ANSWER TO SECOND AMENDED CLASS-ACTION AND …

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

Case No. 9:20-cv-80102-CANNON/BRANNON

TING PENG and LIN FU, on behalf of

themselves individually and all others similarly

situated, and derivatively on behalf of

HARBOURSIDE FUNDING, LP, a Florida

limited partnership,

Plaintiffs,

vs.

NICHOLAS A. MASTROIANNI II;

HARBOURSIDE FUNDING GP, LLC, a

Florida limited liability company; and

HARBOURSIDE PLACE, LLC, a Delaware

limited liability company,

Defendants,

and

HARBOURSIDE FUNDING, LP, a Florida

limited partnership,

Nominal Defendant.

ANSWER TO SECOND AMENDED CLASS-ACTION AND

DERIVATIVE COMPLAINT AND COUNTERCLAIMS

OF NICHOLAS A. MASTROIANNI II, HARBOURSIDE

FUNDING GP, LLC AND HARBOURSIDE PLACE, LLC

Defendants Nicholas A. Mastroianni II (“Mastroianni”), Harbourside Funding GP, LLC

and Harbourside Place, LLC (collectively, the “Defendants”), as and for their Answer and

Counterclaims to the Second Amended Class-Action and Derivative Complaint (the “Complaint”),

filed by Plaintiffs Ting Peng and Lin Fu, respectfully allege as follows:

Case 9:20-cv-80102-AMC Document 99 Entered on FLSD Docket 05/17/2021 Page 1 of 28

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AS TO THE INTRODUCTION

1. Deny the allegations set forth in the first sentence of paragraph 1, except admit that

defendant Mastroianni was involved in the finance and development of a mixed-use commercial

development in Jupiter, Florida, financed in part by a loan to Harbourside Place LLC from

Harbourside Funding LP (the “Funding Partnership”), the limited partners of whom were

immigrant investors who applied for permanent residence in the United States under the EB-5

Program. Admit the allegations set forth in the second sentence of paragraph 1.

2. Deny the allegations set forth in paragraph 2 of the Complaint, except admit that

the Funding Partnership sold 199 units of membership in the Funding Partnership, and refer to the

transactional documents for the actual terms and conditions.

3-6. Deny the allegations set forth in paragraphs 3 through 6 of the Complaint, and refer

to the documents referenced therein for their actual terms and conditions.

7-8. Deny the allegations set forth in paragraph 7 through 8 of the Complaint, except

acknowledge that Plaintiffs purport to proceed as alleged therein, and deny that they are entitled

to any of the relief sought.

AS TO THE PARTIES

9. Deny knowledge or information sufficient to form a belief as to the truth of the

allegations set forth in paragraph 9, except admit that Plaintiff Ting Peng is an individual

participant in the EB-5 program who became a limited partner of the Funding Partnership on or

about April 2, 2013.

10. Deny knowledge or information sufficient to form a belief as to the truth of the

allegations set forth in paragraph 10, except admit that Plaintiff Lin Fu is an individual participant

in the EB-5 program that became a limited partner of the Funding Partnership on or about

December 16, 2011.


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11. Deny the allegations in paragraph 11, except admit that Mastroianni is an individual

who resides in Palm Beach County.

12. Deny the allegations set forth in paragraph 12 of the Complaint, except admit that

Florida Regional Center, LLC is a Delaware limited liability company, and state that by Order

dated May 3, 2021, Florida Regional Center, LLC was dismissed from this action, with prejudice.

13. Admit the allegations in the first sentence of paragraph 13. Deny the allegations in

the second sentence of paragraph 13.

14. Admit the allegations in the first sentence of paragraph 14. Deny the allegations

in the second sentence of paragraph 14.

15. Deny the allegations set forth in paragraph 15 of the Complaint.

AS TO JURISDICTION AND VENUE

16. The allegations set forth in paragraph 16 of the Complaint state a legal conclusion

to which no response is required. To the extent the allegations set forth in paragraph 16 are deemed

to contain facts to which a response is required, Defendants deny the allegations set forth in

paragraph 16 of the Complaint.

