Securities And Exchange Commission v. Charles C. Liu et al

NOTICE OF MOTION AND MOTION for Summary Judgment as to DEFENDANTS CHARLES C. LIU AND XIN

C.D. Cal.January 4, 2017

Case No. SACV16-00974-CJC(AGRx) 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 JOHN W. BERRY (Cal. Bar No. 295760) Email: berryj@sec.gov GARY Y. LEUNG (Cal. Bar No. 302928) E-mail: leungg@sec.gov JACOB A. REGENSTREIF (Cal. Bar No. 234734) E-mail: regenstreifj@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director Alka N. Patel, Associate Regional Director John W. Berry, Associate Regional Director 444 S. Flower Street, Suite 900 Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Southern Division SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. CHARLES C. LIU; XIN WANG a/k/a LISA WANG; PACIFIC PROTON THERAPY REGIONAL CENTER, LLC; PACIFIC PROTON EB-5 FUND, LLC; and BEVERLY PROTON CENTER, LLC f/k/a LOS ANGELES COUNTY PROTON THERAPY, LLC, Defendants. Case No. SACV16-00974-CJC (AGRx) PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANTS CHARLES C. LIU AND XIN (LISA) WANG Date: February 6, 2017 Time: 1:30 p.m. Ctrm: 9B Judge: Hon. Cormac J. Carney Case 8:16-cv-00974-CJC-AGR Document 199 Filed 01/04/17 Page 1 of 5 Page ID #:5400 1 Case No. SACV16-00974-CJC(AGRx) 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 TO DEFENDANTS AND THEIR COUNSEL: PLEASE TAKE NOTICE that Plaintiff Securities and Exchange Commission (“SEC”) will, and hereby does, move for summary judgment against defendants Charles C. Liu and Xin (Lisa) Wang. This motion is based upon the accompanying Memorandum of Points and Authorities; the Declaration of Gary Y. Leung; the filings and records in this action; and any other evidence or argument that the SEC may present in support of the motion. This Motion is made after the conference of counsel pursuant to Local Rule 7-3 which took place on November 29 and December 6, 2016. PLEASE TAKE FURTHER NOTICE that the SEC’s motion will be heard on February 6, 2017 at 1:30 p.m., or some other date and time set by the Court, before the Honorable Cormac J. Carney in Courtroom 9B of the Ronald Reagan Federal Building and United States Courthouse, located at 411 West Fourth Street, Santa Ana, CA 92701. Dated: January 4, 2017 Respectfully submitted, /s/ Gary Y. Leung John W. Berry Gary Y. Leung Attorneys for Plaintiff Securities and Exchange Commission Case 8:16-cv-00974-CJC-AGR Document 199 Filed 01/04/17 Page 2 of 5 Page ID #:5401 1 Case No. SACV16-00974-CJC(AGRx) 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 PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. On January 4, 2017, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANTS CHARLES C. LIU AND XIN (LISA) WANG on all the parties to this action addressed as stated on the attached service list: ☐ OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. ☐ PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. ☐ EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. ☐ HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. ☒ UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ☒ ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. ☒ E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. ☐ FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: January 4, 2017 /s/ Gary Y. Leung GARY Y. LEUNG Case 8:16-cv-00974-CJC-AGR Document 199 Filed 01/04/17 Page 3 of 5 Page ID #:5402 Case 8:16-cv-00974-CJC-AGR Document 199 Filed 01/04/17 Page 4 of 5 Page ID #:5403 Case 8:16-cv-00974-CJC-AGR Document 199 Filed 01/04/17 Page 5 of 5 Page ID #:5404 Case No. SACV16-00974-CJC(AGRx) 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 JOHN W. BERRY (Cal. Bar No. 295760) Email: berryj@sec.gov GARY Y. LEUNG (Cal. Bar No. 302928) Email: leungg@sec.gov JACOB A. REGENSTREIF (Cal. Bar No. 234734) E-mail: regenstreifj@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director Alka N. Patel, Associate Regional Director John W. Berry, Associate Regional Director 444 S. Flower Street, Suite 900 Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Southern Division SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. CHARLES C. LIU; XIN WANG a/k/a LISA WANG; PACIFIC PROTON THERAPY REGIONAL CENTER, LLC; PACIFIC PROTON EB-5 FUND, LLC; and BEVERLY PROTON CENTER, LLC f/k/a LOS ANGELES COUNTY PROTON THERAPY, LLC, Defendants. Case No. SACV16-00974-CJC (AGRx) PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANTS CHARLES C. LIU AND XIN (LISA) WANG Date: February 6, 2017 Time: 1:30 p.m. Ctrm: 9B Judge: Hon. Cormac J. Carney Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 1 of 36 Page ID #:5405 i Case No. SACV16-00974-CJC(AGRx) 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 TABLE OF CONTENTS I. INTRODUCTION .................................................................................................. 1 II. STATEMENT OF FACTS ..................................................................................... 1 A. The EB-5 Program........................................................................................ 2 B. Liu Forms an EB-5 Regional Center ............................................................ 2 C. Liu’s and Wang’s Roles with the Entity Defendants ................................... 2 D. The Stated Terms of the Fraudulent EB-5 Offering .................................... 3 E. Liu and Wang Personally Solicit Investors .................................................. 5 F. Liu and Wang Accomplish Very Little and Liu Ousts Thropay .................. 5 G. Liu and Wang Misappropriate Investor Money ........................................... 6 H. Dissipation of Investor Funds to Foreign Accounts ..................................... 6 I. Liu’s and Wang’s Material Misrepresentations and Omissions .................. 7 J. Liu and Wang Refuse to Answer the SEC’s Written Discovery ................. 8 K. Liu and Wang Assert Their Fifth Amendment Rights At Deposition ......... 8 III. ARGUMENT .......................................................................................................... 9 A. Standard of Review ...................................................................................... 9 B. Liu and Wang Violated the Antifraud Provisions ........................................ 9 1. Liu and Wang offered and sold securities ....................................... 10 2. Liu and Wang engaged in a scheme to defraud ............................... 11 3. Liu’s and Wang’s false statements and omissions .......................... 13 4. Liu and Wang acted with scienter and their conduct was unreasonable ..................................................................................... 16 C. Liu and Wang Failed to Respond to Written Discovery and Invoked Their Fifth Amendment Privilege .............................................................. 16 1. Refusal to answer written discovery ................................................ 16 2. Liu’s and Wang’s invocation of the Fifth Amendment ................... 17 D. Liu and Wang Should Be Permanently Enjoined ...................................... 19 E. Liu and Wang Should Be Ordered To Pay Monetary Remedies ............... 20 Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 2 of 36 Page ID #:5406 ii Case No. SACV16-00974-CJC(AGRx) 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 1. Liu and Wang should disgorge their illegal gains ........................... 20 2. Liu and Wang should pay prejudgment interest .............................. 23 3. Liu and Wang should pay civil penalties ......................................... 23 IV. CONCLUSION ..................................................................................................... 25 Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 3 of 36 Page ID #:5407 iii Case No. SACV16-00974-CJC(AGRx) 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 TABLE OF AUTHORITIES CASES Aaron v. SEC 446 U.S. 680 (1980)............................................................................................. 9 Anderson v. Libby Lobby, Inc. 477 U.S. 242 (1986)............................................................................................. 9 Avis Budget Group Inc. v. Cal. State Teachers’ Ret. System 552 U.S. 1162 (2008)......................................................................................... 12 Basic Inc. v. Levinson 485 U.S. 224 (1988)........................................................................................... 14 Celotex Corp. v. Catrett 477 U.S. 317 (1986)............................................................................................. 9 Conlon v. United States 474 F.3d 616 (9th Cir. 2007) ............................................................................. 16 Cooper v. Pickett 137 F.3d 616 (9th Cir. 1997) ............................................................................. 12 Ernst & Ernst v. Hochfelder 425 U.S. 185 (1976)........................................................................................... 10 FTC v. Medicor, LLC, et al. 217 F. Supp. 2d 1048 (C.D. Cal. 2002) ............................................................. 17 SEC v. Gowrish, 2011 WL 2790482 (N.D. Cal. Jul. 14, 2011) .................................................... 25 Herman & MacLean v. Huddleston 459 U.S. 375 (1983)........................................................................................... 10 SEC v. J.T. Wallenbrock & Assocs., 440 F.3d 1109 (9th Cir. 2006) ............................................................... 20, 21, 22 Janus Capital Group, Inc. v. First Derivative Traders 564 U.S. 135 (2011)............................................................................... 13, 14, 15 Krohn v. San Bernardino County Sheriff’s Dept. No. EDCV 06-00595 GW (AJW), 2008 WL 4390162 (C.D. Cal. Sept. 10, 2008) ............................................................................................................ 17 Matsushita Elec. Indus. Co. v. Zenith Radio Corp. 475 U.S. 574 (1986)............................................................................................. 9 Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit 547 U.S. 71 (2006)............................................................................................. 11 Middlesex Retirement Sys. v. Quest Software Inc. Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 4 of 36 Page ID #:5408 iv Case No. SACV16-00974-CJC(AGRx) 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 28 527 F. Supp. 2d 1164 (C.D. Cal. 2007) ............................................................. 12 Nationwide Life Ins. Co. v. Richards 541 F.3d 903 (9th Cir. 2008) ................................................................. 17, 18, 19 Rainier Nat’l. Bank v. Hartstein NO. 91-36165, 1993 WL 175265 (9th Cir. 1993) ............................................. 18 Sanchez v. Vild 891 F.2d 240 (9th Cir. 1989) ............................................................................... 9 SEC v. Abacus International Holding Corp. 2001 WL 940913 (N.D. Cal. Aug. 16, 2001) .................................................... 25 SEC v. Benger 931 F. Supp. 2d 904 (N.D. Ill. 2013) ................................................................. 14 SEC v. Benson 657 F. Supp. 1122 (S.D.N.Y. 1987) .................................................................. 18 SEC v. Burns 817 F.2d 471 (9th Cir. 1987) ............................................................................. 10 SEC v. CMKM Diamonds, Inc. 635 F. Supp. 2d 1185 (D. Nev. 2009) ............................................................... 25 SEC v. Coates 137 F. Supp. 2d 413 (S.D.N.Y. 2001) ............................................................... 24 SEC v. Colello 139 F.3d 674 (9th Cir. 1998) ............................................................................. 18 SEC v. Constantin 939 F.Supp.2d 288 (S.D.N.Y. 2013) ................................................................. 16 SEC v. Cross Fin. Services, Inc. 908 F. Supp. 718 (C.D. Cal. 1995) .................................................................... 23 SEC v. Cymaticolor Corp. 106 F.R.D. 545 (S.D.N.Y. 1985) ....................................................................... 17 SEC v. Dain Rauscher, Inc. 254 F.3d at 856 ........................................................................................ 9, 10, 14 SEC v. Fehn 97 F.3d 1276 (9th Cir. 1996) ............................................................................. 19 SEC v. First City Financial Corp., Ltd. 890 F.2d 1215 (D.C. Cir. 1989) ......................................................................... 21 SEC v. First Jersey Sec., Inc. 101 F.3d 1450 (2d Cir. 1996) ............................................................................ 23 SEC v. First Pacific Bancorp 142 F.3d 1186 (9th Cir. 1998) ........................................................................... 20 Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 5 of 36 Page ID #:5409 v Case No. SACV16-00974-CJC(AGRx) 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 SEC v. Gallard 1997 WL 767570 (S.D.N.Y. Dec. 10, 1997) ..................................................... 16 SEC v. Interlink Data Network of Los Angeles, Inc. 1993 WL 603274 (C.D. Cal. 1993) ............................................................. 18, 22 SEC v. Koracorp Indus., Inc. 575 F.2d 692 (9th Cir. 1978) ............................................................................. 19 SEC v. Lowrance No. 11-CV-03451-EJD, 2012 WL 2599127 (N.D. Cal. Jul. 5, 2012) ............... 12 SEC v. Luna No. 2:10-CV-2166-PMP-CWH, 2014 WL 794202 (D. Nev. Feb. 26, 2014) 18 SEC v. Manor Nursing Ctrs., Inc. 458 F.2d 1082 (2d Cir.1972) ....................................................................... 22, 23 SEC v. Marker 427 F. Supp. 2d 583 (M.D. Fla. 2006) .............................................................. 24 SEC v. Moran 944 F. Supp. 286 (S.D.N.Y. 1996) .................................................................... 24 SEC v. Murphy 626 F.2d 633 (9th Cir. 1980) ................................................................. 19, 23, 25 SEC v. Olins 762 F. Supp. 2d 1193 (N.D. Cal. 2011) ................................................. 20, 23, 24 SEC v. Palmisano 135 F.2d 860 (2d Cir. 1998) .............................................................................. 24 SEC v. Pittsford Capital Income Ptrs., LLC No. 06 Civ. 6353 T(P), 2007 WL 2455124 (W.D.N.Y. Aug. 23, 2007) ............... 22 SEC v. Platforms Wireless Int'l. Corp., 617 F.3d 1072 (9th Cir. 2010) ...................................................10, 14, 20, 21, 22 SEC v. Private Equity Management Group No. CV 09-2901 PSG, 2009 WL 2019788 (C.D. Cal. Jul. 2, 2009) ................. 12 SEC v. R.G. Reynolds Enterprises, Inc. 952 F.2d 1125 (9th Cir. 1991) ..................................................................... 10, 11 SEC v. Rana Research, Inc. 8 F.3d 1358 (9th Cir. 1993) ............................................................................... 14 SEC v. Rind 991 F.2d 1486 (9th Cir. 1993) ........................................................................... 20 SEC v. Rogers 1981 WL 1622 (C.D. Cal. Mar. 31, 1981) ........................................................ 15 SEC v. Sahley Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 6 of 36 Page ID #:5410 vi Case No. SACV16-00974-CJC(AGRx) 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 No. 92 Civ. 8842 (JSM), 1994 WL 9682 (S.D.N.Y. Jan. 10, 1994) ................. 22 SEC v. Sells No. C-11-4941, 2012 WL 3242551 (N.D. Cal. Aug. 10, 2012) .................. 12, 13 SEC v. W.J. Howey Co. 328 U.S. 293 (1946)..................................................................................... 10, 11 SEC v. Watermark Financial Services Group, Inc. No. 08-CV-361S, 2012 WL 501450 (W.D.N.Y. Feb. 14, 2012) ...................... 22 SEC v. Wencke 622 F.3d 1363 (9th Cir. 1980) ........................................................................... 20 SEC v. Wilde No. SACV 11-0315 DOC (AJWx), 2012 WL 6621747 (C.D. Cal. Dec. 17, 2012) ............................................................................................................ 12 SEC v. Zandford 535 U.S. 813 (2002)........................................................................................... 12 Simpson v. AOL Time Warner, Inc. 452 F.3d 1040 (9th Cir. 2006) ........................................................................... 12 Superintendent of Ins. v. Bankers Life & Casualty, Co. 404 U.S. 6 (1971) ............................................................................................... 11 Taylor v. List 880 F.2d 1040 (9th Cir. 1989) ............................................................................. 9 TSC Indus. v. Northway 426 U.S. 438 (1976)........................................................................................... 14 Securities Act of 1933 Section 17(a) [15 U.S.C. § 77q(a)] ................................................................................ 9, 10, 11 Section 17(a)(1) [15 U.S.C. § 77q(a)(1)] ...................................................................... 9, 11, 13, 14 Section 17(a)(2) [15 U.S.C. § 77q(a)(2)] ............................................................................ 9, 14, 15 Section 17(a)(3) [15 U.S.C. § 77q(a)(3)] ...................................................................... 9, 11, 13, 14 Section 2(a)(1) [15 U.S.C. § 77b(a)(1)] ...................................................................................... 10 Section 20 [15 U.S.C. § 77t] ................................................................................................ 24 Section 20(b) [15 U.S.C. § 77t(b)] ........................................................................................... 19 Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 7 of 36 Page ID #:5411 vii Case No. SACV16-00974-CJC(AGRx) 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 Section 20(d) [15 U.S.C. § 77t(d)] ........................................................................................... 24 Section 20(d)(3)(B)(i) [15 U.S.C. § 77t(d)(3)(B)(i)] ............................................................................. 24 Section 20(d)(3)(B)(ii) [15 U.S.C. § 77t(d)(3)(B)(ii)] ............................................................................ 24 Section 20(d)(3)(B)(iii) [15 U.S.C. § 77t(d)(3)(B)(iii)] ........................................................................... 24 Securities Exchange Act of 1934 Section 10(b) [15 U.S.C. § 78j(b)] ........................................................................... 9, 10, 11, 13 Section 21(d) [15 U.S.C. § 78u(d)] .................................................................................... 19, 24 Section 21(d)(3)(B) [15 U.S.C. § 78u(d)(3)(B)] ................................................................................ 24 Section 21(d)(3)(B)(i) [15 U.S.C. § 78u(d)(3)(B)(i)] ............................................................................ 24 Section 21(d)(3)(B)(ii) [15 U.S.C. § 78u(d)(3)(B)(ii)] ........................................................................... 24 Section 21(d)(3)(B)(iii) [15 U.S.C. § 78u(d)(3)(B)(iii)] .......................................................................... 24 Section 3(a)(10) [15 U.S.C. § 78c(a)(10)] .................................................................................... 10 FEDERAL REGULATIONS 8 C.F.R. § 204.6(j)(2) ................................................................................................... 11 Rule 10b-5 [17 C.F.R. § 240.10b-5] ..................................................................... 9, 11, 13, 14 OTHER AUTHORITIES Rule 36 [Fed. R. Civ. P. 36] .......................................................................................... 1, 2 Rule 36(a)(3) [Fed. R. Civ. P. 36(a)(3)] ................................................................................... 16 Rule 56(a) [Fed. R. Civ. P. 56(a)] ......................................................................................... 9 Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 8 of 36 Page ID #:5412 1 Case No. SACV16-00974-CJC(AGRx) 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 I. INTRODUCTION This past spring, the SEC proffered compelling evidence of defendants Charles C. Liu’s and Xin (Lisa) Wang’s scheme to misappropriate more than $20 million from their EB-5 investors, and the lies and omissions that were told in service of their illegal securities offering. On that showing, this Court found on July 11 that the SEC had established a prima facie case and reasonable likelihood that Liu and Wang had engaged in securities fraud. Dkt. No. 77 at 1. In the six months since, the SEC’s substantial proof has remained unaltered, undisturbed, and unrefuted by defendants. What’s more, Liu and Wang have now paved a clear path for this Court to grant summary judgment in the SEC’s favor. First, Liu and Wang never answered or even objected to the SEC’s October written discovery requests, including discovery propounded under Fed. R. Civ. P. 36 seeking Liu’s and Wang’s admission of facts which prove every element of the securities law charges against them. Those facts may now be deemed admitted on summary judgment. Second, Liu and Wang invoked their Fifth Amendment privilege against self-incrimination in response to November deposition questions aimed at establishing those very same elements. Because two consequences necessarily follow – Liu and Wang should be precluded from offering evidence on those subjects, and this Court should further draw an adverse inference against them – there is no conceivable way in which Liu and Wang may now evade an adverse judgment. The combination of the SEC’s independent evidence of fraud; the price of Liu’s and Wang’s refusal to respond to the SEC’s written discovery; and the unavoidable import of defendants’ Fifth Amendment assertions, dispels any vestige of a genuine dispute of material fact. This matter is ripe for summary judgment. The SEC respectfully requests that the Court grant its motion in every respect. II. STATEMENT OF FACTS The following facts are drawn from the SEC’s affirmative proof, the answers filed by the individual defendants, and facts deemed admitted by Liu and Wang under Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 9 of 36 Page ID #:5413 2 Case No. SACV16-00974-CJC(AGRx) 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 Fed. R. Civ. P. 36. A. The EB-5 Program The EB-5 Immigrant Investor Program administered by U.S. Citizenship and Immigration Services (“USCIS”) promotes economic growth in the United States by granting visas to foreign investors on several strict conditions. Statement of Uncontroverted Facts (“SUF”) at ¶ 1. Entities that the USCIS designates as “regional centers” administer EB-5 investment projects. Id. at ¶ 7. To obtain conditional permanent residency status for a period of two years, foreign investors must invest in a “commercial enterprise” that is associated with a USCIS-approved regional center. Id. at ¶¶ 1-3. For that investment to be eligible for the EB-5 program, the foreign investment must be at least $500,000, made in a “Targeted Employment Area,” create at least ten full-time jobs, and significantly, the investment must actually put the investors’ capital at risk for “the purpose of generating a return.” Id. at ¶¶ 4-5. B. Liu Forms an EB-5 Regional Center Liu co-founded defendant Beverly Proton Center, LLC (“Beverly Proton”) with Dr. John Thropay, a radiation oncologist; Beverly Proton was to operate a proton therapy cancer treatment center in Southern California. Id. at ¶¶ 10-11. To capitalize that business, Liu decided to raise money under the auspices of the EB-5 program. Id. at ¶ 9. In 2010, Liu submitted an application to USCIS to have defendant Pacific Proton Therapy Center, LLC (“Pacific Proton”) designated as a regional center. Id. at ¶ 12. Liu also formed the Pacific Proton EB-5 Fund (“PPEB5- Fund”) to act as the investment vehicle for foreigners interested in making an EB-5- eligible investment in his proposed Beverly Proton cancer treatment center. Id.at ¶ 13. On June 28, 2012, USCIS approved Liu’s regional center application. Id. at ¶ 14. C. Liu’s and Wang’s Roles with the Entity Defendants Liu controlled Beverly Proton throughout the relevant period. Id.at ¶¶ 17-18. In addition to owning 75% of the company, Liu has been Beverly Proton’s president, treasurer, and managing member since 2010. Id. at ¶¶ 15-16. He caused Beverly Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 10 of 36 Page ID #:5414 3 Case No. SACV16-00974-CJC(AGRx) 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 Proton to pay him $750,000 in annual compensation, and in January 2016, he elected himself and his wife, co-defendant Xin (Lisa) Wang, as the only two directors of the company. Id. at ¶¶ 19-20. In addition to her board role, Wang was Beverly Proton’s Vice President of Marketing in Asia. Id. at ¶ 21. Wang was likewise handsomely compensated by Beverly Proton: Liu executed, on Beverly Proton’s behalf, a 2016 employment agreement with Wang which provided her with $200,000 in annual compensation, and also paid her that compensation on a retroactive basis, all the way back to 2011. Id. at ¶¶ 22-23. Liu controlled Pacific Proton throughout the relevant period. Id. at ¶¶ 26-27. Liu owned 75% of Pacific Proton, held the title of president, and awarded himself a substantial annual salary ($350,000) from Pacific Proton. Id. at ¶¶ 24-25, 28. Wang, for her part, was also an officer of the company, and served as its corporate secretary. Id. at ¶ 29. Liu further controlled the PPEB5 Fund because Pacific Proton is the fund’s sole manager, and Liu controls Pacific Proton. Id. at ¶¶ 30-31. Yet again, Liu caused an entity under his control to pay him an ample salary, in this case $200,000 in annual compensation from the PPEB5 Fund. Id. at ¶ 32. D. The Stated Terms of the Fraudulent EB-5 Offering From October 2014 through April 2016, defendants offered and sold investments in the form of limited liability company units in the PPEB5 Fund, for $500,000 each, raising at least $26,967,918 from 50 investors in China (the “Pacific Proton offering”). Id. at ¶ 34. Each investor in the Pacific Proton offering was provided with a May 2013 private offering memorandum (“POM”) setting forth the terms of their investment. Id. at ¶ 36. Liu provided the information contained in the POM and reviewed and approved the content of all of its disclosures. Id. at ¶ 53. With respect to the nature of their investment, the POM: refers to investments as “securities,” id. at ¶¶ 38-39, describes those purchasing the limited liability company units as “investors” and “accredited investors,” id. at ¶¶ 40-41, stresses that investors’ investments “must be at risk to qualify” for the EB-5 program in that Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 11 of 36 Page ID #:5415 4 Case No. SACV16-00974-CJC(AGRx) 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 investors must show that they have “placed the required amount of capital at risk for the purpose of generating a return on such capital,” id. at ¶ 42, confirms that limited liability company units in the PPEB5 Fund meets those regulatory conditions, id. at ¶ 43, and explains that although “actual returns could differ materially and adversely from those expressed or implied” given “important risk factors,” the “primary motive” of investors in the Pacific Proton offering “should be for long-term appreciation.” Id. at ¶¶ 44-45. The POM also defined the manner in which investor funds would be used. It states that each $500,000 investment – defined by the POM as a “Capital Contribution” – could only be used to fund a loan from the PPEB5 Fund to Beverly Proton for the purpose of developing and operating a proton therapy center in Los Angeles County under the medical direction of Dr. Thropay. Id. at ¶¶ 47-48. Separate from the $500,000 Capital Contribution, the PPEB5 Fund charged investors an additional $45,000 “Administrative Fee,” which was to be paid directly to the PPEB5 Fund. Id. at ¶¶ 49-50. Importantly, the POM represented that Capital Contributions and Administrative Fees were distinct and to be used for divergent purposes: Proceeds of this Offering do not include Administrative Fees. Offering expenses, commissions and fees incurred in connection with this Offering shall be paid from the proceeds of Administrative Fees and not from EB-5 Capital Contributions. Id. at ¶ 51. Last, the POM emphasizes that Dr. Thropay’s contributions to the proposed project were critical to the success of the investment. The POM provides that Beverly Proton “is dependent upon the continued involvement of Dr. Thropay” and that the “loss of services of either Dr. Thropay or Mr. Liu would have a material adverse effect on PPEB5 [Fund]’s and the Borrower’s business, financial condition and results of operations.” Id. at ¶ 52. Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 12 of 36 Page ID #:5416 5 Case No. SACV16-00974-CJC(AGRx) 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 E. Liu and Wang Personally Solicit Investors Liu and Wang both met with investors and personally encouraged them to invest in the Pacific Proton EB-5 project. Id. at ¶¶ 59-61. Separately, Liu engaged several marketing firms, including Overseas Chinese Immigration Consulting Ltd. (“Overseas Chinese”), United Damei Group, United Damei Investment Company, Ltd., and Beijing Pacific Damei Consulting Co. Ltd. (collectively, “UDG”), and Hong Kong Delsk Business Co., Ltd. (“Delsk”). Id. at ¶ 57. Of the known investors in the PPEB5 Fund, 11 were solicited by Overseas Chinese, 10 by UDG, and 37 by Delsk. Id. at ¶ 58. UDG – one of the main marketing firms who solicited investments in the Pacific Proton EB-5 project – is inextricably tied to Wang and Liu. Wang was the chief executive officer and chairman of the board of UDG, and she and her husband controlled UDG. Id. at ¶¶ 62-64. UDG operated a website that promoted the Pacific Proton offering through several affirmative representations, including that: the offering was a “secure and reliable investment project” which had advantages over other EB-5 projects because it used established technology from Optivus Proton Therapy, Inc. (“Optivus”) that is “the most effective, reliable, precise and environmental proton therapy system in the market.” Id. at ¶¶ 66-71. F. Liu and Wang Accomplish Very Little and Liu Ousts Thropay While in 2015 some work to demolish a building owned by Dr. Thropay was accomplished by Liu, the actual construction of a therapy center never commenced. Id. at ¶¶ 74-76. Rather, Liu worked in 2015 to consummate a deal with another southern California cancer center that would have cut Dr. Thropay out of any future involvement in Beverly Proton. Id. at ¶ 81-82. By January 2016, Liu had removed Dr. Thropay as an officer of Pacific Proton, appointed himself as president and treasurer/chief financial officer of the entity, and appointed Wang as its corporate secretary. Id. at ¶¶ 83-84. Liu finalized that purge by electing himself and Wang as Beverly Proton’s sole directors in January 19, 2016. Id. at ¶ 86. Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 13 of 36 Page ID #:5417 6 Case No. SACV16-00974-CJC(AGRx) 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 Despite this abject lack of progress, of the $26.7 million raised by Liu and Wang from foreign investors from 2014 to 2016, only $234,899.19 remained in the corporate defendants bank accounts as of June 3, 2016. Id. at ¶ 131. This near-total dissipation of investor funds was occasioned by Liu and Wang’s massive misappropriation of investor money. G. Liu and Wang Misappropriate Investor Money It is beyond dispute that Pacific Proton offering proceeds were used in a way that violated the terms and representations made by the PPEB5 Fund POM. Id. at ¶ 87. The most glaring breach of the POM’s terms concerns their transfer of tens of millions of investor dollars to either enrich themselves, or to pay commissions – forbidden by the POM with respect to investors’ Capital Contributions – to the overseas marketers who brought investors to the Pacific Proton project. Of the $26,967,918 raised by Liu and Wang, $24,712,217 was sent to the PPEB 5 Fund and earmarked as Capital Contributions. Id. at ¶¶ 88-89. Although that $24.7 million in Capital Contributions was required, under the POM, to be loaned to Beverly Proton and then spent in furtherance of its proposed cancer therapy center, Liu and Wang diverted almost $21.2 million of investor money for their own purposes. Liu took $6.7 million in investor funds for himself. Compounding her husband’s windfall, another $1.538 million of investor money went to bank accounts under Wang’s control. And last, Liu sent $12.9 million in commissions to the overseas marketers, including UDG – an entity controlled by him and Wang – which individually received $3.815 million. Id. at ¶¶ 90-110. Further, Liu used company funds to pay a hodge-podge of his living expenses, including the cost of the private education enjoyed by Liu’s and Wang’s dependent children. Id. at ¶¶ 112-114. H. Dissipation of Investor Funds to Foreign Accounts Once the SEC subpoenaed Liu in February 2016, Liu and Wang quickly dissipated investor funds by transferring them en masse to foreign bank accounts. Liu took $4.27 million of the $6.7 million he misappropriated during February and Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 14 of 36 Page ID #:5418 7 Case No. SACV16-00974-CJC(AGRx) 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 March alone. Id.at ¶ 116. Wang received $1 million of the $1.538 million she misappropriated in March, as well. Id. at ¶ 117. In all, Liu sent nearly $17 million in investor funds out of the U.S. to foreign locations. Id. at ¶¶ 119, 123-127. I. Liu’s and Wang’s Material Misrepresentations and Omissions The POM provided to investors and the UDG website’s promotional statements were both materially misleading. First, the POM represented that Capital Contributions would only be used to fund the development and operation of a proposed cancer treatment center, while Administrative Fees would be used to pay commission and other offering expenses. This was undisputedly false. Because Liu and Wang misappropriated the vast majority of the investors’ Capital Contributions for either their personal use or for excessive commissions to overseas marketers, most of the investor money was never used for actual development work. Id. at ¶¶ 87-116. Next, Liu’s removal of Dr. Thropay from the cancer therapy project rendered the POM’s statements about his central involvement materially misleading as well. The POM stated that the investment project’s success was “dependent” on Dr. Thropay’s continuous involvement, and explicitly drew the conclusion that losing Dr. Thropay “would have a material adverse effect” on the PPEB5 Fund and Beverly Proton’s “business, financial condition and results of operations.” Liu and Wang, however, failed to inform investors of Dr. Thropay’s ouster. Id. at ¶¶ 52, 83. Finally, Liu and Wang controlled UDG, which touted the Beverly Proton treatment center project over the internet as a “safe and reliable” investment, in large part because it was using proton therapy technology from an established market participant, Optivus. Id. at ¶¶ 65-73. Those statements were materially misleading given Liu’s decision to abandon the Optivus technology in 2015. Id. at ¶¶ 77, 80. Indeed, Optivus engaged outside counsel to convey this very point to Liu. Id. at ¶ 80 (“[I]t is highly inappropriate for [Pacific Proton, Beverly Proton] and others associated with those entities, to suggest that Optivus is involved in the project on an ongoing basis or to use Optivus’ name and reputation for purposes of promoting the Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 15 of 36 Page ID #:5419 8 Case No. SACV16-00974-CJC(AGRx) 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 proposed [cancer treatment] facility, all without Optivus’ authorization.”). J. Liu and Wang Refuse to Answer the SEC’s Written Discovery On October 18, 2016, the SEC propounded written discovery on Liu and Wang, including Rule 36 requests to admit and Rule 33 interrogatories. Leung Decl. at ¶¶ 3-4, 8-9, Exs. 1-2, 6-7. The SEC’s Rule 36 requests sought Liu’s and Wang’s admission of every fact critical to the elements of its antifraud claims, including: the individual defendants’ ownership, role and control of the corporate defendants and UDG (id. at ¶¶3-4, Exs. 1 and 2 (RFA Nos. 1-10)); facts showing that limited liability company units in the PPEB5 Fund are securities (id. at ¶¶ 3-4, Exs. 1 and 2 (RFA No. 14)); the gross proceeds (e.g., investor money raised) of their fraudulent offering (id. at ¶¶ 3-4, Exs. 1 and 2 (RFA Nos. 13, 15)); Liu’s and Wang’s misappropriation and dissipation of investor funds (id. at ¶¶ 3-4, Exs. 1 and 2 (RFA Nos. 16-24)); and that the individual defendants acted with fraudulent intent, recklessly, or unreasonably in stealing investor funds and either making false statements in the POM, or obtaining money by means of those false statements. Id. at ¶¶3-4, Exs. 1 and 2 (RFA Nos. 25- 27. The SEC’s Rule 33 interrogatories covered those same subjects, and specifically asked Liu and Wang for the factual basis for their defenses. See, e.g., id. at ¶¶ 8-9, Exs. 6-7 (Interrog. Nos. 8, 16-17). Liu’s and Wang’s written discovery responses were originally due on November 21. At their request, the SEC agreed to an extension of time to December 2. Dkt. No. 194-2 at ¶ 8, Ex. 6. In spite of that extension, neither Liu nor Wang timely answered or objected to the SEC’s October 18 requests for admission and interrogatories. Id. at ¶ 10. K. Liu and Wang Assert Their Fifth Amendment Rights At Deposition After being ordered to appear for deposition, Liu and Wang each asserted their Fifth Amendment right against self-incrimination when questioned by the SEC on the material issues in this case; namely, whether they had engaged in a scheme to misappropriate investor funds, whether they had made (or obtained money by means Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 16 of 36 Page ID #:5420 9 Case No. SACV16-00974-CJC(AGRx) 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 of ) misstatements and omissions to investors, their mental state in perpetrating their fraud, and the significance, to a reasonable investor, of their lies, omissions, and fraudulent misappropriation. SUF at ¶¶ 142-161. III. ARGUMENT A. Standard of Review Summary judgment is appropriate when there are no genuine disputes as to any material fact regarding the plaintiff’s claims. See Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The movant bears the initial burden of identifying the evidence that demonstrates the absence of any material fact. See Celotex, 477 U.S. at 323. Once the movant has met its burden, the nonmoving party may not rest on conclusory allegations or bald assertions, see Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989), but must come forward with significant probative evidence tending to support its claim that material, triable issue of fact remain. See Anderson v. Libby Lobby, Inc., 477 U.S. 242, 249-50 (1986); Sanchez v. Vild, 891 F.2d 240, 242 (9th Cir. 1989). The evidence set forth by the non-moving party must be sufficient, taking the record as a whole, to allow a rational jury to find for the non- moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). B. Liu and Wang Violated the Antifraud Provisions Liu’s and Wang’s fraudulent EB-5 offering ran afoul of the antifraud provisions of the federal securities laws. Section 17(a) prohibits fraud in the offer or sale of securities, and Section 10(b) prohibits fraud in connection with the purchase or sale of any security. 