EVERETT — Everett developer Lobsang Dargey is expected to plead guilty to federal criminal charges Wednesday for allegedly defrauding Chinese investors and lenders who put nearly $240 million into projects in the Everett and Seattle areas, court papers show.
The U.S. Attorney’s Office on Tuesday charged Dargey with wire fraud and falsifying information. A notice federal prosecutor filed in a related civil case says Dargey is scheduled to plead guilty to the charges before a U.S. District Court judge in Seattle on Wednesday morning.
Dargey’s attorney in the criminal case, Bob Mahler of Foster Pepper, and federal prosecutors declined to comment on the terms of the apparent plea agreement.
The criminal charges come more than a year after the U.S. Securities and Exchange Commission accused Dargey of defrauding investors and misusing their money. They filed a civil lawsuit to freeze his assets and bring a halt to his business activities.
Dargey, who lives in Bellevue, has reached a tentative agreement to settle the lawsuit, said Peter Ehrlichman of Dorsey & Whitney, one of his attorneys in that case.
“Dargey secretly funneled tens of millions of dollars in investor funds to uses not disclosed to the investors or to the United States,” assistant U.S. attorneys said in charging documents. That money allegedly was spent on side development projects, to pay Dargey’s business expenses, to purchase a Bellevue house and trips to casinos, among other things.
Nearly 300 Chinese citizens put more than $150 million into projects in Everett and Seattle under the federal EB-5 program, which offers foreigners a chance at green cards if they invest money in projects creating jobs in the United States.
To make up for money he allegedly siphoned off, Dargey acquired $85 million in financing from two Chinese lenders.
Federal prosecutors say that Dargey hid his misconduct by lying to investors, lenders and federal immigration officials in the EB-5 program, and altering bank statements, balance sheets and other documents.
Each charge carries a maximum sentence of five years in federal prison.
Dargey broke into the local real estate scene in 2006, when he bought and refurbished the Everett Public Market in downtown Everett. He followed that up by purchasing the former Federal Building on Colby Avenue. Then in the midst of the recession, he turned a former used-car lot into Potala Village, a four-story apartment building with ground-floor retail.
By 2015, the Tibetan native had become a local development powerhouse. His projects included Potala Place, a 220-unit apartment building in downtown Everett and Potala Tower, a proposed 41-story tower in Seattle. Mayors in the two cities lauded him, and actor Tom Skerritt attended the tower’s groundbreaking ceremony.
Dargey is still fighting a court-appointed receiver’s plan to finish the ground-floor retail at Potala Place in Everett. A Las Vegas-based developer bought the Potala Tower project in October in a court-approved sale.