17. The allegations set forth in paragraph 17 of the Complaint state a legal conclusion

to which no response is required. To the extent the allegations set forth in paragraph 17 are deemed

to contain facts to which a response is required, Defendants deny the allegations set forth in

paragraph 17 of the Complaint.

AS TO THE GENERAL ALLEGATIONS

18. Paragraph 18 purports to characterize statutes, which speak for themselves.

Defendants respectfully refer to the statutes cited therein for their full and accurate contents.

19-21. Deny the allegations set forth in paragraphs 19 through 21, and refer generally to

the EB-5 statutes, policies, rules and regulations for the full terms and scope thereof.


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22. Admit the allegations set forth in paragraph 22 of the Complaint.

23. Deny the allegations in paragraph 23 of the Complaint.

24. Deny the allegations set forth in paragraph 24, and state that each Plaintiff

specifically represented, as a condition to acceptance as a limited partner of the Funding

Partnership that he or she did not rely on any “advertising materials,” and that if any Plaintiff

believed that repayment was guaranteed, he or she could not qualify for EB-5 immigration status

or a green card, because the investment had to be “at risk” in order to so qualify.

25-29. Deny the allegations set forth in paragraphs 25 through 29, which purport to

characterize the terms of the Offering Documents, and refer to the Offering Documents for their

full and accurate contents.

30. Deny the allegations set forth in paragraph 30, and to the extent the allegations in

paragraph 30 purport to characterize the terms of the Offering Documents, refer to the Offering

Documents for their full and accurate contents.

31. Deny the allegations set forth in paragraph 31, which purport to characterize the

terms of the Offering Documents, and refer to the Offering Documents for their full and accurate

contents.

32. Deny the allegations set forth in paragraph 32 of the Complaint, and state that the

principals of Harbourside Place reserved the right to sell less than 200 membership units for any

reason.

33-35. Deny the allegations set forth in paragraphs 33 through 35, and state that the

transactions complained of therein were consistent with the terms of the Offering Documents,

disclosed in writing to the EB-5 Investors and authorized, ratified and directed by the written

consent of the limited partners in 2014—including the specific, written approval of the two named

Plaintiffs.


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paragraph 36 purport to characterize the terms of the April 2013 Letter, refer to the April 2013

Letter for its full and accurate contents.


terms of the April 2013 Letter, and refer to the April 2013 Letter for its full and accurate contents.


paragraph 38 purport to characterize the terms of the April 2013 Letter, refer to the April 2013

Letter for its full and accurate contents.


paragraph 39 purport characterize the terms of the April 2013 Letter, refer to the April 2013 Letter

for its full and accurate contents.

40-42. Deny the allegations set forth in paragraphs 40 through 41 of the Complaint, which

purport to characterize the terms of the April 2013 Letter, and refer to the April 2013 Letter for its

full and accurate contents.


terms of the March 2014 Report, and refer to the March 2014 Report for its full and accurate

contents.

44-47. Deny the allegations set forth in paragraphs 44 through 47 of the Complaint.

48. Admit that a majority of the Limited Partners declined to ratify a proposed

resolution provided in December 2016, demonstrating that the Limited Partners knew how to agree

or not agree to proposals.

49-50. Deny the allegations set forth in paragraphs 49 through 50, and to the extent the

allegations in paragraphs 49 through 50 purport to characterize the terms of the August 25, 2017

Letter, refer to the August 25, 2017 for its full and accurate contents.


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paragraph 51 purport to characterize the terms of the October 13, 2017 Letter and the Limited

Partnership Agreement, refer to those documents for their full and accurate contents.


terms of the October 13, 2017 Letter, and refer to the October 13, 2017 for its full and accurate

contents.



terms of the Offering Documents, and refer to the Offering Documents for their full and accurate

contents.