15 U.S.C. § 77q(a); 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b- 5; SEC v. Dain Rauscher, Inc., 254 F.3d 852, 855 (9th Cir. 2001). Violations of Section 17(a)(1), Section 10(b) and Rule 10b-5 require a showing of scienter, whereas violations of Section 17(a)(2) and 17(a)(3) only require a showing of negligence. Aaron v. SEC, 446 U.S. 680, 697 (1980). Scienter is defined as a “mental state embracing intent to deceive, manipulate or defraud.” Ernst & Ernst v. Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 17 of 36 Page ID #:5421 10 Case No. SACV16-00974-CJC(AGRx) 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 Hochfelder, 425 U.S. 185, 193 n. 12 (1976). In the Ninth Circuit, scienter may be established by a showing of either “deliberate recklessness” or “conscious recklessness.” SEC v. Platform Wireless Int’l Corp., 617 F.3d 1072, 1093 (9th Cir. 2010). Recklessness may be inferred from circumstantial evidence. Herman & MacLean v. Huddleston, 459 U.S. 375, 390-91, n. 30 (1983); SEC v. Burns, 817 F.2d 471, 474 (9th Cir. 1987). Negligence, by contrast, is the absence of “reasonable prudence.” Dain Rauscher, Inc., 254 F.3d at 856-57. Liu and Wang have violated both Section 17(a) and Section 10(b). 1. Liu and Wang offered and sold securities The EB-5 investments offered and sold by Liu and Wang are securities. As this Court found when denying Liu’s and Wang’s motion to dismiss: Here, every indication made to investors was that they were putting money at risk to purchase investment[ ] instruments that would produce a profit. Those instruments are therefore securities under the meaning of the federal securities laws. Dkt. No. 139 (Order on Liu MTD) at 9. Because the SEC’s proof fully corroborates the allegations of its complaint, the Court may now reach the same conclusion on summary judgment. Since they are “investment contracts,” the Pacific Proton investments fall within the heartland of the definition of securities set forth in Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act. Under the Supreme Court’s Howey test, a financial instrument is an investment contract if it is: “(1) an investment of money (2) in a common enterprise (3) with an expectation of profits produced by the efforts of others.” SEC v. R.G. Reynolds Enterprises, Inc., 952 F.2d 1125, 1130 (9th Cir. 1991); SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946). All three Howey elements are met here. First, investors invested money – they all purchased PPEB5 Fund limited liability company units by investing a $500,000 “Capital Contribution” that had to be “at risk for the purpose of generating a return” under the requirements of the EB-5 Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 18 of 36 Page ID #:5422 11 Case No. SACV16-00974-CJC(AGRx) 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 program. 8 C.F.R. § 204.6(j)(2). And second, Liu’s and Wang’s victims invested their money in a “common enterprise” that was dependent on the efforts of others, given the pooling of investors’ funds, and their passive involvement in the Beverly Proton therapy center project, a fact that further establishes the final prong of the Howey analysis. See R.G. Reynolds, 952 F.2d at 1130 (“common enterprise” element is satisfied by either horizontal commonality (pooling of investor funds) or strict vertical commonality (returns are dependent on efforts of promoter)).1 2. Liu and Wang engaged in a scheme to defraud Having misappropriated more than $20 million in investor funds, Liu and Wang cannot genuinely dispute that they engaged in a scheme to defraud their EB-5 investors. The individual defendants’ misappropriation of over $20 million of investor money is central to their misconduct. That vein of defendants’ fraud triggers the “scheme liability” provisions of the antifraud statutes – Section 17(a)(1) and (a)(3) of the Securities Act, and Rule 10b-5 (a) and (c) of the Exchange Act. Those provisions prohibit defendants from engaging in a “scheme … to defraud” or a “course of business which operates … as a fraud.” 15 U.S.C. §§ 77q(a)(1), (3); 17 C.F.R. §§ 240.10b-5(a), (c). The SEC’s first count against Liu and Wang is brought under all of the subsections of Section 17(a), including the scheme liability sub- provisions (a)(1) and (a)(3), and its second count against Liu and Wang is brought specifically under subsections (a) and (c) of Rule 10b-5. See Dkt. No. 1 at pp. 23-24. A defendant is subject to scheme liability if she “engaged in conduct that had the principal purpose and effect of creating a false appearance of fact in furtherance 1 And separately, both the “in the offer and sale,” and “in connection with the purchase or sale” elements of Section 17(a) and Section 10(b) are clearly met here. The “in connection with the purchase or sale” element is established by proof that the fraud “coincides with a securities transaction.” Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 85 (2006); see also Superintendent of Ins. v. Bankers Life & Casualty, Co.,404 U.S. 6, 12-13 (1971) (“in connection with” requires only that there be “deceptive practices touching” the purchase or sale of securities). Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 19 of 36 Page ID #:5423 12 Case No. SACV16-00974-CJC(AGRx) 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 of the scheme.” Simpson v. AOL Time Warner, Inc., 452 F.3d 1040, 1048 (9th Cir. 2006), vacated on other grounds sub nom., Avis Budget Group Inc. v. Cal. State Teachers’ Ret. System, 552 U.S. 1162 (2008); see also SEC v. Sells, No. C-11-4941, 2012 WL 3242551, *7 (N.D. Cal. Aug. 10, 2012); Middlesex Retirement Sys. v. Quest Software Inc., 527 F. Supp. 2d 1164, 1191 (C.D. Cal. 2007). A defendant can be held liable for engaging in a fraudulent scheme under these provisions if she “‘committed a manipulative or deceptive act in furtherance of a scheme,’” which is an act that “create[s] the false appearance of fact.” Simpson, 452 F.3d at 1048 (quoting Cooper v. Pickett, 137 F.3d 616 (9th Cir. 1997)). The misappropriation of investor money fits squarely within the confines of scheme liability, see, e.g., SEC v. Zandford, 535 U.S. 813, 820-21 (2002) (addressing scheme liability arising from defendant’s misappropriation of securities from brokerage client without his knowledge or consent), as acknowledged by this Court when finding that the SEC’s allegations that Wang used UDG to misappropriate investor money sufficiently pled a claim for scheme liability. Dkt. No. 140 (Wang MTD Order) at 7:15-28; see also SEC v. Wilde, No. SACV 11-0315 DOC (AJWx), 2012 WL 6621747, *5 (C.D. Cal. Dec. 17, 2012) (finding defendants violated Sections 17(a) and 10(b) for “knowingly or recklessly engag[ing] in a fraudulent practice to misappropriate investors’ money”); SEC v. Lowrance, No. 11-CV-03451- EJD, 2012 WL 2599127, *4 (N.D. Cal. Jul. 5, 2012) (“Offering a security for sale with the intent to misappropriate the proceeds is a fraudulent scheme”); SEC v. Private Equity Management Group, No. CV 09-2901 PSG, 2009 WL 2019788, *14 (C.D. Cal. Jul. 2, 2009) (holding that misappropriation of investor money which coincides with the sale of securities violates federal securities laws). Liu and Wang took advantage of the EB-5 investment program to quickly raise a massive amount of money, all told, at least $26.9 million in less than two years. They then transferred more than $21.1 million of that amount to either themselves, or to overseas marketers in the form of exorbitant commissions. See, e.g., SUF at ¶¶ 99- Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 20 of 36 Page ID #:5424 13 Case No. SACV16-00974-CJC(AGRx) 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 28 101, 104-105 (defendants paid Overseas Chinese and UDG $702,000 and $381,500 in commissions, respectively, per investor). Liu and Wang have not been able to dispute that they took this money, and cannot refute it now. Liu’s and Wang’s deceptive conduct – their use and dissipation of that $21.1 million – was in stark contravention of the terms of the POM, which prohibited the use of Capital Contributions to pay commissions and instead designated those funds for development of the therapy center, and also irreconcilable with disclosures made by the UDG website, which gave investors the false impression that the EB-5 project was making real progress. That progress was illusory. Next to no development work had in fact been done for the simple reason that Liu and Wang had frittered away upwards of 75% of all investor money raised on themselves and commissions to foreign marketers, with one of those marketers being under their control, and thus an additional source of personal enrichment for Liu and Wang. Liu and Wang are liable under the scheme provisions of the antifraud statutes.2 3. Liu’s and Wang’s false statements and omissions Separate from their scheme to misappropriate investor funds, Liu and Wang are also charged with defrauding investors with material misrepresentations and omissions. Specifically, in count III of its complaint, the SEC alleges that Liu made those misrepresentations and omissions in violation of Section 10(b) of the Exchange Act and Rule 10b-5 (b); and in count I alleges that Liu and Wang obtained money by 2 Unlike a claim alleging misrepresentations under Rule 10b-5 (b) where the SEC is required to allege and prove who “made” the misrepresentation under the Supreme Court’s holding in Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135, 142 (2011), the SEC has no such burden for scheme liability claims brought under Section 17(a)(1) and (3), or Rule 10b-5(a) and (c). See Dkt. No. 76 at 16-19. And so to the extent misstatements are made in the course of a fraudulent scheme, the SEC need not demonstrate who actually “made” them to sustain its fraudulent scheme claim. See, e.g., SEC v. Monterosso, 756 F.3d 1326, 1334 (11th Cir. 2014) (“Janus only discussed what it means to ‘make’ a statement for purposes of Rule 10b-5(b), and did not concern 17(a)(1) or (3) or Rule 10b5-(a) or (c)”); SEC v. Sells, No. C 11- 4941 CW, 2012 WL 3242551, *7 (N.D. Cal. Aug. 10, 2012) (“[a]llowing liability for Defendants’ alleged conduct under Rule 10b-5(a) and (c) would not make Janus meaningless because Janus did not address these sections”). Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 21 of 36 Page ID #:5425 14 Case No. SACV16-00974-CJC(AGRx) 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 means of those falsehoods in violation of Section 17(a)(2) of the Securities Act. To establish a violation of Section 10(b) and Rule 10b-5 (b) as alleged against Liu in count III of the complaint, the SEC must show that Liu, in connection with the purchase or sale of a security: (1) made an untrue statement or omitted to state a material fact, (2) with scienter; (3) by means of interstate commerce. See 17 C.F.R. § 240.10b-5(b). SEC v. Platforms Wireless Int’l Corp., 617 F.3d 1072, 1092 (9th Cir. 2010); see also SEC v. Rana Research, Inc., 8 F.3d 1358, 1364 (9th Cir. 1993). As for count I against both Liu and Wang for violating Section 17(a)(2), the SEC must prove that they obtained money “by means of” materially false statements or omissions in the offer or sale of a security. See, e.g., SEC v. Dain Rauscher, Inc., 254 F.3d at 856.3 For both Rule 10b-5(b) and Section 17(a)(2) claims, the misstatements and omissions must concern material facts. Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988). A fact is material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision. See TSC Indus. v. Northway, 426 U.S. 438, 449 (1976); SEC v. Platforms Wireless, 617 F.3d at 1092. Liability arises not only from affirmative representations but also from failures to disclose material information. SEC v. Dain Rauscher, 254 F.3d at 855-56. The SEC has established its count I claim against Liu for making material misrepresentations in the POM’s disclosures to investors. Liu reviewed and approved the content of that key disclosure document and is thus its “maker” for purposes of 3 Under Janus, the SEC must show that Liu “made” the misleading statements and omissions for him to be liable under Section 10(b) and Rule 10b-5. See 131 S. Ct. at 2302 (the maker of a statement is the person or entity with ultimate authority over the statement, including its content and whether to communicate it”). The Janus decision, however, has no bearing on Section 17(a)(2) misrepresentation and omission claims (and as discussed above, see supra n. 2, Janus does not govern scheme liability claims under Section 17(a)(1) or liability for transactions, practices, or courses of practice that operate as a fraud under Section 17(a)(3). See Dkt. No. 76 at 16-19; see also, e.g., SEC v. Benger, 931 F. Supp. 2d 904, 906 (N.D. Ill. 2013) (“vast majority of courts dealing with the question of whether Janus also applies to claims under Section 17 have answered that question with a resounding ‘no’”) (citing cases). Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 22 of 36 Page ID #:5426 15 Case No. SACV16-00974-CJC(AGRx) 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 Janus. SUF at ¶ 53. The POM was materially misleading because the defendants’ diversion of more than $21 million in investor funds to their own coffers, or to overseas marketers as absurdly large commissions, cannot be squared with the POM’s express representation that Capital Contributions raised from investors would be used to “finance development and operation of the therapy center,” and not be used to pay commissions. The POM further misled investors by representing that Dr. Thropay would be a key member of the project’s management team, whose loss “would have a material impact” on the PPEB5 Fund’s performance and operations; in spite of these representations, defendants never disclosed Dr. Thropay’s January 2016 ouster from the project. As for the Section 17(a)(2) count I against Liu and Wang, which does not require proof that they “made” any of the misstatements under Janus, the irrefutable evidence is that both of them obtained money by means of these misleading statements. Offering proceeds were raised “by means” of the false statements and omissions in the POM about the use of proceeds and Dr. Thropay’s continued role at the project. See, e.g., SEC v. Rogers, 1981 WL 1622, *3-4 (C.D. Cal. Mar. 31, 1981). Those proceeds were also obtained by means of UDG’s website, which touted the Pacific Proton EB-5 investment with false promises about the success of the project (e.g., underscoring its use of Optivus technology that had actually been abandoned). SUF at ¶¶ 65-73. Wang undisputedly controlled UDG – in fact, she should be deemed to have admitted as much. See infra Argument C(1); SUF at ¶ 64. Liu and Wang then took most of those fraudulently obtained proceeds to enrich themselves or overseas brokers, including Wang’s UDG. See Dkt. No 76 (Order on PI) at 13:20-28 (finding that “[i]t is beyond question that the SEC has made out a prima facie case of securities violations” by the entity defendants because “at the very least, the PPEB5 Fund made false representations in its POM that ended up enriching all of the Corporate Defendants, who received funds from duped investors.”). Finally, the misrepresentations and omissions were unquestionably material. Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 23 of 36 Page ID #:5427 16 Case No. SACV16-00974-CJC(AGRx) 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 See SEC v. Constantin, 939 F.Supp.2d 288, 307-08 (S.D.N.Y. 2013) (misappropriation of investor funds material); SEC v. Gallard, 1997 WL 767570, at *3 (S.D.N.Y. Dec. 10, 1997) (same). In fact, as addressed below, Liu and Wang should not be permitted to argue to the contrary since they declined to answer deposition questions on the materiality of their falsehoods. SUF at ¶¶ 154, 160. 4. Liu and Wang acted with scienter and their conduct was unreasonable Facts establishing Liu’s and Wang’s wrongful mental state and the unreasonableness of their conduct should be deemed admitted by the Court, given their failure to answer the SEC’s requests to admit. See infra Argument C(1); SUF at ¶¶ 132-141. In addition, the SEC has demonstrated with affirmative evidence that Liu knew of the misappropriation and, as someone who reviewed and approved the POM, knew that the diversion of investor money violated the terms of that document. Moreover, Liu received a letter from Optivus that told him, point blank, that disclosures to investors were misleading. As for Wang, she was in charge of marketing proton therapy to investors, and she likewise knew that she and her husband were taking millions of dollars from the project. At the least, Wang knew or should have known that investor money was being misused, contrary to the claims on UDG’s website. C. Liu and Wang Failed to Respond to Written Discovery and Invoked Their Fifth Amendment Privilege 1. Refusal to answer written discovery Under Rule 36(a)(3), “[a] matter is admitted unless, within 30 days after being served, the party to whom the request is directed serves on the requesting party a written answer or objection addressed to the matter and signed by the party or its attorney.” Fed. R. Civ. P. 36(a)(3); see, e.g., Conlon v. United States, 474 F.3d 616, 621 (9th Cir. 2007) (“Unanswered requests for admissions may be relied on as the basis for granting summary judgment”); Krohn v. San Bernardino County Sheriff’s Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 24 of 36 Page ID #:5428 17 Case No. SACV16-00974-CJC(AGRx) 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 Dept., No. EDCV 06-00595 GW (AJW), 2008 WL 4390162, *4 (C.D. Cal. Sept. 10, 2008) (granting summary judgment in light of unanswered Rule 36 requests). Moreover, when a party fails to respond, no motion to establish the admissions is needed because Rule 36(a) is self-executing. FTC v. Medicor, LLC, et al., 217 F. Supp. 2d 1048, 1053 (C.D. Cal. 2002). Accordingly, the Court has ample grounds to grant summary judgment on the basis of, inter alia, the dozens of factual admissions made by Liu and Wang as a consequence of their refusal to answer the SEC’s Rule 36 requests for admission. See, e.g., SUF at ¶¶ 54-56, 87-88, 91, 94, 132-141. 2. Liu’s and Wang’s invocation of the Fifth Amendment At deposition, Liu and Wang invoked the Fifth Amendment when questioned about the material facts in this case, including their misappropriation of investor funds, false statements to investors, their mental state and the reasonableness of their conduct, and how investors would have perceived the truth of what was done by Liu and Wang. See SUF at ¶¶142-161. Though it is their constitutional right, that invocation of the privilege has consequences: first, Liu and Wang should be precluded from offering evidence on these issues, and second, this Court should draw an adverse inference against them. See, e.g., Dkt. No. 185-1, Ex. 1 (10/7/16 Hearing Tr.) at 66:5-17 (anticipating present motion and request for adverse inference – “[T]hen you make [a Fifth Amendment assertion] and then I say yes, it’s a valid assertion of the privilege. And if I make that, then there’s going to be a motion. I don’t know if it’s a summary judgment motion or what to say that there should be an adverse inference from the assertion of the Fifth.”) “Trial courts generally will not permit a party to invoke the privilege against self-incrimination with respect to deposition questions and then later testify about the same subject matter at trial.” Nationwide Life Ins. Co. v. Richards, 541 F.3d 903, 910-11 (9th Cir. 2008). Because the whole objective of discovery is to ascertain the position of an adverse party on controverted issues, SEC v. Cymaticolor Corp., 106 F.R.D. 545, 549 (S.D.N.Y. 1985), “it would be an abuse of the Fifth Amendment to Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 25 of 36 Page ID #:5429 18 Case No. SACV16-00974-CJC(AGRx) 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 allow a civil litigant to use it to offer proofs while denying the adversary discovery of his contentions.” SEC v. Benson, 657 F. Supp. 1122, 1129 *S.D.N.Y. 1987); see also SEC v. Interlink Data Network of Los Angeles, Inc., 1993 WL 603274, *8 n. 97 (C.D. Cal. 1993). To assess whether preclusion is proper, courts apply a balancing test: Because the interest is constitutionally based, ‘the competing interests of the party asserting the privilege, and the party against whom the privilege is invoked must be carefully balanced,’ and ‘the detriment to the party asserting it should be no more than is necessary to prevent unfair and unnecessary prejudice to the other side. Nationwide, 541 F.3d at 910 (citation omitted). The balance of interests warrants preclusion here. Liu and Wang have thwarted the SEC’s efforts to obtain plainly discoverable information – their own account of what happened, including any facts they might claim in defense of the SEC’s suit – by asserting their Fifth Amendment right. Under these circumstances, preclusion should be “the price of, not a penalty for, [Liu’s and Wang’s] invocation of the Fifth Amendment.” Rainier Nat’l. Bank v. Hartstein, NO. 91-36165, 1993 WL 175265, at *5 (9th Cir. 1993) (affirming preclusion order at trial following defendant’s Fifth Amendment assertion at deposition). Second, this Court may additionally draw an adverse inference from Liu’s and Wang’s Fifth Amendment assertions – e.g., that because they refused to answer questions about whether they engaged in a scheme to misappropriate investor money with fraudulent intent, the Court may infer that to be true. “Parties are free to invoke the Fifth Amendment in civil cases, but the court is equally free to draw adverse inferences from their failure of proof.” SEC v. Colello, 139 F.3d 674, 677 (9th Cir. 1998). An adverse inference is not automatic, and in SEC v. Luna, the court summarized what the SEC must show for an inference to be drawn: The Court does not draw the inference unless (1) the SEC has a substantial need for the information, (2) no other, less burdensome means of obtaining the information exists, (3) “the value of presenting [the] evidence is not “substantially outweighed by the danger of unfair prejudice to the party asserting the privilege,” and (4) independent evidence of the fact about which the party refuses to testify exists. Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 26 of 36 Page ID #:5430 19 Case No. SACV16-00974-CJC(AGRx) 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 No. 2:10-CV-2166-PMP-CWH, 2014 WL 794202, at *12 (D. Nev. Feb. 26, 2014) (quoting Nationwide, 541 F.3d at 911-12). Each of these criteria is satisfied here. The SEC has a substantial need for Liu’s and Wang’s testimony because their own account of the relevant events – and any admissions made by them in the course of being interrogated on their conduct – would be more compelling and probative than any alternative source of evidence on that subject. Further, the SEC has presented ample independent evidence of defendants’ fraud, as evidenced by this Court’s entry of a preliminary injunction against Liu and Wang. See, e.g., Dkt. No. 76 (Order on PI) at 13:20-28. This Court accordingly has abundant cause to draw an adverse inference that: Liu and Wang controlled UDG, id. at ¶¶ 142-143, Liu and Wang offered and sold securities, SUF at ¶¶ 145-146, 161, they engaged in a scheme to misappropriate the money they raised through their EB-5 offering, id. at ¶¶ 148, 157-158, they made false statements to their investors, id. at ¶¶ 147, 149-150, they acted unreasonably and with scienter, id. at ¶¶ 151-154, 159, and investors would have considered facts about the true use of their funds to be significant to their investment. Id. at ¶¶ 154, 160. D. Liu and Wang Should Be Permanently Enjoined Section 20(b) of the Securities Act, 15 U.S.C. § 77t(b), and Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d), provide that when the evidence establishes a reasonable likelihood of a future violation of the securities laws, a permanent injunction shall be granted in enforcement actions brought by the SEC. SEC v. Murphy, 626 F.2d at 633; SEC v. Koracorp Indus., Inc., 575 F.2d 692 (9th Cir. 1978); SEC v. Fehn, 97 F.3d 1276, 1295-96 (9th Cir. 1996). Factors to be considered include the degree of scienter involved; the isolated or recurrent nature of the infractions; the defendant’s recognition of the wrongful nature of his conduct; the likelihood that, based on the defendant’s occupation, future violations might occur; and the sincerity of the defendant’s assurances against future violations. Id. Here, the totality of the circumstances weighs in favor of a permanent injunction. As stated Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 27 of 36 Page ID #:5431 20 Case No. SACV16-00974-CJC(AGRx) 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 above, Liu and Wang acted with a high degree of scienter, their conduct also extended over a period of years, and there is no evidence that they have recognized the wrongful nature of his conduct, nor provided any assurances against future violations. The Court should therefore enter a permanent injunction against future violations. In addition, the Court has the equitable power to issue a conduct-based injunction. See, e.g., SEC v. Wencke, 622 F.3d 1363, 1369 (9th Cir. 1980) (holding that order prohibiting nonparty from initiating litigation against an entity in receivership is within the court’s equitable powers). The SEC accordingly requests that the Court also enjoin Liu and Wang from engaging in any further EB-5-related solicitation of investors. E. Liu and Wang Should Be Ordered To Pay Monetary Remedies 1. Liu and Wang should disgorge their illegal gains In the Ninth Circuit, it is well-settled that this Court has broad equity powers to order the disgorgement of ill-gotten gains obtained through a defendant’s violation of the securities laws. Disgorgement is designed to deprive a wrongdoer of unjust enrichment, and to deter others from violating securities laws by making violations unprofitable. SEC v. Platforms Wireless, 617 F.3d 1072, 1096 (9th Cir. 2010); SEC v. J.T. Wallenbrock & Assocs., 440 F.3d 1109, 1113 (9th Cir. 2006); SEC v. First Pacific Bancorp, 142 F.3d 1186, 1191 (9th Cir. 1998); SEC v. Rind, 991 F.2d 1486, 1493 (9th Cir. 1993) (disgorgement is an appropriate equitable remedy for violations of the securities laws); SEC v. Olins, 762 F. Supp. 2d 1193, 1197 (N.D. Cal. 2011). To prove an appropriate disgorgement amount, the SEC need only show a “reasonable approximation” of profits causally connected to the violation. Platforms Wireless, 617 F.3d at 1096; J.T. Wallenbrock, 440 F.3d at 1113-14. Once the SEC has made such a showing, the burden then shifts to the defendant to “demonstrate that the disgorgement figure was not a reasonable approximation.” Platforms Wireless, 617 F.3d at 1096 (quoting SEC v. First City Financial Corp., Ltd., 890 F.2d 1215, Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 28 of 36 Page ID #:5432 21 Case No. SACV16-00974-CJC(AGRx) 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 1232 (D.C. Cir. 1989)). As the Ninth Circuit observed, “the risk of uncertainty should fall on the wrongdoer whose illegal conduct created that uncertainty.” Id. (quoting First City Financial, 890 F.2d at 1231, 1232). No such uncertainty exists here. Liu and Wang admit that they raised at least $26,967,918 from 50 Chinese investors. SUF at ¶ 34. Not a single dime was ever paid to any of those investors, and only a small portion – $234,899.19 – remains. The defendants’ ill-gotten gains from their offering fraud is therefore the gross proceeds from the Pacific Proton offering, less the small amount that remains in the corporate accounts,, or $26,733,018.81. That is the is the appropriate amount of disgorgement.4 Moreover, Liu’s and Wang’s claim that they may offset “legitimate” business expenses arising from their scheme to misappropriate more than $20 million in investor funds is without merit. See Dkt. No. 121. To start, the vast majority of expenses that Liu and Wang have previously claimed to be “legitimate” simply aren’t. The $12.9 million Liu paid to overseas marketers was transferred in contravention of the plain language of the POM. Thus, factual premise for the individual defendants’ claim of a “legitimate expenses” offset is without merit. Moreover, Liu’s and Wang’s legal premise for an offset has been repeatedly rejected by the Ninth Circuit. In this circuit, the proper disgorgement amount for an offering fraud like this one equals the total amount of proceeds fraudulently raised from the investors, less whatever may have been paid back to investors. JT Wallenbrock & Associates, 440 F.3d at 1111-13 (affirming disgorgement award of $139.4 million, which represented “the entire proceeds from the scheme less amounts paid to investors”); Platforms Wireless, 617 F.3d at 1096-97 (affirming disgorgement 4 This calculation is in fact conservative given other evidence that the total amount raised by Liu and Wang may in fact exceed $31 million. See SUF at ¶ 35 (Pacific Proton-produced investor list showing 58 investors indicates $31.6 million was raised). The $26.9 million in gross proceeds is based on the SEC’s analysis of the bank records obtained during its investigation, which ran from October 2014 to April 2016. It is not inclusive of any amounts potentially raised prior to that timeframe. Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 29 of 36 Page ID #:5433 22 Case No. SACV16-00974-CJC(AGRx) 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 award of about $1.75 million, which equaled the total “amount of proceeds obtained from” illegal offering); SEC v. Interlink Data Network of Los Angeles, Inc., Civ. A. No. 93-3073 R1993 WL 603274, at *12-13 (C.D. Cal. Nov. 15, 1993) (where defendants engaged in “boiler-room” operation to fraudulently raise money in illegal stock offering, holding “each defendant should be held jointly and severally liable for the return of the entire amount raised,” which was $12,285,035); see also SEC v. Manor Nursing Ctrs., Inc., 458 F.2d 1082, 1104 (2d Cir.1972) (“it was appropriate for the district court to order [defendants] to disgorge the proceeds received in connection with the [securities] offering”); SEC v. Sahley, No. 92 Civ. 8842 (JSM), 1994 WL 9682 (S.D.N.Y. Jan. 10, 1994) (“The investors who lost their entire investment are entitled to an order of disgorgement of the full amount raised through those fraudulent statements.”); SEC v. Watermark Financial Services Group, Inc., No. 08-CV-361S, 2012 WL 501450, at *8 (W.D.N.Y. Feb. 14, 2012) (finding defendants liable for offering fraud and setting disgorgement at $5.2 million, which was “the total amount still owed [to investors]”); SEC v. Pittsford Capital Income Ptrs., LLC, No. 06 Civ. 6353 T(P), 2007 WL 2455124, at *16 (W.D.N.Y. Aug. 23, 2007) (same, and setting disgorgement at $11.7 million by subtracting amount returned to investors from total amount raised in fraudulent offering). Consequently, it is of no moment that defendants may no longer have all of the $26.9 million they fraudulently raised from investors. “A person who controls the distribution of illegally obtained funds is liable for the funds he or she dissipated as well as the funds he or she retained.” Platforms Wireless, 617 F.3d at 1098. As the Ninth Circuit succinctly explained: [It] would be unjust to permit the defendants to offset against the investor dollars they received the expenses of running the very business they created to defraud those investors into giving the defendants the money in the first place. JT Wallenbrock, 440 F.3d at 1114; see also Platform Wireless, 617 F.3d at 1097-98 (“[t]he manner in which [the defendant] chose to spend the illegally obtained funds Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 30 of 36 Page ID #:5434 23 Case No. SACV16-00974-CJC(AGRx) 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 has no relevance to the disgorgement calculation.”) (quoting JT Wallenbrock, 440 F.3d at 1113) (internal quotations omitted). This Court should accordingly find Liu and Wang jointly and severally liable for disgorgement in the amount of $26,733,018.81. 2. Liu and Wang should pay prejudgment interest Disgorgement normally includes prejudgment interest to insure that wrongdoers do not profit from their illegal conduct. SEC v. Manor Nursing, 458 F.2d 1082, 1105 (2d Cir. 1972); SEC v. Cross Fin. Services, Inc., 908 F. Supp. 718, 734 (C.D. Cal. 1995). The decision whether to grant prejudgment interest and the rate used are generally matters confided to the district court’s broad consideration, taking into consideration the need to fully compensate the wronged party for actual damages suffered, consideration of fairness and the relative equities of the award, the remedial purposes of the statute involved, and such other general principles considered relevant by the court. See SEC v. Olins, 762 F. Supp. 2d at 1198-99 (citing SEC v. First Jersey Sec., Inc., 101 F.3d 1450, 1476 (2d Cir. 1996)). Accordingly, the Court should further order Liu and Wang to disgorge prejudgment interest in the amount of $89,110.06, running from April 30, 2016 (the last possible date on which Liu and Wang had raised all $26,967,918) to June 1, 2016 (the date the SEC brought this enforcement action). 3. Liu and Wang should pay civil penalties In this motion, the SEC seeks an order imposing third-tier penalties against Liu and Wang. SEC counsel, however, is unable to move the Court for a specific penalty at this time. Although we have already prepared a penalty recommendation for approval by the commissioners of the SEC, we expect that the Commission will not be able to act on our recommendation until the end of January under its present schedule. Once counsel receives penalty authority from the Commission, the SEC will propose specific penalty amounts for Liu and Wang. We have, however, briefed the Murphy factors and related law on penalties within this brief in anticipation of our Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 31 of 36 Page ID #:5435 24 Case No. SACV16-00974-CJC(AGRx) 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 specific penalty request. Section 21(d)(3)(A) of the Exchange Act, 15 U.S.C. §78u(d)(3)(A), provides that the SEC may seek, and the Court may impose, civil monetary penalties for violations of the Exchange Act. Section 20 of the Securities Act, 15 U.S.C. § 77t(d)(2) contains similar provisions. Congress enacted civil penalty provisions to achieve the dual goals of punishment of the individual violator and deterrence of future violations. SEC v. Marker, 427 F. Supp. 2d 583, 592 (M.D. Fla. 2006) (citing SEC v. Coates, 137 F. Supp. 2d 413, 428 (S.D.N.Y. 2001)); SEC v. Palmisano, 135 F.2d 860, 866 (2d Cir. 1998). The deterrence of securities law violations through the imposition of monetary sanctions serves several important goals, including encouraging investor confidence, increasing the efficiency of financial markets, and promoting stability in the securities industry. See Palmisano, 135 F.2d at 866. The Exchange Act and Securities Act provide for three tiers of penalties, and the amount of any penalty is to be “determined by the court in light of the facts and circumstances.” 15 U.S.C. §§ 78u(d)(3)(B), 77t(d). First tier penalties may be imposed for any violation of either Act. See id. §§ 78u(d)(3)(B)(i), 77t(d)(3)(B)(i). Second tier penalties apply to violations that “involved fraud, deceit, manipulation or deliberate or reckless disregard of a regulatory requirement.” Id. §§ 78u(d)(3)(B)(ii), 77t(d)(3)(B)(ii). Third tier penalties apply to violations that (i) involve “fraud, deceit, manipulation, or reckless disregard of a regulatory requirement” and (ii) “directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons.” Id. §§ 78u(d)(3)(B)(iii), 77t(d)(3)(B)(iii). The specific amount of the civil penalty imposed within each tier is discretionary. See Olins, 769 F. Supp. 2d at 1199 (citing SEC v. Moran, 944 F. Supp. 286, 296-97 (S.D.N.Y. 1996)). Consistent with the goal of deterrence, this Court may award third tier penalties of up to either “the gross amount of pecuniary gain to the defendant as a result” of the defendant’s securities law violations or $150,000, whichever is higher. 15 U.S.C. § 78u(d)(3)((B)(iii), 77t(d)(3)(B)(iii). Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 32 of 36 Page ID #:5436 25 Case No. SACV16-00974-CJC(AGRx) 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 In assessing an appropriate civil penalty, courts frequently consider the factors used for determining the appropriateness of injunctive relief set forth in SEC v. Murphy, 626 F.2d 633 (9th Cir. 1980). See, e.g., SEC v. Abacus International Holding Corp., 2001 WL 940913, *5 (N.D. Cal. Aug. 16, 2001); SEC v. Gowrish, 2011 WL 2790482, *9 (N.D. Cal. Jul. 14, 2011). Those factors are: (1) the degree of scienter involved; (2) the isolated or recurrent nature of the infraction; (3) the defendant’s recognition of the wrongful nature of his conduct; (4) the likelihood, because of the defendant’s professional occupation, that future violations might occur; and (5) the sincerity of his assurances against future violations. See Murphy, 626 F.2d at 655; see also SEC v. CMKM Diamonds, Inc., 635 F. Supp. 2d 1185, 1192 (D. Nev. 2009). All of these factors militate in favor of substantial civil penalty against Liu and Wang. Liu and Wang knew exactly what they were doing when they took more than $21 million in investor funds over a multi-year period. There is further evidence that Liu and Wang were involved in other EB-5 investment projects apart from the Pacific Proton investment that forms the basis for this case. They have offered this Court no assurances against future violations, and given their sustained activity in the EB-5 space, there remains an actual potential of future violations. For all of those reasons, this Court should impose third-tier civil penalties against Liu and Wang. IV. CONCLUSION Based on the undisputed evidence, the SEC is entitled to summary judgment and injunctive and monetary relief on all of its claims against Liu and Wang. Dated: January 4, 2017 /s/ Gary Y. Leung John W. Berry Gary Y. Leung Attorneys for Plaintiff Securities and Exchange Commission Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 33 of 36 Page ID #:5437 26 Case No. SACV16-00974-CJC(AGRx) 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 PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. On January 4, 2017, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANTS CHARLES C. LIU AND XIN (LISA) WANG on all the parties to this action addressed as stated on the attached service list: ☐ OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. ☐ PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. ☐ EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. ☐ HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. ☐ UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ☒ ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. ☒ E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. ☐ FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: January 4, 2017 /s/ Gary Y. Leung GARY Y. LEUNG Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 34 of 36 Page ID #:5438 Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 35 of 36 Page ID #:5439 Case 8:16-cv-00974-CJC-AGR Document 199-1 Filed 01/04/17 Page 36 of 36 Page ID #:5440 Case No. SACV16-00974-CJC 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 JOHN W. BERRY (Cal. Bar No. 295760) Email: berryj@sec.gov GARY Y. LEUNG (Cal. Bar No. 302928) Email: leungg@sec.gov JACOB A. REGENSTREIF (Cal. Bar No. 234734) E-mail: regenstreifj@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director Alka N. Patel, Associate Regional Director John W. Berry, Associate Regional Director 444 S. Flower Street, Suite 900 Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Southern Division SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. CHARLES C. LIU; XIN WANG a/k/a LISA WANG; PACIFIC PROTON THERAPY REGIONAL CENTER, LLC; PACIFIC PROTON EB-5 FUND, LLC; and BEVERLY PROTON CENTER, LLC f/k/a LOS ANGELES COUNTY PROTON THERAPY, LLC, Defendants. Case No. SACV16-00974-CJC (AGRx) DECLARATION OF GARY Y. LEUNG IN SUPPORT OF PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANTS LIU AND WANG Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 1 of 150 Page ID #:5441 1 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 I, Gary Y. Leung, declare pursuant to 28 U.S.C. § 1746 as follows: 1. I am an attorney admitted to practice law by the State Bar of California and by this Court. I am a Senior Trial Counsel with Plaintiff Securities and Exchange Commission’s (“SEC”) Los Angeles Regional Office. I have personal knowledge of the matters set forth below, except as otherwise noted, and, if called as a witness, I could and would competently testify under oath to the facts stated herein. 2. I submit this declaration in support of the SEC’s motion for summary judgment against defendants Charles C. Liu and Xin (Lisa) Wang. 3. A true and accurate copy of the SEC’s First Set of Requests for Admission to Defendant Liu is attached hereto as Exhibit 1. 4. A true and accurate copy of the SEC’s First Set of Requests for Admission to Defendant Wang is attached hereto as Exhibit 2. 5. A true and accurate copy of the SEC’s February 4, 2016 investigative subpoena to defendant Charles C. Liu is attached hereto as Exhibit 3. 6. A true and accurate copy of transcript excerpts from the November 10, 2016 deposition of defendant Charles C. Liu is attached hereto as Exhibit 4. 7. A true and accurate copy of transcript excerpts from the November 9, 2016 deposition of defendant Xin (Lisa) Wang is attached hereto as Exhibit 5. 8. A true and accurate copy of the SEC’s First Set of Interrogatories to Defendant Liu is attached hereto as Exhibit 6. 9. A true and accurate copy of the SEC’s First Set of Interrogatories to Defendant Wang is attached hereto as Exhibit 7. 10. I calculated the prejudgment interest owed on the disgorgement amount the SEC recommends in its motion – the $26,733,018.81 in ill-gotten gains received by defendants Liu and Wang ($26,967,918 in gross offering proceeds less the $234,899.19 remaining in the corporate defendants’ bank accounts). I calculated that interest on a quarterly basis over the period from April 30, 2016 to June 1, 2016. As of April 30, 2016, defendants had raised at least $26,967,918 in investor proceeds. Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 2 of 150 Page ID #:5442 2 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 June 1, 2016 is the date that the SEC brought this civil injunctive action. The interest rate I used is the same rate used by the Internal Revenue Service to calculate underpayment penalties, and is defined as the federal short term rate (also known as the “period rate”) plus three percentage points (also known as the “annual rate”). See 26 U.S.C. § 6621(a)(2). When calculating the prejudgment interest, I ignored any partial months at the beginning and the end of the period. 11. I determined that the prejudgment interest on the recommended disgorgement amount of $$26,733,018.81 is $89,110.06. In making this calculation, I utilized a computer program maintained by the SEC to calculate prejudgment interest in SEC enforcement actions. 12. Therefore, the total of amounts of disgorgement and prejudgment interest that the SEC is recommending the Court to order the defendant to pay is $26,822,128.87. A true and correct copy of the Report of Prejudgment Interest generated by the SEC prejudgment interest calculator reflecting this information is attached as Exhibit 8. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed this 4th day of January, 2017 in Los Angeles, California. /s/ Gary Y. Leung GARY Y. LEUNG Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 3 of 150 Page ID #:5443 Exhibit 1 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 4 of 150 Page ID #:5444 1 Case No. SACV16-00974-CJC (AGRx) 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 JOHN W. BERRY (Cal. Bar No. 295760) Email: berryj@sec.gov GARY Y. LEUNG (Cal. Bar No. 302928) Email: leungg@sec.gov JACOB A. REGENSTREIF (Cal. Bar No. 234734) E-mail: regenstreifj@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director Alka N. Patel, Associate Regional Director John W. Berry, Regional Trial Counsel 444 S. Flower Street, Suite 900 Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Southern Division SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. CHARLES C. LIU; XIN WANG a/k/a LISA WANG; PACIFIC PROTON THERAPY REGIONAL CENTER, LLC; PACIFIC PROTON EB-5 FUND, LLC; and BEVERLY PROTON CENTER, LLC f/k/a LOS ANGELES COUNTY PROTON THERAPY, LLC, Defendants. Case No. SACV16-00974-CJC (AGRx) PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S FIRST SET OF REQUESTS FOR ADMISSION TO DEFENDANT CHARLES C. LIU PROPOUNDING PARTY: SECURITIES AND EXCHANGE COMMISSION RESPONDING PARTY: CHARLES C. LIU SET NO.: ONE (Nos. 1-47) In accordance with Rule 36 of the Federal Rules of Civil Procedure, the Securities and Exchange Commission (“SEC”) hereby requests that defendant Exhibit 1, Page 3 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 5 of 150 Page ID #:5445 2 Case No. SACV16-00974-CJC (AGRx) 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 Charles C. Liu respond to the following requests for admission within 30 days of the date of service hereof. I. INSTRUCTIONS & DEFINITIONS A. Definitions 1. The term “SEC” means the U.S. Securities and Exchange Commission. 2. The term “document(s)” is synonymous in meaning and equal in scope to the usage of the term “documents” in Rule 34(a) of the Federal Rules of Civil Procedure and the term “writings and recordings” in Rule 1001(l) of the Federal Rules of Evidence, and shall include any drafts, originals, and non-identical copies of any kind, written, typewritten, printed, recorded, computer-generated or graphic material, however produced, reproduced or compiled, including, but not limited to, any correspondence, memoranda, letters, notes, instructions, contracts, agreements, books, journals, ledgers, statements, reports, studies, bills, invoices, articles, diaries, minutes, calendars, analyses, projections, transcripts, declarations, witness statements, interview reports, summaries, notes of personal or telephonic conversations, e-mail, summaries or notes of any meetings or conferences, and all electronically stored information including electronic or computerized data compilations. A draft or non-identical copy is a separate document within the meaning of this term. 3. The term “communication(s)” means any written, oral, telephonic or other utterances of any nature whatsoever, shared, shown, and/or transferred between and/or among any two and/or more persons, including, but not limited to, any statements, inquiries, discussions, conversations, dialogues, correspondence, e-mail, consultations, negotiations, agreements, understandings, meetings, letters, notations, telegrams, advertisements, declarations, transcripts, interviews, interview reports, blogs, chat room or other Internet postings, and all other documents. A draft or non- identical copy is a separate communication within the meaning of this term. 4. The term “identify” means to describe with particularity, in full detail, Exhibit 1, Page 4 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 6 of 150 Page ID #:5446 3 Case No. SACV16-00974-CJC (AGRx) 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 all relevant facts about the subject matter, including, but not limited to, names, dates, relationships, functions, addresses, purposes, objectives, results and other information which could lead to the discovery of admissible evidence. 5. The term “identify” when used with respect to a document or communication means to identify the document or communication by exhibit number or bates number(s) if previously produced in this action or the SEC’s non-public investigation that preceded this action; or if the document or communication has not been previously produced in this action or the SEC’s prior investigation, to set forth the following information: (a) the nature or type of document or communication (e.g., telephone communication, letter, e-mail or memorandum); (b) the date the document or communication was made: (c) the author(s) of the document or communication; (d) each person who received a copy of the document or communication or was informed of its contents; (e) the person who now has the document or communication or was last known to have it; and (f) the general subject matter and, if applicable, the title of the document or communication. 6. The term “concerning” shall mean discussing, reflecting, evidencing, constituting, mentioning, pertaining to, assessing, embodying, recording, stating, describing, supporting, contradicting, contravening, touching upon or summarizing. 7. The term “person(s)” means any natural individual(s) and/or natural person(s), in any capacity whatsoever, or any entity or organization including divisions, subsidiaries, departments, and other units thereof, and shall include, but not be limited to, a public or private corporation(s), partnership(s), professional corporation(s), limited liability company(ies), business trust(s), banking institution(s), firm(s), joint venture(s), voluntary or unincorporated association(s), organizations(s), proprietorship(s), trust(s), estate(s), governmental agency(ies), commission(s), bureau(s) and/or department(s), and/or any other legal entity. 8. The terms “you” and “your” mean defendant Charles C. Liu, and all persons, agents, attorneys, representatives or other persons or entities acting or Exhibit 1, Page 5 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 7 of 150 Page ID #:5447 4 Case No. SACV16-00974-CJC (AGRx) 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 purporting to act on his behalf, including, but not limited to, your spouse or Lance Gong, Richard Zheng and Stan Lam at Marcum, LLP. 9. The term “your spouse” means defendant Xin (Lisa) Wang, and all persons, agents, attorneys, representatives or other persons or entities acting or purporting to act on her behalf. 10. The term “your children” means any of your children, including, but not limited to, . 11. The term “Beverly Proton” means defendant Beverly Proton Center, LLC f/k/a Los Angeles County Proton Therapy, LLC. 12. The term “Pacific Proton” means defendant Pacific Proton Therapy Regional Center, LLC. 13. The term “PPEB5 Fund” means Pacific Proton EB-5 Fund, LLC. 14. The term “Overseas Chinese” means Overseas Chinese Immigration Consulting Ltd., and any and all of its U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on its behalf. 15. The term “UDG Entities” means United Damei Group, United Damei Investment Company, Ltd., Beijing Pacific Damei Consulting Co. Ltd., and/or United Damei US, and any and all of their U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on their behalf. 16. The term “Delsk” means Hong Kong Delsk Business Co., Ltd., and any and all of its U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on its behalf. 17. The term “Identified Entities” means the following: a. Pacific Proton Therapy Regional Center LLC; b. Pacific Proton EB-5 Fund LLC; c. Beverly Proton Center LLC; Exhibit 1, Page 6 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 8 of 150 Page ID #:5448 5 Case No. SACV16-00974-CJC (AGRx) 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 d. Los Angeles County Proton Therapy, LLC; e. Overseas Chinese Immigration Consulting Ltd.; f. United Damei Group; g. United Damei Investment Company, Ltd.; h. Beijing Pacific Damei Consulting Co. Ltd.; i. United Damei US; j. United MPH Ventures LLC; k. MP Medical Hotel Inc.; l. SP MPH Fund LP; m. SC MPH Management LLC; n. Pacific Medical Regional Center LLC; o. Beverly MP Hotel, Inc.; p. Beverly Medical Hotel; q. COH Beverly Cancer Center; r. Root Medical Peace Corp (U.S.A.); s. Southern California Medical/Proton/Hotel Center, LLC CLCC International Inc.; t. USREDA Law, Inc.; u. Root International Peace Corps; v. Beverly International Cancer Center, LLC; and/or w. JC Oriental Pearl, Inc. 18. The term “Pacific Proton offering memorandum” means the “Private Offering Memoranda” attached as Exhibit 5 to the Declaration of Jacob A. Regenstreif in Support of Plaintiff Securities and Exchange Commission’s Ex Parte Application for a Temporary Restraining Order, Order to Show Cause Why a Preliminary Injunction Should Not Be Granted, and Orders (1) Freezing Assets; (2) Repatriating Assets; (3) Requiring Accountings; (4) Prohibiting the Destruction of Documents (dated May 26, 2016 and Dkt. No. 7 in this action), and attached as Exhibit 1, Page 7 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 9 of 150 Page ID #:5449 6 Case No. SACV16-00974-CJC (AGRx) 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 Exhibit 15 hereto. 19. The term “Pacific Proton offering” means the offering of membership units in PPEB5 Fund, as described in the Pacific Proton offering memorandum. 20. The term “Pacific Proton offering proceeds” means the total amount of money raised from or delivered by investors who subscribed to the Pacific Proton offering or who otherwise delivered money in response to that offering. 21. The term “account” shall mean all financial accounts of every nature (including, but not limited, to checking, savings, trust, money market, brokerage, investment, securities and other financial accounts). 22. The term “control” (including the terms “controlling” or “controlled by”) means possessing, directly or indirectly, the power to direct or cause the direction of, or the power over the decision-making concerning the management, operation and policies of the entity in question, whether through the ownership of voting securities, by contract or otherwise. B. Instructions 1. In responding to these requests for admission, you are required to obtain all responsive information that is available to you and to any of your representatives, agents, employees or attorneys, and to obtain all such responsive information that is in your actual or constructive possession, custody or control, or in the actual or constructive possession, custody or control of any of your representatives, agents, employees or attorneys. 2. These requests for admission are continuing in nature and you are required to promptly supplement or amend your responses to the requests for admission if, after the time of your initial responses, you learn that any response is or has become, in some material respect, incomplete or incorrect, to the full extent provided for by Federal Rule of Civil Procedure 26(e). 3. If you object to a request for admission, and that objection pertains to only a part of the request for admission, or word, phrase or clause in it, then you are Exhibit 1, Page 8 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 10 of 150 Page ID #:5450 7 Case No. SACV16-00974-CJC (AGRx) 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 required to state your objection to that portion only and to respond to the remainder of the request for admission, using your best efforts to do so. No part of an request for admission shall be left unanswered merely because you interpose an objection to another part of a request for admission. 4. For requests for admission regarding the authenticity or accuracy of a copy of a document or communication, each document or communication identified and described in the particular request for admissions consists of one or more individual pages. Should you deny any request, state with specificity whether your denial is to the entire document or communication, or solely to certain pages, sections or other aspects (such as markings or annotations) contained within the document or communication. Also, if your denial is only with respect to certain pages, sections, or other aspects (such as markings or annotations) contained within the document or communication, specify, by bates number and by description of the page, sections or other aspects as appropriate, those specific pages, sections or other aspects that you refuse to admit are authentic and/or and true and correct copies of “records of a regularly conducted activity” or “business records” within the meaning of Rule 803(6) of the Federal Rules of Evidence. 5. If you withhold any information, or documents or communications asked to be identified, which is responsive to a request for admission, based on a claim of privilege or any other reason, then provide the following information concerning the withheld information, document or communication: (a) the nature or type of information that is being withheld (e.g., telephone communication, letter, e-mail or memorandum); (b) a general description of the subject matter of the information that is being withheld; (c) the date the responsive information was made; (d) the name, address, and telephone number and occupation of each person who (i) made or authored the information or (ii) received (or was intended to receive) the information, or was otherwise informed about the information; and (e) a statement of the privilege or other reason claimed to withhold the information or otherwise object to the request Exhibit 1, Page 9 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 11 of 150 Page ID #:5451 8 Case No. SACV16-00974-CJC (AGRx) 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 for admission. 6. If you identify any document(s) or communication(s) in your responses to these requests for admission that no longer exist, cannot be located or are not in your possession, custody or control, then in your response, identify those document(s) or communication(s), as well as: (a) the author(s); (b) the date the responsive material was created; (c) each person who received a copy of the responsive material or was informed of its contents; (d) the person who now has the responsive material or was last known to have it; (e) the general subject matter and, if applicable, the title of the responsive material; (f) the type of such responsive material (e.g., telephone communication, letter, e-mail or memorandum); (g) the size of the material (e.g., number of pages); (h) a detailed description of the responsive material; and (i) a detailed and complete explanation of why such responsive material is no longer in your possession, custody, or control. 7. For each of the requests for admission below, in order to make the request inclusive rather than exclusive, the past tense shall be construed to include the present tense, and vice versa. Moreover, “and” and “or” as used herein are both conjunctive and disjunctive, and “any” includes the word “all” and vice versa. 8. No agreement by the SEC or its staff purporting to modify, limit, or otherwise vary these requests for admission is binding on the SEC or its staff unless confirmed or acknowledged in writing by the SEC or its staff. II. REQUESTS FOR ADMISSION Request for Admission No. 1: (a) Admit that from about 2010 to at least April 2016 you held at least a 75% membership interest in Pacific Proton. (b) Admit that after April 2016 you held, and continue to hold, at least a 37.5% membership interest in Pacific Proton. Request for Admission No. 2: (a) Admit that from about 2010 to at least April 2016 you held a controlling Exhibit 1, Page 10 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 12 of 150 Page ID #:5452 9 Case No. SACV16-00974-CJC (AGRx) 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 membership interest in Pacific Proton. (b) Admit that from about 2010 to at least April 2016 you controlled Pacific Proton. (c) Admit that after April 2016 you held, and continue to hold, a controlling membership interest in Pacific Proton. (d) Admit that after April 2016 you controlled and continue to control Pacific Proton. Request for Admission No. 3: Admit that Pacific Proton is the manager of, has a controlling interest in, and controls PPEB5 Fund. Request for Admission No. 4: (a) Admit that from about 2010 to at least April 2016 you held at least a 75% membership interest in Beverly Proton. (b) Admit that after April 2016 you held, and continue to hold, at least a 75% membership interest in Beverly Proton. Request for Admission No. 5: (a) Admit that from about 2010 to at least April 2016 you held a controlling membership interest in Beverly Proton. (b) Admit that from about 2010 to at least April 2016 you controlled Beverly Proton. (c) Admit that after April 2016 you held, and continue to hold, a controlling membership interest Beverly Proton. (d) Admit that after April 2016 you controlled and continue to control Beverly Proton. Request for Admission No. 6: Admit that you held the title of president of Pacific Proton from about 2010 to at least April 2016. Exhibit 1, Page 11 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 13 of 150 Page ID #:5453 10 Case No. SACV16-00974-CJC (AGRx) 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 Request for Admission No. 7: Admit that defendant Xin (Lisa) Wang held the title of secretary of Pacific Proton from at least January 2016 to at least April 2016. Request for Admission No. 8: (a) Admit that you held the titles of president and treasurer of Beverly Proton from about 2010 to at least sometime in 2016. (b) Admit that you were the managing member of Beverly Proton from in or about 2010 to at least sometime in 2016. (c) Admit that you and defendant Xin (Lisa) Wang were the sole directors of Beverly Proton from at least January 2016 to at least April 2016 . (d) Admit that defendant Xin (Lisa) Wang holds and/or held the title of Vice President of Marketing of Asia for Beverly Proton. Request for Admission No. 9: (a) Admit that defendant Xin (Lisa) Wang held the title of chairman for at least one of the UDG Entities. (b) Admit that defendant Xin (Lisa) Wang currently holds the title of chairman for at least one of the UDG Entities. (c) Admit that defendant Xin (Lisa) Wang held the title of chief executive officer for at least one of the UDG Entities. (d) Admit that defendant Xin (Lisa) Wang currently holds the title of chief executive officer for at least one of the UDG Entities. Request for Admission No. 10: (a) Admit that from about 2010 to at least April 2016 you controlled at least one of the UDG Entities. (b) Admit that from about 2010 to at least April 2016 defendant Xin (Lisa) Wang controlled at least one of the UDG Entities. (c) Admit that from about 2010 to at least April 2016 Wenli Yao controlled at least one of the UDG Entities. Exhibit 1, Page 12 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 14 of 150 Page ID #:5454 11 Case No. SACV16-00974-CJC (AGRx) 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 Request for Admission No. 11: (a) Admit that Wenli Yao is your mother-in-law. (b) Admit that Wenli Yao is the mother of defendant Xin (Lisa) Wang. Request for Admission No. 12: Admit that Exhibit 1 attached hereto is a genuine, true and correct copy of a list of investors in the PPEB5 Fund produced to the SEC by your counsel in the SEC’s investigation. Request for Admission No. 13: (a) Admit that there were at least 58 investors who invested in the Pacific Proton offering. (b) Admit that the total amount of Pacific Proton offering proceeds was at least $31,610,000. Request for Admission No. 14: (a) Admit that, in order to qualify for the federal EB-5 program, investors in the Pacific Proton offering had to invest capital, the capital had to be at risk, and the investment had to be made for the purpose of generating a return on the capital invested. (b) Admit that investors in the Pacific Proton offering depended on the entrepreneurial or managerial skills of you or others involved in the Pacific Proton offering for returns to be generated on the investors’ investments. (c) Admit that investors in the Pacific Proton offering had an expectation of profits or returns on their investments and that these profits would depend on others, including yourself. Request for Admission No. 15: (a) Admit that the total amount of Pacific Proton offering proceeds during the period from October 2014 to April 2016 was at least $26,967,918. (b) Admit that, of the total amount of Pacific Proton offering proceeds during the period from October 2014 to April 2016, at least $24,712,217 came in the form Exhibit 1, Page 13 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 15 of 150 Page ID #:5455 12 Case No. SACV16-00974-CJC (AGRx) 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 of, or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that, of the total amount of Pacific Proton offering proceeds during the period from October 2014 to April 2016, at least $2,255,701 came in the form of, or were designated as or considered “Administrative Fees,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 16: (a) Admit that you received Pacific Proton offering proceeds. (b) Admit that you received funds from the Pacific Proton offering proceeds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that during the period from October 2014 to April 2016, you received at least $6,714,580 from the Pacific Proton offering proceeds. (d) Admit that the $6,714,580 described above in subsection (c) came from, primarily, if not entirely, funds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (e) Admit that during the period from February to March 2016, you received at least $4,270,000 from the Pacific Proton offering proceeds. (f) Admit that the $4,270,000 described above in subsection (e) came from, primarily, if not entirely, funds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 17: (a) Admit that defendant Xin (Lisa) Wang received Pacific Proton offering proceeds. (b) Admit that defendant Xin (Lisa) Wang received funds from the Pacific Proton offering proceeds that came in the form of or were designated as or considered Exhibit 1, Page 14 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 16 of 150 Page ID #:5456 13 Case No. SACV16-00974-CJC (AGRx) 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 “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that during the period from October 2014 to April 2016, defendant Xin (Lisa) Wang received at least $1,538,000 from the Pacific Proton offering proceeds. (d) Admit that the $1,538,000 described above in subsection (c) came from, primarily, if not entirely, funds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (e) Admit that during March 2016, defendant Xin (Lisa) Wang received at least $996,000 from the Pacific Proton offering proceeds. (f) Admit that the $996,000 described above in subsection (e) came from, primarily, if not entirely, funds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 18: (a) Admit that Overseas Chinese received Pacific Proton offering proceeds. (b) Admit that Overseas Chinese received funds from the Pacific Proton offering proceeds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that during the period from October 2014 to April 2016, Overseas Chinese received at least $7,722,000 from the Pacific Proton offering proceeds. (d) Admit that the $7,722,000 described above in subsection (c) primarily, if not entirely, came from funds designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (e) Admit that Overseas Chinese was responsible for securing the investments of eleven investors who invested in the Pacific Proton offering. Exhibit 1, Page 15 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 17 of 150 Page ID #:5457 14 Case No. SACV16-00974-CJC (AGRx) 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 Request for Admission No. 19: (a) Admit that one or more of the UDG Entities Pacific Proton offering proceeds. (b) Admit that one or more of the UDG Entities received funds from the Pacific Proton offering proceeds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that during the period from October 2014 to April 2016, one or more of the UDG Entities received at least $3,815,000 from the Pacific Proton offering proceeds. (d) Admit that the $3,815,000 described above in subsection (c) primarily, if not entirely, came from funds designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (e) Admit that one or more of the UDG Entities was responsible for securing the investments of ten investors who invested in the Pacific Proton offering. Request for Admission No. 20: (a) Admit that Delsk received Pacific Proton offering proceeds. (b) Admit that Delsk received funds from the Pacific Proton offering proceeds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that during the period from October 2014 to April 2016, Delsk received at least $1,387,500 from the Pacific Proton offering proceeds. (d) Admit that the $1,387,500 described above in subsection (c) primarily, if not entirely, came from funds designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (e) Admit that Delsk was responsible for securing the investments of 37 investors who invested in the Pacific Proton offering. Exhibit 1, Page 16 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 18 of 150 Page ID #:5458 15 Case No. SACV16-00974-CJC (AGRx) 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 Request for Admission No. 21: (a) Admit that you transferred at least $3,250,000 from your personal bank account(s) to China Merchants Bank from February to April 2016. (b) Admit that all of the $3,250,000 that you transferred to China Merchants Bank from February to April 2016 came from Pacific Proton offering proceeds that primarily, if not entirely, came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 22: (a) Admit that at least $500,000 was transferred from the bank account(s) of the PPEB5 Fund to China Merchants Bank in October 2015. (b) Admit that all of the $500,000 that was transferred from the PPEB5 Fund to China Merchants Bank in October 2015 came from Pacific Proton offering proceeds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 23: (a) Admit that you transferred at least $118,605.11 from your personal bank account(s) to Bank of America, N.A. A/0959 A/C: Grenada Co-operative Bank Limited (hereinafter, “Grenada Bank”) in March 2016. (b) Admit that all of the $118,605.11 that you transferred to Grenada Bank in March 2016 came from Pacific Proton offering proceeds that primarily, if not entirely, came in the form of, or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 24: Admit that the descriptions of the transactions in paragraph 48, sub-paragraphs (a) though (e) of the Supplemental Declaration of Lorraine Pearson in Support of Plaintiff Securities and Exchange Commission’s Motion for Orders Requiring the Exhibit 1, Page 17 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 19 of 150 Page ID #:5459 16 Case No. SACV16-00974-CJC (AGRx) 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 Repatriation of Assets and Accountings (dated June 3, 2016 and Dkt. No. 16 in this case), which is attached hereto as Exhibit 2, are accurate. Request for Admission No. 25: Admit that the Pacific Proton offering proceeds were not used or expended in a manner consistent with the terms and disclosures of the Pacific Proton offering memorandum. Request for Admission No. 26: Admit that you intended to have the Pacific Proton offering proceeds used or expended in a manner that was inconsistent with the terms and disclosures of the Pacific Proton offering memorandum. Request for Admission No. 27: (a) Admit that you intended not to disclose to investors that the Pacific Proton offering proceeds would be used expended in a manner that was inconsistent with the terms and disclosures of the Pacific Proton offering memorandum. (b) Admit that you made false statements concerning the Pacific Proton offering and the use of proceeds from that offering to investors in the Pacific Proton. (c) Admit that the descriptions of how the Pacific Proton offering proceeds would be used in the Pacific Proton offering memorandum were false. (d) Admit that you knew or recklessly disregarded that the descriptions of how the Pacific Proton offering proceeds would be used in the Pacific Proton offering memorandum were false. (e) Admit that you should have known that the descriptions of how the Pacific Proton offering proceeds would be used in the Pacific Proton offering memorandum were false. (f) Admit that you knew or recklessly disregarded that false statements concerning the Pacific Proton offering and the use of proceeds from that offering were being made to investors in the Pacific Proton offering. (g) Admit that you should have known that false statements concerning the Exhibit 1, Page 18 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 20 of 150 Page ID #:5460 17 Case No. SACV16-00974-CJC (AGRx) 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 Pacific Proton offering and the use of proceeds from that offering were being made to investors in the Pacific Proton offering. Request for Admission No. 28: Admit that you are able to transfer or cause to be transferred the sum of $26,967,818.00 as called for by the “Repatriation Order” provision, section VIII, of the Amended and Restated Injunction dated and entered October 17, 2016 in this case, and attached as Exhibit 3 hereto. Request for Admission No. 29: Admit that you are able to transfer or cause to be transferred at least $6,714,580 to the account of the Court-appointed Monitor. Request for Admission No. 30: Admit that defendant Xin (Lisa) Wang is able to transfer or cause to be transferred at least $1,538,000 to the account of the Court-appointed Monitor. Request for Admission No. 31: Admit that you can cause Overseas Chinese to repatriate the Pacific Proton offering proceeds that it received. Request for Admission No. 32: Admit that you can cause one or more of the UDG Entities to repatriate the Pacific Proton offering proceeds that any of them received. Request for Admission No. 33: (a) Admit that Exhibit 4 attached hereto is a genuine, true and correct copy of an “Engagement Agreement” between United Damei Investment Company, Ltd. and Beverly Proton. (b) Admit that Exhibit 4 attached hereto is a genuine, true and correct copy of a contract that is signed by Wenli Yao on behalf of United Damei Investment Company, Ltd. as “It’s Director,” with a date of August 15, 2013. Request for Admission No. 34: (a) Admit that Exhibit 5 attached hereto is a genuine, true and correct copy of a Exhibit 1, Page 19 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 21 of 150 Page ID #:5461 18 Case No. SACV16-00974-CJC (AGRx) 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 page from the website of one or more of the UDG Entities from May 2016. (b) Admit that Exhibit 5 attached hereto contains a photograph of defendant Xin (Lisa) Wang in the middle of the page marked “Exhibit 32, Page 631,” directly under the heading “Management Team.” Request for Admission No. 35: (a) Admit that Exhibit 6 attached hereto is a genuine, true and correct copy of a pages from the website of one or more of the UDG Entities from May 2016. (b) Admit that Exhibit 6 attached hereto contains a photograph of you and defendant Xin (Lisa) Wang on the bottom half of the page marked “Exhibit 33, Page 640.” (c) Admit that Exhibit 6 attached hereto contains two photographs of defendant Xin (Lisa) Wang on the page marked “Exhibit 33, Page 641.” Request for Admission No. 36: (a) Admit that Exhibit 7 attached hereto is a genuine, true and correct copy of pages from the website of one or more of the UDG Entities from May 2016. (b) Admit that Exhibit 7 attached hereto contains a photograph of you and defendant Xin (Lisa) Wang on the page marked “Exhibit 35, Page 661.” (c) Admit that the caption under the photograph on the page marked “Exhibit 35, Page 661” of Exhibit 7 attached hereto accurately identifies you in the photograph, accurately identifies defendant Xin (Lisa) Wang in the photograph, and accurately identifies defendant Xin (Lisa) Wang as “United Damei Group CEO.” Request for Admission No. 37: (a) Admit that Exhibit 8 attached hereto is a genuine, true and correct copy of a business card for defendant Xin (Lisa) Wang for United Damei Group. (b) Admit that Exhibit 8 attached hereto accurately identifies the title of defendant Xin (Lisa) Wang as “Chairman” of United Damei Group. Request for Admission No. 38: (a) Admit that Exhibit 9 attached hereto is a genuine, true and correct copy of Exhibit 1, Page 20 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 22 of 150 Page ID #:5462 19 Case No. SACV16-00974-CJC (AGRx) 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 an email from you to Harlan Levine, dated March 21, 2016. (b) Admit that in the email that is Exhibit 9 attached hereto, you accurately describe “UDG” as “my wife’s company.” Request for Admission No. 39: (a) Admit that Exhibit 10 attached hereto is a genuine, true and correct copy of pages from the website the Grenada Embassy – Commercial Attaché Office regarding a May 2015 event in Shanghai, China. (b) Admit that defendant Xin (Lisa) Wang attended the May 2015 event described in Exhibit 10 attached hereto. (c) Admit that Exhibit 10 attached hereto contains a photograph of defendant Xin (Lisa) Wang on the page marked “Exhibit 10, Page 62.” (d) Admit that the caption under the photograph on the page marked “Exhibit 10, Page 62” of Exhibit 10 attached hereto accurately identifies defendant Xin (Lisa) Wang as “President of United Damei Group Ms. WANG Xin.” (e) Admit that Exhibit 10 attached hereto contains a photograph of defendant Xin (Lisa) Wang on the page marked “Exhibit 10, Page 64.” (d) Admit that the caption under the photograph on the page marked “Exhibit 10, Page 64” of Exhibit 10 attached hereto accurately identifies defendant Xin (Lisa) Wang as “the President of United Damei Group.” Request for Admission No. 40: (a) Admit that Exhibit 11 attached hereto is a genuine, true and correct copy of an email from you to Edison Zahn, dated October 7, 2014. (b) Admit that attached to Exhibit 11 is a list of invitees to an event in Beijing, China in December 2014, which accurately identifies Xiaojun Chen as the Director of the New China Insurance Company. Request for Admission No. 41: (a) Admit that Exhibit 12 attached hereto is a genuine, true and correct copy of an email from you to Edison Zahn, dated October 21, 2015. Exhibit 1, Page 21 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 23 of 150 Page ID #:5463 20 Case No. SACV16-00974-CJC (AGRx) 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 (b) Admit that, as of October 21, 2015, you were president, chief executive officer and sole owner of United MPH Ventures, LLC. (c) Admit that, as of October 21, 2015, United MPH Ventures, LLC was the 100% shareholder of United Damei US. Request for Admission No. 42: (a) Admit that Exhibit 13 attached hereto is a genuine, true and correct copy of a printout of registration information concerning United Damei Investment Company, Ltd. from the official Chinese government website containing registration information filed by Chinese companies, found at http://gsxt.saic.gov.cn/. (b) Admit that Exhibit 14 attached hereto is a correct, in all material terms, translation of Exhibit 13. (c) Admit that Wenli Yao was the “Legal Representative” of United Damei Investment Company, Ltd. before May 19, 2016. (d) Admit that Wenli Yao was the “Executive Director” and “Manager” of United Damei Investment Company, Ltd. before May 19, 2016. (e) Admit that Wenli Yao and Zhongshen Wang were the two “Natural person shareholders” of United Damei Investment Company, Ltd. before May 19, 2016. Request for Admission No. 43: (a) Admit that Exhibit 15 attached hereto is a genuine, true and correct copy of the private offering memorandum for the offer for sale of membership interests or units in the PPEB5 Fund. (b) Admit that you reviewed and approved the content of Exhibit 15 attached hereto. (c) Admit that Exhibit 15 was sent to investors who invested in the Pacific Proton offering. Request for Admission No. 44: Admit that Exhibit 16 attached hereto is a genuine, true and correct copy of a letter, dated March 22, 2016, which you received from counsel for Loma Linda Exhibit 1, Page 22 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 24 of 150 Page ID #:5464 21 Case No. SACV16-00974-CJC (AGRx) 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 University and Loma Linda University Medical Center. Request for Admission No. 45: Admit that Exhibit 17 attached hereto is a genuine, true and correct copy of a letter, dated March 18, 2016, which you received from counsel for Optivus Proton Therapy, Inc. Request for Admission No. 46: (a) Admit that Exhibit 18 attached hereto is a genuine, true and correct copy of a letter, dated May 3, 2016, from your counsel, copying you, to counsel for the SEC. (b) Admit that Exhibit 18 attached hereto includes a genuine, true and correct copy (on the page marked “Exh 1 Page 6”) of an agreement between Los Angeles County Proton Therapy, LLC and Overseas Chinese regarding the return of “marketing fees” to Los Angeles County Proton Therapy, LLC, which you signed on behalf of Los Angeles County Proton Therapy, LLC. (c) Admit that Beverly Proton was formerly known as Los Angeles County Proton Therapy, LLC. Request for Admission No. 47: (a) Admit that Exhibit 19 attached hereto is a genuine, true and correct copy of a letter, dated May 18, 2016, from your counsel, copying you, to counsel for the SEC. (b) Admit that Exhibit 19 attached hereto includes a genuine, true and correct copies of the English translation and Chinese version (on the pages marked “Exh 2 Page 12” and “Exh 2 Page 13”) of an agreement by Beijing Pacific Damei Consulting Co., Ltd. regarding the return of “agent fees” to “your company,” Los Angeles County Proton Therapy, LLC. Dated: October 18, 2016 /s/ John W. Berry John W. Berry Attorney for Plaintiff Exhibit 1, Page 23 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 25 of 150 Page ID #:5465 22 Case No. SACV16-00974-CJC (AGRx) 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 Exhibit 1, Page 24 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 26 of 150 Page ID #:5466 1 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 PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. On October 19, 2016, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S FIRST SET OF REQUESTS FOR ADMISSION TO DEFENDANT CHARLES C. LIU on all the parties to this action addressed as stated on the attached service list: ☐ OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. ☒ PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. ☐ EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. ☐ HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. ☐ UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ☒ ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. ☐ E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. ☐ FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: October 19, 2016 /s/ Joseph Law Joseph Law Exhibit 1, Page 25 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 27 of 150 Page ID #:5467 2 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 SEC v. Liu et al. United States District Court—Central District of California Case No. SACV16-00974-CJC (AGRx) SERVICE LIST Counsel for Defendants Charles C. Liu and Xin Wang a/k/a Lisa Wang: Hervé Gouraige, Esq. Sills Cummis & Gross P.C. The Legal Center One Riverfront Plaza Newark, New Jersey 07102 Email: hgouraige@sillscummis.com Lawrence B. Steinberg Buchalter Nemer, P.C. 