EVERETT — A federal judge has cut off a developer accused of securities fraud from his Everett-based companies.

Lobsang Dargey’s businesses, bank accounts, records and other properties will be controlled by a third-party, called a receiver, appointed by U.S. District Court for Western Washington.

The order had been requested by the U.S. Securities and Exchange Commission, which is suing Dargey and several companies he owns.

The FBI also is conducting a criminal investigation of Dargey, 41, according to court records. The FBI did not respond to a request for comment.

In court Thursday, Dargey’s lead attorney, Daniel Dunne, had asked the court to limit the receiver’s powers and control. Dunne is with the Seattle-based firm of Orrick, Herrington and Sutcliffe.

He argued that communication between Dargey and lawyers that he consulted on behalf of his companies should be privileged and protected.

Given the FBI’s investigation, waiving that privilege, Dunne said, would potentially violate Dargey’s Fifth Amendment right against self-incrimination.

U.S. District Judge James Robart was not impressed with the argument, though. He appointed a receiver Friday based on the SEC’s request.

“Counsel, however, has submitted no evidence in support of his assertion that Mr. Dargey holds any such” personal attorney-client privilege, he wrote in an addendum to his order.

He appointed Michael Grassmueck of the Portland-based Grassmueck Group as receiver.

The SEC accuses Dargey of defrauding foreign investors out of more than $17.6 million dollars.

Dargey solicited Chinese nationals to invest in development projects in Everett and Seattle through a federal program called the EB-5 program, which offers investors a shortcut to a U.S. visa if they invest in a project that creates jobs in the U.S.

In all, Dargey got foreign investors to put more than $125 million into two projects — the 220-apartment Potala Place and Farmer’s Market and adjacent Hampton Inn in downtown Everett and a 41-story Potala Tower in Seattle.

The SEC alleges that Dargey misused and misappropriated more than $17.6 million. The agency says that he used the money to fund projects not included in the EB-5 program and for personal expenses, including shopping at luxury stores and trips to casinos in Washington and Las Vegas.

Dargey’s attorneys have said that the SEC is overstating its case, which comes down to sloppy bookkeeping and not fraud.

The receiver is tasked with finding and maintaining assets belonging to any of Dargey’s companies named as defendants in the SEC’s civil complaint against him. If necessary, he has the authority to liquidate assets.

Potala Place in Everett likely won’t be affected by going into receivership. The mixed-use building is nearly finished with construction. Dozens of renters have already moved in, and the ground-floor retail spots are expected to open by the end of the year.

The future of Potala Tower in Seattle is much less clear. The SEC’s lawsuit stopped excavation work for the building, leaving an unfinished hole in the ground in the booming Belltown neighborhood.

Dargey’s attorneys say that the project has enough funding to finish.

SEC attorneys have said in court filings that the project’s financing is “illusory” and it is likely not financially viable.

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.