AS TO THE VEIL-PIERCING ALLEGATIONS

63-64. Deny the allegations set forth in paragraphs 63 through 64 of the Complaint, and

state a six-year-old allegation in a dismissed lawsuit does not provide adequate basis to pierce the

corporate veil, particularly where the threatened basis, i.e., “serious problems” with the USCIS or

SEC never came to pass, and each Plaintiff successfully obtained their green cards.

AS TO THE DERIVATIVE ACTION ALLEGATIONS

65. Deny that a derivative action is appropriate, except admit that the Plaintiffs purport

to proceed as alleged in paragraph 65.

66. The allegations set forth in paragraph 66 state a legal conclusion to which no

response is required. To the extent a response is required, Defendants deny the allegations set

forth in paragraph 66, and state that because Plaintiffs only became limited partners as a result of

their breaches of representations and warranties, they never properly became limited partners and

have no standing to pursue derivative claims.


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67. Deny the allegations set forth in paragraph 67 of the Complaint.

AS TO DEMAND FUTILITY

68. Deny the allegations set forth in paragraph 68, including subparagraphs (a) through

(f) alleged therein.

AS TO THE CLASS ALLEGATIONS

69. Deny that a Class action is appropriate, except admit that Plaintiffs purport to

proceed as alleged in paragraph 69.



forth in paragraph 70.

71. Deny that Plaintiffs are entitled to the relief sought in paragraph 71.

72-78. Defendants deny the allegations set forth in paragraphs 72 through 78, except admit

that Defendants have last known addresses for Limited Partners of the Funding Partnership; and

Defendants state that two of the those alleged “questions of law and fact common to the Class”

described in paragraphs 77. (a), (b) and (c) have already been dismissed with prejudice.

AS TO THE CLAIMS FOR RELIEF

As to Count I – Declaratory Relief on Behalf of Plaintiffs and the Proposed Class

79. Deny that Plaintiffs are entitled to seek the relief, individually and/or on behalf of

the other limited partners.

80-82. Deny the allegations set forth in paragraphs 80 through 82 of the Complaint, except

admit the allegation in paragraph 82 that Defendants dispute Plaintiffs’ allegations.

As to Count II – Breach of Fiduciary Duties Owed to the Funding Partnership

83. Deny that Plaintiffs are entitled to seek derivative relief.


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85-89. Deny the allegations set forth in paragraphs 85 through 89 of the Complaint,

including subparagraphs 85. (a) through (h).

As to Count III – Breach of Fiduciary Duties Owed to Plaintiffs and the Proposed Class

90. Deny that Plaintiffs are entitled to seek relief, individually and/or on behalf of the

proposed class.




92-96. Deny the allegations set forth in paragraphs 92 through 96 of the Complaint,

including subparagraphs 92. (a) through (f) and subparagraphs 93. (i) through (l). [There are no

subparagraphs (g) or (h) in the Complaint].

As to Count IV – Aiding and Abetting Breaches of Fiduciary Duty

to the Funding Partnership

97-101. By Order dated May 3, 2021, this Count was dismissed with prejudice, so no

response is required to paragraphs 97 through 101. To the extent any response is required,

Defendants deny the allegations in paragraphs 97-101, including subparagraphs 98. (a) through

(h).

As to Count V – Aiding and Abetting Breaches of Fiduciary Duty to Plaintiffs

and the Proposed Class



Defendants deny the allegations in paragraphs 102 through 107.


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As to Count VI – Breach of Contract


109-110. Admit the allegations set forth in paragraphs 109 through 110 of the Complaint.


As to Count VII – Conversion



Defendants deny the allegations in paragraphs 118-125.

As to Count VIII – Civil Theft



Defendants deny the allegations in paragraphs 126-138.

As to Count IX – Accounting


140. Deny that Plaintiffs are entitled to equitable relief.


AS TO THE PRAYER FOR RELIEF

143. To the extent not otherwise denied, Defendants deny that Plaintiffs are entitled to

any relief or remedy in the “Wherefore” clauses set forth in the Complaint, including

subparagraphs (1) through (14) alleged therein.

