Feds: Developer of big Everett project skimmed investor money

EVERETT — The developer of a hotel, apartment complex and farmer’s market in downtown Everett is under investigation by the federal government for allegedly bilking overseas investors out of millions of dollars.

Lobsang Dargey, the CEO of Path America and the builder of the Potala Place development, is being sued in federal court by the U.S. Securities and Exchange Commission.

The civil complaint, filed Monday in U.S. District Court in Seattle, says Dargey fraudulently raised more than $125 million through sales of securities to at least 250 investors.

In particular, funds raised for downtown Everett’s Potala Place building and the 40-story Potala Tower skyscraper in downtown Seattle allegedly were misappropriated, sometimes redirected to other projects. The government also contends money was diverted to buy a luxury home in Bellevue and make cash withdrawals, including at several casinos.

Potala Place, which occupies half a block at Grand Avenue and Wall Street in Everett, has not opened. It is a 220-unit apartment building with 60,000 square feet of retail space, including the Potala Farms boutique grocery-cum-farmer’s market.

Potala Tower has broken ground, but a web camera feed on the project’s Web page just shows a hole in the ground with some construction equipment.

A message left for Lobsang Dargey was not immediately returned Monday.

Everett Mayor Ray Stephanson could not be reached for comment.

Everett Chief Administrative Officer Debra Bryant said she had not heard about the complaint until contacted by a reporter.

“I think it’s too soon to make any determinations on the impact of that,” Bryant said.

“There’s just not enough information,” she added.

Path America is a highly visible local example of how the government’s EB-5 visa system works. Foreign nationals who invest at least $500,000 in a project that generates or preserves at least 10 jobs for U.S. workers may qualify for residency in the United States.

Dargey and Path America used the EB-5 system to raise money from Chinese investors by encouraging them to invest in Potala Place and Potala Tower.

However, the suit alleges that of the $125 million raised, $17.6 million has been misappropriated.

Among the charges: $14.7 million has been used in separate real estate projects under Dargey’s control — Potala Shoreline LLC and Potala Village Kirkland LLC. Those projects are not eligible for the EB-5 visa program.

Dargey also is accused of using $2.5 million in investor funds to purchase a home for himself in Bellevue and making cash withdrawals of about $350,000. More than $200,000 of the money was withdrawn at 14 different casinos in Washington, Nevada, California and British Columbia, according to the complaint.

Dargey allegedly promised his backers that their investments would make them eligible for U.S. residency. He failed to reveal that those investments would not qualify under the EB-5 program if they weren’t used for those dedicated projects, federal officials say.

Details are provided in the complaint and hundreds of pages of supporting documents. Among other things, they show that each investor who bought a $500,000 partnership interest in either of the two Path America projects also was charged a $45,000 administrative fee. The investment capital was wired to an escrow account in the U.S. while the administrative fee was wired to an account in Hong Kong.

Approximately $41 million was raised from 82 Chinese nationals for the Potala Place and Farmer’s Market in Everett. About $85 million was raised from 170 Chinese nationals for Potala Tower in Seattle.

Backers were told that the capital raised for the Everett project also would be invested in Everett Hospitality Co., the Dargey-controlled company that built the new 122-room Hampton Inn in Everett next to Potala Place. The hotel opened in 2014.

According to the complaint, on Sept. 9, 2014, Dargey transferred $1.5 million from the account for the Potala Tower project in Seattle to an account in the name of Dargey Development, another company which he controls.

The next day, Dargey transferred another $1 million from the Potala Tower account directly into an account controlled by Dargey and his wife, Tamara Agassi Dargey, according to the complaint.

Then on Sept. 14, 2014, Dargey used nearly $2.5 million from the account in his and his wife’s names to purchase a home in Bellevue. The purchase was made in the name of Bellewood Farms Trust, the beneficiaries of which are the Dargeys.

Tamara Agassi Dargey is the sister of tennis star Andre Agassi. She is not named as a defendant in the suit.

The suit also alleges that Dargey withdrew about $350,000 in cash from both the Potala Tower and Potala Place accounts between October 2012 and June 2015, mostly with a debit card or at a bank or casino teller.