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017-1730 Email: LSteinberg@buchalter.com Defendants Pacific Proton Therapy Regional Center, LLC and Beverly Proton Center, LLC: (on counsel for Charles C. Liu¸ the controlling shareholder of each) Hervé Gouraige, Esq. Sills Cummis & Gross P.C. The Legal Center One Riverfront Plaza Newark, New Jersey 07102 Email: hgouraige@sillscummis.com Lawrence B. Steinberg Buchalter Nemer, P.C. 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017-1730 Email: LSteinberg@buchalter.com (on Charles C. Liu¸ controlling shareholder of each) c/o Charles C. Liu Laguna Niguel, CA 92677 Exhibit 1, Page 26 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 28 of 150 Page ID #:5468 3 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 Email: charlesliul26@gmail.com Email: charlesliu@me.com Email: liu@pptus.com Defendant Pacific Proton EB-5 Fund, LLC: (on the registered agent) c/o Corporation Trust Company 1209 Orange St. Wilmington, DE 19801 (on Charles C. Liu¸ controlling shareholder of the manager) c/o Charles C. Liu Laguna Niguel, CA 92677 Email: charlesliul26@gmail.com Email: charlesliu@me.com Email: liu@pptus.com Exhibit 1, Page 27 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 29 of 150 Page ID #:5469 Exhibit 2 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 30 of 150 Page ID #:5470 1 Case No. SACV16-00974-CJC (AGRx) 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 JOHN W. BERRY (Cal. Bar No. 295760) Email: berryj@sec.gov GARY Y. LEUNG (Cal. Bar No. 302928) Email: leungg@sec.gov JACOB A. REGENSTREIF (Cal. Bar No. 234734) E-mail: regenstreifj@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director Alka N. Patel, Associate Regional Director John W. Berry, Regional Trial Counsel 444 S. Flower Street, Suite 900 Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Southern Division SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. CHARLES C. LIU; XIN WANG a/k/a LISA WANG; PACIFIC PROTON THERAPY REGIONAL CENTER, LLC; PACIFIC PROTON EB-5 FUND, LLC; and BEVERLY PROTON CENTER, LLC f/k/a LOS ANGELES COUNTY PROTON THERAPY, LLC, Defendants. Case No. SACV16-00974-CJC (AGRx) PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S FIRST SET OF REQUESTS FOR ADMISSION TO DEFENDANT XIN (LISA) WANG PROPOUNDING PARTY: SECURITIES AND EXCHANGE COMMISSION RESPONDING PARTY: XIN (LISA) WANG SET NO.: ONE (Nos. 1-47) In accordance with Rule 36 of the Federal Rules of Civil Procedure, the Securities and Exchange Commission (“SEC”) hereby requests that defendant Exhibit 2, Page 28 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 31 of 150 Page ID #:5471 2 Case No. SACV16-00974-CJC (AGRx) 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 Charles C. Liu respond to the following requests for admission within 30 days of the date of service hereof. I. INSTRUCTIONS & DEFINITIONS A. Definitions 1. The term “SEC” means the U.S. Securities and Exchange Commission. 2. The term “document(s)” is synonymous in meaning and equal in scope to the usage of the term “documents” in Rule 34(a) of the Federal Rules of Civil Procedure and the term “writings and recordings” in Rule 1001(l) of the Federal Rules of Evidence, and shall include any drafts, originals, and non-identical copies of any kind, written, typewritten, printed, recorded, computer-generated or graphic material, however produced, reproduced or compiled, including, but not limited to, any correspondence, memoranda, letters, notes, instructions, contracts, agreements, books, journals, ledgers, statements, reports, studies, bills, invoices, articles, diaries, minutes, calendars, analyses, projections, transcripts, declarations, witness statements, interview reports, summaries, notes of personal or telephonic conversations, e-mail, summaries or notes of any meetings or conferences, and all electronically stored information including electronic or computerized data compilations. A draft or non-identical copy is a separate document within the meaning of this term. 3. The term “communication(s)” means any written, oral, telephonic or other utterances of any nature whatsoever, shared, shown, and/or transferred between and/or among any two and/or more persons, including, but not limited to, any statements, inquiries, discussions, conversations, dialogues, correspondence, e-mail, consultations, negotiations, agreements, understandings, meetings, letters, notations, telegrams, advertisements, declarations, transcripts, interviews, interview reports, blogs, chat room or other Internet postings, and all other documents. A draft or non- identical copy is a separate communication within the meaning of this term. 4. The term “identify” means to describe with particularity, in full detail, Exhibit 2, Page 29 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 32 of 150 Page ID #:5472 3 Case No. SACV16-00974-CJC (AGRx) 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 all relevant facts about the subject matter, including, but not limited to, names, dates, relationships, functions, addresses, purposes, objectives, results and other information which could lead to the discovery of admissible evidence. 5. The term “identify” when used with respect to a document or communication means to identify the document or communication by exhibit number or bates number(s) if previously produced in this action or the SEC’s non-public investigation that preceded this action; or if the document or communication has not been previously produced in this action or the SEC’s prior investigation, to set forth the following information: (a) the nature or type of document or communication (e.g., telephone communication, letter, e-mail or memorandum); (b) the date the document or communication was made: (c) the author(s) of the document or communication; (d) each person who received a copy of the document or communication or was informed of its contents; (e) the person who now has the document or communication or was last known to have it; and (f) the general subject matter and, if applicable, the title of the document or communication. 6. The term “concerning” shall mean discussing, reflecting, evidencing, constituting, mentioning, pertaining to, assessing, embodying, recording, stating, describing, supporting, contradicting, contravening, touching upon or summarizing. 7. The term “person(s)” means any natural individual(s) and/or natural person(s), in any capacity whatsoever, or any entity or organization including divisions, subsidiaries, departments, and other units thereof, and shall include, but not be limited to, a public or private corporation(s), partnership(s), professional corporation(s), limited liability company(ies), business trust(s), banking institution(s), firm(s), joint venture(s), voluntary or unincorporated association(s), organizations(s), proprietorship(s), trust(s), estate(s), governmental agency(ies), commission(s), bureau(s) and/or department(s), and/or any other legal entity. 8. The terms “you” and “your” mean defendant Xin (Lisa) Wang, and all persons, agents, attorneys, representatives or other persons or entities acting or Exhibit 2, Page 30 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 33 of 150 Page ID #:5473 4 Case No. SACV16-00974-CJC (AGRx) 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 purporting to act on her behalf, including, but not limited to, your spouse or Lance Gong, Richard Zheng and Stan Lam at Marcum, LLP. 9. The term “your spouse” means defendant Charles C. Liu, and all persons, agents, attorneys, representatives or other persons or entities acting or purporting to act on her behalf. 10. The term “your children” means any of your children, including, but not limited to, . 11. The term “Beverly Proton” means defendant Beverly Proton Center, LLC f/k/a Los Angeles County Proton Therapy, LLC. 12. The term “Pacific Proton” means defendant Pacific Proton Therapy Regional Center, LLC. 13. The term “PPEB5 Fund” means Pacific Proton EB-5 Fund, LLC. 14. The term “Overseas Chinese” means Overseas Chinese Immigration Consulting Ltd., and any and all of its U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on its behalf. 15. The term “UDG Entities” means United Damei Group, United Damei Investment Company, Ltd., Beijing Pacific Damei Consulting Co. Ltd., and/or United Damei US, and any and all of their U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on their behalf. 16. The term “Delsk” means Hong Kong Delsk Business Co., Ltd., and any and all of its U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on its behalf. 17. The term “Identified Entities” means the following: a. Pacific Proton Therapy Regional Center LLC; b. Pacific Proton EB-5 Fund LLC; c. Beverly Proton Center LLC; Exhibit 2, Page 31 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 34 of 150 Page ID #:5474 5 Case No. SACV16-00974-CJC (AGRx) 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 d. Los Angeles County Proton Therapy, LLC; e. Overseas Chinese Immigration Consulting Ltd.; f. United Damei Group; g. United Damei Investment Company, Ltd.; h. Beijing Pacific Damei Consulting Co. Ltd.; i. United Damei US; j. United MPH Ventures LLC; k. MP Medical Hotel Inc.; l. SP MPH Fund LP; m. SC MPH Management LLC; n. Pacific Medical Regional Center LLC; o. Beverly MP Hotel, Inc.; p. Beverly Medical Hotel; q. COH Beverly Cancer Center; r. Root Medical Peace Corp (U.S.A.); s. Southern California Medical/Proton/Hotel Center, LLC CLCC International Inc.; t. USREDA Law, Inc.; u. Root International Peace Corps; v. Beverly International Cancer Center, LLC; and/or w. JC Oriental Pearl, Inc. 18. The term “Pacific Proton offering memorandum” means the “Private Offering Memoranda” attached as Exhibit 5 to the Declaration of Jacob A. Regenstreif in Support of Plaintiff Securities and Exchange Commission’s Ex Parte Application for a Temporary Restraining Order, Order to Show Cause Why a Preliminary Injunction Should Not Be Granted, and Orders (1) Freezing Assets; (2) Repatriating Assets; (3) Requiring Accountings; (4) Prohibiting the Destruction of Documents (dated May 26, 2016 and Dkt. No. 7 in this action), and attached as Exhibit 2, Page 32 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 35 of 150 Page ID #:5475 6 Case No. SACV16-00974-CJC (AGRx) 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 Exhibit 15 hereto. 19. The term “Pacific Proton offering” means the offering of membership units in PPEB5 Fund, as described in the Pacific Proton offering memorandum. 20. The term “Pacific Proton offering proceeds” means the total amount of money raised from or delivered by investors who subscribed to the Pacific Proton offering or who otherwise delivered money in response to that offering. 21. The term “account” shall mean all financial accounts of every nature (including, but not limited, to checking, savings, trust, money market, brokerage, investment, securities and other financial accounts). 22. The term “control” (including the terms “controlling” or “controlled by”) means possessing, directly or indirectly, the power to direct or cause the direction of, or the power over the decision-making concerning the management, operation and policies of the entity in question, whether through the ownership of voting securities, by contract or otherwise. B. Instructions 1. In responding to these requests for admission, you are required to obtain all responsive information that is available to you and to any of your representatives, agents, employees or attorneys, and to obtain all such responsive information that is in your actual or constructive possession, custody or control, or in the actual or constructive possession, custody or control of any of your representatives, agents, employees or attorneys. 2. These requests for admission are continuing in nature and you are required to promptly supplement or amend your responses to the requests for admission if, after the time of your initial responses, you learn that any response is or has become, in some material respect, incomplete or incorrect, to the full extent provided for by Federal Rule of Civil Procedure 26(e). 3. If you object to a request for admission, and that objection pertains to only a part of the request for admission, or word, phrase or clause in it, then you are Exhibit 2, Page 33 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 36 of 150 Page ID #:5476 7 Case No. SACV16-00974-CJC (AGRx) 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 required to state your objection to that portion only and to respond to the remainder of the request for admission, using your best efforts to do so. No part of an request for admission shall be left unanswered merely because you interpose an objection to another part of a request for admission. 4. For requests for admission regarding the authenticity or accuracy of a copy of a document or communication, each document or communication identified and described in the particular request for admissions consists of one or more individual pages. Should you deny any request, state with specificity whether your denial is to the entire document or communication, or solely to certain pages, sections or other aspects (such as markings or annotations) contained within the document or communication. Also, if your denial is only with respect to certain pages, sections, or other aspects (such as markings or annotations) contained within the document or communication, specify, by bates number and by description of the page, sections or other aspects as appropriate, those specific pages, sections or other aspects that you refuse to admit are authentic and/or and true and correct copies of “records of a regularly conducted activity” or “business records” within the meaning of Rule 803(6) of the Federal Rules of Evidence. 5. If you withhold any information, or documents or communications asked to be identified, which is responsive to a request for admission, based on a claim of privilege or any other reason, then provide the following information concerning the withheld information, document or communication: (a) the nature or type of information that is being withheld (e.g., telephone communication, letter, e-mail or memorandum); (b) a general description of the subject matter of the information that is being withheld; (c) the date the responsive information was made; (d) the name, address, and telephone number and occupation of each person who (i) made or authored the information or (ii) received (or was intended to receive) the information, or was otherwise informed about the information; and (e) a statement of the privilege or other reason claimed to withhold the information or otherwise object to the request Exhibit 2, Page 34 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 37 of 150 Page ID #:5477 8 Case No. SACV16-00974-CJC (AGRx) 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 for admission. 6. If you identify any document(s) or communication(s) in your responses to these requests for admission that no longer exist, cannot be located or are not in your possession, custody or control, then in your response, identify those document(s) or communication(s), as well as: (a) the author(s); (b) the date the responsive material was created; (c) each person who received a copy of the responsive material or was informed of its contents; (d) the person who now has the responsive material or was last known to have it; (e) the general subject matter and, if applicable, the title of the responsive material; (f) the type of such responsive material (e.g., telephone communication, letter, e-mail or memorandum); (g) the size of the material (e.g., number of pages); (h) a detailed description of the responsive material; and (i) a detailed and complete explanation of why such responsive material is no longer in your possession, custody, or control. 7. For each of the requests for admission below, in order to make the request inclusive rather than exclusive, the past tense shall be construed to include the present tense, and vice versa. Moreover, “and” and “or” as used herein are both conjunctive and disjunctive, and “any” includes the word “all” and vice versa. 8. No agreement by the SEC or its staff purporting to modify, limit, or otherwise vary these requests for admission is binding on the SEC or its staff unless confirmed or acknowledged in writing by the SEC or its staff. II. REQUESTS FOR ADMISSION Request for Admission No. 1: (a) Admit that from about 2010 to at least April 2016 defendant Charles C. Liu held at least a 75% membership interest in Pacific Proton. (b) Admit that after April 2016 defendant Charles C. Liu held, and continues to hold, at least a 37.5% membership interest in Pacific Proton. Request for Admission No. 2: (a) Admit that from about 2010 to at least April 2016 defendant Charles C. Liu Exhibit 2, Page 35 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 38 of 150 Page ID #:5478 9 Case No. SACV16-00974-CJC (AGRx) 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 held a controlling membership interest in Pacific Proton. (b) Admit that from about 2010 to at least April 2016 defendant Charles C. Liu controlled Pacific Proton. (c) Admit that after April 2016 defendant Charles C. Liu held, and continues to hold, a controlling membership interest in Pacific Proton. (d) Admit that after April 2016 defendant Charles C. Liu controlled and continues to control Pacific Proton. Request for Admission No. 3: Admit that Pacific Proton is the manager of, has a controlling interest in, and controls PPEB5 Fund. Request for Admission No. 4: (a) Admit that from about 2010 to at least April 2016 defendant Charles C. Liu held at least a 75% membership interest in Beverly Proton. (b) Admit that after April 2016 defendant Charles C. Liu held, and continues to hold, at least a 75% membership interest in Beverly Proton. Request for Admission No. 5: (a) Admit that from about 2010 to at least April 2016 defendant Charles C. Liu held a controlling membership interest in Beverly Proton. (b) Admit that from about 2010 to at least April 2016 defendant Charles C. Liu controlled Beverly Proton. (c) Admit that after April 2016 defendant Charles C. Liu held, and continues to hold, a controlling membership interest Beverly Proton. (d) Admit that after April 2016 defendant Charles C. Liu controlled and continue to control Beverly Proton. Request for Admission No. 6: Admit that defendant Charles C. Liu held the title of president of Pacific Proton from about 2010 to at least April 2016. Exhibit 2, Page 36 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 39 of 150 Page ID #:5479 10 Case No. SACV16-00974-CJC (AGRx) 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 Request for Admission No. 7: Admit that defendant you held the title of secretary of Pacific Proton from at least January 2016 to at least April 2016. Request for Admission No. 8: (a) Admit that defendant Charles C. Liu held the titles of president and treasurer of Beverly Proton from about 2010 to at least sometime in 2016. (b) Admit that defendant Charles C. Liu was the managing member of Beverly Proton from in or about 2010 to at least sometime in 2016. (c) Admit that defendant Charles C. Liu and you were the sole directors of Beverly Proton from at least January 2016 to at least April 2016 . (d) Admit that you hold and/or held the title of Vice President of Marketing of Asia for Beverly Proton. Request for Admission No. 9: (a) Admit that you held the title of chairman for at least one of the UDG Entities. (b) Admit that you currently hold the title of chairman for at least one of the UDG Entities. (c) Admit that you held the title of chief executive officer for at least one of the UDG Entities. (d) Admit that you currently hold the title of chief executive officer for at least one of the UDG Entities. Request for Admission No. 10: (a) Admit that from about 2010 to at least April 2016 defendant Charles C. Liu controlled at least one of the UDG Entities. (b) Admit that from about 2010 to at least April 2016 you controlled at least one of the UDG Entities. (c) Admit that from about 2010 to at least April 2016 Wenli Yao controlled at least one of the UDG Entities. Exhibit 2, Page 37 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 40 of 150 Page ID #:5480 11 Case No. SACV16-00974-CJC (AGRx) 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 Request for Admission No. 11: (a) Admit that Wenli Yao is your mother. (b) Admit that Wenli Yao is the mother-in-law of defendant Charles C. Liu. Request for Admission No. 12: Admit that Exhibit 1 attached hereto is a genuine, true and correct copy of a list of investors in the PPEB5 Fund produced to the SEC by counsel for defendant Charles C. Liu in the SEC’s investigation. Request for Admission No. 13: (a) Admit that there were at least 58 investors who invested in the Pacific Proton offering. (b) Admit that the total amount of Pacific Proton offering proceeds was at least $31,610,000. Request for Admission No. 14: (a) Admit that, in order to qualify for the federal EB-5 program, investors in the Pacific Proton offering had to invest capital, the capital had to be at risk, and the investment had to be made for the purpose of generating a return on the capital invested. (b) Admit that investors in the Pacific Proton offering depended on the entrepreneurial or managerial skills of defendant Charles C. Liu or others involved in the Pacific Proton offering for returns to be generated on the investors’ investments. (c) Admit that investors in the Pacific Proton offering had an expectation of profits or returns on their investments and that these profits would depend on others, including defendant Charles C. Liu. Request for Admission No. 15: (a) Admit that the total amount of Pacific Proton offering proceeds during the period from October 2014 to April 2016 was at least $26,967,918. (b) Admit that, of the total amount of Pacific Proton offering proceeds during the period from October 2014 to April 2016, at least $24,712,217 came in the form Exhibit 2, Page 38 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 41 of 150 Page ID #:5481 12 Case No. SACV16-00974-CJC (AGRx) 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 of, or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that, of the total amount of Pacific Proton offering proceeds during the period from October 2014 to April 2016, at least $2,255,701 came in the form of, or were designated as or considered “Administrative Fees,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 16: (a) Admit that defendant Charles C. Liu received Pacific Proton offering proceeds. (b) Admit that defendant Charles C. Liu received funds from the Pacific Proton offering proceeds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that during the period from October 2014 to April 2016, defendant Charles C. Liu received at least $6,714,580 from the Pacific Proton offering proceeds. (d) Admit that the $6,714,580 described above in subsection (c) came from, primarily, if not entirely, funds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (e) Admit that during the period from February to March 2016, defendant Charles C. Liu received at least $4,270,000 from the Pacific Proton offering proceeds. (f) Admit that the $4,270,000 described above in subsection (e) came from, primarily, if not entirely, funds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 17: (a) Admit that defendant you received Pacific Proton offering proceeds. (b) Admit that you received funds from the Pacific Proton offering proceeds Exhibit 2, Page 39 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 42 of 150 Page ID #:5482 13 Case No. SACV16-00974-CJC (AGRx) 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 that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that during the period from October 2014 to April 2016, you received at least $1,538,000 from the Pacific Proton offering proceeds. (d) Admit that the $1,538,000 described above in subsection (c) came from, primarily, if not entirely, funds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (e) Admit that during March 2016, you received at least $996,000 from the Pacific Proton offering proceeds. (f) Admit that the $996,000 described above in subsection (e) came from, primarily, if not entirely, funds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 18: (a) Admit that Overseas Chinese received Pacific Proton offering proceeds. (b) Admit that Overseas Chinese received funds from the Pacific Proton offering proceeds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that during the period from October 2014 to April 2016, Overseas Chinese received at least $7,722,000 from the Pacific Proton offering proceeds. (d) Admit that the $7,722,000 described above in subsection (c) primarily, if not entirely, came from funds designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (e) Admit that Overseas Chinese was responsible for securing the investments of eleven investors who invested in the Pacific Proton offering. Exhibit 2, Page 40 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 43 of 150 Page ID #:5483 14 Case No. SACV16-00974-CJC (AGRx) 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 Request for Admission No. 19: (a) Admit that one or more of the UDG Entities Pacific Proton offering proceeds. (b) Admit that one or more of the UDG Entities received funds from the Pacific Proton offering proceeds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that during the period from October 2014 to April 2016, one or more of the UDG Entities received at least $3,815,000 from the Pacific Proton offering proceeds. (d) Admit that the $3,815,000 described above in subsection (c) primarily, if not entirely, came from funds designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (e) Admit that one or more of the UDG Entities was responsible for securing the investments of ten investors who invested in the Pacific Proton offering. Request for Admission No. 20: (a) Admit that Delsk received Pacific Proton offering proceeds. (b) Admit that Delsk received funds from the Pacific Proton offering proceeds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (c) Admit that during the period from October 2014 to April 2016, Delsk received at least $1,387,500 from the Pacific Proton offering proceeds. (d) Admit that the $1,387,500 described above in subsection (c) primarily, if not entirely, came from funds designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. (e) Admit that Delsk was responsible for securing the investments of 37 investors who invested in the Pacific Proton offering. Exhibit 2, Page 41 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 44 of 150 Page ID #:5484 15 Case No. SACV16-00974-CJC (AGRx) 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 Request for Admission No. 21: (a) Admit that defendant Charles C. Liu transferred at least $3,250,000 from your personal bank account(s) to China Merchants Bank from February to April 2016. (b) Admit that all of the $3,250,000 that defendant Charles C. Liu transferred to China Merchants Bank from February to April 2016 came from Pacific Proton offering proceeds that primarily, if not entirely, came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 22: (a) Admit that at least $500,000 was transferred from the bank account(s) of the PPEB5 Fund to China Merchants Bank in October 2015. (b) Admit that all of the $500,000 that was transferred from the PPEB5 Fund to China Merchants Bank in October 2015 came from Pacific Proton offering proceeds that came in the form of or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 23: (a) Admit that defendant Charles C. Liu transferred at least $118,605.11 from his personal bank account(s) to Bank of America, N.A. A/0959 A/C: Grenada Co- operative Bank Limited (hereinafter, “Grenada Bank”) in March 2016. (b) Admit that all of the $118,605.11 that defendant Charles C. Liu transferred to Grenada Bank in March 2016 came from Pacific Proton offering proceeds that primarily, if not entirely, came in the form of, or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum. Request for Admission No. 24: Admit that the descriptions of the transactions in paragraph 48, sub-paragraphs (a) though (e) of the Supplemental Declaration of Lorraine Pearson in Support of Exhibit 2, Page 42 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 45 of 150 Page ID #:5485 16 Case No. SACV16-00974-CJC (AGRx) 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 Plaintiff Securities and Exchange Commission’s Motion for Orders Requiring the Repatriation of Assets and Accountings (dated June 3, 2016 and Dkt. No. 16 in this case), which is attached hereto as Exhibit 2, are accurate. Request for Admission No. 25: Admit that the Pacific Proton offering proceeds were not used or expended in a manner consistent with the terms and disclosures of the Pacific Proton offering memorandum. Request for Admission No. 26: Admit that you obtained money, in the form of Pacific Proton offering proceeds, by means of false statements made to investors in the Pacific Proton offering concerning the Pacific Proton offering and the use of proceeds from that offering. Request for Admission No. 27: (a) Admit that the descriptions of how the Pacific Proton offering proceeds would be used in the Pacific Proton offering memorandum were false. (b) Admit that you knew or recklessly disregarded that the descriptions of how the Pacific Proton offering proceeds would be used in the Pacific Proton offering memorandum were false. (c) Admit that you should have known that the descriptions of how the Pacific Proton offering proceeds would be used in the Pacific Proton offering memorandum were false. (d) Admit that you knew or recklessly disregarded that false statements concerning the Pacific Proton offering and the use of proceeds from that offering were being made to investors in the Pacific Proton offering. (e) Admit that you should have known that false statements concerning the Pacific Proton offering and the use of proceeds from that offering were being made to investors in the Pacific Proton offering. Exhibit 2, Page 43 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 46 of 150 Page ID #:5486 17 Case No. SACV16-00974-CJC (AGRx) 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 Request for Admission No. 28: Admit that you are able to transfer or cause to be transferred the sum of $26,967,818.00 as called for by the “Repatriation Order” provision, section VIII, of the Amended and Restated Injunction dated and entered October 17, 2016 in this case, and attached as Exhibit 3 hereto. Request for Admission No. 29: Admit that defendant Charles C. Liu is able to transfer or cause to be transferred at least $6,714,580 to the account of the Court-appointed Monitor. Request for Admission No. 30: Admit that you are able to transfer or cause to be transferred at least $1,538,000 to the account of the Court-appointed Monitor. Request for Admission No. 31: Admit that you can cause Overseas Chinese to repatriate the Pacific Proton offering proceeds that it received. Request for Admission No. 32: Admit that you can cause one or more of the UDG Entities to repatriate the Pacific Proton offering proceeds that any of them received. Request for Admission No. 33: (a) Admit that Exhibit 4 attached hereto is a genuine, true and correct copy of an “Engagement Agreement” between United Damei Investment Company, Ltd. and Beverly Proton. (b) Admit that Exhibit 4 attached hereto is a genuine, true and correct copy of a contract that is signed by Wenli Yao on behalf of United Damei Investment Company, Ltd. as “It’s Director,” with a date of August 15, 2013. Request for Admission No. 34: (a) Admit that Exhibit 5 attached hereto is a genuine, true and correct copy of a page from the website of one or more of the UDG Entities from May 2016. (b) Admit that Exhibit 5 attached hereto contains a photograph of you in the Exhibit 2, Page 44 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 47 of 150 Page ID #:5487 18 Case No. SACV16-00974-CJC (AGRx) 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 middle of the page marked “Exhibit 32, Page 631,” directly under the heading “Management Team.” Request for Admission No. 35: (a) Admit that Exhibit 6 attached hereto is a genuine, true and correct copy of a pages from the website of one or more of the UDG Entities from May 2016. (b) Admit that Exhibit 6 attached hereto contains a photograph of you and defendant Charles C. Liu on the bottom half of the page marked “Exhibit 33, Page 640.” (c) Admit that Exhibit 6 attached hereto contains two photographs of you on the page marked “Exhibit 33, Page 641.” Request for Admission No. 36: (a) Admit that Exhibit 7 attached hereto is a genuine, true and correct copy of pages from the website of one or more of the UDG Entities from May 2016. (b) Admit that Exhibit 7 attached hereto contains a photograph of you and defendant Charles C. Liu on the page marked “Exhibit 35, Page 661.” (c) Admit that the caption under the photograph on the page marked “Exhibit 35, Page 661” of Exhibit 7 attached hereto accurately identifies defendant Charles C. Liu in the photograph, accurately identifies you in the photograph, and accurately identifies you as “United Damei Group CEO.” Request for Admission No. 37: (a) Admit that Exhibit 8 attached hereto is a genuine, true and correct copy of your business card for United Damei Group. (b) Admit that Exhibit 8 attached hereto accurately identifies your title as “Chairman” of United Damei Group. Request for Admission No. 38: (a) Admit that Exhibit 9 attached