AFFIRMATIVE AND OTHER DEFENSES

144. Defendants state the following affirmative defenses without assuming any burden

of proof or persuasion that properly lies with the Plaintiffs.


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AS AND FOR A FIRST DEFENSE

145. Each of the remaining Counts in the Complaint fails to state a claim upon which

relief may be granted.

AS AND FOR A SECOND DEFENSE

146. Defendants have a defense based upon documentary evidence received by and/or

executed by the Plaintiffs, including but not limited to the Subscription Agreement, Partnership

Agreement, Offering Documents, and 2014 Ordinary Resolution of the Partnership.

AS AND FOR A THIRD DEFENSE

147. Plaintiffs are equitably estopped from maintaining their claims.

AS AND FOR A FOURTH DEFENSE

148. The relief sought in the Complaint is barred by the applicable statutes of limitations.

AS AND FOR A FIFTH DEFENSE

149. The asserted claims are barred, in whole or in part, by the doctrines of waiver,

laches, acquiescence and/or ratification.

AS AND FOR A SIXTH DEFENSE

150. The actions of the General Partner were undertaken in good faith in accordance

with the terms of the Partnership Agreement, and the General Partner is protected by the

contractually agreed limitations on liability set forth therein.

AS AND FOR A SEVENTH DEFENSE

151. Plaintiffs have no right or standing to assert derivative claims.

AS AND FOR AN EIGHTH DEFENSE

152. This action is not suitable as a class action and Plaintiffs and their proposed counsel

do not qualify as class representatives or class counsel.


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AS AND FOR A NINTH DEFENSE

153. Plaintiffs are not entitled to any relief because if, arguendo, their allegations in the

Complaint and at deposition were true, then Plaintiffs have committed a fraud against the

Defendants and lied on their sworn immigration petitions.

AS AND FOR A TENTH DEFENSE

154. The claims asserted are barred by the doctrine of judicial estoppel because Plaintiffs

signed and swore to a set of facts in their immigration petitions, which were administratively

adjudicated and approved by the United States Citizenship and Immigration Services division of

the United States Department of Homeland Security, that are contradicted by the allegations in the

Complaint. Because the Plaintiffs obtained the immigration benefits for themselves and for their

families for which they had petitioned, they are estopped from asserting facts different from those

in their immigration petitions, and their claims are barred.

AS AND FOR AN ELEVENTH DEFENSE

155. Plaintiffs’ claims are barred and/or any compensable damages reduced by

Plaintiffs’ contributory or comparative fault/negligence, including without limitation Plaintiffs’

failure to request translations of the Offering Documents and/or consult with independent advisors

prior to purchasing their membership interests in the Funding Partnership as they represented and

warranted they had done.

AS AND FOR A TWELFTH DEFENSE

156. Defendants reserve the right to amend this Answer, including, without limitation,

to raise and rely upon any defenses that become available or apparent during discovery.


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COUNTERCLAIMS

Nicholas A. Mastroianni II, Harbourside Funding GP, LLC and Harbourside Place, LLC

(collectively, the “Counterclaim Plaintiffs”), respectfully allege as follows for their Counterclaims

against Ting Peng and Lin Fu (together, the “Counterclaim Defendants”).

INTRODUCTION

1. The Counterclaims involve fraud, misrepresentation and breach of warranty by the

two Plaintiffs and Counterclaim Defendants, as revealed in their depositions in this action, and a

contractual duty to indemnify set forth in the agreements signed by the Counterclaim Defendants.

The Counterclaim Defendants, Chinese nationals, obtained green cards for themselves and their

families through a years-long series of lies, investment fraud, immigration fraud, lies to the

Department of Homeland Security, and lies to the very partnership in which they invested.

