New York Attorney General Letitia James filed a lawsuit against Xi Hui “Steven” Wu, his ex-wife Xiao Rong Yang, and his companies TCJ Construction Inc. (TCJ Construction) and 345 Ovington LLC for taking advantage of at least 20 Chinese immigrants and their families by illegally selling them non-existent condominiums in Bay Ridge, Brooklyn and collecting fraudulent monthly “mortgage” payments and building fees totaling more than $5 million. Wu never provided the purchasers with deeds to the condos they bought from his company and used their deposits and monthly payments for his own personal expenses, rather than holding the funds in segregated escrow accounts as required by law. In the lawsuit filed today, the Office of the Attorney General (OAG) seeks to recover all the money stolen from the families and permanently ban Wu, Yang, and his companies from conducting real estate business in New York state.
“Steven Wu took advantage of hardworking immigrants and sold them and their families a lie,” said Attorney General James. “He earned their trust as a pillar of the community only to exploit it and steal their life’s savings. These families were cheated out of their livelihoods, so we’re taking action to ensure they get their money back.”
In January 2013, Wu submitted an offering plan to OAG for a new construction 25-unit condo building at 345 Ovington Avenue in Bay Ridge, Brooklyn. The offering plan and subsequent effectiveness amendment were filed with OAG at the time, but Wu never filed the necessary paperwork with the New York City Department of Finance (DOF) to make the building a condo. As a result, DOF never subdivided the building into separate tax lots, and no separate deeds were created to transfer individual condo units to purchasers.
Though he could not legally transfer the titles to individual condo units in the building, Wu nevertheless proceeded to “sell” condo units to at least 20 immigrant families in the community who subsequently moved into the property. These purchasers knew and trusted Wu because of his role as a wealthy developer in the neighborhood, and in lieu of formal contracts, many signed just single-page agreements prepared in Chinese before paying Wu for what they believed to be a home of their own. In reality, there were no homes to sell, and the families paid Wu in exchange for nothing. Many residents of 345 Ovington Avenue believed they were condo unit owners, but Wu never legally transferred a title to a unit to any purchaser. He couldn’t have, because a legal condo was never created.
In addition to collecting down payments — and in some cases, full payments — from the families, Wu also collected monthly residential mortgage payments from many of the residents who did not pay for their units in full. Nearly all of the residents were also making monthly payments to Wu, which they believed to be monthly condominium common charges. However, because no condominium actually existed, these payments were essentially direct payments to Wu.
Over the years, Wu cheated at least 20 families out of their life’s savings, totaling more than $5 million, none of which went to purchasing their units. Instead, Wu used the money for other expenses, including payments on loans against the building and building construction.
Wu has repeatedly lied and fabricated documents in an effort to avoid enforcement. For example, when OAG questioned the legitimacy of the purchase agreements used to declare the offering plan effective, Wu submitted the single-page “purchase agreements” and documentation of individual escrow accounts, each holding a $5,000 deposit purportedly paid by the purchasers, as proof of the validity of the sales. However, OAG has since uncovered that Wu personally funded those escrow accounts to represent the deposits received but kept the purchasers’ additional down payments and never deposited those funds into escrow accounts as required by law.
The OAG’s investigation revealed Wu’s ex-wife Xiao Rong Yang was closely involved in executing Wu’s scheme, and their deception continues to this day, violating OAG regulations, the Martin Act, Rent Stabilization laws, and New York State Executive Law. Shimon Avrahami, Yechiel Shimon Sprei, and John Does #1 to #10 are named as relief defendants in the lawsuit, as they may have a financial interest in 345 Ovington but are not accused of wrongdoing.
With this lawsuit filed today, OAG aims to compel full disgorgement of all stolen and illegally obtained funds to be returned to the families Wu cheated, and to permanently bar Wu, Yang, and all defendants from offering or selling real estate in New York.
Recently, Wu’s lender, from which he borrowed $5.8 million to develop the building, began foreclosure proceedings and residents were faced with possible eviction. A group of the purchasers Wu stole from then forced 345 Ovington LLC into Chapter 7 bankruptcy in the Eastern District of New York, which paused the foreclosure. The OAG has appeared in these proceedings. Bankruptcy court may prove to be an opportunity to negotiate with Wu’s creditors to assist the defrauded residents and return the money they lost.
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