SEC v. Lobsang Dargey; Path America, LLC; Path America SnoCo LLC; Path America Farmer’s Market, LP; Path America KingCo LLC; Path America Tower, LP, et al., No. 2:15-cv-01350, Western District of Washington (Aug. 25, 2015) — Complaint

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT
 SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

SECURITIES AND EXCHANGE COMMISSION,

  Plaintiff,

 vs.

PATH AMERICA, LLC; PATH AMERICA SNOCO
LLC; PATH AMERICA FARMER’S MARKET, LP;
PATH AMERICA KINGCO LLC; PATH
AMERICA TOWER, LP; PATH TOWER
SEATTLE, LP; POTALA TOWER SEATTLE, LLC;
and LOBSANG DARGEY,

  Defendants, and

POTALA SHORELINE, LLC; and POTALA
VILLAGE KIRKLAND, LLC,

  Relief Defendants.

Civil Action No. ________________

COMPLAINT

Plaintiff Securities and Exchange Commission (“Commission” or “SEC”) alleges:
SUMMARY OF ACTION
1. Since February 2012, defendants Lobsang Dargey; Path America, LLC; Path
America SnoCo LLC; Path America Farmer’s Market, LP; Path America KingCo LLC; Path
America Tower, LP; Path Tower Seattle, LP; and Potala Tower Seattle, LLC (collectively,
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
SEATTLE DIVISION

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

“Defendants”) have exploited a federal visa program to defraud investors seeking investment
returns and a path to United States residency.  To date, Defendants have fraudulently raised at
least $125 million through their sales of securities to 250 investors and collected at least $11
million in additional fees.
2. Most of the direct victims of this fraud are foreign nationals seeking residency
in the United States.  Defendants Dargey, Path America, Path America SnoCo, Path America
Farmer’s Market, Path America KingCo, Path America Tower, and Path Tower Seattle
(collectively, the “Offering Defendants”) solicited the investments predominantly from
Chinese citizens, claiming the investments would qualify under the EB-5 Program
administered by United States Citizenship and Immigration Services (“USCIS”), which
provides that foreign nationals may qualify for United States residency if they make a
qualified investment of $500,000 or more in a specified project that is determined to have
created or preserved at least 10 jobs for United States workers.
3. Using this lure, and the promise of investment returns, Defendants have
targeted and continue to target Chinese investors in a scheme to sell securities to finance two
different real estate projects, a skyscraper in downtown Seattle and a mixed-use commercial
and residential development containing a farmer’s market in Everett, Washington.  However,
rather than use the money solely for the projects for which it was purportedly raised,
Defendants have misappropriated approximately $17.6 million.  For example, Defendant
Dargey misappropriated approximately $2.5 million of investor funds to purchase a residence
in Bellevue, Washington.  Further, Dargey made cash withdrawals of investor funds totaling
approximately $350,000, including more than $200,000 withdrawn at 14 different casinos in
Washington, Nevada, California, and British Columbia, Canada.  Defendants have also
misappropriated approximately $14.7 million of investor funds for use in real estate projects
under Dargey’s control through relief defendants Potala Shoreline, LLC and Potala Village
Kirkland, LLC,  which are unrelated to the projects for which the funds were raised.

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

4. The Offering Defendants have also made materially false and misleading
statements and omissions of material facts to solicit investors for the real estate projects.
Investors were provided with a Private Placement Memorandum (“PPM”) that describes the
securities offering and states that the offering is designed to provide investors with a path to
residency in the United States through the EB-5 Program.  However, the Offering Defendants
knew, or were reckless in not knowing, at the time investors were provided the PPMs that
Defendants’ use of funds contrary to what was disclosed in filings to USCIS put in jeopardy
the investors’ EB-5 petitions and ability to obtain residency in the United States.
5. Through this action, the Commission seeks to protect the interests of current and
future investors.  As the fraud described is ongoing and likely to continue, and millions of dollars
of investor funds remain at risk of dissipation, the Commission seeks emergency ex parte relief
in this action to enjoin violations of the anti-fraud provisions of the federal securities laws, freeze
assets, and secure other equitable relief.
JURISDICTION AND VENUE
6. The Commission brings this action pursuant to Sections 20(b), 20(d), and 22(a)
of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t(b) and 77t(d), and 77v(a)],
and Sections 21(d), 21(e), and 27 of the Securities Exchange Act of 1934 (“Exchange Act”)
[15 U.S.C. §§ 78u(d)  , 78u(e), and 78aa].  Defendants, directly or indirectly, made use of the
means and instrumentalities of interstate commerce or of the mails in connection with the
acts, transactions, practices, and courses of business alleged in this Complaint.
7. Venue is proper in this District pursuant to Section 22(a) of the Securities Act
[15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)].  During
the period described in this Complaint, defendants Path America, Path America SnoCo, Path
America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower Seattle,
and Potala Tower Seattle have maintained their principal places of business in Everett,
Washington.  Defendant Dargey also resides in this District.  In addition, acts, practices, and

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

courses of business that form the basis for the violations alleged in this Complaint occurred in
this District.
8. Assignment to the Seattle Division is appropriate pursuant to Local Rule
3(  d)  (1) because a substantial part of the events that give rise to the claims occurred in
Snohomish County and King County.  In addition, defendant Dargey resides in King County
and defendants Path America, Path America SnoCo, Path America Farmer’s Market, Path
America KingCo, Path America Tower, Path Tower Seattle, and Potala Tower Seattle
maintain their principal places of business in Snohomish County.
DEFENDANTS
9. Defendant Lobsang Dargey, age 41, of Bellevue, Washington, is the
controlling owner and sole member of Dargey Development, LLC, which is the owner and
controlling member of defendant Path America, LLC.  Dargey, through Path America, also
controls each of the other defendants.  Dargey also controls the bank accounts for each of the
entities through which investor money flowed.
10. Defendant Path America, LLC is a Washington limited liability company
registered with the Washington Secretary of State since 2010 that maintains its principal place
of business in Everett, Washington.  Dargey is the controlling owner and sole member of
Dargey Development, the owner and controlling member of Path America.  Path America is
the parent and managing member of defendants Path America SnoCo and Path America
KingCo.
11. Defendant Path America SnoCo LLC is a Washington limited liability
company registered with the Washington Secretary of State since 2010 that maintains its
principal place of business in Everett, Washington.  Defendant Path America is the owner and
sole member of Path America SnoCo.  On or about August 8, 2011, Path America SnoCo
obtained designation as a “Regional Center” from USCIS, which authorized it to sponsor EB-
5 Program investment offerings.