hereto is a genuine, true and correct copy of an email from defendant Charles C. Liu to Harlan Levine, dated March 21, 2016. (b) Admit that in the email that is Exhibit 9 attached hereto, defendant Charles Exhibit 2, Page 45 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 48 of 150 Page ID #:5488 19 Case No. SACV16-00974-CJC (AGRx) 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 C. Liu accurately describes “UDG” as “my wife’s company.” Request for Admission No. 39: (a) Admit that Exhibit 10 attached hereto is a genuine, true and correct copy of pages from the website the Grenada Embassy – Commercial Attaché Office regarding a May 2015 event in Shanghai, China. (b) Admit that you attended the May 2015 event described in Exhibit 10 attached hereto. (c) Admit that Exhibit 10 attached hereto contains a photograph of you on the page marked “Exhibit 10, Page 62.” (d) Admit that the caption under the photograph on the page marked “Exhibit 10, Page 62” of Exhibit 10 attached hereto accurately identifies you as “President of United Damei Group Ms. WANG Xin.” (e) Admit that Exhibit 10 attached hereto contains a photograph of you on the page marked “Exhibit 10, Page 64.” (d) Admit that the caption under the photograph on the page marked “Exhibit 10, Page 64” of Exhibit 10 attached hereto accurately identifies you as “the President of United Damei Group.” Request for Admission No. 40: (a) Admit that Exhibit 11 attached hereto is a genuine, true and correct copy of an email from defendant Charles C. Liu to Edison Zahn, dated October 7, 2014. (b) Admit that attached to Exhibit 11 is a list of invitees to an event in Beijing, China in December 2014, which accurately identifies Xiaojun Chen as the Director of the New China Insurance Company. Request for Admission No. 41: (a) Admit that Exhibit 12 attached hereto is a genuine, true and correct copy of an email from defendant Charles C. Liu to Edison Zahn, dated October 21, 2015. (b) Admit that, as of October 21, 2015, defendant Charles C. Liu was president, chief executive officer and sole owner of United MPH Ventures, LLC. Exhibit 2, Page 46 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 49 of 150 Page ID #:5489 20 Case No. SACV16-00974-CJC (AGRx) 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 (c) Admit that, as of October 21, 2015, United MPH Ventures, LLC was the 100% shareholder of United Damei US. Request for Admission No. 42: (a) Admit that Exhibit 13 attached hereto is a genuine, true and correct copy of a printout of registration information concerning United Damei Investment Company, Ltd. from the official Chinese government website containing registration information filed by Chinese companies, found at http://gsxt.saic.gov.cn/. (b) Admit that Exhibit 14 attached hereto is a correct, in all material terms, translation of Exhibit 13. (c) Admit that Wenli Yao was the “Legal Representative” of United Damei Investment Company, Ltd. before May 19, 2016. (d) Admit that Wenli Yao was the “Executive Director” and “Manager” of United Damei Investment Company, Ltd. before May 19, 2016. (e) Admit that Wenli Yao and Zhongshen Wang were the two “Natural person shareholders” of United Damei Investment Company, Ltd. before May 19, 2016. Request for Admission No. 43: (a) Admit that Exhibit 15 attached hereto is a genuine, true and correct copy of the private offering memorandum for the offer for sale of membership interests or units in the PPEB5 Fund. (b) Admit that defendant Charles C. Liu reviewed and approved the content of Exhibit 15 attached hereto. (c) Admit that Exhibit 15 was sent to investors who invested in the Pacific Proton offering. Request for Admission No. 44: Admit that Exhibit 16 attached hereto is a genuine, true and correct copy of a letter, dated March 22, 2016, which defendant Charles C. Liu received from counsel for Loma Linda University and Loma Linda University Medical Center. Exhibit 2, Page 47 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 50 of 150 Page ID #:5490 21 Case No. SACV16-00974-CJC (AGRx) 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 Request for Admission No. 45: Admit that Exhibit 17 attached hereto is a genuine, true and correct copy of a letter, dated March 18, 2016, which defendant Charles C. Liu received from counsel for Optivus Proton Therapy, Inc. Request for Admission No. 46: (a) Admit that Exhibit 18 attached hereto is a genuine, true and correct copy of a letter, dated May 3, 2016, from defendant Charles C. Liu’s counsel to counsel for the SEC. (b) Admit that Exhibit 18 attached hereto includes a genuine, true and correct copy (on the page marked “Exh 1 Page 6”) of an agreement between Los Angeles County Proton Therapy, LLC and Overseas Chinese regarding the return of “marketing fees” to Los Angeles County Proton Therapy, LLC, which defendant Charles C. Liu signed on behalf of Los Angeles County Proton Therapy, LLC. (c) Admit that Beverly Proton was formerly known as Los Angeles County Proton Therapy, LLC. Request for Admission No. 47: (a) Admit that Exhibit 19 attached hereto is a genuine, true and correct copy of a letter, dated May 18, 2016, from defendant Charles C. Liu’s counsel to counsel for the SEC. (b) Admit that Exhibit 19 attached hereto includes a genuine, true and correct copies of the English translation and Chinese version (on the pages marked “Exh 2 Page 12” and “Exh 2 Page 13”) of an agreement by Beijing Pacific Damei Consulting Co., Ltd. regarding the return of “agent fees” to “your [defendant Charles C. Liu’s] company,” Los Angeles County Proton Therapy, LLC. Dated: October 18, 2016 /s/ John W. Berry John W. Berry Exhibit 2, Page 48 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 51 of 150 Page ID #:5491 22 Case No. SACV16-00974-CJC (AGRx) 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 Attorney for Plaintiff Securities and Exchange Commission Exhibit 2, Page 49 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 52 of 150 Page ID #:5492 1 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 PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. On October 19, 2016, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S FIRST SET OF REQUESTS FOR ADMISSION TO DEFENDANT XIN (LISA) WANG on all the parties to this action addressed as stated on the attached service list: ☐ OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. ☒ PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. ☐ EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. ☐ HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. ☐ UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ☒ ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. ☐ E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. ☐ FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: October 19, 2016 /s/ Joseph Law Joseph Law Exhibit 2, Page 50 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 53 of 150 Page ID #:5493 2 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 SEC v. Liu et al. United States District Court—Central District of California Case No. SACV16-00974-CJC (AGRx) SERVICE LIST Counsel for Defendants Charles C. Liu and Xin Wang a/k/a Lisa Wang: Hervé Gouraige, Esq. Sills Cummis & Gross P.C. The Legal Center One Riverfront Plaza Newark, New Jersey 07102 Email: hgouraige@sillscummis.com Lawrence B. Steinberg Buchalter Nemer, P.C. 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017-1730 Email: LSteinberg@buchalter.com Defendants Pacific Proton Therapy Regional Center, LLC and Beverly Proton Center, LLC: (on counsel for Charles C. Liu¸ the controlling shareholder of each) Hervé Gouraige, Esq. Sills Cummis & Gross P.C. The Legal Center One Riverfront Plaza Newark, New Jersey 07102 Email: hgouraige@sillscummis.com Lawrence B. Steinberg Buchalter Nemer, P.C. 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017-1730 Email: LSteinberg@buchalter.com (on Charles C. Liu¸ controlling shareholder of each) c/o Charles C. Liu Laguna Niguel, CA 92677 Exhibit 2, Page 51 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 54 of 150 Page ID #:5494 3 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 Email: charlesliul26@gmail.com Email: charlesliu@me.com Email: liu@pptus.com Defendant Pacific Proton EB-5 Fund, LLC: (on the registered agent) c/o Corporation Trust Company 1209 Orange St. Wilmington, DE 19801 (on Charles C. Liu¸ controlling shareholder of the manager) c/o Charles C. Liu Laguna Niguel, CA 92677 Email: charlesliul26@gmail.com Email: charlesliu@me.com Email: liu@pptus.com Exhibit 2, Page 52 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 55 of 150 Page ID #:5495 Exhibit 3 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 56 of 150 Page ID #:5496 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Los ANGELES REGIONAL OFFICE VIA UPS OVERNIGHT Mr. Charles c_ Liu 28202 Cabot Road Suite 640 Laguna Niguel, California 92677 444 SOUTH FLOWER STREET, SUITE 900 Los ANGELES, CA 90071 February 4, 2016 DIRECT DIAL: (323) 965-3985 FACSIMILE: (213) 443-1905 EMAIL: REGENSTREIFJ@SEC.GOV Re: In the Matter of Pacific Proton Therapv Regional Center, LLC (LA-4639) Dear Mr. Liu: The staff of the Securities and Exchange Commission is conducting an investigation in the matter identified above. The enclosed subpoena has been issued to Mr. Charles C. Liu as part of this investigation. The subpoena requires you to give us documents and provide sworn testimony. Please note that if you comply with the instructions for producing documents, you will not need to appear for testimony at the indicated time. Please read the subpoena and this letter carefully. This letter answers some questions you may have about the subpoena. You should also read the enclosed SEC Form 1662. You must comply with the subpoena. You may be subject to a fine and/or imprisonment if you do not. Producing Documents Whal materials do I have lo produce? The subpoena requires you to give us the documents described in the attachment to the subpoena. You must provide these documents by February 17, 2016. The attachment to the subpoena defines some terms (such as "document") before listing what you must provide. Please note that if copies of a document differ in any way, they are considered separate documents and you must send each one. For example, if you have two copies of the same letter, but only one of them has handwritten notes on it, you must send both the clean copy and the one with notes. If you prefer, you may send us photocopies of the originals. The Commission cannot reimburse you for the copying costs. The copies must be identical to the originals, including even faint marks or print. If you choose to send copies, you must keep the originals in a safe place. The staff will accept the copies for now, but may require you to produce the originals later. If you do send us photocopies, please put an identifying notation on each page of each document to indicate that it was produced by you, and number the pages of all the documents submitted. (For example, if Jane Doe sends documents to the staff, she may number the pages JD- 1, JD-2, JD-3, etc., in a blank corner of the documents.) Please make sure the notation and number Exhibit 3, Page 53 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 57 of 150 Page ID #:5497 Subpoena issued to Mr. Charles C. Liu February 4, 2016 Page 2 do not conceal any writing or marking on the document. If you send us originals, please do not add any identifying notations. Copies of documents and information provided in electronic formats must comply with the technical requirements set out in the attached copy of the SEC's Data Delivery Standards. You should contact me prior to production in an electronic format other than those identified in the Data Delivery Standards. Do I need to send anything else? You should enclose a list briefly describing each item you send. The list should state which paragraph(s) in the subpoena attachment each item responds to. A copy of the subpoena should be included with the documents that are produced. Passwords for documents, files, compressed archives, and encrypted media should be provided separately either via email addressed to ENF-CPU@sec.gov, or in a separate cover letter mailed separately from the data. Please include a cover letter stating whether you believe you have met your obligations under the subpoena by searching carefully and thoroughly for everything called for by the subpoena, and sending it all to us. I have attached a Declaration Certifying Records; execution of the declaration may allow the Commission to introduce documents that you provide in any subsequent judicial proceeding, without requiring the testimony of your custodian of records. What if I do not send everything described in the attachment to the subpoena? The subpoena requires you to send all the materials described in it. If, for any reason - including a claim of attorney-client privilege -- you do not produce something called for by the subpoena, you should submit a list of what you are not producing. The list should describe each item separately, noting: • its author(s); • its date; • its subject matter; • the name of the person who has the item now, or the last person known to have it; • the names of everyone who ever had the item or a copy of it, and the names of everyone who was told the item's contents; and • the reason you did not produce the item. If you withhold anything on the basis of a claim of attorney-client privilege or attorney work product protection, you should also identify the attorney and client involved. Exhibit 3, Page 54 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 58 of 150 Page ID #:5498 Subpoena issued to Mr. Charles C. Liu February 4, 2016 Page 3 Where should I send the materials? Please send the materials to: ENF-CPU United States Securities and Exchange Commission 100 F St., N.E., Mailstop 5973 Washington, DC 20549-5973 For smaller electronic productions that are less than 10 MB in size, the materials may be emailed to the following email address: ENF-CPU@sec.gov. Testifying Where and when do I testify? The subpoena requires you to come to the Commission's offices at 444 S. Flower St., 9th Floor, Los Angeles, California 90071, on February 17, 2016 at 9:00 a.m., to testify under oath in the matter identified on the subpoena. Your testimony will be recorded by stenographic means. But, as noted above, if you comply with all the directions for producing documents, we will not require you to testify at the indicated time. We may require your testimony later, however. Other Important Information May I have a lawyer help me respond to the subpoena? Yes. You have the right to consult with and be represented by your own lawyer in this matter. Your lawyer may also advise and accompany you when you testify. We cannot give you legal advice. What will the Commission do with the materials I send and/or the testimony I provide? The enclosed SEC Form 1662 includes a List of Routine Uses of information provided to the Commission. This form has other important information for you. Please read it carefully. Has the Commission determined that anyone has done anything wrong? This investigation is a non-public, fact-finding inquiry. We are trying to determine whether there have been any violations of the federal securities laws. The investigation and the subpoena do not mean that we have concluded that you or anyone else has broken the law. Also, the investigation does not mean that we have a negative opinion of any person, entity or security. Important Policy Concerning Settlements Please note that, in any matter in which enforcement action is ultimately deemed to be warranted, the Division of Enforcement will not recommend any settlement to the Commission unless the party wishing to settle certifies, under penalty of perjury, that all documents responsive to Commission subpoenas and formal and informal document requests in this matter have been produced. Exhibit 3, Page 55 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 59 of 150 Page ID #:5499 Subpoena issued to Mr. Charles C. Liu February 4, 2016 Page 4 I have read this letter, the subpoena, and the SEC Form 1662, but I still have questions. What should I do? If you have any other questions, you may call me at (323) 965-3985. If you are represented by a lawyer, you should have your lawyer contact me. Enclosures: Subpoena Attachment to Subpoena SEC Form 1662 Sincerely, SEC Data Delivery Standards Certification of Business Records Exhibit 3, Page 56 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 60 of 150 Page ID #:5500 UNITED STATES OF AMERICA SECURITIES AND EXCHANGE COMMISSION In the Matter of Pacific Proton Therapy Regional Center, LLC (LA-4639) To: Mr. Charles C. Liu 28202 Cabot Road Suite 640 Laguna Niguel, California 92677 0 YOU MUST PRODUCE everything specified in the Attachment to this subpoena to officers of the Securities and Exchange Commission, at the place, date, and time specified below. ENF-CPU, United States Securities and Exchange Commission, F St., N.E., Mailstop 5973, Washington, DC 20549-5973, or ENF-CPU@scc.gov, February 17, 2016, at 9:00 a.m. 0 YOU MUST TESTIFY before officers of the Securities and Exchange Commission, at the place, date, and time specified below. 444 S. Flower St., 9th Floor, Los Angeles, California 90071, February 17, 2016, at 9:00 a.m. FEDERAL LAW REQUIRES YOU TO COMPLY WITH THJS SUBPOENA. ly may subject you to a fine and/or imprisomnent. By: �-r-t-�-r�_,,,'="'4- Date: February 4. 2016 Tony Re I am an officer of the Securities and Exchange Commission authorized to issue subpoenas in this matter. The Securities and Exchange Commission has issued a formal order authorizing this investigation under Section 20(a) of the Securities Act of 1933 and Section 21 (a) of the Securities Exchange Act. NOTICE TO WITNESS: If you claim a witness fee or mileage, submit this subpoena with the claim voucher. Exhibit 3, Page 57 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 61 of 150 Page ID #:5501 ATTACHMENT TO SUBPOENA ISSUED TO Mr. Charles C. Liu IN THE MATTER OF PACIFIC PROTON THERAPY REGIONAL CENTER, LLC CLA- 4639) A. DEFINITIONS February 4, 2016 I. "Document" includes any written, printed, or typed matter including, but not limited to agreements and amendments thereto, letters and correspondence, electronic mail, instant messages, text messages, interoffice communications, slips, tickets, records, worksheets, financial records, accounting documents, bookkeeping documents, memoranda, reports, manuals, telephone logs, telegrams, facsimiles, messages of any type, telephone messages, voice mails, tape recordings, notices, instructions, minutes, summaries, notes of meetings, purchase orders, information recorded by photographic process, including microfilm and microfiche, computer printouts, computer files, spreadsheets, websites, information posted on social networking sites, or other electronically stored information stored in any medium from which information can be retrieved, obtained, manipulated, or translated (including computer hard drives, servers, compact discs or other removable media, archives, and backup tapes). 2. "Communication" means and includes, without limitation, any and all written, oral, telephonic, electronic, or other utterances of any nature whatsoever, shared, shown, transferred between or among any two or more persons or entities, including, but not limited to, correspondence, memoranda, notes, e-mail, instant messages, chat, discussion forums, telephone conversations, and other conversations, conferences or meetings, statements, inquiries, discussions, dialogues, consultations, negotiations, agreements, understandings, meetings, letters, notations, telegrams, advertisements, or interviews. 3. "PPTRC" means Mr. Charles C. Liu and any of its parents, subsidiaries, affiliates, predecessors, successors, officers, directors, employees, agents, partners, and independent contractors, as well as aliases, code names, trade names, or business names used by, or formerly used by, any of the foregoing. 4. "EB-5 Fund" means Pacific Proton EB-5 Fund, LLC and any of its parents, subsidiaries, affiliates, predecessors, successors, officers, directors, employees, agents, partners, and independent contractors, as well as aliases, code names, trade names, or business names used by, or formerly used by, any of the foregoing. 5. "LA Proton Therapy" means Los Angeles County Proton Therapy LLC and any of its parents, subsidiaries, affiliates, predecessors, successors, officers, directors, employees, agents, partners, and independent contractors, as well as aliases, code names, trade names, or business names used by, or formerly used by, any of the foregoing. Exhibit 3, Page 58 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 62 of 150 Page ID #:5502 Attachment to Subpoena issued to Mr. Charles C. Liu February 4, 2016 Page 2 6. "Payment" means an offer, transfer of anything of value, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to any person, body, party, or entity. 7. Reference to a person shall also include that person's trusts, affiliates, employees, agents, partners, and independent contractors, as well as aliases, code names, trade names, or business names used by, or formerly used by, any of the foregoing. 8. Reference to an entity shall also include that entity's parents, subsidiaries, affiliates, predecessors, successors, officers, directors, employees, agents, partners, and independent contractors, as well as aliases, code names, trade names, or business names used by, or formerly used by, any of the foregoing. 9 . Documents or communications "relating to," "relate to," "regarding," o r "concerning" a given subject matter means any document or communication that constitutes, contains, embodies, comprises, reflects, identifies, states, alludes to, refers to, deals with, comments on, responds to, describes, analyzes, or is in any way pertinent to that subject, including, but not limited to, documents concerning the presentation of other documents. 10. To "identify" a person or entity means to provide that person's or entity's full legal name, nicknames, residential address( es), business address( es), nationality, telephone number( s ), e-mail address( es), and state of incorporation, if applicable. 11. To the extent necessary to bring within the scope of this request any information or documents that might otherwise be construed to be outside its scope: (a) the word "or" means "and/or"; (b) the word "and" means "and/or"; ( c) the functional words "each," "every" "any" and "all" shall each be deemed to include each of the other functional words; ( d) any gender pronouns used should be read expansively to include both male and female pronouns; ( e) the singular includes the plural and the plural includes the singular; (f) the words "including" and "includes" mean "without limitation"; and (g) the past tense includes the present tense and vice versa. Exhibit 3, Page 59 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 63 of 150 Page ID #:5503 Attachment to Subpoena issued to Mr. Charles C. Liu February 4, 2016 Page 3 12. Unless otherwise stated, produce documents dated, written, generated, received, or existing during the period from October 1, 2014, through present (the "Subpoena Period"). B. INSTRUCTIONS 1. You must produce all documents and communications sought in this subpoena that are in your possession or control, be it actual or constructive, including but not limited to your documents and communications that are in the possession of any third-party vendor. 2. Unless otherwise specified, this subpoena calls for production of the original documents and all copies and drafts of same. You may provide original documents or copies of original documents, at your expense, with the understanding that the staff has the right to compel production of the original documents at a later date. The Commission cannot reimburse you for the copying costs. If you are sending copies, the staff requests that you scan (rather than photocopy) hard copy documents. All electronic documents responsive to the document request, including all metadata, must also be secured and retained in their native software format and stored in a safe place. The staff may later request or require that you produce the native format. All electronic productions must comply with the Commission's Data Delivery Standards (attached). 3. Whether you scan or photocopy documents, the copies must be identical to the originals, including even faint marks or print. Also, please note that if copies of a document differ in any way, they are considered separate documents and you must send each one. For example, if you have two copies of the same letter, but only one of them has handwritten notes on it, you must send both the clean copy and the one with notes. 4. All documents must be produced in the manner in which they were maintained. For example, if documents are maintained loose in a file folder, the documents are to be produced in that same manner and not reorganized and/or put into a binder. On the other hand, if documents are maintained in a binder, the documents are to be produced in the same manner. Produce the entirety of each and every document described below, without alteration, deletion or obliteration of any information contained therein, even though such information is not specifically requested. 5. If any of the documents called for are not produced, for whatever reason, submit a list of the documents not produced and state for each document: (a) the identity and position of the creator(s); (b) the creation date; ( c) its present or last known custodian; Exhibit 3, Page 60 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 64 of 150 Page ID #:5504 Attachment to Subpoena issued to Mr. Charles C. Liu February 4, 2016 Page 4 (d) a brief description, including the subject matter; ( e) the identity and position of all persons or entities known to have been furnished the document or a copy of the document, or informed of its substance (f) the reason the document is not being produced; (g) the specific request in Paragraph C to which the document relates; (h) in the case of a claim of attorney-client privilege, the attomey(s) and the client(s) involved; and (i) in the case of a claim of the work product doctrine, the litigation for which the document was prepared in anticipation and the first date that the subject litigation was anticipated. Additionally, if the document is no longer in existence, please state the actual or approximate date it ceased to exist, the circumstances under which it ceased to exist, and the identity of all persons having knowledge of the circumstances under which it ceased to exist or having knowledge of the contents thereof. 6. All documents produced must be legible. 7. Documents should be labeled with sequential numbering (i.e., bates-stamped). 8. For business records, provide a certification from the custodian of records or other qualified person that the documents produced are records of regularly conducted business activities (see attached exemplars). C. REQUIRED DOCUMENTS 1. DOCUMENTS sufficient to identify all officers, directors, principals, owners shareholders, employees, and all others acting on behalf of PPR TC, and DOCUMENTS sufficient to disclose, for each individual identified in response to this Item: (a) title; (b) dates of affiliation with PPR TC; ( c) current or last known home address and telephone number; ( d) current or last known employment address and telephone number; and (e) salary or other compensation for each year from January 1, 2014 to the present; Exhibit 3, Page 61 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 65 of 150 Page ID #:5505 Attachment to Subpoena issued to Mr. Charles C. Liu February 4, 2016 Page 5 2. DOCUMENTS sufficient to disclose all domestic and foreign bank, brokerage, or other financial accounts held by or on behalf of PPR TC, EB-5 Fund, and LA Proton Therapy from January 1, 2014 to the present; 3. DOCUMENTS sufficient to identify all EB-5 Fund investors by name, address, and telephone number; 4. For each investor identified in response to Item 3 above, Documents sufficient to disclose: a. the amount invested, b. the date(s) of investments, and c. whether, when, and how much of each investors' principal has been returned to them; 5. For each investor identified in response to Item 3 above, all DOCUMENTS CONCERNING agreements or contracts between EB-5 Fund and the investor and all DOCUMENTS CONCERNING the terms of investments; 6. For each investor identified in response to Item 3 above, all periodic or other account statements; 7 . For each investor identified in response to Item 3 above, all DOCUMENTS CONCERNING the investment of (or other use of) their funds by EB-5 Fund that were provided to the investor, including without limitation: a. Offering memoranda, confidential offering memoranda, information memoranda, prospectuses; and private placement memoranda; b. Brochures and any other promotional materials; c. Presentations, including without limitation PowerPoint and video presentations; d. COMMUNICATIONS, including without limitation letters and e-mails; 8. All DOCUMENTS CONCERNING COMMUNICATIONS between PPRTC, EB-5 Fund, and investors or potential investors in EB-5 Fund; 9. All agreements between YOU and any PERSON to offer or sell EB-5 Fund investments, including without limitation sales agents and brokers; 10. All financial books and records ofEB-5 Fund, including without limitation any electronic financial books and records, such as QuickBooks; and 11. All DOCUMENTS CONCERNING agreements, including without limitation leases and letters of intent, between EB-5 Fund and any other party. Exhibit 3, Page 62 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 66 of 150 Page ID #:5506 DECLARATION OF [Insert Name] CERTIFYING RECORDS OF REGULARLY CONDUCTED BUSINESS ACTIVITY I, the undersigned, [insert name], pursuant to 28 U.S.C. § 1746, declare that: 1. I am employed by [insert name of company] as [insert position] and by reason of my position am authorized and qualified to make this declaration. [if possible supply additional information as to how person is qualified to make declaration, e.g., I am custodian of records, I am familiar with the company's recordkeeping practices or systems, etc.] 2. I further certify that the documents [attached hereto or submitted herewith] and stamped [insert bates range] are true copies of records that were: (a) made at or near the time of the occurrence of the matters set forth therein, by, or from information transmitted by, a person with knowledge of those matters; (b) kept in the course of regularly conducted business activity; and ( c) made by the regularly conducted business activity as a regular practice. I declare under penalty of perjury that the foregoing is true and correct. Executed on [date]. [Name] Exhibit 3, Page 63 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 67 of 150 Page ID #:5507 DECLARATION OF (Insert Name] CERTIFYING RECORDS OF REGULARLY CONDUCTED BUSINESS ACTIVITY I, the undersigned, [insert name], declare that: I. I am employed by [insert name of company] as [insert position] and by reason of my position am authorized and qualified to make this declaration. [if possible supply additional information as to how person is qualified to make declaration, e.g., I am custodian of records, I am familiar with the company's recordkeeping practices or systems, etc.] 2. I further certify that the documents [attached hereto or submitted herewith] and stamped [insert bates range] are true copies of records that were: (a) made at or near the time of the occurrence of the matters set forth therein, by, or from information transmitted by, a person with knowledge of those matters; (b) kept in the course of regularly conducted business activity; and ( c) made by the regularly conducted business activity as a regular practice. 3. I understand that a false statement in this declaration could subject me to criminal penalty under the laws of [country where declaration is signed]. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on [date] at fplace of execution]. [Name] Exhibit 3, Page 64 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 68 of 150 Page ID #:5508 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Supplemental Information for Persons Requested to Supply Information Voluntarily or Directed to Supply Information Pursuant to a Commission Subpoena A. False Statements and Documents Section 1001 of Title 18 of the United States Code provides as follows: [WJhoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully - (1) falsifies, conceals or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry; shall be fined under this title, imprisoned not more than 5 years . . . or both. B. Testimony If your testimony is taken, you should be aware of the following: 1. Record. Your testimony will be transcribed by a reporter. If you desire to go off the record, please indicate this to the Commission employee taking your testimony, who will determine whether to grant your request. The reporter will not go off the record at your, or your counsel's, direction. 2. Counsel. You have the right to be accompanied, represented and advised by counsel of your choice. Your counsel may advise you before, during and after your testimony; question you briefly at the conclusion of your testimony to clarify any of the answers you give during testimony; and make summary notes during your testimony solely for your use. If you are accompanied by counsel, you may consult privately. If you are not accompanied by counsel, please advise the Commission employee taking your testimony if, during the testimony, you desire to be accompanied, represented and advised by counsel. Your testimony will be adjourned once to afford you the opportunity to arrange to be so accompanied, represented or advised. You may be represented by counsel who also represents other persons involved in the Commission's investigation. This multiple representation, however, presents a potential conflict of interest if one client's interests are or may be adverse to another's. If you are represented by counsel who also represents other persons involved in the investigation, the Commission will assume that you and counsel have discussed and resolved all issues concerning possible conflicts of interest. The choice of counsel, and the responsibility for that choice, is yours. 3. Transcript Availability. Rule 6 of the Commission's Rules Relating to Investigations, 17 CFR 203.6, states: A person who has submitted documentary evidence or testimony in a formal investigative proceeding shall be entitled, upon written request, to procure a copy of his documentary evidence or a transcript of his testimony on payment of the appropriate fees: Provided, however, That in a nonpublic formal investigative proceeding the Commission may for good cause deny such request. In any event, any witness, upon proper identification, shall have the right to inspect the official transcript of the witness' own testimony. If you wish to purchase a copy of the transcript of your testimony, the reporter will provide you with a copy of the appropriate form. Persons requested to supply information voluntarily will be allowed the rights provided by this rule. 4. Perjury. Section 1 621 ofTitle 18 of the United States Code provides as follows: Whoever- (1) having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed, is true, willfully and SEC 1662 (09-14) 1 Exhibit 3, Page 65 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 69 of 150 Page ID #:5509 contrary to such oath states or subscribes any material matter which he does not believe to be true; or (2) in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 17 46 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true; is guilty of perjury and shall, except as otherwise expressly provided by law, be fined under this title or imprisoned not more than five years or both .... 5. Fifth Amendment and Voluntary Testimony. Information you give may be used against you in any federal, state, local or foreign administrative, civil or criminal proceeding brought by the Commission or any other agency. You may refuse, in accordance with the rights guaranteed to you by the Fifth Amendment to the Constitution of the United States, to give any information that may tend to incriminate you. If your testimony is not pursuant to subpoena, your appearance to testify is voluntary, you need not answer any question, and you may leave whenever you wish. Your cooperation is, however, appreciated. 