From 2012-15, Dargey allegedly diverted $7.5 million from the Potala Farmer’s Market and Potala Tower accounts to an account in the name of Potala Village Kirkland.

In 2014 and 2015, Dargey also shifted a total of $7.2 million from the Potala Tower to purchase property in Shoreline, the complaint alleges.

The Securities and Exchange Commission has asked a federal judge to approve a restraining order prohibiting Dargey or his companies from raising more money from investors, selling any securities of any business interest they own, and freezing all their assets.

The government also is seeking an accounting of all money received from investors, an order prohibiting the alteration or destruction of books and records, an order to return any investors’ funds that have been transferred overseas back to the United States and unspecific civil monetary penalties.

Chris Winters: 425-374-4165; cwinters@heraldnet.com. Twitter: @Chris_At_Herald.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Trader Joe’s customers walk in and out of the store on Monday, Nov. 20, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
New Trader Joe’s opens this week at Everett Mall

It’s a short move from a longtime location, essentially across the street, where parking was often an adventure.

Ian Bramel-Allen enters a guilty plea to second-degree murder during a plea and sentencing hearing on Wednesday, March 6, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
‘Deep remorse’: Man gets 17 years for friend’s fatal stabbing in Edmonds

Ian Bramel-Allen, 44, pleaded guilty Wednesday to second-degree murder for killing Bret Northcutt last year at a WinCo.

Firefighters respond to a small RV and a motorhome fire on Tuesday afternoon in Marysville. (Provided by Snohomish County Fire Distrct 22)
1 injured after RV fire, explosion near Marysville

The cause of the fire in the 11600 block of 81st Avenue NE had not been determined, fire officials said.

Ashton Dedmon appears in court during his sentencing hearing on Tuesday, March 5, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
Everett Navy sailor sentenced to 90 days for fatal hit and run

Ashton Dedmon crashed into Joshua Kollman and drove away. Dedmon, a petty officer on the USS Kidd, reported he had a panic attack.

A kindergarten student works on a computer at Emerson Elementary School on Wednesday, Feb. 28, 2024, in Everett, Washington. (Ryan Berry / The Herald)
‘¡Una erupción!’: Dual language programs expanding to 10 local schools

A new bill aims to support 10 new programs each year statewide. In Snohomish County, most follow a 90-10 model of Spanish and English.

Logo for news use featuring the Tulalip Indian Reservation in Snohomish County, Washington. 220118
Woman drives off cliff, dies on Tulalip Reservation

The woman fell 70 to 80 feet after driving off Priest Point Drive NW on Sunday afternoon.

Everett
Boy, 4, survives fall from Everett fourth-story apartment window

The child was being treated at Seattle Children’s. The city has a limited supply of window stops for low-income residents.

People head out to the water at low tide during an unseasonably warm day on Saturday, March 16, 2024, at Lighthouse Park in Mukilteo, Washington. (Ryan Berry / The Herald)
Everett shatters record high temperature by 11 degrees

On Saturday, it hit 73 degrees, breaking the previous record of 62 set in 2007.

Snohomish County Fire District #4 and Snohomish Regional Fire & Rescue respond to a motor vehicle collision for a car and pole. The driver was pronounced dead at the scene, near Triangle Bait & Tackle in Snohomish. (Snohomish County Sheriff’s Office)
Police: Troopers tried to stop driver before deadly crash in Snohomish

The man, 31, was driving at “a high rate of speed” when he crashed into a traffic light pole and died, investigators said.

Alan Dean, who is accused of the 1993 strangulation murder of 15-year-old Bothell girl Melissa Lee, appears in court during opening statements of his trial on Monday, March 18, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
31 years later, trial opens in Bothell teen’s brutal killing

In April 1993, Melissa Lee’s body was found below Edgewater Creek Bridge. It would take 27 years to arrest Alan Dean in her death.

Logo for news use featuring the municipality of Snohomish in Snohomish County, Washington. 220118
Man dies after crashing into pole in Snohomish

Just before 1 a.m., the driver crashed into a traffic light pole at the intersection of 2nd Street and Maple Avenue.

Bodies of two men recovered after falling into Eagle Falls near Index

Two men fell into the falls and did not resurface Saturday, authorities said. After a recovery effort, two bodies were found.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.