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

12. Defendant Path America Farmer’s Market, LP is a Washington limited
partnership that maintains its principal place of business in Everett, Washington.  Path
America Farmer’s Market is the issuer for an EB-5 Program investment offering sponsored by
Path America SnoCo, and maintains a bank account into which proceeds raised from
defrauded investors are deposited.
13. Defendant Path America KingCo LLC is a Washington limited liability
company registered with the Washington Secretary of State since 2010 that maintains its
principal place of business in Everett, Washington.  Defendant Path America is the owner and
sole member of Path America KingCo.  On or about June 6, 2013, Path America KingCo
obtained designation as a “Regional Center” from USCIS, which authorized it to sponsor EB-
5 Program investment offerings.
14. Defendant Path America Tower, LP is a Washington limited partnership that
maintains its principal place of business in Everett, Washington.  Path America Tower is the
issuer for an EB-5 Program investment offering sponsored by Path America KingCo, and
maintains a bank account into which proceeds raised from defrauded investors are deposited.
15. Defendant Path Tower Seattle, LP is Washington limited partnership that
maintains its principal place of business in Everett, Washington.  Path Tower Seattle is the
issuer for an EB-5 Program investment offering sponsored by Path America KingCo, and
maintains a bank account into which proceeds raised from defrauded investors are deposited.
16. Defendant Potala Tower Seattle, LLC is a Delaware limited liability company
that maintains its principal place of business in Everett, Washington.  Potala Tower Seattle
maintains a bank account into which proceeds raised from defrauded investors are deposited.
Potala Tower Seattle also owns property purchased with funds raised from defrauded
investors.

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

RELIEF DEFENDANTS
17. The following entities are named as Relief Defendants in this action for the
purpose of assuring complete relief.  Each received investor money or property that was
obtained in violation of the federal securities laws.
18. Potala Shoreline, LLC is a Delaware limited liability company that maintains
its principal place of business in Everett, Washington.  Potala Shoreline maintains a bank
account into which proceeds raised from defrauded investors are deposited.  Potala Shoreline
also owns property purchased with funds raised from defrauded investors.
19. Potala Village Kirkland, LLC is a Washington limited liability company that
maintains its principal place of business in Everett, Washington.  Potala Village Kirkland
maintains a bank account into which proceeds raised from defrauded investors are deposited.
Potala Village Kirkland also owns property purchased with funds raised from defrauded
investors.
FACTUAL ALLEGATIONS
A. The Tower Project
20. From November 2013 to the present, Defendants Dargey, Path America, and
Path America KingCo, through Defendants Path America Tower and Path Tower Seattle,
raised approximately $85 million from 170 Chinese nationals as investments in a real estate
development project in downtown Seattle (referred to herein as the “Tower Project”).
21. Whether through Path America Tower or Path Tower Seattle, Defendants
Dargey, Path America, and Path America KingCo solicit investments as limited partnership
interests which are sold for $500,000 each, plus an administrative fee of $45,000 per investor.
22. The PPMs for both Path America Tower and Path Tower Seattle contain
substantially the same information, including the statement that an investment in the project is
intended to qualify under the EB-5 Program.  The PPMs seek to raise a combined $122
million from 244 investors and are provided to investors by Defendants Path America, Path

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

America KingCo, Path America Tower, Path Tower Seattle, and Dargey, and/or individuals or
entities acting under their direction.
23. According to the PPMs, the proceeds of the offerings are to be loaned to an
operating company controlled by Dargey, Potala Tower Seattle, for the construction and
development of a 40-story tower on the real property located at 2116 Fourth Avenue, Seattle,
Washington.  Specifically, Potala Tower Seattle is to use the money “to acquire, construct,
manage and operate a new mixed-use facility to include [a hotel] ..., a restaurant and wine
bar, residential apartment units, a variety of amenities for the hotel guests and residents, and
underground parking.”
24. In addition to providing investors with the PPMs, Defendants Path America,
Path America KingCo, Path America Tower, Path Tower Seattle, and Dargey also provide
subscription agreements which direct investors to send $500,000, by wire, to an escrow
account in the United States.  The subscription agreements also direct investors to send a
$45,000 administrative fee, by wire, to an account in Hong Kong.
25. Investors are told in both the PPMs and subscription agreements that upon
confirmation that the investor has filed an EB-5 visa petition with USCIS, $400,000 is
released from escrow, with the remaining $100,000 released from escrow upon confirmation
that USCIS has approved the investor’s EB-5 visa petition.
B. The Farmer’s Market Project
26. From February 2012 through approximately April 2014, Defendants Dargey,
Path America, and Path America SnoCo, through Path America Farmer’s Market, raised
approximately $41 million from 82 Chinese nationals as investments in a real estate
development project in Everett, Washington (referred to herein as the “Farmer’s Market
Project”).
27. Defendants Dargey, Path America, Path America SnoCo, and Path America
Farmer’s Market solicited money for the Farmer’s Market Project from investors through the
sale of limited partnership interests in Path America Farmer’s Market.  The limited

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

partnership interests were sold for $500,000 each, plus an administrative fee of $45,000 per
investor.
28. The PPM for Path America Farmer’s Market states that an investment in the
security is intended to qualify under the EB-5 Program.  The PPM, which sought to raise $40
million from 80 investors, was provided to investors by defendants Path America, Path
America SnoCo, Path America Farmer’s Market, and Dargey, and/or individuals or entities
acting under their direction.
29. According to the PPM, the proceeds from the offering were to be used to (1)
invest in Path Farmer’s Market, LLC, an entity that “intends to develop, construct, manage
and operate” a real estate project with residential apartments and retail stores in Everett,
Washington, and (2) invest in Everett Hospitality Company, LLC, an entity that “intends to
develop, construct, manage, and operate a hotel project” on a parcel of land immediately
adjacent to the Path America Farmer’s Market parcel.
30. In addition to providing investors with the PPM, Defendants Path America,
Path America SnoCo, Path America Farmer’s Market, and Dargey also provided a
subscription agreement which directs investors to send $500,000, by wire, to an escrow
account in the United States.  The subscription agreement also directs investors to send a
$45,000 administrative fee, by wire, to an account in Hong Kong.
31. Investors were told in both the PPM and subscription agreement that, upon
confirmation that the investor has filed an EB-5 visa petition with USCIS, $400,000 is
released from escrow, with the remaining $100,000 released from escrow upon confirmation
that USCIS has approved the investor’s EB-5 visa petition.
C. Defendants’ Misappropriation of Investor Funds
32. Defendants have misappropriated approximately $17.6 million of investor
funds.  As described above, the funds invested in both the Tower Project and the Farmer’s
Market Project were originally deposited into accounts under the control of an escrow agent
in California.  The escrow agent followed the instructions provided in the escrow agreements