6. Formal Order Availability. If the Commission has issued a formal order of investigation, it will be shown to you during your testimony, at your request. If you desire a copy of the formal order, please make your request in writing. C. Submissions and Settlements Rule 5(c) of the Commission's Rules on Informal and Other Procedures, 17 CFR 202.5(c), states: Persons who become involved in ... investigations may, on their own initiative, submit a written statement to the Commission setting forth their interests and position in regard to the subject matter of the investigation. Upon request, the staff, in its discretion, may advise such persons of the general nature of the investigation, including the indicated violations as they pertain to them, and the amount of time that may be available for preparing and submitting a statement prior to the presentation of a staff recommendation to the Commission for the commencement of an administrative or injunction proceeding. Submissions by interested persons should be forwarded to the appropriate Division Director or Regional Director with a copy to the staff members conducting the investigation and should be clearly referenced to the specific investigation to which they relate. In the event a recommendation for the commencement of an enforcement proceeding is presented by the staff, any submissions by interested persons will be forwarded to the Commission in conjunction with the staff memorandum. The staff of the Commission routinely seeks to introduce submissions made pursuant to Rule 5(c) as evidence in Commission enforcement proceedings, when the staff deems appropriate. Rule 5(f) of the Commission's Rules on Informal and Other Procedures, 17 CFR 202.S(f), states: In the course of the Commission's investigations, civil lawsuits, and administrative proceedings, the staff, with appropriate authorization, may discuss with persons involved the disposition of such matters by consent, by settlement, or in some other manner. It is the policy of the Commission, however, that the disposition of any such matter may not, expressly or impliedly, extend to any criminal charges that have been, or may be, brought against any such person or any recommendation with respect thereto. Accordingly, any person involved in an enforcement matter before the Commission who consents, or agrees to consent, to any judgment or order does so solely for the purpose of resolving the claims against him in that investigative, civil, or administrative matter and not for the purpose of resolving any criminal charges that have been, or might be, brought against him. This policy reflects the fact that neither the Commission nor its staff has the authority or responsibility for instituting, conducting, settling, or otherwise disposing of criminal proceedings. That authority and responsibility are vested in the Attorney General and representatives of the Department of Justice. D. Freedom of Information Act The Freedom of Information Act, 5 U.S.C. 5 52 (the "FOIA"), generally provides for disclosure of information to the public. Rule 83 of the Commission's Rules on Information and Requests, 17 CFR 200.83, provides a procedure by which a person can make a written request that information submitted to the Commission not be disclosed under the FOIA. That rule states that no determination as to the validity of such a request will be made until a request for disclosure of the information under the FOIA is received. Accordingly, no response to a request that information not be disclosed under the FOIA is necessary or will be given until a request for disclosure under the FOIA is received. If you desire an acknowledgment of receipt of your written request that information not be disclosed under the FOIA, please provide a duplicate request, together with a SEC 1662 (09-14) 2 Exhibit 3, Page 66 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 70 of 150 Page ID #:5510 stamped, self-addressed envelope. E. Authority for Solicitation of Information Persons Directed to Supply Information Pursuant to Subpoena. The authority for requiring production of information is set forth in the subpoena. Disclosure of the information to the Commission is mandatory, subject to the valid assertion of any legal right or privilege you might have. Persons Requested to Supply Information Voluntarily. One or more of the following provisions authorizes the Commission to solicit the information requested: Sections 19 and/or 20 of the Securities Act of 1933; Section 21 of the Securities Exchange Act of 1934; Section 321 of the Trust Indenture Act of 1939; Section 42 of the Investment Company Act of 1940; Section 209 of the Investment Advisers Act of 1940; and 17 CFR 202.5. Disclosure of the requested information to the Commission is voluntary on your part. F. Effect of Not Supplying Information Persons Directed to Supply Information Pursuant to Subpoena. If you fail to comply with the subpoena, the Commission may seek a court order requiring you to do so. If such an order is obtained and you thereafter fail to supply the information, you may be subject to civil and/or criminal sanctions for contempt of court. In addition, if the subpoena was issued pursuant to the Securities Exchange Act of 1934, the Investment Company Act of 1940, and/or the Investment Advisers Act of 1940, and if you, without just cause, fail or refuse to attend and testify, or to answer any lawful inquiry, or to produce books, papers, correspondence, memoranda, and other records in compliance with the subpoena, you may be found guilty of a misdemeanor and fined not more than $1,000 or imprisoned for a term of not more than one year, or both. Persons Requested to Supply Information Voluntarily. There are no direct sanctions and thus no direct effects for failing to provide all or any part of the requested information. G. Principal Uses of Information The Commission's principal purpose in soliciting the information is to gather facts in order to determine whether any person has violated, is violating, or is about to violate any provision of the-federal securities laws or rules for which the Commission has enforcement authority, such as rules of securities exchanges and the rules of the Municipal Securities Rulemaking Board. Facts developed may, however, constitute violations of other laws or rules. Information provided may be used in Commission and other agency enforcement proceedings. Unless the Commission or its staff explicitly agrees to the contrary in writing, you should not assume that the Commission or its staff acquiesces in, accedes to, or concurs or agrees with, any position, condition, request, reservation of right, understanding, or any other statement that purports, or may be deemed, to be or to reflect a limitation upon the Commission's receipt, use, disposition, transfer, or retention, in accordance with applicable law, of information provided. H. Routine Uses of Information The Commission often makes its files available to other governmental agencies, particularly United States Attorneys and state prosecutors. There is a likelihood that information supplied by you will be made available to such agencies where appropriate. Whether or not the Commission makes its files available to other governmental agencies is, in general, a confidential matter between the Commission and such other governmental agencies. Set forth below is a list of the routine uses which may be made of the information furnished. 1. To appropriate agencies, entities, and persons when (a) it is suspected or confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the SEC has determined that, as a result of the suspected or confirmed compromise, there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the SEC or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the SEC's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm. 2. To other federal, state, local, or foreign law enforcement agencies; securities self-regulatory organizations; and foreign financial regulatory authorities to assist in or coordinate regulatory or law enforcement activities with the SEC. 3. To national securities exchanges and national securities associations that are registered with the SEC, the Municipal Securities Rulemaking Board; the Securities Investor Protection Corporation; the Public Company Accounting Oversight SEC 1662 (09-14) 3 Exhibit 3, Page 67 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 71 of 150 Page ID #:5511 Board; the federal banking authorities, including, but not limited to, the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation; state securities regulatory agencies or organizations; or regulatory authorities of a foreign government in connection with their regulatory or enforcement responsibilities. 4. By SEC personnel for purposes of investigating possible violations of, or to conduct investigations authorized by, the federal securities laws. 5. In any proceeding where the federal securities laws are in issue or in which the Commission, or past or present members of its staff, is a party or otherwise involved in an official capacity. 6. In connection with proceedings by the Commission pursuant to Rule 102(e) of its Rules of Practice, 17 CFR 201.102(e). 7. To a bar association, state accountancy board, or other federal, state, local, or foreign licensing or oversight authority; or professional association or self-regulatory authority to the extent that it performs similar functions (including the Public Company Accounting Oversight Board) for investigations or possible disciplinary action. 8. To a federal, state, local, tribal, foreign, or international agency, if necessary to obtain information relevant to the SEC's decision concerning the hiring or retention of an employee; the issuance of a security clearance; the letting of a contract; or the issuance of a license, grant, or other benefit. 9. To a federal, state, local, tribal, foreign, or international agency in response to its request for information concerning the hiring or retention of an employee; the issuance of a security clearance; the reporting of an investigation of an employee; the letting of a contract; or the issuance of a license, grant, or other benefit by the requesting agency, to the extent that the information is relevant and necessary to the requesting agency's decision on the matter. 10. To produce summary descriptive statistics and analytical studies, as a data source for management information, in support of the function for which the records are collected and maintained or for related personnel management functions or manpower studies; may also be used to respond to general requests for statistical information (without personal identification of individuals) under the Freedom of Information Act. 11. To any trustee, receiver, master, special counsel, or other individual or entity that is appointed by a court of competent jurisdiction, or as a result of an agreement between the parties in connection with litigation or administrative proceedings involving allegations of violations of the federal securities laws (as defined in section 3(a)(47) of the Securities Exchange Act of 1934, 15 U.S.C. 78c(a)(47)) or pursuant to the Commission's Rules of Practice, 17 CFR 201.100- 900 or the Commission's Rules of Fair Fund and Disgorgement Plans, 17 CFR 201.1100-1106, or otherwise, where such trustee, receiver, master, special counsel, or other individual or entity is specifically designated to perform particular functions with respect to, or as a result of, the pending action or proceeding or in connection with the administration and enforcement by the Commission of the federal securities laws or the Commission's Rules of Practice or the Rules of Fair Fund and Disgorgement Plans. 12. To any persons during the course of any inquiry, examination, or investigation conducted by the SEC's staff, or in connection with civil litigation, if the staff has reason to believe that the person to whom the record is disclosed may have further information about the matters related therein, and those matters appeared to be relevant at the time to the subject matter of the inquiry. 13. To interns, grantees, experts, contractors, and others who have been engaged by the Commission to assist in the performance of a service related to this system of records and who need access to the records for the purpose of assisting the Commission in the efficient administration of its programs, including by performing clerical, stenographic, or data analysis functions, or by reproduction of records by electronic or other means. Recipients of these records shall be required to comply with the requirements of the Privacy Act of 1974, as amended, 5 U.S.C. 5 52a. 14. In reports published by the Commission pursuant to authority granted in the federal securities laws (as such term is defined in section 3(a)(47) of the Securities Exchange Act of 1934, 15 U.S.C. 78c(a)(47)), which authority shall include, but not be limited to, section 21(a) of the Securities Exchange Act of 1934, 1 5 U.S.C. 78u(a)). 1 5. To members of advisory committees that are created by the Commission or by Congress to render advice and recommendations to the Commission or to Congress, to be used solely in connection with their official designated functions. 16. To any person who is or has agreed to be subject to the Commission's Rules of Conduct, 17 CFR 200.735-1 to 200.73 5- SEC 1662 (09-14) 4 Exhibit 3, Page 68 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 72 of 150 Page ID #:5512 18, and who assists in the investigation by the Commission of possible violations of the federal securities laws (as such term is defined in section 3(a)(47) of the Securities Exchange Act of 1934, 15 U.S.C. 78c(a)(47)), in the preparation or conduct of enforcement actions brought by the Commission for such violations, or otherwise in connection with the Commission's enforcement or regulatory functions under the federal securities laws. 17. To a Congressional office from the record of an individual in response to an inquiry from the Congressional office made at the request of that individual. 18. To members of Congress, the press, and the public in response to inquiries relating to particular Registrants and their activities, and other matters under the Commission's jurisdiction. 19. To prepare and publish information relating to violations of the federal securities laws as provided in 1 5 U.S. C. 78c(a)(47)), as amended. 20. To respond to subpoenas in any litigation or other proceeding. 21. To a trustee in bankruptcy. 22. To any governmental agency, governmental or private collection agent, consumer reporting agency or commercial reporting agency, governmental or private employer of a debtor, or any other person, for collection, including collection by administrative offset, federal salary offset, tax refund offset, or administrative wage garnishment, of amounts owed as a result of Commission civil or administrative proceedings. ***** Small Business Owners: The SEC always welcomes comments on how it can better assist small businesses. If you would like more information, or have questions or comments about federal securities regulations as they affect small businesses, please contact the Office of Small Business Policy, in the SEC's Division of Corporation Finance, at 202-5 51-3460. If you would prefer to comment to someone outside of the SEC, you can contact the Small Business Regulatory Enforcement Ombudsman at http://www.sba.gov/ombudsman or toll free at 888-REG-FAIR. The Ombudsman's office receives comments from small businesses and annually evaluates federal agency enforcement activities for their responsiveness to the special needs of small business .. SEC 1662 (09-14) 5 Exhibit 3, Page 69 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 73 of 150 Page ID #:5513 U.S. Securities and Exchange Commission Data Delivery Standards U.S. Securities and Exchange Commission Data Delivery Standards This document describes the technical requirements for paper and electronic document productions to the U.S. Securities and Exchange Commission (SEC). **Any proposed file formats other than those described below must be discussed with tlze legal and technical staff o(tlte SEC Division of Enforcement prior to submission.** General Instructions . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . ... . . . . ... . . . . . . . . . . I Delivery Formats ........................................................................................................................................................................... 2 I. Concordance® Imaged Productions ........................................................................................................................................... 2 1. Images . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . ... ... . . . . . ....................... . . . . . . . . . . . . . . . . . . . . ... . . ... . . . . . .... .. .. . . . . . . ..... . . . . . .. .2 2. Concordance Image® or Opticon Cross-Reference File .................................................................................................. .2 3. Concordance® Data File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... . . . . . . ... . . . . .... ... . . . . . . . . . . . . . . . . . . . . . . .. .. . . .. . . .. . . . . .... . . . . . . . . . . . . . . . . . . . .3 4. Text . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . .3 5. Linked Native Files . . . . .. . . ... . . . . . . . . . . . . . . . . . . .... . . . . . . . . . . . . . . . . . .... . . . ... ... . . . . . . ....... . . . . . .. .. . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . ...... ......... .. .3 II. Native File Productions without loadfiles . . . . ......... .. . . ..... . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . ...... . . . . . . . . . . .... ........ . .. .. . .... . . . . . . . . . . . . . . . . . . .3 Ill. Adobe PDF File Productions . . . . . . . . . . . . ... . . . ... ... . .... . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . ......... ......... ...... .. . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . ..... ..... . . . ... .3 JV. Audio Files . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... ........ . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . .................. .. . .. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .. . . . .... . . .. . . .. . . . . . .4 V. Video Files .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .. . . .. . .. . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . ... . . . .... . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... .4 VI. Electronic Trade and Bank Records . . ... . . . . . . . ....... .. . . . . . . .. . . . . . . . . . . . . . ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... ....... ... .. . . ....... . . ... . . . . . . . ... .... . . ... . ... . ... 4 VII. Electronic Phone Records . . . . . . . . . . . . . . . . . . . . . . ..... . . .. . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . . . . . . . . . . ... . . . . . . . . . . . . . ... . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 General Instructions Electronic files must be produced in their native format, i.e., the format in which they are ordinarily used and maintained during the normal course of business. For example, an MS Excel file must be produced as an MS Excel file rather than an image of a spreadsheet (Note: An Adobe PDF file is l1J!.J. considered a native file unless tile document was initially created as a PDF.) Jn the event produced files require the use of proprietary software not commonly found in the workplace, the SEC will explore other format options with the producing party. The proposed use of file de-duplication methodologies or computer-assisted review or technology-assisted review (TAR) during the processing of documents must be discussed with and approved by the legal and technical staff of the Division of Enforcement (ENF). If your production will be de-duplicated it is vital that you 1) preserve any unique metadata associated with the duplicate files, for example, custodian name, and, 2) make that unique metadata part of your production to the SEC. Rev 10/2014 Exhibit 3, Page 70 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 74 of 150 Page ID #:5514 U.S. Securities and Exchange Commission Data Delivery Standards General requirements for ALL document productions are: I. A cover letter should be included with each production and include the following: a. A list of each piece of media included in the production with its unique production volume number b. A list of custodians, identifying the Bates range for each custodian. c. The time zone in which the emails were standardized during conversion. 2. Data can be produced on CD, DVD, thumb drive, etc., using the media requiring the least number of deliverables and labeled with the following: a. Case number b. Production date c. Producing party d. Bates range 3. All submissions must be organized by custodian unless otherwise instructed. 4. All document family groups, i.e. email attachments, embedded files, etc., should be produced together and children files should follow parent files sequentially in the Bates numbering. 5. All load-ready collections should include only one data load file and one image pointer file. 6. All load-ready text must be produced as separate text files. 7. All load-ready collections should account for custodians in the custodian field. 8. Audio files should be separated from data files if both are included in the production. 9. Only alphanumeric characters and the underscore character are permitted in file names and folder names. Special characters are not permitted. I 0. All data productions must be produced using industry standard self-extracting encryption software. 1 1 . Passwords for documents, files, compressed archives and encrypted media must be provided separately either via email or in a separate cover letter from the media. 12. All productions should be produced free of computer viruses. 1 3. Additional technical descriptions can be found in the addendum to this document. *Please note that productions that come via United States Postal Service are subject to Mail Irradiation, as a result electronic productions may be damaged.* Delivery Formats I. Concordance® Imaged Productions The SEC prefers that all documents and data be produced in a structured format prepared for Concordance. All scanned paper electronic file collections should be converted to TIFF files, Bates numbered, and include fully searchable text files. 1. Images a. Black and white images must be 300 DPI Group IV single-page TIFF files. b. Color images must be produced in JPEG format. b. File names cannot contain embedded spaces or special characters (including the comma). c. Folder names cannot contain embedded spaces or special characters (including the comma). d. All TIFF image files must have a unique file name, i.e. Bates number. e. Images must be endorsed with sequential Bates numbers in the lower right comer of each image. f. The number of TIFF files per folder should not exceed 500 files. g. Excel spreadsheets should have a placeholder image named by the Bates number of the file. h. AUTOCAD/photograph files should be produced as a single page JPEG file. Rev 1 0/20 1 4 Exhibit 3, Page 71 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 75 of 150 Page ID #:5515 U.S. Securities and Exchange Commission Data Delivery Standards 2. Concordance Image® OR Opticon Cross-Reference File The image cross-reference file to link the images to the database should be a comma- delimited file consisting of seven fields per line with a line in the cross-reference file for every image in the database with the following format: lmage/D, Volumelabel,lmageFilePath,DocumentBreak,FolderBreak,BoxBreak,Pag 3. Concordance® Data File The data file (.DAT) contains all of the fielded information that will be loaded into the Concordance® database. a. The first line of the .DAT file must be a header row identifying the field names. b. The .DAT file must use the following Concordance® default delimiters: Comma ASCII character (254) c. Date fields should be provided in the format: mm/dd/yyyy d. Date and time fields must be two separate fields. e. If the production includes imaged emails and attachments, the attachment fields must be included to preserve the parent/child relationship between an email and its attachments. f. An OCRP A TH field must be included to provide the file path and name of the extracted text file on the produced storage media. The text file must be named after the FIRSTBA TES. Do not include the text in the .DAT file. g. For production with native files, a NA TIVELINK field must be included to provide the file path and name of the native file on the produced storage media. h. BEGA TT and ENDA TT fields must be two separate fields. i. A complete list of metadata fields is available in Addendum A to this document. 4. Text Text must be produced as separate text files, not as fields within the .DAT file. The full path to the text file (OCRP ATH) should be included in the .DAT file. We require document level ANSI text files, named per the FIRSTBA TES/Image Key. (Please note in the cover letter if any non-ANSI text files are included in the production.) Extracted text must be in a separate folder, one text file per document. The number of files per folder should not exceed 500 files. There should be no special characters (including commas in the folder names). For redacted documents, provide the full text for the redacted version. 5. Linked Native Files Copies of original email and native file documents/attachments must be included for all electronic productions. a. Native file documents must be named per the FIRSTBA TES number. b. The full path of the native file must be provided in the .DAT file for the LINK field. c. The number of native files per folder should not exceed 500 files. II. Native File Production without Loadfiles With prior approval, native files may be produced without loadfiles. The files must be produced as they are maintained in the normal course of business and organized by custodian-named file folders. When approved, Outlook (.PST) and Lotus Notes (.NSF) email files may be produced in native file format. A separate folder should be provided for each custodian. III. Adobe PDF File Production With prior approval, Adobe PDF files may be produced in native file format. 1 . PDF files should be produced in separate folders named by the custodian. The folders should not contain any special characters (including commas). 2. All PDFs must be unitized at the document level, i.e., each PDF should represent a discrete document. 3 . All PDF files must contain embedded text that includes all discernible words within the document, not selected text or image only. This requires all layers of the PDF to be flattened first. 4. If PDF files are Bates endorsed, the PDF files must be named by the Bates range. Rev 1 0/20 1 4 Exhibit 3, Page 72 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 76 of 150 Page ID #:5516 IV. Audio Files U.S. Securities and Exchange Commission Data Delivery Standards Audio files from telephone recording systems must be produced in a format that is playable using Microsoft Windows Media Player™. Additionally, the call information (metadata) related to each audio recording MUST be provided. The metadata file must be produced in a delimited text format. Field names must be included in the first row of the text file. The metadata must include, at a minimum, the following fields: 1) Caller Name: Caller's name or account/identification number 2) Originating Number: Caller's phone number 3) Called Party Name: Called party's name 4) Terminating Number: Called party's phone number 5) Date: Date of call 6) Time: Time of call 7) Filename: Filename of audio file V. Video Files Video files must be produced in a format that is playable using Microsoft Windows Media Player™. VI. Electronic Trade and Bank Records When producing electronic trade and bank records, provide the files in one of the following formats: I . MS Excel spreadsheet with header information detailing the field structure. If any special codes exist in the dataset, a separate document must be provided that details all such codes. If details of the field structure do not fit in the header, a separate document must be provided that includes such details. 2. Delimited text file with header information detailing the field structure. The preferred delimiter is a vertical bar "I". If any special codes exist in the dataset, a separate document must be provided that details all such codes. If details of the field structure do not fit in the header, a separate document must be provided that includes such details. VII. Electronic Phone Records When producing electronic phone records, provide the files in the following format: I . M S Excel spreadsheet with header information detailing the field structure. I f any special codes exist i n the dataset, a separate document must be provided that details all such codes. If details of the field structure do not fit in the header, a separate document must be provided that includes such details. Data must be formatted in its native format (i.e. dates in a date format, numbers in an appropriate numerical format, and numbers with leading zeroes as text). a. The metadata that must be included is outline in Addendu m B of this document. Each field of data must be loaded into a separate column. For example, Date and Start_ Time must be produced in separate columns and not combined into a single column containing both pieces of information. Any fields of data that are provided in addition to those listed in Addendum B must also be loaded into separate columns. Rev 1 0/20 1 4 Exhibit 3, Page 73 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 77 of 150 Page ID #:5517 ADDENDUM A U.S. Securities and Exchange Commission Data Delivery Standards The metadata of electronic document collections should be extracted and provided in a .DAT file using the field definition and formatting described below: Field Name Sample Data Description FIRSTBATES EDCOOOOOO I First Bates number of native file document/email LASTBATES EDCOOOOOO I Last Bates number of native fi le document/email **The LASTBATES field should be populated for single page documents/emails. ATTACHRANGE EDCOOOOOO I - EDCOOOOO 1 5 Bates number of the first page of the parent document to the Bates number of the last page of the last attachment "child" document BEGATTACH EDCOOOOOO I First Bates number of attachment range ENDATTACH EDC00000 1 5 Last Bates number o f attachment range PARENT BATES EDCOOOOOO I First Bates number of parent document/Email **This PARENT_BATES field should be populated in each record representing an attachment "child" document CHILD BATES EDC0000002; EDCOOOOO 14 First Bates number of "child" attachment(s); can be more than one Bates number listed depending on the number of attachments **The CHILD_BATES field should be populated in each record representing a ''parent" document CUSTODIAN Smith, John Email: mailbox where the email resided Native: Individual from whom the document originated FROM John Smith Email: Sender Native: Author(s) of document **semi-colon should be used to separate multiple entries TO Coffinan, Janice; LeeW Recipient(s) [mailto:LeeW@MSN .com] **semi-colon should be used to separate multiple entries cc Frank Thompson [mailto: Carbon copy recipient(s) frank_ Thompson@cdt.com] **semi-colon should be used to separate multiple entries BCC John Cain Blind carbon copy recipient(s) **semi-colon should be used to separate multiple entries SUBJECT Board Meeting Minutes Email: Subject line of the email Native: Title of document (ifavailable) DATE SENT 1 0/ 12/20 1 0 Email : Date the email was sent Native: (empty) TIME_ SENT/TIME 07:05 PM GMT Email: Time the email was sent/ Time zone in whicl ZONE the emails were standardized during conversion. Native: (empty) **This data must be a separate field and cannot be combined with the DATE_SENT field; TIME_ZONE GMT The time zone in which the emails were standardizec during conversion. Email: Time zone Native: (empty) LINK D:\00 1 \ EDCOOOOOO 1 .msg Hyperlink to the email or native file document **The linked file must be named per the FIRSTBA TES number Rev 1 0/20 1 4 Exhibit 3, Page 74 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 78 of 150 Page ID #:5518 MIME TYPE MSG FILE EXTEN MSG AUTHOR John Smith DATE CREATED 1 0/1 0/20 1 0 TIME CREATED 1 0:25 AM DATE_MOD 1 0/ 12/20 10 TIME_MOD 07:00 PM DATE _ACCESSD 10/ 12/20 1 0 TIME ACCESSD 07:00 PM PRINTED_DATE 10/ 12/20 10 FILE SIZE 5,952 PG COUNT 1 PATH J :\Shared\SmithJ\October Agenda.doc INTFILEP ATH Personal Folders\Deleted Items\Board Meeting Minutes.msg INTMSGID <000805c2c7 1 b$75977050$cb 8306d 1 �MSN> MD5HASH d 1 3 1 dd02c5e6eec4693d9a069 8aff95c 2fcab587 12467eab4004583eb 8fb7f89 OCRPATH TEXT /00 1/EDCOOOOOO 1 . txt Sample Image Loadfile: IMGOOOOOOl,,E:\001\IMGOOOOOOl.TI F,Y,,, IMG0000002,,E:\001\IMG0000002.TIF,,,, IMG0000003,,E:\001\IMG0000003.TIF,,,, IMG0000004,,E:\001\IMG0000003.TIF,Y,,, IMGOOOOOOS,,E:\001\IMG0000003.TIF,Y,,, IMG0000006,,E :\001\IMG0000003.TIF,,,, U.S. Securities and Exchange Commission Data Delivery Standards The content type of an Email or native file document as identified/extracted from the header The file type extension representing the Email or native file document; will vary depending on the email format Email: (empty) Native: Author of the document Email: (empty) Native: Date the document was created Email: (empty) Native: Time the document was created **This data must be a separate field and cannot be combined with the DATE CREATED field Email: (empty) Native: Date the document was last modified Email: (empty) Native: Time the document was last modified **This data must be a separate field and cannot be combined with the DATE MOD field Email: (empty) Native: Date the document was last accessed Email: (empty) Native: Time the document was last accessed **This data must be a separate field and cannot be combined with the DATE ACCESSD field Email: (empty) Native: Date the document was last printed Size of native file document/email in KB Number of pages in native file document/email Email: (empty) Native: Path where native file document was stored including original file name. Email: original location of email including original file name. Native: (empty) Email: Unique Message ID Native: (empty) MDS Hash value of the document. Path to extracted text of the native file Rev 1 0/20 1 4 Exhibit 3, Page 75 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 79 of 150 Page ID #:5519 ADDENDUM B For Electronic Phone Records, include the following fields in separate columns: For Calls: 1) Account Number 2) Connection Date - Date the call was received or made 3) Connection Time - Time call was received or made 4) Seizure Time - Time it took for the call to be placed in seconds 5) Originating Number - Phone that placed the call 6) Terminating Number - Phone that received the call 7) Elapsed Time - The length of time the call lasted, preferably in seconds 8) End Time - The time the call ended 9) Number Dialed - Actual number dialed 1 0) IMEi Originating - Unique id to phone used to make call 1 1 ) IMEi Terminating- Unique id to phone used to receive call 1 2) IMSI Originating - Unique id to phone used to make call 1 3) IMSI Terminating- Unique id to phone used to receive call 14) Call Codes - Identify call direction or other routing information 1 5) Time Zone - Time Zone in which the call was received or placed, if applicable For Text messages: 1 ) Account Number 2) Connection Date - Date the text was received or made 3) Connection Time - Time text was received or made 4) Originating Number - Who placed the text 5) Terminating Number - Who received the text 6) IMEi Originating - Unique id to phone used to make text 7) IMEi Terminating- Unique id to phone used to receive text 8) IMSI Originating - Unique id to phone used to make text 9) IMSI Terminating- Unique id to phone used to receive text 1 0) Text Code - Identify text direction, or other text routing information 1 1 ) Text Type Code - Type of text message (sent SMS, MMS, or other) 12) Time Zone - Time Zone in which the call was received or placed, if applicable For Mobile Data Usage: 1) Account Number 2) Connection Date - Date the data was received or made 3) Connection Time - Time data was received or made 4) Originating number - Number that used data 5) IMEi Originating - Unique id of phone that used data 6) IMSI Originating - Unique id of phone that used data 7) Data or Data codes - Identify data direction, or other data routing information 8) Time Zone - Time Zone in which the call was received or placed, if applicable U.S. Securities and Exchange Commission Data Delivery Standards Rev 1 0/20 1 4 Exhibit 3, Page 76 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 80 of 150 Page ID #:5520 UPS CampusShip: Shipment Label UPS CampusShip: View/Print Label 1 . Ensure there are no other shipping or tracking labels attached to your package. Select the Print button on the print dialog box that appears. Note: If your browser does not support this function select Print from the File menu to print the label. 2. Fold the printed label at the solid line below. Place the label in a UPS Shipping Pouch. If you do not have a pouch, affix the folded label using clear plastic shipping tape over the entire label. 3. GETTING YOUR SHIPMENT TO U PS Customers with a Daily Pickup Your driver will pickup your shipment(s) as usual. Customers without a Daily Pickup Take your package to any location of The UPS Store®, UPS Access Point(TM) location, UPS Drop Box, UPS Customer Center, UPS Alliances (Office Depot® or Staples®) or Authorized Shipping Outlet near you. Items sent via UPS Return Services(SM) (including via Ground) are also accepted at Drop Boxes. To find the location nearest you, please visit the Resources area of CampusShip and select UPS Locations. Schedule a same day or future day Pickup to have a UPS driver pickup all your CampusShip packages. Hand the pack�e to any UPS driver in your area. UPS Access Point UPS Access Point™ BIXEL LIQUOR AND THE UPS STORE CONVENIENCE 467 S BIXEL ST 645 W 9TH ST LOS ANGELES ,CA 900 1 7 LOS ANGELES , CA 9001 5 FOLD HERE ...-t ...-t I � 0 \0 N °' UPS Access Point™ UNION LIQUOR 1 703 BEVERLY BLVD LOS ANGELES ,CA 90026 Page 1 of 1 .... \0 - Vl � 0 0 t:J C:: lll o � a:: � (-.°' - P"i �: cs �� 3:: Joi O lll �'°Cll !i c.:> -�g rli � �� eCll ..,..;J I I:'-.. I:'-.. \0 N °' cJ �(� ::> o � � C!> :J E--i 1-4 · $ o Z u co < ti) '° tS w � � o � � � C!> E-ta s � :s f: ti) N :c V,) N °' � LI') < ...-l C") � °' � ...-l 0 °' � � LI') ['... � � N r--i � � z t!) z Cll 8 � � iiiiiiiiii - !!!!!!!!! iiiiiiiiii - r-1 -- � � https://www.campusship.ups.com/cship/create? ActionOriginPair=default_Print WindowP . . . 214120 16 Exhibit 3, Page 77 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 81 of 150 Page ID #:5521 Exhibit 4 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 82 of 150 Page ID #:5522 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 UNITED STATES DISTRICT COURT 2 CENTRAL DISTRICT OF CALIFORNIA 3 SOUTHERN DIVISION 4 - - - - - - - - - - - - - - - - 5 SECURITIES AND EXCHANGE ) 6 COMMISSION, ) 7 Plaintiff, ) CASE NO. 8 V. ) 8:16-cv-00974-CJC-AGR 9 CHARLES C. LIU; XIN WANG a/k/a ) 10 LISA WANG; PACIFIC PROTON ) 11 THERAPY REGIONAL CENTER, LLC; ) 12 PACIFIC PROTON EB-5 FUND, LLC; ) 13 and BEVERLY PROTON CENTER, LLC ) 14 f/k/a/ LOS ANGELES COUNTY ) 15 PROTON THERAPY, LLC, ) 16 Defendants. ) 17 - - - - - - - - - - - - - - - - 18 VIDEOTAPED DEPOSITION OF CHARLES C. LIU 19 THURSDAY, NOVEMBER 10, 2016 20 21 BEHMKE REPORTING AND VIDEO SERVICES, INC. 22 BY: GRACE CHUNG, CSR NO. 6246, RMR, CRR 23 160 SPEAR STREET, SUITE 300 24 SAN FRANCISCO, CALIFORNIA 94105 25 (415) 597-5600 1 Exhibit 4, Page 78 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 83 of 150 Page ID #:5523 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 2 3 4 5 6 7 Videotaped Deposition of CHARLES C. LIU, 8 taken on behalf of Defendant, at 444 South 9 Flower Street Suite 900, Los Angeles, California, 10 via videoconference, commencing at 7:59 A.M., 11 on THURSDAY, NOVEMBER 10, 2016, before Grace 12 Chung, CSR No. 6246, RMR, CRR, CLR. 13 14 15 16 17 18 19 20 21 22 23 24 25 2 Exhibit 4, Page 79 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 84 of 150 Page ID #:5524 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 answer. 2 A. Based on the Fifth Amendment right, I'm 3 not going to answer. 4 BY MR. LEUNG: 5 Q. Is it your intention to assert your Fifth 6 Amendment privilege in response to any questions I 7 may ask you concerning your ability to cause UDG to 8 return Pacific Proton investor funds? 9 MR. GOURAIGE: I advise the witness to 10 answer yes. 11 A. The answer is yes. 12 BY MR. LEUNG: 13 Q. Mr. Liu, do you control UDG? 14 MR. GOURAIGE: Based on his Fifth 15 Amendment right, I advise the witness not to 16 answer. 17 A. Based on my Fifth Amendment right, I'm not 18 going to answer. 19 BY MR. LEUNG: 20 Q. Mr. Liu, do you have the authority to 21 direct UDG's decision-making on its management, 22 operations, and policies? 23 MR. GOURAIGE: Based on his Fifth 24 Amendment right, I advise the witness not to 25 answer. 37 Exhibit 4, Page 80 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 85 of 150 Page ID #:5525 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 A. Based on the Fifth Amendment right, I'm 2 not going to answer. 3 BY MR. LEUNG: 4 Q. Is it your intention to assert your Fifth 5 Amendment privilege in response to any questions I 6 may ask you concerning your control of UDG? 7 MR. GOURAIGE: I'm going to advise the 8 witness to answer yes. 9 A. The answer is yes. 10 BY MR. LEUNG: 11 Q. Does Ms. Wang, your spouse, control UDG? 12 MR. GOURAIGE: Based on his Fifth 13 Amendment right, I advise the witness not to 14 answer. 