Lobsang Dargey, shortly after he bought the Everett Public Market building at the corner of Grand Ave and Claifornia Street, 2006.                                (Herald file photo)

Lobsang Dargey, shortly after he bought the Everett Public Market building at the corner of Grand Ave and Claifornia Street, 2006. (Herald file photo)

The spectacular downfall of developer Lobsang Dargey

EVERETT — In August 2014, four Buddhist monks chanted in a dimly-lit garage in downtown Seattle. They asked for good fortune for the 41-story skyscraper planned for the site by developer Lobsang Dargey, a rising star in the region’s hot real estate market. News media snapped photos as Dargey raised a shovelful of dirt along with friend and movie star Tom Skerritt and Seattle Mayor Ed Murray.

Just a couple years prior, he had been a small developer in Everett. And it had been less than 20 years since he had landed in America, wearing the orange robe of a Tibetan Buddhist monk and speaking no English.

Dargey had tapped Chinese investors eager to get U.S. green cards to bankroll his newer developments.

As fast as Dargey’s rise was, his fall was even swifter.

Almost exactly a year after the skyscraper groundbreaking, federal agents raided his Bellevue and Everett offices, seizing records, documents and electronic devices. Attorneys for the U.S. Securities and Exchange Commission filed a lawsuit in U.S. District Court for Western Washington, accusing Dargey of defrauding investors and misusing tens of millions of dollars. The court handed control of most of his businesses and projects to a receiver.

In early 2017, the U.S. Attorney’s Office filed charges. He already had reached a plea agreement with the prosecutors. On Jan. 4, he stood, and speaking in a subdued voice, pleaded guilty to one count of wire fraud and one count of concealing information from U.S. immigration officials.

Next month, the 43-year-old Dargey is scheduled to appear again in a federal courtroom in Seattle to learn how much time he can expect to spend in prison. He faces up to 10 years. He also agreed to pay back as much as $24 million to more than 200 investors in his projects. The final sum could be smaller based on investment returns and refunded fees.

Dargey has settled the case with the SEC. So long as he follows the terms of his plea agreement, he is not on the hook for paying back more money under the terms of the settlement.

He signed over ownership of properties already under control of a court-appointed receiver. That’s left him with a stake in three downtown Everett properties — the Everett Public Market, the Chicago Title Building and Potala Village.

He declined interview requests for this article.

The connector

Dargey arrived in Everett in 2006, intent on getting into real estate. He had no real experience and no mentor to show the way. He did have a disarming personality, a head for numbers and plenty of ambition.

Lobsang Dargey grew up tending his family’s livestock in a Tibetan village with no electricity or running water. His parents sent him to a monastery at 13 to become a monk, he told associates and reporters over the years. Around 1992, when he was 18, he traveled to India, where he helped build a hotel for a Buddhist organization.

In 1997, he came to America, with help from a local sponsor. A few weeks after arriving in Seattle, Dargey walked into a small English-language school in the city’s University District. “He came in wearing his orange robes and his head shaved,” with a check from his sponsor for $400, said Melissa Rivkin, who owned the school with her husband David Cohanim. “He handed it over and said, ‘How much English can I get for this much?’”

Dargey quickly became a familiar face along University Avenue. “Within a few weeks, he knew everyone on The Ave by name,” she said. “He remembers everything about people.”

“Lobsang, he’s a connector,” said Rivkin, who is still friends with Dargey. She and her husband also own a small stake in his first development in Everett, Potala Village.

The name is a nod to Dargey’s homeland. Potala Palace was the seat of religious and civil authority in Tibet. All of his developments have Potala in the names.

His enthusiasm landed him a sales job at Sprint, despite speaking broken English with a thick accent. He tried to catch the dot-com boom, but his startup went bust. He had the entrepreneur itch, though, and formally gave up his vows as a monk.

Around that same time, he met Tami Agassi at a fundraiser for the Seattle-based Rivkin Center, an ovarian cancer research group named after Melissa Rivkin’s mother.

“He just liked (Tami) from the moment he met her,” Rivkin recalled. “I don’t know if she noticed him at all.”

Dargey pursued Agassi for months before she agreed to a date. All along, he had no idea her brother was tennis superstar Andre Agassi, Rivkin said.

The couple married in 2004 and moved to a modest home in Bellevue.

Eager for success, Dargey saw Everett as his entry into real estate. With money from his savings, friends and his in-laws, he paid $2.05 million for the Everett Public Market in 2006. He threw himself into renovating the downtown two-story building, which has a co-op grocery and a restaurant on the ground floor, and offices above.

Everett was an up-and-coming city, he told The Daily Herald in 2006.

“Look at the view here,” he said at the time, gesturing toward Port Gardner from his office in the public market. “You can’t just create that. There are limited places to get that.”

The next year, he paid $2.7 million for a used car lot on Rucker and Pacific avenues. And in 2008, he and partners paid $2.4 million for the old Federal Building, now called the Chicago Title Building, in Everett.

The City of Everett’s head of economic development, Lanie McMullin, would sometimes drive by the Federal Building on her way home after a long day and see Dargey hard at work inside.

“The lights were on late into the night,” McMullin said. “He was doing the remodel work himself with a skeleton crew.”

He turned the used car lot into a 108-unit apartment building called Potala Village, which opened in 2011. It was a bright spot in a downtown hard hit by economic recession.

“We were doing everything we could to encourage anyone to develop,” Everett Mayor Ray Stephanson said.