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

signed by, or at the direction of, the Offering Defendants, which describe how investor funds
are to be released to the Offering Defendants.
33. For investments in the Tower Project, after the escrow agent released funds
from escrow into accounts held in the names of the two issuers, Path America Tower and Path
Tower Seattle, Defendant Dargey transferred the funds to an account held in the name of
Potala Tower Seattle (the “Tower Account”).  For investments in the Farmer’s Market
Project, the escrow agent released funds from escrow into an account held in the name of Path
America Farmer’s Market (the “Farmer’s Market Account”).
34. On September 9, 2014, Dargey transferred $1.5 million from the Tower
Account to an account held in the name of Dargey Development, LLC, another entity he
controls.  The next day, Dargey transferred the $1.5 million from Dargey Development into
an account held in his name and that of his wife.  On September 10, 2014, Dargey also
transferred $1 million from the Tower Account directly into the account held in his name and
that of his wife.  On September 19, 2014, Dargey used $2,473,500 from the account in his and
his wife’s name to fund the purchase of a residential property in Bellevue, Washington by
Bellewood Farms Trust, the beneficiaries of which are Dargey and his wife.
35. Between approximately October 2012 and June 2015, Defendant Dargey
withdrew approximately $350,000 in cash from the Tower Account and the Farmer’s Market
Account, in most instances through a debit card or at a bank teller.  Defendant Dargey made
more than $200,000 of those withdrawals at 14 different gambling establishments in
Washington, Nevada, California, and British Columbia, Canada.
36. On October 7, 2014, Dargey transferred $200,000 from the Tower Account for
use as earnest money on the purchase of property in Shoreline, Washington.  The Shoreline
property was not part of the Tower Project and is located more than seven miles away.  On
January 14, 2015, Dargey transferred an additional $350,000 from the Tower Account for use
as earnest money on the purchase of the Shoreline property.

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

37. From January 2015 through approximately May 2015, Dargey transferred
$6,675,000 from the Tower Account to an account held in the name of Potala Shoreline, an
entity Dargey owns and controls and which is unrelated to the Tower Project.  On May 13,
2015, Dargey transferred approximately $5.9 million from the Potala Shoreline account to
complete the purchase of the property in Shoreline, Washington.  Together with the prior
transfers of $550,000 for use as earnest money, Dargey thus diverted a total of $7,225,000
from the Tower Project for the benefit of Potala Shoreline, of which he used approximately
$6,450,000 to purchase the Shoreline property.
38. From July 2012 through approximately August 2014, on approximately 40
occasions Defendant Dargey transferred a total of approximately $7.5 million from the Tower
Account and Farmer’s Market Account to an account held in the name of Potala Village
Kirkland, an entity Dargey owns and controls and which is unrelated to either the Tower
Project or the Farmer’s Market Project.  In August 2014, Dargey used approximately $4.25
million of those funds to purchase property in Kirkland, Washington.
D. Defendants’ Material Misrepresentations and Omissions in the PPMs
39. The Offering Defendants made materially false and misleading statements and
omissions of material facts in the PPMs used to solicit investors in the Tower Project and
Farmer’s Market Project.
40. The PPMs for both the Tower Project and Farmer’s Market Project state that
the offerings are intended to allow for an investment to qualify under the EB-5 Program.
Moreover, the Tower Project PPMs state that defendant Path America KingCo takes on the
responsibility of “maintenance and compliance ... under USCIS guidelines.”
41. In particular, the Tower Project PPMs state that an investor’s permanent
residency petition may be denied by USCIS if the funds are used for a project that is a
“material departure from the business plan presented to USCIS in obtaining the investor’s
initial EB-5 petition approval.”  The Offering Defendants’ statements are false and misleading
because at the time they made the statements acknowledging the importance of adhering to

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

the project plans, Defendants had transferred or were then transferring millions of dollars of
investor funds for purposes contrary to those set forth in the business plans provided to
USCIS.  Thus, while stating in a business plan provided to USCIS that Defendants would use
the Tower Project funds solely for the Tower Project, Defendants siphoned millions of dollars
of investor funds from the Tower Project for Dargey’s personal use.
E. Defendants’ Fraudulent Conduct Is Ongoing
42. Defendants’ fraud is ongoing.  First, the PPMs for the Tower Project set forth
Defendants’ intention to raise an additional approximately $35 million for that project.
Defendant Dargey also has recently submitted new materials with USCIS stating his intention
to raise an additional $95 million from foreign investors, also via the EB-5 Program.
43. Second, Defendants continue to misappropriate investor funds and to use them
contrary to the purposes stated in PPMs provided to solicit new investments.    In June 2015
alone, Defendant Dargey withdrew c ash from investor funded bank accounts, including
$12,000 withdrawn at gambling establishments.  Defendants also continue to use investor
funds for unrelated real estate projects.  As recently as May 2015, Defendants P ath America,
Path America KingCo, Path America Tower, Path Tower Seattle, Potala Tower Seattle, and
Dargey used approximately $5.9 million of investor funds for the purchase of property in
Shoreline, Washington as described above.
44. Defendants also have transferred substantial funds to foreign bank accounts.
From September 2013 through May 2015, Defendants transferred over $3 million from the
Tower Account and Farmer’s Market Account to a Hong Kong account held in the name of
Path America Asia, Ltd.,  over which Dargey has sole control.
45. Defendants engaged in the scheme to defraud through the misappropriation of
investor funds knowingly or recklessly.  Further, the Offering Defendants made false and
misleading statements, and material omissions of fact to investors, knowingly or recklessly.

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 by Path America, Path
America SnoCo, Path America Farmer’s Market, Path America KingCo, Path America
Tower, Path Tower Seattle, Potala Tower Seattle, and Dargey
(Securities Fraud)
46. The Commission realleges and incorporates by reference paragraphs 1 through
45.
47. By engaging in the conduct described above, Defendants Path America, Path
America SnoCo, Path America Farmer’s Market, Path America KingCo, Path America
Tower, Path Tower Seattle, Potala Tower Seattle, and Dargey, in connection with the
purchase and sale of securities, by the use of the means and instrumentalities of interstate
commerce and by the use of the mails, directly and indirectly: used and employed devices,
schemes and artifices to defraud; and engaged in acts, practices and courses of business which
operated as a fraud and deceit upon purchasers and sellers and prospective purchasers and
sellers of securities.  Further, Defendants Path America, Path America SnoCo, Path America
Farmer’s Market, Path America KingCo, Path America Tower, Path Tower Seattle, Potala
Tower Seattle, and Dargey made untrue statements of material fact and omitted to state
material facts necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
48. Defendants knew, or were reckless in not knowing, of the facts and
circumstances described above.
49. By reason of the foregoing, Defendants violated Section 10(b) of the Exchange
Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5].