15 A. Based on my Fifth Amendment right, I'm not 16 going to answer. 17 BY MR. LEUNG: 18 Q. Did Ms. Wang ever control UDG? 19 MR. GOURAIGE: Based on his Fifth 20 Amendment right, I advise the witness not to 21 answer. 22 A. Based on the Fifth Amendment right, I'm 23 not going to answer. 24 BY MR. LEUNG: 25 Q. Does Ms. Wang have the ability to direct 38 Exhibit 4, Page 81 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 86 of 150 Page ID #:5526 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 UDG's decision-making concerning its management, 2 operations, and policies? 3 MR. GOURAIGE: Based on his Fifth 4 Amendment right, I advise the witness not to 5 answer. 6 A. Based on the Fifth Amendment right, I'm 7 not going to answer. 8 BY MR. LEUNG: 9 Q. Did Ms. Wang ever have the authority to 10 direct UDG's decision-making concerning its 11 management, operations, and policies? 12 MR. GOURAIGE: Based on his Fifth 13 Amendment right, I advise the witness not to 14 answer. 15 A. Based on the Fifth Amendment right, I'm 16 not going to answer. 17 BY MR. LEUNG: 18 Q. Was Ms. Wang ever UDG's chief executive 19 officer? 20 MR. GOURAIGE: Based on his Fifth 21 Amendment realty, I advise the witness not to 22 answer. 23 A. Based on the Fifth Amendment right, I'm 24 not going to answer. 25 BY MR. LEUNG: 39 Exhibit 4, Page 82 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 87 of 150 Page ID #:5527 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 Q. Was Ms. Wang ever UDG's president? 2 MR. GOURAIGE: Based on his Fifth 3 Amendment right, I advise the witness not to 4 answer. 5 A. Based on the Fifth Amendment right, I'm 6 not going to answer. 7 BY MR. LEUNG: 8 Q. Was Ms. Wang ever UDG's chairman of the 9 board? 10 MR. GOURAIGE: Based on his Fifth 11 Amendment right, I advise the witness not to 12 answer. 13 A. Based on the Fifth Amendment right, I'm 14 not going to answer. 15 BY MR. LEUNG: 16 Q. Is it your intention to assert your Fifth 17 Amendment privilege in response to any questions I 18 may ask you about Ms. Wang's control of UDG? 19 MR. GOURAIGE: I advise the witness to 20 answer yes. 21 A. The answer is yes. 22 BY MR. LEUNG: 23 Q. Mr. Liu, please identify for the last 20 24 years each and every bank in which you had an 25 account, use of an account, or had a financial or 40 Exhibit 4, Page 83 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 88 of 150 Page ID #:5528 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 know, I -- I'm still entitled to get additional 2 compensation. 3 Even the funds -- even the company does 4 not have enough funds because we are still in the 5 middle of raising more capital. If we raise more 6 capital, and then I guess the company still is 7 going to pay me. 8 Q. Is it true that more than $20 million of 9 the capital that you had raised today was paid 10 either to you, your wife, or the overseas 11 marketers? 12 MR. GOURAIGE: Based on his Fifth 13 Amendment right, I advise him not to answer. 14 A. Based on the Fifth Amendment right, I'm 15 not going to answer. 16 BY MR. LEUNG: 17 Q. Is it true that in order to receive your 18 million-dollar bonus, you needed to raise 19 additional capital because the corporate defendants 20 did not have enough money? 21 A. That's the right logic. 22 Q. And, Mr. Liu, do you have any interest -- 23 an interest in any type of trust? 24 MR. GOURAIGE: Based on his Fifth 25 Amendment right, I advise him not to answer. 79 Exhibit 4, Page 84 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 89 of 150 Page ID #:5529 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 Amendment privilege in response to any questions I 2 may ask you concerning money or assets held by 3 another person on your behalf? 4 MR. GOURAIGE: I am going to advise him to 5 say yes. 6 A. The answer is yes. 7 BY MR. LEUNG: 8 Q. Were there at least 58 investors that 9 invested in the Pacific Proton EB-5 Fund? 10 MR. GOURAIGE: I -- based on his Fifth 11 Amendment right, I advise him not to answer. 12 A. Based on the Fifth Amendment right, I'm 13 not going to answer. 14 BY MR. LEUNG: 15 Q. Was the total amount of money that you 16 raised in connection with the Pacific Proton 17 Regional Center and the Pacific Proton EB-5 Fund 18 and Beverly Proton at least 31,160,000 dollars 19 U.S.? 20 MR. GOURAIGE: Based on his Fifth 21 Amendment right, I advise him not to answer. 22 A. Based on my Fifth Amendment right, I'm not 23 going to answer. 24 BY MR. LEUNG: 25 Q. Did investors in the Pacific Proton 83 Exhibit 4, Page 85 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 90 of 150 Page ID #:5530 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 offering depend on the entrepreneurial or 2 managerial skills of you or others involved in the 3 offering in order for them to return -- generate 4 returns on their investment? 5 MR. GOURAIGE: Based on his Fifth 6 Amendment right, I advise him not to answer. 7 A. Based on the Fifth Amendment right, I'm 8 not going to answer. 9 BY MR. LEUNG: 10 Q. Did Pacific Proton investors have an 11 expectation of profit or return on their 12 investments? 13 MR. GOURAIGE: Could you repeat the 14 question, please? 15 BY MR. LEUNG: 16 Q. Did Pacific Proton investors have an 17 expectation of profit in connection with the 18 investments that they made in the Pacific Proton 19 EB-5 Fund? 20 MR. GOURAIGE: Based on his Fifth 21 Amendment right, I advise him not to answer. 22 A. Based on the Fifth Amendment right, I'm 23 not going to answer. 24 BY MR. LEUNG: 25 Q. Did you transfer at least 3.25 million 84 Exhibit 4, Page 86 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 91 of 150 Page ID #:5531 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 dollars U.S. from your personal bank accounts in 2 the United States to China Merchants Bank from 3 February to April 2016? 4 MR. GOURAIGE: Based on his Fifth 5 Amendment right, I advise him not to answer. 6 A. Based on the Fifth Amendment right, I'm 7 not going to answer. 8 BY MR. LEUNG: 9 Q. Is it true that the offering proceeds from 10 the Pacific Proton offering weren't used or 11 expended in a way consistent with the terms and 12 disclosures of the Pacific Proton offering 13 memorandum? 14 MR. GOURAIGE: Based on his Fifth 15 Amendment right, I advise him not to answer. 16 A. Based on the Fifth Amendment right, I'm 17 not going to answer. 18 BY MR. LEUNG: 19 Q. Did you engage in a scheme to 20 misappropriate Pacific Proton investor funds by 21 failing to disclose to those investors the true 22 uses of those funds? 23 MR. GOURAIGE: Based on his Fifth 24 Amendment right, I advise him not to answer. 25 A. Based on the Fifth Amendment right, I'm 85 Exhibit 4, Page 87 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 92 of 150 Page ID #:5532 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 not going to answer. 2 BY MR. LEUNG: 3 Q. Did you engage in that scheme with 4 fraudulent intents? 5 MR. GOURAIGE: Based on his Fifth 6 Amendment right, I advise him not to answer. 7 A. Based on the Fifth Amendment right, I'm 8 not going to answer. 9 BY MR. LEUNG: 10 Q. Did you deal directly with the Pacific 11 Proton investors? 12 MR. GOURAIGE: Based on his Fifth 13 Amendment right, I advise him not to answer. 14 A. Based on the Fifth Amendment right, I'm 15 not going to answer. 16 BY MR. LEUNG: 17 Q. Did you communicate with Pacific Proton 18 investors about their investment in the Pacific 19 Proton EB-5 Fund? 20 MR. GOURAIGE: Based on his Fifth 21 Amendment right, I advise him not to answer. 22 A. Based on my Fifth Amendment right, I'm not 23 going to answer. 24 BY MR. LEUNG: 25 Q. Is it true that investors in the Pacific 86 Exhibit 4, Page 88 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 93 of 150 Page ID #:5533 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 Proton EB-5 Fund would have considered it to be a 2 significant piece of information had they known 3 that you were using their funds in the manner in 4 which you did? 5 MR. GOURAIGE: Based on his Fifth 6 Amendment right, I advise him not to answer. 7 A. Based on the Fifth Amendment right, I'm 8 not going to answer. 9 BY MR. LEUNG: 10 Q. Did you know that false statements 11 concerning the Pacific Proton offering and the use 12 of proceeds from that offering were being made to 13 investors? 14 MR. GOURAIGE: Based on his Fifth 15 Amendment right, I advise him not to answer. 16 A. Based on the Fifth Amendment right, I'm 17 not going to answer. 18 BY MR. LEUNG: 19 Q. Please identify all personal property 20 currently in your possession having a value greater 21 than $500. 22 MR. GOURAIGE: Based on his Fifth 23 Amendment right, I advise him not to answer. 24 A. Based on the Fifth Amendment right, I'm 25 not going to answer. 87 Exhibit 4, Page 89 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 94 of 150 Page ID #:5534 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 MR. GOURAIGE: Based on his Fifth 2 Amendment right, I advise him not to answer. 3 A. Based on the Fifth Amendment right, I'm 4 not going to answer. 5 BY MR. LEUNG: 6 Q. Do you own any paintings? 7 MR. GOURAIGE: Based on his Fifth 8 Amendment right, I advise him not to answer. 9 A. Based on the Fifth Amendment right, I'm 10 not going to answer. 11 BY MR. LEUNG: 12 Q. Is it true that Pacific Proton offering 13 proceeds weren't used or expended in a manner 14 consistent with the terms and disclosures of the 15 Pacific Proton offering memorandum? 16 MR. GOURAIGE: Based on his Fifth 17 Amendment right, I advise him not to answer. 18 A. Based on the Fifth Amendment right, I am 19 not going to answer. 20 BY MR. LEUNG: 21 Q. Is it true that you intended to have the 22 Pacific Proton offering proceeds used or expended 23 in a manner that was inconsistent with the terms 24 and disclosures of the Pacific Proton offering 25 memoranda? 90 Exhibit 4, Page 90 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 95 of 150 Page ID #:5535 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 MR. GOURAIGE: Based on his Fifth 2 Amendment right, I advise him not to answer. 3 A. Based on the Fifth Amendment right, I'm 4 not going to answer. 5 BY MR. LEUNG: 6 Q. Is it true that you intended not to 7 disclose to investors in the Pacific Proton 8 offering that offering proceeds would be used or 9 expended in a manner that was inconsistent with the 10 terms and disclosures of the Pacific Proton 11 offering memoranda? 12 MR. GOURAIGE: Based on his Fifth 13 Amendment right, I advise him not to answer. 14 A. Based on the Fifth Amendment right, I'm 15 not going to answer. 16 BY MR. LEUNG: 17 Q. Is it true that you made false statements 18 concerning the Pacific Proton offering and the use 19 of proceeds from that offering to investors in 20 Pacific Proton? 21 MR. GOURAIGE: Based on his Fifth 22 Amendment right, I advise him not to answer. 23 A. Based on the Fifth Amendment right, I'm 24 not going to answer. 25 BY MR. LEUNG: 91 Exhibit 4, Page 91 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 96 of 150 Page ID #:5536 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 Q. Is it true that the Pacific Proton 2 offering memorandum's description of how Pacific 3 Proton offering proceeds would be used were false? 4 MR. GOURAIGE: Based on his Fifth 5 Amendment, I advise him not to answer. 6 A. Based on the Fifth Amendment, I'm not 7 going to answer. 8 BY MR. LEUNG: 9 Q. Is it true that you should have known, 10 under a reasonable standard of care, that the 11 descriptions of how the Pacific Proton offering 12 proceeds would be used that are in the Pacific 13 Proton offering memorandum were false? 14 MR. GOURAIGE: Based on his Fifth 15 Amendment right, I advise him not to answer. 16 A. Based on the Fifth Amendment right, I'm 17 not going to answer. 18 BY MR. LEUNG: 19 Q. Is it true that you knew false statements 20 concerning the Pacific Proton offering and the use 21 of proceeds from that offering were being made to 22 investors in the Pacific Proton offering? 23 MR. GOURAIGE: Based on his Fifth 24 Amendment right, I advise him not to answer. 25 A. Based on the Fifth Amendment right, I'm 92 Exhibit 4, Page 92 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 97 of 150 Page ID #:5537 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 not going to answer. 2 BY MR. LEUNG: 3 Q. Is it true that you recklessly disregarded 4 that false statements were being made to investors 5 in the Pacific Proton offering memorandum? 6 MR. GOURAIGE: Based on his Fifth 7 Amendment right, I advise him not to answer. 8 A. Based on the Fifth Amendment right, I'm 9 not going to answer. 10 BY MR. LEUNG: 11 Q. Do you drive a car? 12 MR. GOURAIGE: What was the question? 13 BY MR. LEUNG: 14 Q. Do you drive a car, Mr. Liu? 15 A. Here or U.S.? 16 Q. In Beijing, sir. 17 A. No. 18 Q. Do you own cars? 19 A. No. 20 Q. Do you own or have a financial interest in 21 any boats? 22 A. Boats? 23 Q. Boats. 24 A. Oh, boats. No. 25 Q. Do you own or have a financial interest in 93 Exhibit 4, Page 93 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 98 of 150 Page ID #:5538 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 STATE OF CALIFORNIA ) 2 ) ss. 3 COUNTY OF LOS ANGELES ) 4 I hereby certify that the witness in the 5 foregoing deposition, CHARLES C. LIU, was by me duly 6 sworn to testify to the truth, the whole truth and 7 nothing but the truth, in the within-entitled cause; 8 that said deposition was taken at the time and place 9 herein named; and that the deposition is a true record 10 of the witness's testimony as reported by me, a duly 11 certified shorthand reporter and a disinterested 12 person, and was thereafter transcribed into typewriting 13 by computer. 14 I further certify that I am not interested in 15 the outcome of the said action, nor connected with nor 16 related to any of the parties in said action, nor to 17 their respective counsel. 18 IN WITNESS WHEREOF, I have hereunto set my 19 hand this 16th day of November, 2016. 20 Reading and Signing was: 21 _X_ requested ___ waived ___ not requested 22 23 24 25 GRACE CHUNG, CSR NO. 6246 170 Exhibit 4, Page 94 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 99 of 150 Page ID #:5539 Exhibit 5 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 100 of 150 Page ID #:5540 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 UNITED STATES DISTRICT COURT 2 CENTRAL DISTRICT OF CALIFORNIA 3 SOUTHERN DIVISION 4 - - - - - - - - - - - - - - - - 5 SECURITIES AND EXCHANGE ) 6 COMMISSION, ) 7 Plaintiff, ) CASE NO. 8 V. ) 8:16-cv-00974-CJC-AGR 9 CHARLES C. LIU; XIN WANG a/k/a ) 10 LISA WANG; PACIFIC PROTON ) 11 THERAPY REGIONAL CENTER, LLC; ) 12 PACIFIC PROTON EB-5 FUND, LLC; ) 13 and BEVERLY PROTON CENTER, LLC ) 14 f/k/a/ LOS ANGELES COUNTY ) 15 PROTON THERAPY, LLC, ) 16 Defendants. ) 17 - - - - - - - - - - - - - - - - 18 VIDEOTAPED DEPOSITION OF XIN WANG 19 WEDNESDAY, NOVEMBER 9, 2016 20 21 BEHMKE REPORTING AND VIDEO SERVICES, INC. 22 BY: CHRISTINA VALERY, CSR NO. 14140 23 160 SPEAR STREET, SUITE 300 24 SAN FRANCISCO, CALIFORNIA 94105 25 (415) 597-5600 1 Exhibit 5, Page 95 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 101 of 150 Page ID #:5541 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 2 3 4 5 6 7 Videotaped Deposition of XIN WANG, taken on 8 behalf of Plaintiff, at 444 South Flower Street, 9 Suite 900, Los Angeles, California, commencing at 10 8:25 A.M., WEDNESDAY, NOVEMBER 9, 2016, before 11 Christina Valery, Certified Shorthand Reporter No. 12 14140, pursuant to Notice of Videotaped Deposition. 13 14 15 16 17 18 19 20 21 22 23 24 25 2 Exhibit 5, Page 96 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 102 of 150 Page ID #:5542 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 based on her 5th amendment right. 2 THE WITNESS: I'm not going to answer this question 3 based on the 5th amendment. 4 BY MR. LEUNG: 5 Q. Is it true that you caused UDG to return at 6 least -- strike that. 7 Is it true that you caused UDG to agree to 8 return at least $3.15 million in fees paid by 9 Beverly Proton to UDG? 10 MR. GOURAIGE: I advise the witness not to answer 11 based on her 5th amendment right. 12 THE WITNESS: I'm not going to answer this question 13 based on 5th amendment. 14 BY MR. LEUNG: 15 Q. Is it your intention to assert your 5th 16 amendment privilege in response to any questions I may 17 ask you about your ability to cause UDG to return 18 Pacific Proton investor funds? 19 MR. GOURAIGE: I advise the witness to answer yes to 20 the question. 21 THE WITNESS: Yes. 22 BY MR. LEUNG: 23 Q. Ms. Wang, do you control UDG? 24 MR. GOURAIGE: I advise the witness not to answer 25 based on her 5th -- 33 Exhibit 5, Page 97 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 103 of 150 Page ID #:5543 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 THE WITNESS: I'm not going to answer this question 2 based on the 5th amendment. 3 BY MR. LEUNG: 4 Q. Ms. Wang, do you have the authority to direct 5 UDG's decision making concerning its management, 6 operations, and policies? 7 MR. GOURAIGE: I advise the witness not to answer 8 based on her 5th amendment right. 9 THE WITNESS: I'm not going to answer this question 10 based on the 5th amendment. 11 BY MR. LEUNG: 12 Q. Ms. Wang, were you UDG's chief executive 13 officer? 14 MR. GOURAIGE: I advise the witness not to answer 15 based on her 5th amendment right. 16 THE WITNESS: I'm not going to answer this question 17 based on the 5th amendment. 18 BY MR. LEUNG: 19 Q. Mr. Wang, were you UDG's chairman of the board? 20 MR. GOURAIGE: I advise the witness not to answer 21 based on her 5th amendment. 22 THE WITNESS: I'm not going to answer this question 23 based on the 5th amendment. 24 BY MR. LEUNG: 25 Q. Is it your intention to assert your 5th 34 Exhibit 5, Page 98 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 104 of 150 Page ID #:5544 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 amendment privilege in response to any questions I may 2 ask you about your control of UDG? 3 MR. GOURAIGE: I advise the witness to answer yes. 4 THE WITNESS: Yes. Sorry. 5 MR. LEUNG: Yes is the witness's answer? 6 THE INTERPRETER: Yes. 7 BY MR. LEUNG: 8 Q. Ms. Wang, does Mr. Liu control UDG? 9 MR. GOURAIGE: I advise the witness not to answer 10 based on her 5th amendment right. 11 THE WITNESS: I'm not going to answer this question 12 based on the 5th amendment. 13 BY MR. LEUNG: 14 Q. Ms. Wang, is it your intention to assert your 15 5th amendment privilege in response to any question I 16 may ask you concerning Mr. Liu's control of UDG? 17 MR. GOURAIGE: I advise the witness to answer yes. 18 THE WITNESS: Yes. 19 BY MR. LEUNG: 20 Q. Ms. Wang, for the last 20 years, identify every 21 bank in which you had an account, use of an account, or 22 financial interest in an account? 23 MR. GOURAIGE: I advise the witness not to answer 24 based on her 5th amendment right. 25 THE WITNESS: I'm not going to answer this question 35 Exhibit 5, Page 99 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 105 of 150 Page ID #:5545 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 MR. LEUNG: Did you get that? 2 THE WITNESS: Well, I was also responsible for 3 Chinese patients to go to overseas such as U.S. I -- I 4 was helping them to promote that. That included to 5 contact doctors in China and also communication with 6 patients. Well, we were preparing for a center for 7 Chinese patients to go to these centers in the U.S. and 8 we were promoting and hoping to build a green channel 9 for these patients to go to these -- to this center in 10 the U.S. 11 BY MR. LEUNG: 12 Q. Are you referring to your work for 13 Beverly Proton? Are you referring to your work for 14 Beverly Proton? 15 MR. GOURAIGE: Witness may answer the question. 16 THE WITNESS: Yes. 17 BY MR. LEUNG: 18 Q. Were you an officer of Beverly Proton? 19 MR. GOURAIGE: I advise the witness not to answer 20 based on the 5th amendment. 21 THE WITNESS: Not going to answer this question 22 based on the 5th amendment. 23 BY MR. LEUNG: 24 Q. Did you have control over Beverly Proton's bank 25 accounts at any point between 2010 and 2016? And by 57 Exhibit 5, Page 100 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 106 of 150 Page ID #:5546 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 2016, I mean the current day. 2 MR. GOURAIGE: I advise the witness not to answer 3 based on the 5th amendment. 4 THE WITNESS: I'm not going to answer this question 5 based on the 5th amendment. 6 BY MR. LEUNG: 7 Q. Did you control the bank accounts for Pacific 8 Proton Therapy Regional Center LLC at any point in time 9 between 2010 to the present day? 10 THE INTERPRETER: The interpreter would ask counsel 11 to repeat the question. 12 BY MR. LEUNG: 13 Q. I'll repeat the question. Did you control the 14 bank accounts for Pacific Proton Regional Center -- 15 strike that? 16 Did you control the bank accounts for Pacific 17 Proton Therapy Regional Center LLC at any point in time 18 from the beginning of 2010 through the present day? 19 MR. GOURAIGE: I advise the witness not to answer 20 based on the 5th amendment. 21 THE WITNESS: I'm not going to answer this question 22 based on the a 5th amendment. 23 BY MR. LEUNG: 24 Q. Did you have control over the bank accounts of 25 Pacific Proton EB-5 Fund LLC at any point in time from 58 Exhibit 5, Page 101 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 107 of 150 Page ID #:5547 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 the beginning of 2010 to the present day? 2 MR. GOURAIGE: I advise the witness not to answer 3 based on the 5th amendment. 4 THE WITNESS: I'm got going to answer this question 5 based on the 5th amendment. 6 BY MR. LEUNG: 7 Q. Is it true that you control the corporate bank 8 accounts of the corporate defendants in this case from 9 2010 to the present day? 10 MR. GOURAIGE: I advise the witness not to answer 11 based on the 5th amendment. 12 BY MR. LEUNG: 13 Q. Is it true that you control the bank -- what 14 was the answer? 15 THE WITNESS: I'm not going to answer this question. 16 BY MR. LEUNG: 17 Q. Based on the 5th amendment? 18 A. Yes -- Yes, based on the 5th amendment. 19 Q. Is it true that you control the bank accounts 20 of the corporate defendants during the time periods in 21 which they were raising investor funds? 22 MR. GOURAIGE: I advise the witness not to answer 23 based on the 5th amendment. 24 THE WITNESS: I'm not going to answer this question 25 based on the 5th amendment. 59 Exhibit 5, Page 102 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 108 of 150 Page ID #:5548 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 BY MR. LEUNG: 2 Q. Is it true that you caused the corporate 3 defendants to misappropriate investor funds? 4 MR. GOURAIGE: I advise the witness not to answer 5 based on the 5th amendment. 6 THE WITNESS: I'm not going to answer this question 7 based on the 5th amendment. 8 BY MR. LEUNG: 9 Q. Is it your intention to assert your 5th 10 amendment privilege in response to any question I may 11 ask you, Ms. Wang, concerning the use and 12 misappropriation of investor funds by the corporate 13 defendants in this case? 14 MR. GOURAIGE: I advise the witness to answer yes. 15 THE WITNESS: Yes. 16 BY MR. LEUNG: 17 Q. What amount of income have you received in each 18 of the last 15 years in connection with your 19 professional work? 20 MR. GOURAIGE: I advise the witness not to answer 21 based on the 5th amendment. 22 THE WITNESS: I'm not going to answer this question 23 based on the 5th amendment. 24 BY MR. LEUNG: 25 Q. Please identify all of your current sources of 60 Exhibit 5, Page 103 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 109 of 150 Page ID #:5549 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 income. 2 MR. GOURAIGE: I advise the witness not to answer 3 based on the 5th amendment. 4 THE WITNESS: I'm not going to answer this question 5 based on the 5th amendment. 6 BY MR. LEUNG: 7 Q. Is it true that you misappropriated funds 8 invested by investors in the Pacific Proton EB-5 Fund? 9 MR. GOURAIGE: I advise the witness not to answer 10 based on the 5th amendment. 11 THE WITNESS: I'm not going to answer this question 12 based on the 5th amendment. 13 BY MR. LEUNG: 14 Q. Is it true that you engaged in a scheme to 15 misappropriate investor money by failing to disclose to 16 investors in the Pacific Proton EB-5 Fund the true use 17 of their money? 18 MR. GOURAIGE: I advise the witness not to answer 19 based on the 5th amendment. 20 THE WITNESS: I'm not going to answer this question 21 based on the 5th amendment. 22 BY MR. LEUNG: 23 Q. Is it true that you acted with fraudulent 24 intent when engaging in that scheme to misappropriate? 25 MR. GOURAIGE: I advise the witness not to answer 61 Exhibit 5, Page 104 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 110 of 150 Page ID #:5550 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 based on the 5th amendment. 2 THE WITNESS: I'm not going to answer this question 3 based on the 5th amendment. 4 BY MR. LEUNG: 5 Q. Is it true that you, Mr. Liu, and the corporate 6 defendants in this case raised at least -- at least 7 $26,967,918 from investors in the form of capital 8 contributions to the Pacific Proton EB-5 Fund and 9 administrative fees paid to Beverly Proton? 10 MR. GOURAIGE: I advise the witness not to answer 11 based on the 5th amendment. 12 BY MR. LEUNG: 13 Q. Is it true that you directly -- 14 A. I'm not going to answer this question based on 15 the 5th amendment. 16 Q. Is it true that you directly interacted with 17 investors when soliciting their investment in the 18 Pacific Proton EB-5 Fund? 19 MR. GOURAIGE: I advise the witness not to answer 20 based on the 5th amendment. 21 THE WITNESS: I'm not going to answer this question 22 based on the 5th amendment. 23 BY MR. LEUNG: 24 Q. Based on your interaction with Pacific Proton 25 EB-5 Fund investors, do you know that they would have 62 Exhibit 5, Page 105 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 111 of 150 Page ID #:5551 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 found the misappropriation of their money to be a 2 significant piece of information relevant to their 3 investment? 4 MR. GOURAIGE: I advise the witness not to answer 5 based on the 5th amendment. 6 THE WITNESS: I'm not going to answer this question 7 based on the 5th amendment. 8 BY MR. LEUNG: 9 Q. Is it true that investors in the Pacific Proton 10 EB-5 Fund invested with an expectation of profit? 11 MR. GOURAIGE: I advise the witness not to answer 12 based on the 5th amendment. 13 THE WITNESS: I'm not going to answer this question 14 based on the 5th amendment. 15 BY MR. LEUNG: 16 Q. Are you currently employed? 17 MR. GOURAIGE: Witness may answer the question. 18 THE WITNESS: Yes. 19 BY MR. LEUNG: 20 Q. Where are you currently employed? 21 MR. GOURAIGE: Witness may answer the question. 22 THE INTERPRETER: Okay. I did not hear -- the 23 interpreter did not hear the witness. Can the witness 24 repeat it again? 25 THE WITNESS: I am currently employee at the 63 Exhibit 5, Page 106 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 112 of 150 Page ID #:5552 BEHMKE REPORTING AND VIDEO SERVICES, INC. (415) 597-5600 1 STATE OF CALIFORNIA ) 2 ) ss. 3 COUNTY OF LOS ANGELES ) 4 I hereby certify that the witness in the 5 foregoing deposition, XIN WANG, was by me duly sworn to 6 testify to the truth, the whole truth, and nothing but 7 the truth, in the within-entitled cause; that said 8 deposition was taken at the time and place herein named; 9 that the deposition is a true record of the witness's 10 testimony as reported by me, a duly certified shorthand 11 reporter and a disinterested person, and was thereafter 12 transcribed into typewriting by computer. 13 I further certify that I am not interested in 14 the outcome of the said action, nor connected with, nor 15 related to any of the parties in said action, nor to 16 their respective counsel. 17 IN WITNESS WHEREOF, I have hereunto set my hand 18 this 16th day of November, 2016. 19 Reading and Signing was: 20 _X_ requested ___ waived ___ not requested 21 22 23 24 CHRISTINA VALERY, CSR NO. 14140 25 STATE OF CALIFORNIA 112 Exhibit 5, Page 107 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 113 of 150 Page ID #:5553 Exhibit 6 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 114 of 150 Page ID #:5554 1 Case No. SACV16-00974-CJC (AGRx) 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 JOHN W. BERRY (Cal. Bar No. 295760) Email: berryj@sec.gov GARY Y. LEUNG (Cal. Bar No. 302928) Email: leungg@sec.gov JACOB A. REGENSTREIF (Cal. Bar No. 234734) E-mail: regenstreifj@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director Alka N. Patel, Associate Regional Director John W. Berry, Regional Trial Counsel 444 S. Flower Street, Suite 900 Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Southern Division SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. CHARLES C. LIU; XIN WANG a/k/a LISA WANG; PACIFIC PROTON THERAPY REGIONAL CENTER, LLC; PACIFIC PROTON EB-5 FUND, LLC; and BEVERLY PROTON CENTER, LLC f/k/a LOS ANGELES COUNTY PROTON THERAPY, LLC, Defendants. Case No. SACV16-00974-CJC (AGRx) PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S FIRST SET OF INTERROGATORIES TO DEFENDANT CHARLES C. LIU PROPOUNDING PARTY: SECURITIES AND EXCHANGE COMMISSION RESPONDING PARTY: CHARLES C. LIU SET NO.: ONE (Nos. 1-18) In accordance with Rule 33 of the Federal Rules of Civil Procedure, the Securities and Exchange Commission (“SEC”) hereby requests that defendant Exhibit 6, Page 108 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 115 of 150 Page ID #:5555 2 Case No. SACV16-00974-CJC (AGRx) 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 Charles C. Liu respond to the following interrogatories within 30 days of the date of service hereof. I. INSTRUCTIONS & DEFINITIONS A. Definitions 1. The term “SEC” means the U.S. Securities and Exchange Commission. 2. The term “document(s)” is synonymous in meaning and equal in scope to the usage of the term “documents” in Rule 34(a) of the Federal Rules of Civil Procedure and the term “writings and recordings” in Rule 1001(l) of the Federal Rules of Evidence, and shall include any drafts, originals, and non-identical copies of any kind, written, typewritten, printed, recorded, computer-generated or graphic material, however produced, reproduced or compiled, including, but not limited to, any correspondence, memoranda, letters, notes, instructions, contracts, agreements, books, journals, ledgers, statements, reports, studies, bills, invoices, articles, diaries, minutes, calendars, analyses, projections, transcripts, declarations, witness statements, interview reports, summaries, notes of personal or telephonic conversations, e-mail, summaries or notes of any meetings or conferences, and all electronically stored information including electronic or computerized data compilations. A draft or non-identical copy is a separate document within the meaning of this term. 3. The term “communication(s)” means any written, oral, telephonic or other utterances of any nature whatsoever, shared, shown, and/or transferred between and/or among any two and/or more persons, including, but not limited to, any statements, inquiries, discussions, conversations, dialogues, correspondence, e-mail, consultations, negotiations, agreements, understandings, meetings, letters, notations, telegrams, advertisements, declarations, transcripts, interviews, interview reports, blogs, chat room or other Internet postings, and all other documents. A draft or non- identical copy is a separate communication within the meaning of this term. 4. The term “identify” means to describe with particularity, in full detail, Exhibit 6, Page 109 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 116 of 150 Page ID #:5556 3 Case No. SACV16-00974-CJC (AGRx) 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 all relevant facts about the subject matter, including, but not limited to, names, dates, relationships, functions, addresses, purposes, objectives, results and other information which could lead to the discovery of admissible evidence. 5. The term “identify” when used with respect to a document or communication means to identify the document or communication by exhibit number or bates number(s) if previously produced in this action or the SEC’s non-public investigation that preceded this action; or if the document or communication has not been previously produced in this action or the SEC’s prior investigation, to set forth the following information: (a) the nature or type of document or communication (e.g., telephone communication, letter, e-mail or memorandum); (b) the date the document or communication was made: (c) the author(s) of the document or communication; (d) each person who received a copy of the document or communication or was informed of its contents; (e) the person who now has the document or communication or was last known to have it; and (f) the general subject matter and, if applicable, the title of the document or communication. 6. The term “concerning” shall mean discussing, reflecting, evidencing, constituting, mentioning, pertaining to, assessing, embodying, recording, stating, describing, supporting, contradicting, contravening, touching upon or summarizing. 7. The term “person(s)” means any natural individual(s) and/or natural person(s), in any capacity whatsoever, or any entity or organization including divisions, subsidiaries, departments, and other units thereof, and shall include, but not be limited to, a public or private corporation(s), partnership(s), professional corporation(s), limited liability company(ies), business trust(s), banking institution(s), firm(s), joint venture(s), voluntary or unincorporated association(s), organizations(s), proprietorship(s), trust(s), estate(s), governmental agency(ies), commission(s), bureau(s) and/or department(s), and/or any other legal entity. 8. The terms “you” and “your” mean defendant Charles C. Liu, and all persons, agents, attorneys, representatives or other persons or entities acting or Exhibit 6, Page 110 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 117 of 150 Page ID #:5557 4 Case No. SACV16-00974-CJC (AGRx) 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 purporting to act on his behalf, including, but not limited to, your spouse or Lance Gong, Richard Zheng and Stan Lam at Marcum, LLP. 9. The term “your spouse” means defendant Xin (Lisa) Wang, and all persons, agents, attorneys, representatives or other persons or entities acting or purporting to act on her behalf. 10. The term “your children” means any of your children, including, but not limited to, . 11. The term “Beverly Proton” means defendant Beverly Proton Center, LLC f/k/a Los Angeles County Proton Therapy, LLC. 12. The term “Pacific Proton” means defendant Pacific Proton Therapy Regional Center, LLC. 13. The term “PPEB5 Fund” means Pacific Proton EB-5 Fund, LLC. 14. The term “Overseas Chinese” means Overseas Chinese Immigration Consulting Ltd., and any and all of its U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on its behalf. 15. The term “UDG Entities” means United Damei Group, United Damei Investment Company, Ltd., Beijing Pacific Damei Consulting Co. Ltd., and/or United Damei US, and any and all of their U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on their behalf. 16. The term “Delsk” means Hong Kong Delsk Business Co., Ltd., and any and all of its U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on its behalf. 17. The term “Identified Entities” means the following: a. Pacific Proton Therapy Regional Center LLC; b. Pacific Proton EB-5 Fund LLC; c. Beverly Proton Center LLC; Exhibit 6, Page 111 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 118 of 150 Page ID #:5558 5 Case No. SACV16-00974-CJC (AGRx) 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 d. Los Angeles County Proton Therapy, LLC; e. Overseas Chinese Immigration Consulting Ltd.; f. United Damei Group; g. United Damei Investment Company, Ltd.; h. Beijing Pacific Damei Consulting Co. Ltd.; i. United Damei US; j. United MPH Ventures LLC; k. MP Medical Hotel Inc.; l. SP MPH Fund LP; m. SC MPH Management LLC; n. Pacific Medical Regional Center LLC; o. Beverly MP Hotel, Inc.; p. Beverly Medical Hotel; q. COH Beverly Cancer Center; r. Root Medical Peace Corp (U.S.A.); s. Southern California Medical/Proton/Hotel Center, LLC CLCC International Inc.; t. USREDA Law, Inc.; u. Root International Peace Corps; v. Beverly International Cancer Center, LLC; and/or w. JC Oriental Pearl, Inc. 18. The term “Pacific Proton offering memorandum” means Exhibit 5 to the Declaration of Jacob A. Regenstreif in Support of Plaintiff Securities and Exchange Commission’s Ex Parte Application for a Temporary Restraining Order, Order to Show Cause Why a Preliminary Injunction Should Not Be Granted, and Orders (1) Freezing Assets; (2) Repatriating Assets; (3) Requiring Accountings; (4) Prohibiting the Destruction of Documents (Dkt. No. 7 in this action). 19. The term “Pacific Proton offering” means the offering of membership Exhibit 6, Page 112 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 119 of 150 Page ID #:5559 6 Case No. SACV16-00974-CJC (AGRx) 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 units in PPEB5 Fund, as described in the Pacific Proton offering memorandum. 20. The term “Pacific Proton offering proceeds” means the total amount of money raised from or delivered by investors who subscribed to the Pacific Proton offering or who otherwise delivered money in response to that offering. 21. The term “account” shall mean all financial accounts of every nature (including, but not limited, to checking, savings, trust, money market, brokerage, investment, securities and other financial accounts). 22. The term “control” (including the terms “controlling” or “controlled by”) means possessing, directly or indirectly, the power to direct or cause the direction of, or the power over the decision-making concerning the management, operation and policies of the entity in question, whether through the ownership of voting securities, by contract or otherwise. B. Instructions 1. In responding to these interrogatories, you are required to obtain and furnish all responsive information that is available to you and to any of your representatives, agents, employees or attorneys, and to obtain and furnish all such responsive information that is in your actual or constructive possession, custody or control, or in the actual or constructive possession, custody or control of any of your representatives, agents, employees or attorneys. 2. These interrogatories are continuing in nature and you are required to promptly supplement or amend your responses to the interrogatories if, after the time of your initial responses, you learn that any response is or has become, in some material respect, incomplete or incorrect, to the full extent provided for by Federal Rule of Civil Procedure 26(e). 