That included property tax breaks for new construction and substantial renovations. Dargey’s optimistic vision for Everett’s future and his rags-to-riches story resonated with city and county officials. And they encouraged Dargey’s ambitious plans for a bigger apartment building with a ground-floor farmer’s market.

The project would cost far more than he could raise, though.

Dargey already knew where he’d get the tens of millions he needed to build the seven-story Potala Place and Farmer’s Market in Everett: China.

A check and a dream

Glen Bachman met Dargey in Las Vegas at an International Council of Shopping Centers conference in 2007. Dargey was there to learn more about an obscure federal program that offers green cards to foreigners who invest in projects that create jobs in the U.S. It is called the EB-5 program, which is run by U.S. Citizenship and Immigration Services.

McMullin introduced the two men, who spent a day together in Las Vegas, Andre Agassi’s hometown, Bachman said. The former monk drove the pair around the city in a Cadillac that belonged to his in-laws.

His nose for real estate was “spot on,” he said. Dargey already knew plenty about EB-5. “He had invested his heart and soul” in the program, Bachman said.

In a casino, Bachman said, he saw Dargey lose about $600 in a few minutes gambling and shrug it off. “It was like it was nothing. He lost the money, and said, ‘Let’s go to dinner.’”

By 2011, Dargey started traveling to China to find investors for Potala Place and Farmer’s Market, which included an adjacent 120-room Hampton Inn hotel. Under the EB-5 program, individuals are supposed to invest at least $1 million in a development that creates or preserves at least 10 jobs in the U.S. However, investors only have to put in $500,000 if the development is in a low-employment area, which is what Everett is considered. Over the years, the EB-5 program has grown increasingly controversial, in part because of how it links investment and permission to immigrate to the U.S. It’s also spawned plenty of mismanaged projects, some of which have melted down in criminal indictments alleging fraud.

Public officials, including McMullin and former Lt. Gov. Brad Owen, spoke to potential investors in China, talking up the communities around Dargey’s projects. Seeing government officials gave the investors confidence in Dargey, said Bachman, who worked as president of Dargey Enterprises for about a year in 2013 and 2014.

Bachman traveled to China, too. Before his first trip, Dargey gave him a $25,000 watch to wear, telling him that it signaled success to investors, he said.

By this time, millions of dollars were flowing in from Chinese investors for the Everett project and Potala Tower, the skyscraper in Seattle.

Dargey “was very fussy about following rules,” and lectured his employees about complying with EB-5 requirements. But “Lobsang micromanaged the wrong things, and stepped away from things he shouldn’t have,” Bachman said.

The usually soft-spoken former monk would sometimes yell at employees when he felt they weren’t following his vision, he said. “It was tough to say what would set him off.”

Bachman said he lost his job after he objected to what he considered unethical treatment of a broker hired by the company.

From 2012 to 2015, Dargey and associates raised $153.6 million from 282 Chinese investors. In all, 80 investors put $40 million into Potala Place in Everett and 202 investors put $101 million into Potala Tower in Seattle. He also collected about $12.6 million in fees from investors.

However, shortly after the first investor put in money, Dargey began funneling it to other uses — buying land for projects the investors had no stake in, paying employees of his other businesses, for gambling and shopping sprees at high-end stores, and buying a luxury house in Bellevue, according to his plea agreement.

Dargey’s activities soon put the projects in financial holes. He secured $55 million from a lender and an investment firm, according to court documents. To hide the reality, he falsified and forged balance sheets, bank statements and other documents, according to his plea agreement.

When federal agents searched his offices in 2015, Dargey was applying for a $60 million loan and exploring EB-5 projects in California and Oregon.

The court appointed a receiver to take over. Michael Grassmueck, who specializes in acting as a trustee in bankruptcy cases in Washington and Oregon, found the Dargey projects to be a financial mess. Potala Place and Farmer’s Market was “built upon a story and a blank check,” he said in a court filing in March 2016. Dargey’s approach “assumed an unlimited budget for the development, as well as the operation of the business,” he said.

Immigration status in doubt

The immigration status of many of his 282 investors is still in doubt. Dargey’s fraud and misuse of money could derail their shot at green cards.

Filings by federal attorneys painted Dargey as a scheming manipulator bent on bilking investors out of their money.

That is not the case, say Dargey’s friends and associates.

“He has an inherent sense of business,” the Emmy winning actor Tom Skerritt said in an email to The Daily Herald.

The two met through their daughters, who became friends sometime around 2010. Skerritt, who lives in Seattle, attended the 2011 ribbon-cutting for Potala Village, where he posed for a photo with McMullin.

“He’s impatient and an accelerator in business,” Skerritt said. “He’s not, however, a criminal mind.”

Dargey relied too much on others, says Peter Ehrlichman, his attorney in the SEC lawsuit. “That ended up being a very challenging situation for him. He couldn’t keep it all in his head.”

“He was a whirling dervish,” and went astray but he did not set out to steal, he said.

All projects have been sold or are in the process of being sold. The luxury home and expensive goods have been sold, as well. The lavish spending was for entertaining investors and business partners, Ehrlichman said.

Rivkin, who is still friends with Dargey, said she has never seen him gamble or heard him talk about it.

Everett did get a new apartment building, Ehrlichman said.

The ground floor retail space is still almost entirely empty. The receiver is working to finish development, even as he tries to sell the project.

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

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