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

SECOND CLAIM FOR RELIEF
Violations of Section 17(a)(1) and Section 17(a)(3) of the Securities Act by Path America,
Path America SnoCo, Path America Farmer’s Market, Path America KingCo, Path America
Tower, Path Tower Seattle, Potala Tower Seattle, and Dargey
(Securities Fraud)
50. The Commission realleges and incorporates by reference paragraphs 1 through
45.
51. By engaging in the conduct described above, defendants Path America, Path
America SnoCo, Path America Farmer’s Market, Path America KingCo, Path America
Tower, Path Tower Seattle, Potala Tower Seattle, and Dargey, by use of means and
instruments of transportation or communication in interstate commerce or by use of the mails,
directly or indirectly, have employed devices, schemes and artifices to defraud.
52. As detailed above, Defendants intentionally or recklessly made the untrue
statements and omissions and engaged in the devices, schemes, artifices, transactions, acts,
practices and courses of business described above.
53. By reason of the foregoing, Defendants violated Sections 17(a)(1) and (a)(3) of
the Securities Act [15 U.S.C. § 77q(a)(1), 15 U.S.C. § 77q(a)(3)].
THIRD CLAIM FOR RELIEF
 Violations of Section 17(a)(2) of the Securities Act by Path America, Path America
SnoCo, Path America Farmer’s Market, Path America KingCo, Path America Tower, Path
Tower Seattle, and Dargey
(Securities Fraud)
54. The Commission realleges and incorporates by reference paragraphs 1 through
45.
55. By engaging in the conduct described above, Defendants Path America, Path
America SnoCo, Path America Farmer’s Market, Path America KingCo, Path America
Tower, Path Tower Seattle, and Dargey, acting at least negligently, in the offer and sale of

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

securities, by the use of the means and instruments of transportation or communication in
interstate commerce or by use of the mails, directly or indirectly, have obtained money or
property by means of untrue statements of material fact or by omitting to state material facts
necessary in order to make the statements made, in light of the circumstances under which
they were made, not misleading.
56. As detailed above, Defendants Path America, Path America SnoCo, Path
America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower Seattle,
and Dargey have made false and misleading statements in the PPMs to investors.
57. By reason of the foregoing, Defendants Path America, Path America SnoCo,
Path America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower
Seattle, and Dargey violated Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)].
FOURTH CLAIM FOR RELIEF
(Relief Defendants)
58. The Commission realleges and incorporates by reference paragraphs 1 through
45.
59. Relief Defendants Potala Shoreline and Potala Village Kirkland received and
may continue to hold investors funds and/or assets purchased with investors funds that were
obtained through violations of the federal securities laws, as alleged above.
60. As set forth above, investor funds were transferred into bank accounts held in
the names of Relief Defendants Potala Shoreline and Potala Village Kirkland.
61. As set forth above, investor funds were used by Relief Defendants Potala
Shoreline and Potala Village Kirkland to purchase property unrelated to the projects for which
the investor funds were raised.
62. Relief Defendants do not have a legitimate claim to the funds thus obtained.

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court:
I.
Enter an order restraining and enjoining Defendants Path America, Path America
SnoCo, Path America Farmer’s Market, Path America KingCo, Path America Tower, Path
Tower Seattle, Potala Tower Seattle, and Dargey, temporarily, preliminarily and permanently
from, directly or indirectly, violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)],
Section 10(b) of the Exchange Act [15 U.S.C. § 78j] and Exchange Act Rule 10b-5 [17 CFR
240.10b-5] thereunder.
II.
Enter an order restraining and enjoining Defendants Path America, Path America
SnoCo, Path America Farmer’s Market, Path America KingCo, Path America Tower, Path
Tower Seattle, Potala Tower Seattle, and Dargey, temporarily, preliminarily and permanently
from, directly or indirectly, soliciting any person or entity to purchase or sell any security.
III.
Enter an order restraining and enjoining Defendants Path America, Path America
SnoCo, Path America Farmer’s Market, Path America KingCo, Path America Tower, Path
Tower Seattle, Potala Tower Seattle, and Dargey, temporarily, preliminarily and permanently
from, directly or indirectly, participating in the issuance, offer, or sale of any security of any
entity controlled by, or under joint control with, any of them.
IV.
Enter an order freezing the assets of Defendants Path America, Path America SnoCo,
Path America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower
Seattle, Potala Tower Seattle, and Dargey; enter an order freezing all assets currently held in
escrow that are associated with investments in Defendants Path America Farmer’s Market,
Path America Tower, and Path Tower Seattle; and enter an order freezing the assets pending

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

further order of Relief Defendants Potala Shoreline and Potala Village Kirkland in specified
assets or accounts obtained through the violations alleged herein.
V.
Enter an order requiring Defendant Path America to prepare a sworn accounting of all
money obtained from investors, including (1) a report on the disposition and current location
of the money, and (2) disclosure of all bank, brokerage, escrow, and financial accounts where
investor money was deposited.
VI.
Enter an order prohibiting the movement, alteration, and destruction of books and
records to protect the books and records showing the location of assets and the disposition of
investors’ money and to protect all remaining documents necessary for full discovery in this
matter.
VII.
Enter an order requiring Defendant Dargey to return to the United States any
investors’ funds that have been transferred abroad and subjecting those assets to the order
freezing assets.
VIII.
Enter an order requiring Defendants Path America, Path America SnoCo, Path
America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower Seattle,
Potala Tower Seattle, and Dargey, and Relief Defendants Potala Shoreline and Potala Village
Kirkland, to disgorge the ill-gotten gains received as a result of the violations alleged herein,
plus prejudgment interest thereon.
IX.
Enter an order requiring Defendants Path America, Path America SnoCo, Path
America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower Seattle,
Potala Tower Seattle, and Dargey to pay civil monetary penalties pursuant to Section 20(d) of

SEC V. PATH AMERICA, LLC, ET AL.
COMPLAINT

SECURITIES AND EXCHANGE COMMISSION
44 MONTGOMERY STREET, SUITE 2800
SAN FRANCISCO, CA 94104
TELEPHONE:  415-705-2500

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

the Securities Act [15 U.S.C. § 77t(d)], and Section 21(d)(3) of the Exchange Act [15 U.S.C.
§ 78u(d)(3)].
X.
Retain jurisdiction of this action in accordance with the principles of equity and the
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders
and decrees that may be entered, or to entertain any suitable application or motion for
additional relief within the jurisdiction of this Court.
XI.
Grant such other and further relief as this Court may determine to be just, equitable,
and necessary.

Dated:  August 24, 2015    Respectfully submitted,

  s/ Bernard B. Smyth
Bernard B. Smyth

  Attorney for Plaintiff
SECURITIES AND EXCHANGE
COMMISSION

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

 SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

 

SECURITIES AND EXCHANGE COMMISSION, 
 
  Plaintiff, 
 
 vs. 
 
PATH AMERICA, LLC; PATH AMERICA SNOCO 
LLC; PATH AMERICA FARMER’S MARKET, LP; 
PATH AMERICA KINGCO LLC; PATH 
AMERICA TOWER, LP; PATH TOWER 
SEATTLE, LP; POTALA TOWER SEATTLE, LLC; 
and LOBSANG DARGEY, 
 

  Defendants, and 
 

POTALA SHORELINE, LLC; and POTALA 
VILLAGE KIRKLAND, LLC, 

 
  Relief Defendants. 