2. The Counterclaim Defendants are each millionaire Chinese citizens who sought to,

and in fact did, immigrate to the United States with their families, and obtained green cards through

the United States Government-approved EB-5 Visa Program (the “EB-5 Program”). The EB-5

Program (which stands for employment based-fifth preference) permits foreign investors to

immigrate and apply for permanent residency if they invest $500,000 in a new commercial

enterprise that is an “at risk” investment and creates at least ten (10) new permanent jobs per

investor and the funds remain at risk for the required period of time.

3. To qualify for Counterclaim Plaintiffs’ EB-5 project (a loan to finance development

of Harbourside Place in Jupiter, Florida), each Counterclaim Defendant was required to submit an

application to Counterclaim Plaintiffs, and to make a series of material representations and

warranties in order to qualify for consideration as an immigrant investor.

4. Counterclaim Defendants made those representations and warranties in writing to

Counterclaim Plaintiffs, submitted and repeated them to the Department of Homeland Security in


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their immigration petitions, were accepted as partners of Harbourside Funding L.P. and then had

their immigration petitions granted and obtained their green cards.

5. In their deposition testimony, Counterclaim Defendants revealed that their

representations and warranties were false, and consequently, their immigration petitions similarly

contained the false representations and warranties. Counterclaim Plaintiffs relied on the

representations and warranties in accepting Counterclaim Defendants into the partnership, in

paying substantial investment returns to Counterclaim Defendants and in treating Counterclaim

Defendants as partners and supporting their immigration applications.

6. As is generally the case with private investment opportunities, the sponsor creates

an Offering Memorandum setting forth the terms of the investment and providing the transaction

documents. In order to ensure an expressly stated and unambiguous basis for the investment, and

that investors only rely on the information in the Offering Memorandum, and nothing else, the

Subscription Agreement signed by each Counterclaim Defendant contained certain representations

and warranties. Among other representations and warranties, each Counterclaim Defendant

represented that:

she met the “accredited investor” test;

she invested in the partnership based solely on her own analysis of the

partnership;

she had numerous investments prior to investing in the partnership;

she was capable of evaluating the merits and risks of their investment in the

partnership units;

she had received and reviewed the Offering Documents; and

she understood that the estimate prepared by the partnership was not

guaranteed.


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7. The representations and warranties were expressly given by Counterclaim

Defendants to induce Counterclaim Plaintiffs’ reliance and to induce their acceptance as limited

partners of the partnership.

8. Counterclaim Plaintiffs relied on each of these clear, express, unambiguous and

written representations and warranties in admitting Counterclaim Defendants into the partnership.

9. Thereafter, Counterclaim Defendants attached to their sworn immigration petition

submitted to the Department of Homeland Security the very documents evidencing their

investment, including the Subscription Agreement, containing the above representations and

warranties and swore that the attached evidence was true.

10. Then, in March 2021, Counterclaim Defendants admitted at their depositions,

among other things, that:

they did not invest in Harbourside Funding based on their own analysis of

Harbourside Funding;

they were not experienced investors;

they were not capable of evaluating the merits and risks of their investment

in the Partnership units; and

they had not read, understood or reviewed the Offering Documents.

11. Had Counterclaim Defendants not given their representations and warranties, but

instead made the statements in the previous paragraph at the time of their investment application

and immigration applications, they would:

i. not have been accepted into the partnership;

ii. not have obtained green cards for themselves and their families;

iii. not have received more than $50,000 investment returns paid to date by the

partnership.

12. As a result, Counterclaim Defendants are liable for fraud, misrepresentation and

breach of warranty and should be ordered to pay damages to Counterclaim Plaintiffs, including


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disgorging their investment returns. Additionally, Counterclaim Plaintiffs are entitled to a

declaratory judgment determining that the dissociation of Counterclaim Defendants from the

partnership is proper under the agreements and law.

THE PARTIES

13. Counterclaim Plaintiff Nicholas A. Mastroianni II (“Mastroianni”) is an individual

who resides in Palm Beach, County of Florida. In 2010, Mastroianni established the Florida

Regional Center, LLC, Harbourside Funding GP, LLC, Harbourside Funding, LP, and

Harbourside Place, LLC as the appropriate business entities required to properly conduct EB-5

Program business in accordance with USCIS requirements.

