimile, email, hand-delivery, personal or overnight delivery, or U.S. Mail, by

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agents and employees of the SEC or any state or federal law enforcement agency or

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by private process server, upon any financial institution or other entity or person that

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may have possession, custody, or control of any documents or assets of any

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Defendant , or that may otherwise be subject to any provision of this Order. Service

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upon any branch or office of any financial institution shall effect service upon the

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entire Financial Institution.

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XIII.
IT IS FURTHER ORDERED that this Court shall retain jurisdiction over this
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action for the purpose of implementing and carrying out the terms of all orders and

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decrees which may be entered herein and to entertain any suitable application or

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motion for additional relief within the jurisdiction of this Court.

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IT IS SO ORDERED, this date of July 11, 2016 at 11:00 a.m, Pacific Standard Time.

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Dated: July 11, 2016

________________________________
CORMAC J. CARNEY
UNITED STATES DISTRICT JUDGE

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