 

Civil Action No. ________________ 
 
 
COMPLAINT  

Plaintiff Securities and Exchange Commission (“Commission” or “SEC”) alleges: 

SUMMARY OF ACTION 

1. Since February 2012, defendants Lobsang Dargey; Path America, LLC; Path 

America SnoCo LLC; Path America Farmer’s Market, LP; Path America KingCo LLC; Path 

America Tower, LP; Path Tower Seattle, LP; and Potala Tower Seattle, LLC (collectively, 

UNITED STATES DISTRICT COURT 

WESTERN DISTRICT OF WASHINGTON 

SEATTLE DIVISION 

 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 1 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-2- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

“Defendants”) have exploited a federal visa program to defraud investors seeking investment 

returns and a path to United States residency.  To date, Defendants have fraudulently raised at 

least $125 million through their sales of securities to 250 investors and collected at least $11 

million in additional fees. 

2. Most of the direct victims of this fraud are foreign nationals seeking residency 

in the United States.  Defendants Dargey, Path America, Path America SnoCo, Path America 

Farmer’s Market, Path America KingCo, Path America Tower, and Path Tower Seattle 

(collectively, the “Offering Defendants”) solicited the investments predominantly from 

Chinese citizens, claiming the investments would qualify under the EB-5 Program 

administered by United States Citizenship and Immigration Services (“USCIS”), which 

provides that foreign nationals may qualify for United States residency if they make a 

qualified investment of $500,000 or more in a specified project that is determined to have 

created or preserved at least 10 jobs for United States workers. 

3. Using this lure, and the promise of investment returns, Defendants have 

targeted and continue to target Chinese investors in a scheme to sell securities to finance two 

different real estate projects, a skyscraper in downtown Seattle and a mixed-use commercial 

and residential development containing a farmer’s market in Everett, Washington.  However, 

rather than use the money solely for the projects for which it was purportedly raised, 

Defendants have misappropriated approximately $17.6 million.  For example, Defendant 

Dargey misappropriated approximately $2.5 million of investor funds to purchase a residence 

in Bellevue, Washington.  Further, Dargey made cash withdrawals of investor funds totaling 

approximately $350,000, including more than $200,000 withdrawn at 14 different casinos in 

Washington, Nevada, California, and British Columbia, Canada.  Defendants have also 

misappropriated approximately $14.7 million of investor funds for use in real estate projects 

under Dargey’s control through relief defendants Potala Shoreline, LLC and Potala Village 

Kirkland, LLC, which are unrelated to the projects for which the funds were raised. 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 2 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-3- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

4. The Offering Defendants have also made materially false and misleading 

statements and omissions of material facts to solicit investors for the real estate projects.  

Investors were provided with a Private Placement Memorandum (“PPM”) that describes the 

securities offering and states that the offering is designed to provide investors with a path to 

residency in the United States through the EB-5 Program.  However, the Offering Defendants 

knew, or were reckless in not knowing, at the time investors were provided the PPMs that 

Defendants’ use of funds contrary to what was disclosed in filings to USCIS put in jeopardy 

the investors’ EB-5 petitions and ability to obtain residency in the United States. 

5. Through this action, the Commission seeks to protect the interests of current and 

future investors.  As the fraud described is ongoing and likely to continue, and millions of dollars 

of investor funds remain at risk of dissipation, the Commission seeks emergency ex parte relief 

in this action to enjoin violations of the anti-fraud provisions of the federal securities laws, freeze 

assets, and secure other equitable relief. 

JURISDICTION AND VENUE 

6. The Commission brings this action pursuant to Sections 20(b), 20(d), and 22(a) 

of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t(b) and 77t(d), and 77v(a)], 

and Sections 21(d), 21(e), and 27 of the Securities Exchange Act of 1934 (“Exchange Act”) 

[15 U.S.C. §§ 78u(d), 78u(e), and 78aa].  Defendants, directly or indirectly, made use of the 

means and instrumentalities of interstate commerce or of the mails in connection with the 

acts, transactions, practices, and courses of business alleged in this Complaint. 

7. Venue is proper in this District pursuant to Section 22(a) of the Securities Act 

[15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)].  During 

the period described in this Complaint, defendants Path America, Path America SnoCo, Path 

America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower Seattle, 

and Potala Tower Seattle have maintained their principal places of business in Everett, 

Washington.  Defendant Dargey also resides in this District.  In addition, acts, practices, and 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 3 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-4- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

courses of business that form the basis for the violations alleged in this Complaint occurred in 

this District. 

8. Assignment to the Seattle Division is appropriate pursuant to Local Rule 

3(d)(1) because a substantial part of the events that give rise to the claims occurred in 

Snohomish County and King County.  In addition, defendant Dargey resides in King County 

and defendants Path America, Path America SnoCo, Path America Farmer’s Market, Path 

America KingCo, Path America Tower, Path Tower Seattle, and Potala Tower Seattle 

maintain their principal places of business in Snohomish County. 

DEFENDANTS 

9. Defendant Lobsang Dargey, age 41, of Bellevue, Washington, is the 

controlling owner and sole member of Dargey Development, LLC, which is the owner and 

controlling member of defendant Path America, LLC.  Dargey, through Path America, also 

controls each of the other defendants.  Dargey also controls the bank accounts for each of the 

entities through which investor money flowed. 

10. Defendant Path America, LLC is a Washington limited liability company 

registered with the Washington Secretary of State since 2010 that maintains its principal place 

of business in Everett, Washington.  Dargey is the controlling owner and sole member of 

Dargey Development, the owner and controlling member of Path America.  Path America is 

the parent and managing member of defendants Path America SnoCo and Path America 

KingCo. 

11. Defendant Path America SnoCo LLC is a Washington limited liability 

company registered with the Washington Secretary of State since 2010 that maintains its 

principal place of business in Everett, Washington.  Defendant Path America is the owner and 

sole member of Path America SnoCo.  On or about August 8, 2011, Path America SnoCo 

obtained designation as a “Regional Center” from USCIS, which authorized it to sponsor EB-

5 Program investment offerings. 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 4 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-5- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

12. Defendant Path America Farmer’s Market, LP is a Washington limited 

partnership that maintains its principal place of business in Everett, Washington.  Path 

America Farmer’s Market is the issuer for an EB-5 Program investment offering sponsored by 

Path America SnoCo, and maintains a bank account into which proceeds raised from 

defrauded investors are deposited. 

13. Defendant Path America KingCo LLC is a Washington limited liability 

company registered with the Washington Secretary of State since 2010 that maintains its 

principal place of business in Everett, Washington.  Defendant Path America is the owner and 

sole member of Path America KingCo.  On or about June 6, 2013, Path America KingCo 

obtained designation as a “Regional Center” from USCIS, which authorized it to sponsor EB-

5 Program investment offerings.  

14. Defendant Path America Tower, LP is a Washington limited partnership that 

maintains its principal place of business in Everett, Washington.  Path America Tower is the 

issuer for an EB-5 Program investment offering sponsored by Path America KingCo, and 

maintains a bank account into which proceeds raised from defrauded investors are deposited. 

