A recent lawsuit filed in the U.S. District Court for the Eastern District of California has brought significant allegations against prominent law firm Lewis Brisbois Bisgaard & Smith. The lawsuit accuses the firm of failing to protect 185 Chinese investors who collectively lost $92.5 million in investments made through the CMB Export investment group. These investors had participated in a hotel and condominium project, aiming to qualify for the federal EB-5 visa program.
Background: The EB-5 Investment Project
CMB Export, acting as a junior mezzanine lender, had contributed a total of $450 million to the $2.5 billion project. Each investor, through investments of $500,000, sought qualification for the EB-5 visa program. However, despite their investments, these individuals have received no repayment or profits, resulting in a complete loss of their capital.
Want to know if you’re earning what you deserve? Find out with LawCrossing’s salary surveys.
Allegations Against Lewis Brisbois
The lawsuit claims that Lewis Brisbois, representing CMB Export, failed to fulfill its duties to protect the investors and instead engaged in actions to conceal mistakes. The plaintiffs allege malpractice and aiding CMB’s breach of fiduciary duty, further asserting a RICO conspiracy between Lewis Brisbois and CMB to deflect blame.
Legal Failures and Concealment
According to the lawsuit, Lewis Brisbois and CMB neglected to negotiate protective clauses in loan agreements and failed to recognize unfavorable lending terms. Despite being aware of the project’s risks, they allegedly failed to take appropriate actions to safeguard the investors’ interests, such as negotiating an extension of loan maturity dates.
Sham Lawsuits and Concealed Nature of Litigation
In response to foreclosure notices, Lewis Brisbois filed what the investors describe as meritless lawsuits in California and New York. These lawsuits, according to the plaintiffs, aimed to shift blame onto senior lenders and distract from their own failures. Furthermore, CMB continued to fund legal proceedings, concealing the true nature of the litigation from investors.
Ongoing Response and Silence
While Lewis Brisbois has acknowledged the allegations, they have yet to provide detailed responses, citing their policy of not commenting on claims against clients or the firm. The spokesperson informed Law360 that they are currently preparing their response to the accusations.
In summary, the lawsuit alleges serious misconduct on the part of Lewis Brisbois Bisgaard & Smith, accusing them of negligence, breach of fiduciary duty, and conspiracy to cover up mistakes at the expense of the 185 Chinese investors. As the case unfolds, it sheds light on the complexities and risks associated with investment projects like the EB-5 visa program, emphasizing the importance of due diligence and transparency in legal representation.
Don’t be a silent ninja! Let us know your thoughts in the comment section below.