3. You are requested to answer each interrogatory separately and completely in writing under oath. Your written response to the interrogatories is to be signed and verified by the person making it, and the objections signed by the attorney making them, as required by Federal Rule of Civil Procedure 33(b). Exhibit 6, Page 113 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 120 of 150 Page ID #:5560 7 Case No. SACV16-00974-CJC (AGRx) 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. If you object to an interrogatory, and that objection pertains to only a part of the interrogatory, or word, phrase or clause in it, then you are required to state your objection to that portion only and to respond to the remainder of the interrogatory, using your best efforts to do so. No part of an interrogatory shall be left unanswered merely because you interpose an objection to another part of an interrogatory. 5. If you withhold any information, or documents or communications asked to be identified, which is responsive to an interrogatory, based on a claim of privilege or any other reason, then provide the following information concerning the withheld information, document or communication: (a) the nature or type of information that is being withheld (e.g., telephone communication, letter, e-mail or memorandum); (b) a general description of the subject matter of the information that is being withheld; (c) the date the responsive information was made; (d) the name, address, and telephone number and occupation of each person who (i) made or authored the information or (ii) received (or was intended to receive) the information, or was otherwise informed about the information; and (e) a statement of the privilege or other reason claimed to withhold the information or otherwise object to the interrogatory. 6. If you identify any document(s) or communication(s) in your responses to these interrogatories that no longer exist, cannot be located or are not in your possession, custody or control, then in your response, identify those document(s) or communication(s), as well as: (a) the author(s); (b) the date the responsive material was created; (c) each person who received a copy of the responsive material or was informed of its contents; (d) the person who now has the responsive material or was last known to have it; (e) the general subject matter and, if applicable, the title of the responsive material; (f) the type of such responsive material (e.g., telephone communication, letter, e-mail or memorandum); (g) the size of the material (e.g., number of pages); (h) a detailed description of the responsive material; and (i) a detailed and complete explanation of why such responsive material is no longer in Exhibit 6, Page 114 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 121 of 150 Page ID #:5561 8 Case No. SACV16-00974-CJC (AGRx) 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 your possession, custody, or control. 7. For each of the interrogatories below, in order to make the interrogatory inclusive rather than exclusive, the past tense shall be construed to include the present tense, and vice versa. Moreover, “and” and “or” as used herein are both conjunctive and disjunctive, and “any” includes the word “all” and vice versa. 8. No agreement by the SEC or its staff purporting to modify, limit, or otherwise vary these interrogatories is binding on the SEC or its staff unless confirmed or acknowledged in writing by the SEC or its staff. II. INTERROGATORIES Interrogatory No. 1: State the nature of your direct or indirect financial interest (such as percentage of ownership of equity or membership interests), if any, in each of the Identified Entities, as of January 1, 2014, January 1, 2015, January 1, 2016, July 1, 2016, and the date of your written response to this interrogatory. Interrogatory No. 2: Identify the title, if any, you have held as an employee, officer, manager or director for each of the Identified Entities, as of January 1, 2014, January 1, 2015, January 1, 2016, July 1, 2016, and the date of your written response to this interrogatory. Interrogatory No. 3: State (a) the total amount of Pacific Proton offering proceeds; (b) how much of the total amount of Pacific Proton offering proceeds came in the form of, or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum; and (c) how much of the total amount of Pacific Proton offering proceeds came in the form of, or were designated as or considered “Administrative Fees,” as that term is defined and described in the Pacific Proton offering memorandum. Exhibit 6, Page 115 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 122 of 150 Page ID #:5562 9 Case No. SACV16-00974-CJC (AGRx) 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 Interrogatory No. 4: State the total amount of Pacific Proton offering proceeds that were distributed or transferred, directly or indirectly, to (a) you, (b) your spouse, (c) Wenli Yao or (d) your children. Interrogatory No. 5: State the total amount of Pacific Proton offering proceeds that were distributed or transferred, directly or indirectly, to (a) Overseas Chinese, (b) one or more of the UDG Entities or (c) Delsk. Interrogatory No. 6: State the total amount of Pacific Proton offering proceeds that were expended or otherwise used to develop, construct, manage or operate the cancer treatment facility described in the Pacific Proton offering memorandum. Interrogatory No. 7: State the total amount of Pacific Proton offering proceeds that you caused to be transferred, directly or indirectly, to accounts held outside of the United States. Interrogatory No. 8: State whether all of the Pacific Proton offering proceeds were expended or otherwise used in a manner consistent with the terms and disclosures of the Pacific Proton offering memorandum. If the answer is in the affirmative, explain how that was the case. Interrogatory No. 9: State whether you, your spouse or Wenli Yao currently has or used to have a financial interest, whether through the ownership of voting securities, by contract or otherwise, in any of the UDG Entities. If the answer is that you, your wife or Wenli Yao had or has no such financial interest, explain how that is or was the case; if the answer is that you, your wife or Wenli Yao has or had such financial interest, identify the time period and the nature of those interests. Exhibit 6, Page 116 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 123 of 150 Page ID #:5563 10 Case No. SACV16-00974-CJC (AGRx) 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 Interrogatory No. 10: State whether you, your spouse or Wenli Yao currently has or used to have any control over any of the UDG Entities. If the answer is that you, your wife or Wenli Yao has or had no such control, explain how that is or was the case; if the answer is that you, your wife or Wenli Yao has or had such financial interest, identify the time period and the nature of that control. Interrogatory No. 11: State whether you intended that the Pacific Proton offering proceeds would be used in a manner inconsistent with the terms and disclosures of the Pacific Proton offering memorandum, and if so, approximately when you formed that intent. Interrogatory No. 12: State whether you intended to disclose to investors investing in the Pacific Proton offering that the Pacific Proton offering proceeds would not be expended or otherwise used in a manner consistent with the terms and disclosures of the Pacific Proton offering memorandum, and if so, approximately when you formed that intent. Interrogatory No. 13: State how the full amount of Pacific Proton offering proceeds were disbursed and, in doing so, identify the date of each disbursement, the amount of the disbursement and the recipient of the disbursement. Interrogatory No. 14: State whether you have the ability or financial means to cause the sum of $26,967,818.00 to be transferred to the account of the Court-appointed Monitor in this case, as set forth in the “Repatriation Order” provision, section VIII, of the Amended and Restated Injunction dated and entered October 17, 2016 in this case (Dkt. No. 179). If your answer is no, identify all facts and evidence supporting that assertion. Interrogatory No. 15: (a) State whether you can cause Overseas Chinese to repatriate the Pacific Exhibit 6, Page 117 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 124 of 150 Page ID #:5564 11 Case No. SACV16-00974-CJC (AGRx) 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 Proton offering proceeds that it received. If your answer is no, identify all facts and evidence supporting that assertion. (b) State whether you can cause one or more of the UDG Entities to repatriate the Pacific Proton offering proceeds that any of them received. If your answer is no, identify all facts and evidence supporting that assertion. Interrogatory No. 16: Identify all documents or communications that you contend demonstrate (a) that you did not defraud any investors in the Pacific Proton offering, (b) that you did not misappropriate any Pacific Proton offering proceeds, (c) that that you did not obtain money by means of false statements made to the investors in the Pacific Proton offering, (d) that the allegations in the SEC’s complaint in this action are not true, or (e) that you do not have the ability or financial means to satisfy a potential monetary judgment in this case or the Repatriation Order referenced in Interrogatory No. 14 above. Interrogatory No. 17: Identify all witnesses whom you contend could or would testify in support of a contention (a) that you did not defraud any investors in the Pacific Proton offering, (b) that you did not misappropriate any Pacific Proton offering proceeds, (c) that the allegations in the SEC’s complaint in this action are not true, or (d) that you do not have the ability or financial means to satisfy a potential monetary judgment in this case or the Repatriation Order referenced in Interrogatory No. 14 above. Interrogatory No. 18: Identify all financial accounts of every nature (including, but not limited, to checking, savings, trust, money market, brokerage, investment, securities and other financial accounts) held in your name or in which you have any direct or indirect beneficial interest, and for each such account, identify: (a) the financial institution or brokerage firm; (b) the address of the branch where the account is held; (c) the account number; and (d) the type of account. Exhibit 6, Page 118 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 125 of 150 Page ID #:5565 12 Case No. SACV16-00974-CJC (AGRx) 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 Dated: October 19, 2016 /s/ John W. Berry John W. Berry Attorney for Plaintiff Securities and Exchange Commission Exhibit 6, Page 119 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 126 of 150 Page ID #:5566 1 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 PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. On October 18, 2016, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S FIRST SET OF INTERROGATORIES TO DEFENDANT CHARLES C. LIU on all the parties to this action addressed as stated on the attached service list: ☒ OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. ☐ PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. ☐ EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. ☐ HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. ☐ UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ☒ ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. ☐ E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. ☐ FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: October 18, 2016 /s/ Joseph Law Joseph Law Exhibit 6, Page 120 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 127 of 150 Page ID #:5567 2 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 SEC v. Liu et al. United States District Court—Central District of California Case No. SACV16-00974-CJC (AGRx) SERVICE LIST Counsel for Defendants Charles C. Liu and Xin Wang a/k/a Lisa Wang: Hervé Gouraige, Esq. Sills Cummis & Gross P.C. The Legal Center One Riverfront Plaza Newark, New Jersey 07102 Email: hgouraige@sillscummis.com Lawrence B. Steinberg Buchalter Nemer, P.C. 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017-1730 Email: LSteinberg@buchalter.com Defendants Pacific Proton Therapy Regional Center, LLC and Beverly Proton Center, LLC: (on counsel for Charles C. Liu¸ the controlling shareholder of each) Hervé Gouraige, Esq. Sills Cummis & Gross P.C. The Legal Center One Riverfront Plaza Newark, New Jersey 07102 Email: hgouraige@sillscummis.com Lawrence B. Steinberg Buchalter Nemer, P.C. 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017-1730 Email: LSteinberg@buchalter.com (on Charles C. Liu¸ controlling shareholder of each) c/o Charles C. Liu Laguna Niguel, CA 92677 Exhibit 6, Page 121 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 128 of 150 Page ID #:5568 3 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 Email: charlesliul26@gmail.com Email: charlesliu@me.com Email: liu@pptus.com Defendant Pacific Proton EB-5 Fund, LLC: (on the registered agent) c/o Corporation Trust Company 1209 Orange St. Wilmington, DE 19801 (on Charles C. Liu¸ controlling shareholder of the manager) c/o Charles C. Liu Laguna Niguel, CA 92677 Email: charlesliul26@gmail.com Email: charlesliu@me.com Email: liu@pptus.com Exhibit 6, Page 122 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 129 of 150 Page ID #:5569 Exhibit 7 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 130 of 150 Page ID #:5570 1 Case No. SACV16-00974-CJC (AGRx) 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 JOHN W. BERRY (Cal. Bar No. 295760) Email: berryj@sec.gov GARY Y. LEUNG (Cal. Bar No. 302928) Email: leungg@sec.gov JACOB A. REGENSTREIF (Cal. Bar No. 234734) E-mail: regenstreifj@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director Alka N. Patel, Associate Regional Director John W. Berry, Regional Trial Counsel 444 S. Flower Street, Suite 900 Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Southern Division SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. CHARLES C. LIU; XIN WANG a/k/a LISA WANG; PACIFIC PROTON THERAPY REGIONAL CENTER, LLC; PACIFIC PROTON EB-5 FUND, LLC; and BEVERLY PROTON CENTER, LLC f/k/a LOS ANGELES COUNTY PROTON THERAPY, LLC, Defendants. Case No. SACV16-00974-CJC (AGRx) PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S FIRST SET OF INTERROGATORIES TO DEFENDANT XIN (LISA) WANG PROPOUNDING PARTY: SECURITIES AND EXCHANGE COMMISSION RESPONDING PARTY: XIN (LISA) WANG SET NO.: ONE (Nos. 1-18) In accordance with Rule 33 of the Federal Rules of Civil Procedure, the Securities and Exchange Commission (“SEC”) hereby requests that defendant Xin Exhibit 7, Page 123 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 131 of 150 Page ID #:5571 2 Case No. SACV16-00974-CJC (AGRx) 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 (Lisa) Wang respond to the following interrogatories within 30 days of the date of service hereof. I. INSTRUCTIONS & DEFINITIONS A. Definitions 1. The term “SEC” means the U.S. Securities and Exchange Commission. 2. The term “document(s)” is synonymous in meaning and equal in scope to the usage of the term “documents” in Rule 34(a) of the Federal Rules of Civil Procedure and the term “writings and recordings” in Rule 1001(l) of the Federal Rules of Evidence, and shall include any drafts, originals, and non-identical copies of any kind, written, typewritten, printed, recorded, computer-generated or graphic material, however produced, reproduced or compiled, including, but not limited to, any correspondence, memoranda, letters, notes, instructions, contracts, agreements, books, journals, ledgers, statements, reports, studies, bills, invoices, articles, diaries, minutes, calendars, analyses, projections, transcripts, declarations, witness statements, interview reports, summaries, notes of personal or telephonic conversations, e-mail, summaries or notes of any meetings or conferences, and all electronically stored information including electronic or computerized data compilations. A draft or non-identical copy is a separate document within the meaning of this term. 3. The term “communication(s)” means any written, oral, telephonic or other utterances of any nature whatsoever, shared, shown, and/or transferred between and/or among any two and/or more persons, including, but not limited to, any statements, inquiries, discussions, conversations, dialogues, correspondence, e-mail, consultations, negotiations, agreements, understandings, meetings, letters, notations, telegrams, advertisements, declarations, transcripts, interviews, interview reports, blogs, chat room or other Internet postings, and all other documents. A draft or non- identical copy is a separate communication within the meaning of this term. 4. The term “identify” means to describe with particularity, in full detail, Exhibit 7, Page 124 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 132 of 150 Page ID #:5572 3 Case No. SACV16-00974-CJC (AGRx) 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 all relevant facts about the subject matter, including, but not limited to, names, dates, relationships, functions, addresses, purposes, objectives, results and other information which could lead to the discovery of admissible evidence. 5. The term “identify” when used with respect to a document or communication means to identify the document or communication by exhibit number or bates number(s) if previously produced in this action or the SEC’s non-public investigation that preceded this action; or if the document or communication has not been previously produced in this action or the SEC’s prior investigation, to set forth the following information: (a) the nature or type of document or communication (e.g., telephone communication, letter, e-mail or memorandum); (b) the date the document or communication was made: (c) the author(s) of the document or communication; (d) each person who received a copy of the document or communication or was informed of its contents; (e) the person who now has the document or communication or was last known to have it; and (f) the general subject matter and, if applicable, the title of the document or communication. 6. The term “concerning” shall mean discussing, reflecting, evidencing, constituting, mentioning, pertaining to, assessing, embodying, recording, stating, describing, supporting, contradicting, contravening, touching upon or summarizing. 7. The term “person(s)” means any natural individual(s) and/or natural person(s), in any capacity whatsoever, or any entity or organization including divisions, subsidiaries, departments, and other units thereof, and shall include, but not be limited to, a public or private corporation(s), partnership(s), professional corporation(s), limited liability company(ies), business trust(s), banking institution(s), firm(s), joint venture(s), voluntary or unincorporated association(s), organizations(s), proprietorship(s), trust(s), estate(s), governmental agency(ies), commission(s), bureau(s) and/or department(s), and/or any other legal entity. 8. The terms “you” and “your” mean defendant Xin (Lisa) Wang, and all persons, agents, attorneys, representatives or other persons or entities acting or Exhibit 7, Page 125 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 133 of 150 Page ID #:5573 4 Case No. SACV16-00974-CJC (AGRx) 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 purporting to act on her behalf, including, but not limited to, your spouse or Lance Gong, Richard Zheng and Stan Lam at Marcum, LLP. 9. The term “your spouse” means defendant Charles C. Liu, and all persons, agents, attorneys, representatives or other persons or entities acting or purporting to act on his behalf. 10. The term “your children” means any of your children, including, but not limited to, . 11. The term “Beverly Proton” means defendant Beverly Proton Center, LLC f/k/a Los Angeles County Proton Therapy, LLC. 12. The term “Pacific Proton” means defendant Pacific Proton Therapy Regional Center, LLC. 13. The term “PPEB5 Fund” means Pacific Proton EB-5 Fund, LLC. 14. The term “Overseas Chinese” means Overseas Chinese Immigration Consulting Ltd., and any and all of its U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on its behalf. 15. The term “UDG Entities” means United Damei Group, United Damei Investment Company, Ltd., Beijing Pacific Damei Consulting Co. Ltd., and/or United Damei US, and any and all of their U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on their behalf. 16. The term “Delsk” means Hong Kong Delsk Business Co., Ltd., and any and all of its U.S. and non-U.S. parents, subsidiaries, affiliates, predecessors or successors, or any other persons or entities acting or purporting to act on its behalf. 17. The term “Identified Entities” means the following: a. Pacific Proton Therapy Regional Center LLC; b. Pacific Proton EB-5 Fund LLC; c. Beverly Proton Center LLC; Exhibit 7, Page 126 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 134 of 150 Page ID #:5574 5 Case No. SACV16-00974-CJC (AGRx) 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 d. Los Angeles County Proton Therapy, LLC; e. Overseas Chinese Immigration Consulting Ltd.; f. United Damei Group; g. United Damei Investment Company, Ltd.; h. Beijing Pacific Damei Consulting Co. Ltd.; i. United Damei US; j. United MPH Ventures LLC; k. MP Medical Hotel Inc.; l. SP MPH Fund LP; m. SC MPH Management LLC; n. Pacific Medical Regional Center LLC; o. Beverly MP Hotel, Inc.; p. Beverly Medical Hotel; q. COH Beverly Cancer Center; r. Root Medical Peace Corp (U.S.A.); s. Southern California Medical/Proton/Hotel Center, LLC CLCC International Inc.; t. USREDA Law, Inc.; u. Root International Peace Corps; v. Beverly International Cancer Center, LLC; and/or w. JC Oriental Pearl, Inc. 18. The term “Pacific Proton offering memorandum” means Exhibit 5 to the Declaration of Jacob A. Regenstreif in Support of Plaintiff Securities and Exchange Commission’s Ex Parte Application for a Temporary Restraining Order, Order to Show Cause Why a Preliminary Injunction Should Not Be Granted, and Orders (1) Freezing Assets; (2) Repatriating Assets; (3) Requiring Accountings; (4) Prohibiting the Destruction of Documents (Dkt. No. 7 in this action). 19. The term “Pacific Proton offering” means the offering of membership Exhibit 7, Page 127 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 135 of 150 Page ID #:5575 6 Case No. SACV16-00974-CJC (AGRx) 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 units in PPEB5 Fund, as described in the Pacific Proton offering memorandum. 20. The term “Pacific Proton offering proceeds” means the total amount of money raised from or delivered by investors who subscribed to the Pacific Proton offering or who otherwise delivered money in response to that offering. 21. The term “account” shall mean all financial accounts of every nature (including, but not limited, to checking, savings, trust, money market, brokerage, investment, securities and other financial accounts). 22. The term “control” (including the terms “controlling” or “controlled by”) means possessing, directly or indirectly, the power to direct or cause the direction of, or the power over the decision-making concerning the management, operation and policies of the entity in question, whether through the ownership of voting securities, by contract or otherwise. B. Instructions 1. In responding to these interrogatories, you are required to obtain and furnish all responsive information that is available to you and to any of your representatives, agents, employees or attorneys, and to obtain and furnish all such responsive information that is in your actual or constructive possession, custody or control, or in the actual or constructive possession, custody or control of any of your representatives, agents, employees or attorneys. 2. These interrogatories are continuing in nature and you are required to promptly supplement or amend your responses to the interrogatories if, after the time of your initial responses, you learn that any response is or has become, in some material respect, incomplete or incorrect, to the full extent provided for by Federal Rule of Civil Procedure 26(e). 3. You are requested to answer each interrogatory separately and completely in writing under oath. Your written response to the interrogatories is to be signed and verified by the person making it, and the objections signed by the attorney making them, as required by Federal Rule of Civil Procedure 33(b). Exhibit 7, Page 128 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 136 of 150 Page ID #:5576 7 Case No. SACV16-00974-CJC (AGRx) 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. If you object to an interrogatory, and that objection pertains to only a part of the interrogatory, or word, phrase or clause in it, then you are required to state your objection to that portion only and to respond to the remainder of the interrogatory, using your best efforts to do so. No part of an interrogatory shall be left unanswered merely because you interpose an objection to another part of an interrogatory. 5. If you withhold any information, or documents or communications asked to be identified, which is responsive to an interrogatory, based on a claim of privilege or any other reason, then provide the following information concerning the withheld information, document or communication: (a) the nature or type of information that is being withheld (e.g., telephone communication, letter, e-mail or memorandum); (b) a general description of the subject matter of the information that is being withheld; (c) the date the responsive information was made; (d) the name, address, and telephone number and occupation of each person who (i) made or authored the information or (ii) received (or was intended to receive) the information, or was otherwise informed about the information; and (e) a statement of the privilege or other reason claimed to withhold the information or otherwise object to the interrogatory. 6. If you identify any document(s) or communication(s) in your responses to these interrogatories that no longer exist, cannot be located or are not in your possession, custody or control, then in your response, identify those document(s) or communication(s), as well as: (a) the author(s); (b) the date the responsive material was created; (c) each person who received a copy of the responsive material or was informed of its contents; (d) the person who now has the responsive material or was last known to have it; (e) the general subject matter and, if applicable, the title of the responsive material; (f) the type of such responsive material (e.g., telephone communication, letter, e-mail or memorandum); (g) the size of the material (e.g., number of pages); (h) a detailed description of the responsive material; and (i) a detailed and complete explanation of why such responsive material is no longer in Exhibit 7, Page 129 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 137 of 150 Page ID #:5577 8 Case No. SACV16-00974-CJC (AGRx) 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 your possession, custody, or control. 7. For each of the interrogatories below, in order to make the interrogatory inclusive rather than exclusive, the past tense shall be construed to include the present tense, and vice versa. Moreover, “and” and “or” as used herein are both conjunctive and disjunctive, and “any” includes the word “all” and vice versa. 8. No agreement by the SEC or its staff purporting to modify, limit, or otherwise vary these interrogatories is binding on the SEC or its staff unless confirmed or acknowledged in writing by the SEC or its staff. II. INTERROGATORIES Interrogatory No. 1: State the nature of your direct or indirect financial interest (such as percentage of ownership of equity or membership interests), if any, in each of the Identified Entities, as of January 1, 2014, January 1, 2015, January 1, 2016, July 1, 2016, and the date of your written response to this interrogatory. Interrogatory No. 2: Identify the title, if any, you have held as an employee, officer, manager or director for each of the Identified Entities, as of January 1, 2014, January 1, 2015, January 1, 2016, July 1, 2016, and the date of your written response to this interrogatory. Interrogatory No. 3: State (a) the total amount of Pacific Proton offering proceeds; (b) how much of the total amount of Pacific Proton offering proceeds came in the form of, or were designated as or considered “Capital Contributions,” as that term is defined and described in the Pacific Proton offering memorandum; and (c) how much of the total amount of Pacific Proton offering proceeds came in the form of, or were designated as or considered “Administrative Fees,” as that term is defined and described in the Pacific Proton offering memorandum. Exhibit 7, Page 130 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 138 of 150 Page ID #:5578 9 Case No. SACV16-00974-CJC (AGRx) 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 Interrogatory No. 4: State the total amount of Pacific Proton offering proceeds that were distributed or transferred, directly or indirectly, to (a) you, (b) your spouse, (c) Wenli Yao or (d) your children. Interrogatory No. 5: State the total amount of Pacific Proton offering proceeds that were distributed or transferred, directly or indirectly, to (a) Overseas Chinese, (b) one or more of the UDG Entities or (c) Delsk. Interrogatory No. 6: State the total amount of Pacific Proton offering proceeds that were expended or otherwise used to develop, construct, manage or operate the cancer treatment facility described in the Pacific Proton offering memorandum. Interrogatory No. 7: State the total amount of Pacific Proton offering proceeds that you caused to be transferred, directly or indirectly, to accounts held outside of the United States. Interrogatory No. 8: State whether all of the Pacific Proton offering proceeds were expended or otherwise used in a manner consistent with the terms and disclosures of the Pacific Proton offering memorandum. If the answer is in the affirmative, explain how that was the case. Interrogatory No. 9: State whether you, your spouse or Wenli Yao currently has or used to have a financial interest, whether through the ownership of voting securities, by contract or otherwise, in any of the UDG Entities. If the answer is that you, your spouse or Wenli Yao had or has no such financial interest, explain how that is or was the case; if the answer is that you, your spouse or Wenli Yao has or had such financial interest, identify the time period and the nature of those interests. Exhibit 7, Page 131 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 139 of 150 Page ID #:5579 10 Case No. SACV16-00974-CJC (AGRx) 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 Interrogatory No. 10: State whether you, your spouse or Wenli Yao currently has or used to have any control over any of the UDG Entities. If the answer is that you, your spouse or Wenli Yao has or had no such control, explain how that is or was the case; if the answer is that you, your spouse or Wenli Yao has or had such financial interest, identify the time period and the nature of that control. Interrogatory No. 11: State whether you intended that the Pacific Proton offering proceeds would be used in a manner inconsistent with the terms and disclosures of the Pacific Proton offering memorandum, and if so, approximately when you formed that intent. Interrogatory No. 12: State whether you intended to disclose to investors investing in the Pacific Proton offering that the Pacific Proton offering proceeds would not be expended or otherwise used in a manner consistent with the terms and disclosures of the Pacific Proton offering memorandum, and if so, approximately when you formed that intent. Interrogatory No. 13: State how the full amount of Pacific Proton offering proceeds were disbursed and, in doing so, identify the date of each disbursement, the amount of the disbursement and the recipient of the disbursement. Interrogatory No. 14: State whether you have the ability or financial means to cause the sum of $26,967,818.00 to be transferred to the account of the Court-appointed Monitor in this case, as set forth in the “Repatriation Order” provision, section VIII, of the Amended and Restated Injunction dated and entered October 17, 2016 in this case (Dkt. No. 179). If your answer is no, identify all facts and evidence supporting that assertion. Interrogatory No. 15: (a) State whether you can cause Overseas Chinese to repatriate the Pacific Exhibit 7, Page 132 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 140 of 150 Page ID #:5580 11 Case No. SACV16-00974-CJC (AGRx) 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 Proton offering proceeds that it received. If your answer is no, identify all facts and evidence supporting that assertion. (b) State whether you can cause one or more of the UDG Entities to repatriate the Pacific Proton offering proceeds that any of them received. If your answer is no, identify all facts and evidence supporting that assertion. Interrogatory No. 16: Identify all documents or communications that you contend demonstrate (a) that you did not defraud any investors in the Pacific Proton offering, (b) that you did not misappropriate any Pacific Proton offering proceeds, (c) that the allegations in the SEC’s complaint in this action are not true, or (d) that you do not have the ability or financial means to satisfy a potential monetary judgment in this case or the Repatriation Order referenced in Interrogatory No. 14 above. Interrogatory No. 17: Identify all documents or communications that you contend demonstrate (a) that you did not defraud any investors in the Pacific Proton offering, (b) that you did not misappropriate any Pacific Proton offering proceeds, (c) that that you did not obtain money by means of false statements made to the investors in the Pacific Proton offering, (d) that the allegations in the SEC’s complaint in this action are not true, or (e) that you do not have the ability or financial means to satisfy a potential monetary judgment in this case or the Repatriation Order referenced in Interrogatory No. 14 above. Interrogatory No. 18: Identify all financial accounts of every nature (including, but not limited, to checking, savings, trust, money market, brokerage, investment, securities and other financial accounts) held in your name or in which you have any direct or indirect beneficial interest, and for each such account, identify: (a) the financial institution or brokerage firm; (b) the address of the branch where the account is held; (c) the account number; and (d) the type of account. Exhibit 7, Page 133 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 141 of 150 Page ID #:5581 12 Case No. SACV16-00974-CJC (AGRx) 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 Dated: October 19, 2016 /s/ John W. Berry John W. Berry Attorney for Plaintiff Securities and Exchange Commission Exhibit 7, Page 134 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 142 of 150 Page ID #:5582 1 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 PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. On October 19, 2016, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S FIRST SET OF INTERROGATORIES TO DEFENDANT XIN (LISA) WANG on all the parties to this action addressed as stated on the attached service list: ☒ OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. ☐ PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. ☐ EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. ☐ HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. ☐ UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ☒ ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. ☐ E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. ☐ FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: October 19, 2016 /s/ Joseph Law Joseph Law Exhibit 7, Page 135 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 143 of 150 Page ID #:5583 2 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 SEC v. Liu et al. United States District Court—Central District of California Case No. SACV16-00974-CJC (AGRx) SERVICE LIST Counsel for Defendants Charles C. Liu and Xin Wang a/k/a Lisa Wang: Hervé Gouraige, Esq. Sills Cummis & Gross P.C. The Legal Center One Riverfront Plaza Newark, New Jersey 07102 Email: hgouraige@sillscummis.com Lawrence B. Steinberg Buchalter Nemer, P.C. 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017-1730 Email: LSteinberg@buchalter.com Defendants Pacific Proton Therapy Regional Center, LLC and Beverly Proton Center, LLC: (on counsel for Charles C. Liu¸ the controlling shareholder of each) Hervé Gouraige, Esq. Sills Cummis & Gross P.C. The Legal Center One Riverfront Plaza Newark, New Jersey 07102 Email: hgouraige@sillscummis.com Lawrence B. Steinberg Buchalter Nemer, P.C. 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017-1730 Email: LSteinberg@buchalter.com (on Charles C. Liu¸ controlling shareholder of each) c/o Charles C. Liu Laguna Niguel, CA 92677 Exhibit 7, Page 136 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 144 of 150 Page ID #:5584 3 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 Email: charlesliul26@gmail.com Email: charlesliu@me.com Email: liu@pptus.com Defendant Pacific Proton EB-5 Fund, LLC: (on the registered agent) c/o Corporation Trust Company 1209 Orange St. Wilmington, DE 19801 (on Charles C. Liu¸ controlling shareholder of the manager) c/o Charles C. Liu Laguna Niguel, CA 92677 Email: charlesliul26@gmail.com Email: charlesliu@me.com Email: liu@pptus.com Exhibit 7, Page 137 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 145 of 150 Page ID #:5585 Exhibit 8 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 146 of 150 Page ID #:5586 U.S. Securities and Exchange Commission Division of Enforcement Prejudgment Interest Report Liu and Wang Prejudgment Interest Quarter Range Annual Rate Period Rate Quarter Interest Principal+Interest Violation Amount $26,733,018.81 05/01/2016-05/31/2016 4% 0.33% $89,110.06 $26,822,128.87 Prejudgment Violation Range Quarter Interest Total Prejudgment Total 05/01/2016-05/31/2016 $89,110.06 $26,822,128.87 Page 1 of 1 12/30/2016http://enforcenet/PJIC%20Web/Data_Entry.htmlExhibit 8, Page 138 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 147 of 150 Page ID #:5587 1 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 PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. On January 4, 2017, I caused to be served the document entitled DECLARATION OF GARY Y. LEUNG IN SUPPORT OF PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANTS LIU AND WANG on all the parties to this action addressed as stated on the attached service list: ☐ OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. ☐ PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. ☐ EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. ☐ HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. ☒ UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ☒ ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. ☒ E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. ☐ FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: January 4, 2017 /s/ Gary Y. Leung Gary Y. Leung Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 148 of 150 Page ID #:5588 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 149 of 150 Page ID #:5589 Case 8:16-cv-00974-CJC-AGR Document 199-2 Filed 01/04/17 Page 150 of 150 Page ID #:5590