15. Defendant Path Tower Seattle, LP is Washington limited partnership that 

maintains its principal place of business in Everett, Washington.  Path Tower Seattle is the 

issuer for an EB-5 Program investment offering sponsored by Path America KingCo, and 

maintains a bank account into which proceeds raised from defrauded investors are deposited. 

16. Defendant Potala Tower Seattle, LLC is a Delaware limited liability company 

that maintains its principal place of business in Everett, Washington.  Potala Tower Seattle 

maintains a bank account into which proceeds raised from defrauded investors are deposited.  

Potala Tower Seattle also owns property purchased with funds raised from defrauded 

investors. 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 5 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-6- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

RELIEF DEFENDANTS 

17. The following entities are named as Relief Defendants in this action for the 

purpose of assuring complete relief.  Each received investor money or property that was 

obtained in violation of the federal securities laws. 

18. Potala Shoreline, LLC is a Delaware limited liability company that maintains 

its principal place of business in Everett, Washington.  Potala Shoreline maintains a bank 

account into which proceeds raised from defrauded investors are deposited.  Potala Shoreline 

also owns property purchased with funds raised from defrauded investors. 

19. Potala Village Kirkland, LLC is a Washington limited liability company that 

maintains its principal place of business in Everett, Washington.  Potala Village Kirkland 

maintains a bank account into which proceeds raised from defrauded investors are deposited.  

Potala Village Kirkland also owns property purchased with funds raised from defrauded 

investors. 

FACTUAL ALLEGATIONS 

A. The Tower Project 

20. From November 2013 to the present, Defendants Dargey, Path America, and 

Path America KingCo, through Defendants Path America Tower and Path Tower Seattle, 

raised approximately $85 million from 170 Chinese nationals as investments in a real estate 

development project in downtown Seattle (referred to herein as the “Tower Project”). 

21. Whether through Path America Tower or Path Tower Seattle, Defendants 

Dargey, Path America, and Path America KingCo solicit investments as limited partnership 

interests which are sold for $500,000 each, plus an administrative fee of $45,000 per investor. 

22. The PPMs for both Path America Tower and Path Tower Seattle contain 

substantially the same information, including the statement that an investment in the project is 

intended to qualify under the EB-5 Program.  The PPMs seek to raise a combined $122 

million from 244 investors and are provided to investors by Defendants Path America, Path 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 6 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-7- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

America KingCo, Path America Tower, Path Tower Seattle, and Dargey, and/or individuals or 

entities acting under their direction. 

23. According to the PPMs, the proceeds of the offerings are to be loaned to an 

operating company controlled by Dargey, Potala Tower Seattle, for the construction and 

development of a 40-story tower on the real property located at 2116 Fourth Avenue, Seattle, 

Washington.  Specifically, Potala Tower Seattle is to use the money “to acquire, construct, 

manage and operate a new mixed-use facility to include [a hotel] …, a restaurant and wine 

bar, residential apartment units, a variety of amenities for the hotel guests and residents, and 

underground parking.” 

24. In addition to providing investors with the PPMs, Defendants Path America, 

Path America KingCo, Path America Tower, Path Tower Seattle, and Dargey also provide 

subscription agreements which direct investors to send $500,000, by wire, to an escrow 

account in the United States.  The subscription agreements also direct investors to send a 

$45,000 administrative fee, by wire, to an account in Hong Kong. 

25. Investors are told in both the PPMs and subscription agreements that upon 

confirmation that the investor has filed an EB-5 visa petition with USCIS, $400,000 is 

released from escrow, with the remaining $100,000 released from escrow upon confirmation 

that USCIS has approved the investor’s EB-5 visa petition.   

B. The Farmer’s Market Project 

26. From February 2012 through approximately April 2014, Defendants Dargey, 

Path America, and Path America SnoCo, through Path America Farmer’s Market, raised 

approximately $41 million from 82 Chinese nationals as investments in a real estate 

development project in Everett, Washington (referred to herein as the “Farmer’s Market 

Project”). 

27. Defendants Dargey, Path America, Path America SnoCo, and Path America 

Farmer’s Market solicited money for the Farmer’s Market Project from investors through the 

sale of limited partnership interests in Path America Farmer’s Market.  The limited 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 7 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-8- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

partnership interests were sold for $500,000 each, plus an administrative fee of $45,000 per 

investor. 

28. The PPM for Path America Farmer’s Market states that an investment in the 

security is intended to qualify under the EB-5 Program.  The PPM, which sought to raise $40 

million from 80 investors, was provided to investors by defendants Path America, Path 

America SnoCo, Path America Farmer’s Market, and Dargey, and/or individuals or entities 

acting under their direction. 

29. According to the PPM, the proceeds from the offering were to be used to (1) 

invest in Path Farmer’s Market, LLC, an entity that “intends to develop, construct, manage 

and operate” a real estate project with residential apartments and retail stores in Everett, 

Washington, and (2) invest in Everett Hospitality Company, LLC, an entity that “intends to 

develop, construct, manage, and operate a hotel project” on a parcel of land immediately 

adjacent to the Path America Farmer’s Market parcel. 

30. In addition to providing investors with the PPM, Defendants Path America, 

Path America SnoCo, Path America Farmer’s Market, and Dargey also provided a 

subscription agreement which directs investors to send $500,000, by wire, to an escrow 

account in the United States.  The subscription agreement also directs investors to send a 

$45,000 administrative fee, by wire, to an account in Hong Kong. 

31. Investors were told in both the PPM and subscription agreement that, upon 

confirmation that the investor has filed an EB-5 visa petition with USCIS, $400,000 is 

released from escrow, with the remaining $100,000 released from escrow upon confirmation 

that USCIS has approved the investor’s EB-5 visa petition.   

C. Defendants’ Misappropriation of Investor Funds 

32. Defendants have misappropriated approximately $17.6 million of investor 

funds.  As described above, the funds invested in both the Tower Project and the Farmer’s 

Market Project were originally deposited into accounts under the control of an escrow agent 

in California.  The escrow agent followed the instructions provided in the escrow agreements 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 8 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-9- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

signed by, or at the direction of, the Offering Defendants, which describe how investor funds 

are to be released to the Offering Defendants. 

33. For investments in the Tower Project, after the escrow agent released funds 

from escrow into accounts held in the names of the two issuers, Path America Tower and Path 

Tower Seattle, Defendant Dargey transferred the funds to an account held in the name of 

Potala Tower Seattle (the “Tower Account”).  For investments in the Farmer’s Market 

Project, the escrow agent released funds from escrow into an account held in the name of Path 

America Farmer’s Market (the “Farmer’s Market Account”). 

