Case Summary
**Case Summary: Securities and Exchange Commission v. Charles Liu (Docket Number: 8018559)**
**Court:** United States District Court for the Central District of California
**Date:** 2016
**Overview:**
The Securities and Exchange Commission (SEC) filed a lawsuit against Charles Liu, alleging that he engaged in a fraudulent scheme involving the sale of unregistered securities. The case centered around Liu's operation of a company that purportedly offered investments in a film production venture, specifically targeting foreign investors under the EB-5 Immigrant Investor Program.
**Key Facts:**
- Charles Liu and his associates solicited investments from foreign nationals, claiming that their investment would fund a film project and, in return, provide them with a pathway to permanent residency in the United States through the EB-5 program.
- Liu allegedly misrepresented how the funds would be used, diverting a significant portion of the investors’ money for personal expenses and unrelated business ventures instead of investing it in the film production as promised.
- The SEC contended that Liu was operating in violation of federal securities laws by failing to register the securities being offered and sold to investors.
**Legal Issues:**
- Whether Liu engaged in the sale of unregistered securities in violation of Section 5 of the Securities Act of 1933.
- Whether Liu committed fraud in connection with the offer and sale of securities in violation of Section 17(a) of the Securities Act.
**Outcome:**
The court ruled in favor of the SEC, finding that Charles Liu had indeed violated federal securities laws by both the unregistered sale of securities and engaging in fraudulent activities related to those sales. The SEC sought various remedies, including disgorgement of profits and permanent injunctions against Liu to prevent future violations.
**Significance:**
This case serves as a significant reminder about the importance of compliance with federal securities laws, especially in investment schemes targeting foreign investors. It highlights the SEC's commitment to enforcing securities regulations and protecting investors from fraudulent practices.