How a California woman conned Chinese investors out of $23m for a resort she never built

Ruixue Shi spent investors’ money on clothes, cars, restaurants, travel, and ‘styling’ services, the Department of Justice says

According to the Department of Justice, Ruixue Shi used the messaging app WeChat to lure in Chinese investors (AFP via Getty Images)

A real estate executive told her investors she was spending their money on construction. In fact, she had spent it on clothes.

That’s according to the guilty plea from Ruixue “Serena” Shi, a 37-year-old California woman who said she managed a company called Global House Buyer LLC. From 2015 to 2018, Shi raised about $23m from Chinese investors for a new luxury hotel and condo complex in the Coachella Valley.

She never built it. Instead, the US Department of Justice says, Shi “used the money to finance her lavish lifestyle.”

“After Shi received the victim funds, she spent nearly $300,000 in victim funds to purchase two luxury cars,” the DOJ said in a press release. “She also spent approximately $2.2m in victim funds at a company that provided luxury travel and concierge services. Shi also admitted spending almost $800,000 in victim funds at a full-service styling agency in Beverly Hills, as well as hundreds of thousands of dollars of victims’ money on high-end clothing designers, restaurants and other stores.”

All told, Shi misappropriated $22,833,441. She has pleaded guilty to one count of wire fraud.

How did one woman manage to misspend so much money? The Justice Department says Shi wove an intricate web of lies to lure in trusting investors.

She gave presentations at hotels. She chatted with investors over WeChat, a Chinese messaging app. And she was detailed: Shi picked out 47 specific acres of land in Coachella where she said she would build her glamorous complex.

Perhaps most important of all, Shi managed to snooker a legitimate company, SBE Entertainment, into letting her use one of its brand names: “Hyde.” When Shi pitched her fictitious development project to investors, she called it “Hyde Resorts.”

“Hyde Resorts was supposed to be a 207-unit luxury condominium and hotel complex with 95,000 square feet of conference facilities, a pool, spa, fitness center and other amenities,” the Justice Department explained.

The money started pouring in – mostly from China. In one ill-fated wire transfer, an unwitting investor sent $50,000 from a Chinese bank directly to Shi’s bank account in Los Angeles. He was far from the only one, and the cash gradually added up to tens of millions of dollars.

Eventually, the FBI started investigating the con, and Shi was arrested in August. She has been in federal custody since then. On 28 March, she will attend her sentencing hearing, where she could face up to 20 years in federal prison – a considerably less plush environment than what she’s used to.