34. On September 9, 2014, Dargey transferred $1.5 million from the Tower 

Account to an account held in the name of Dargey Development, LLC, another entity he 

controls.  The next day, Dargey transferred the $1.5 million from Dargey Development into 

an account held in his name and that of his wife.  On September 10, 2014, Dargey also 

transferred $1 million from the Tower Account directly into the account held in his name and 

that of his wife.  On September 19, 2014, Dargey used $2,473,500 from the account in his and 

his wife’s name to fund the purchase of a residential property in Bellevue, Washington by 

Bellewood Farms Trust, the beneficiaries of which are Dargey and his wife. 

35. Between approximately October 2012 and June 2015, Defendant Dargey 

withdrew approximately $350,000 in cash from the Tower Account and the Farmer’s Market 

Account, in most instances through a debit card or at a bank teller.  Defendant Dargey made 

more than $200,000 of those withdrawals at 14 different gambling establishments in 

Washington, Nevada, California, and British Columbia, Canada. 

36. On October 7, 2014, Dargey transferred $200,000 from the Tower Account for 

use as earnest money on the purchase of property in Shoreline, Washington.  The Shoreline 

property was not part of the Tower Project and is located more than seven miles away.  On 

January 14, 2015, Dargey transferred an additional $350,000 from the Tower Account for use 

as earnest money on the purchase of the Shoreline property. 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 9 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-10- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

37. From January 2015 through approximately May 2015, Dargey transferred 

$6,675,000 from the Tower Account to an account held in the name of Potala Shoreline, an 

entity Dargey owns and controls and which is unrelated to the Tower Project.  On May 13, 

2015, Dargey transferred approximately $5.9 million from the Potala Shoreline account to 

complete the purchase of the property in Shoreline, Washington.  Together with the prior 

transfers of $550,000 for use as earnest money, Dargey thus diverted a total of $7,225,000 

from the Tower Project for the benefit of Potala Shoreline, of which he used approximately 

$6,450,000 to purchase the Shoreline property. 

38. From July 2012 through approximately August 2014, on approximately 40 

occasions Defendant Dargey transferred a total of approximately $7.5 million from the Tower 

Account and Farmer’s Market Account to an account held in the name of Potala Village 

Kirkland, an entity Dargey owns and controls and which is unrelated to either the Tower 

Project or the Farmer’s Market Project.  In August 2014, Dargey used approximately $4.25 

million of those funds to purchase property in Kirkland, Washington. 

D. Defendants’ Material Misrepresentations and Omissions in the PPMs 

39. The Offering Defendants made materially false and misleading statements and 

omissions of material facts in the PPMs used to solicit investors in the Tower Project and 

Farmer’s Market Project.  

40. The PPMs for both the Tower Project and Farmer’s Market Project state that 

the offerings are intended to allow for an investment to qualify under the EB-5 Program.  

Moreover, the Tower Project PPMs state that defendant Path America KingCo takes on the 

responsibility of “maintenance and compliance … under USCIS guidelines.”  

41. In particular, the Tower Project PPMs state that an investor’s permanent 

residency petition may be denied by USCIS if the funds are used for a project that is a 

“material departure from the business plan presented to USCIS in obtaining the investor’s 

initial EB-5 petition approval.”  The Offering Defendants’ statements are false and misleading 

because at the time they made the statements acknowledging the importance of adhering to 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 10 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-11- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

the project plans, Defendants had transferred or were then transferring millions of dollars of 

investor funds for purposes contrary to those set forth in the business plans provided to 

USCIS.  Thus, while stating in a business plan provided to USCIS that Defendants would use 

the Tower Project funds solely for the Tower Project, Defendants siphoned millions of dollars 

of investor funds from the Tower Project for Dargey’s personal use. 

E. Defendants’ Fraudulent Conduct Is Ongoing 

42. Defendants’ fraud is ongoing.  First, the PPMs for the Tower Project set forth 

Defendants’ intention to raise an additional approximately $35 million for that project.  

Defendant Dargey also has recently submitted new materials with USCIS stating his intention 

to raise an additional $95 million from foreign investors, also via the EB-5 Program. 

43. Second, Defendants continue to misappropriate investor funds and to use them 

contrary to the purposes stated in PPMs provided to solicit new investments.  In June 2015 

alone, Defendant Dargey withdrew cash from investor funded bank accounts, including 

$12,000 withdrawn at gambling establishments.  Defendants also continue to use investor 

funds for unrelated real estate projects.  As recently as May 2015, Defendants Path America, 

Path America KingCo, Path America Tower, Path Tower Seattle, Potala Tower Seattle, and 

Dargey used approximately $5.9 million of investor funds for the purchase of property in 

Shoreline, Washington as described above. 

44. Defendants also have transferred substantial funds to foreign bank accounts.  

From September 2013 through May 2015, Defendants transferred over $3 million from the 

Tower Account and Farmer’s Market Account to a Hong Kong account held in the name of 

Path America Asia, Ltd., over which Dargey has sole control. 

45. Defendants engaged in the scheme to defraud through the misappropriation of 

investor funds knowingly or recklessly.  Further, the Offering Defendants made false and 

misleading statements, and material omissions of fact to investors, knowingly or recklessly. 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 11 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-12- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

FIRST CLAIM FOR RELIEF 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 by Path America, Path 

America SnoCo, Path America Farmer’s Market, Path America KingCo, Path America 

Tower, Path Tower Seattle, Potala Tower Seattle, and Dargey 

(Securities Fraud) 

46. The Commission realleges and incorporates by reference paragraphs 1 through 

45. 

47. By engaging in the conduct described above, Defendants Path America, Path 

America SnoCo, Path America Farmer’s Market, Path America KingCo, Path America 

Tower, Path Tower Seattle, Potala Tower Seattle, and Dargey, in connection with the 

purchase and sale of securities, by the use of the means and instrumentalities of interstate 

commerce and by the use of the mails, directly and indirectly: used and employed devices, 

schemes and artifices to defraud; and engaged in acts, practices and courses of business which 

operated as a fraud and deceit upon purchasers and sellers and prospective purchasers and 

sellers of securities.  Further, Defendants Path America, Path America SnoCo, Path America 

Farmer’s Market, Path America KingCo, Path America Tower, Path Tower Seattle, Potala 

Tower Seattle, and Dargey made untrue statements of material fact and omitted to state 

material facts necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading. 

48. Defendants knew, or were reckless in not knowing, of the facts and 

circumstances described above. 

49. By reason of the foregoing, Defendants violated Section 10(b) of the Exchange 

Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]. 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 12 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-13- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

SECOND CLAIM FOR RELIEF 

Violations of Section 17(a)(1) and Section 17(a)(3) of the Securities Act by Path America, 

Path America SnoCo, Path America Farmer’s Market, Path America KingCo, Path America 

Tower, Path Tower Seattle, Potala Tower Seattle, and Dargey 

(Securities Fraud) 

50. The Commission realleges and incorporates by reference paragraphs 1 through 

45. 

51. By engaging in the conduct described above, defendants Path America, Path 

America SnoCo, Path America Farmer’s Market, Path America KingCo, Path America 

Tower, Path Tower Seattle, Potala Tower Seattle, and Dargey, by use of means and 

instruments of transportation or communication in interstate commerce or by use of the mails, 

directly or indirectly, have employed devices, schemes and artifices to defraud. 

52. As detailed above, Defendants intentionally or recklessly made the untrue 

statements and omissions and engaged in the devices, schemes, artifices, transactions, acts, 

practices and courses of business described above. 

53. By reason of the foregoing, Defendants violated Sections 17(a)(1) and (a)(3) of 

the Securities Act [15 U.S.C. § 77q(a)(1), 15 U.S.C. § 77q(a)(3)]. 

THIRD CLAIM FOR RELIEF 

 Violations of Section 17(a)(2) of the Securities Act by Path America, Path America 

SnoCo, Path America Farmer’s Market, Path America KingCo, Path America Tower, Path 

Tower Seattle, and Dargey 

(Securities Fraud) 

54. The Commission realleges and incorporates by reference paragraphs 1 through 

45. 

55. By engaging in the conduct described above, Defendants Path America, Path 

America SnoCo, Path America Farmer’s Market, Path America KingCo, Path America 

Tower, Path Tower Seattle, and Dargey, acting at least negligently, in the offer and sale of 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 13 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-14- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

securities, by the use of the means and instruments of transportation or communication in 

interstate commerce or by use of the mails, directly or indirectly, have obtained money or 

property by means of untrue statements of material fact or by omitting to state material facts 

necessary in order to make the statements made, in light of the circumstances under which 

they were made, not misleading. 

56. As detailed above, Defendants Path America, Path America SnoCo, Path 

America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower Seattle, 

and Dargey have made false and misleading statements in the PPMs to investors. 

57. By reason of the foregoing, Defendants Path America, Path America SnoCo, 

Path America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower 

Seattle, and Dargey violated Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)]. 

FOURTH CLAIM FOR RELIEF 

(Relief Defendants) 

58. The Commission realleges and incorporates by reference paragraphs 1 through 

45. 

59. Relief Defendants Potala Shoreline and Potala Village Kirkland received and 

may continue to hold investors funds and/or assets purchased with investors funds that were 

obtained through violations of the federal securities laws, as alleged above. 

60. As set forth above, investor funds were transferred into bank accounts held in 

the names of Relief Defendants Potala Shoreline and Potala Village Kirkland. 

61. As set forth above, investor funds were used by Relief Defendants Potala 

Shoreline and Potala Village Kirkland to purchase property unrelated to the projects for which 

the investor funds were raised. 

62. Relief Defendants do not have a legitimate claim to the funds thus obtained. 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 14 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-15- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court: 

I. 

Enter an order restraining and enjoining Defendants Path America, Path America 

SnoCo, Path America Farmer’s Market, Path America KingCo, Path America Tower, Path 

Tower Seattle, Potala Tower Seattle, and Dargey, temporarily, preliminarily and permanently 

from, directly or indirectly, violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j] and Exchange Act Rule 10b-5 [17 CFR 

240.10b-5] thereunder. 

II. 

Enter an order restraining and enjoining Defendants Path America, Path America 

SnoCo, Path America Farmer’s Market, Path America KingCo, Path America Tower, Path 

Tower Seattle, Potala Tower Seattle, and Dargey, temporarily, preliminarily and permanently 

from, directly or indirectly, soliciting any person or entity to purchase or sell any security.  

III. 

Enter an order restraining and enjoining Defendants Path America, Path America 

SnoCo, Path America Farmer’s Market, Path America KingCo, Path America Tower, Path 

Tower Seattle, Potala Tower Seattle, and Dargey, temporarily, preliminarily and permanently 

from, directly or indirectly, participating in the issuance, offer, or sale of any security of any 

entity controlled by, or under joint control with, any of them. 

IV. 

Enter an order freezing the assets of Defendants Path America, Path America SnoCo, 

Path America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower 

Seattle, Potala Tower Seattle, and Dargey; enter an order freezing all assets currently held in 

escrow that are associated with investments in Defendants Path America Farmer’s Market, 

Path America Tower, and Path Tower Seattle; and enter an order freezing the assets pending 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 15 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-16- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

further order of Relief Defendants Potala Shoreline and Potala Village Kirkland in specified 

assets or accounts obtained through the violations alleged herein. 

V. 

Enter an order requiring Defendant Path America to prepare a sworn accounting of all 

money obtained from investors, including (1) a report on the disposition and current location 

of the money, and (2) disclosure of all bank, brokerage, escrow, and financial accounts where 

investor money was deposited. 

VI. 

Enter an order prohibiting the movement, alteration, and destruction of books and 

records to protect the books and records showing the location of assets and the disposition of 

investors’ money and to protect all remaining documents necessary for full discovery in this 

matter. 

VII. 

Enter an order requiring Defendant Dargey to return to the United States any 

investors’ funds that have been transferred abroad and subjecting those assets to the order 

freezing assets. 

VIII. 

Enter an order requiring Defendants Path America, Path America SnoCo, Path 

America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower Seattle, 

Potala Tower Seattle, and Dargey, and Relief Defendants Potala Shoreline and Potala Village 

Kirkland, to disgorge the ill-gotten gains received as a result of the violations alleged herein, 

plus prejudgment interest thereon. 

IX. 

Enter an order requiring Defendants Path America, Path America SnoCo, Path 

America Farmer’s Market, Path America KingCo, Path America Tower, Path Tower Seattle, 

Potala Tower Seattle, and Dargey to pay civil monetary penalties pursuant to Section 20(d) of 

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 16 of 17



  

SEC V. PATH AMERICA, LLC, ET AL. 
COMPLAINT 

-17- SECURITIES AND EXCHANGE COMMISSION 
44 MONTGOMERY STREET, SUITE 2800 

SAN FRANCISCO, CA 94104 
TELEPHONE:  415-705-2500  

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

the Securities Act [15 U.S.C. § 77t(d)], and Section 21(d)(3) of the Exchange Act [15 U.S.C. 

§ 78u(d)(3)]. 

X. 

Retain jurisdiction of this action in accordance with the principles of equity and the 

Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders 

and decrees that may be entered, or to entertain any suitable application or motion for 

additional relief within the jurisdiction of this Court. 

XI. 

Grant such other and further relief as this Court may determine to be just, equitable, 

and necessary. 

 

Dated: August 24, 2015    Respectfully submitted, 

 

  s/ Bernard B. Smyth           
Bernard B. Smyth 

        
  Attorney for Plaintiff 

SECURITIES AND EXCHANGE 
COMMISSION

Case 2:15-cv-01350-JLR   Document 1   Filed 08/24/15   Page 17 of 17


	Summary of ACTION
	JURISDICTION AND VENUE
	defendants
	relief defendants
	FACTUAL ALLEGATIONS
	PRAYER FOR RELIEF