14. Counterclaim Plaintiff Harbourside Funding GP, LLC (the “General Partner”) is a

Florida limited liability company that serves as the general partner of Harbourside Funding, LP

(“Harbourside Funding”).

15. Counterclaim Plaintiff Harbourside Place, LLC (the “Developer”) is a Delaware

limited liability company.

16. Counterclaim Defendant Ting Peng (“Ms. Peng”) is an individual who resides in

Sammamish, Washington. On April 2, 2013, Ms. Peng was accepted as a limited partner of

Harbourside Funding.

17. Counterclaim Defendant Lin Fu (“Ms. Fu”) is an individual who resides in

Princeton, New Jersey. On December 16 2011, Ms. Peng was accepted as a limited partner of

Harbourside Funding.

BACKGROUND TO THE INVESTMENT

18. Harbourside Funding was created in 2010 to be an investment and funding vehicle

to make a loan to the Developer of Harbourside Place, a multi-use real estate development in

Jupiter, Florida.


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19. To raise funds, Harbourside Funding was established to be an EB-5 compliant

investment, under regulations promulgated by the United States Citizenship and Immigration

Services (“USCIS”) division of the Department of Homeland Security.

A. The EB-5 Program

20. The EB-5 program was created in 1990 by Congress to encourage the flow of capital

into the U.S. economy and to promote employment in the United States. Foreign investors are

offered the prospect (but not the guarantee) of lawful permanent residence in the U.S. (evidenced

by an issued green card) if they invest a minimum of $500,000 in a new commercial enterprise in

the U.S., and that investment results in the creation or maintenance of at least ten full-time jobs in

the U.S. for American citizens.

21. The EB-5 Program is regulated by USCIS. USCIS’ EB-5 Program regulations

require applicants’ investments to be “at risk”— i.e., subject to the possibility of gain or loss.

B. The EB-5 Visa Process

22. The primary steps in the EB-5 visa process are as follows:

The foreign investor invests in a new commercial enterprise (the “NCE,” here,

Harbourside Funding) in the U.S. The NCE may be affiliated with a regional center

(here, the Regional Center), which allows it to deploy the proceeds of the EB-5

investments, as debt or equity, to a job creating enterprise (here, the Developer),

which will use the funds to directly or indirectly create at least ten full-time jobs for

U.S. workers per investor.

In this situation, the investment was held in escrow pending approval of an

immigrant investor’s I-526 Petition, which the investor files with USCIS in order

to be designated as an “alien entrepreneur” under the EB-5 program.


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Upon approval of the investor’s I-526 Petition by USCIS, the investor presents

himself or herself to be interviewed under oath by a U.S. State Department Consular

Officer, during which the Officer determines whether the investor has complied

with all of the EB-5 requirements, that the investment is at risk and not guaranteed,

and the entire package of investment documents is reviewed again. After U.S. State

Department approval, the investor is granted an immigrant visa, and upon entering

the U.S. with that visa the investor becomes a conditional permanent resident

(“CPR”). CPR status is initially granted for a two-year period, during which time

the investor must maintain the investment in the NCE and satisfy numerous other

requirements to qualify for permanent residency status.

Between 21 and 24 months after the date of becoming a CPR, the investor must file

an I-829 petition with USCIS to remove the conditions on the investor’s residency.

The approval of the I-829 petition generally requires the investor to demonstrate

that the requirements under the EB-5 program have been fulfilled during the prior

two-year period, including showing that the job creating enterprise (in this case,

Harbourside Place) has created a minimum of ten permanent jobs per investor as a

result of the investment and that the investor’s investment in the NCE has been

sustained “at risk” for the entire two year CPR period.

If the I-829 Petition is approved, the investor and qualifying family members will

be granted unconditional permanent resident status in the U.S., and they are issued

green cards. They may also apply for U.S. citizenship after approximately five

years of residency. If denied, the investor and family members will be placed in

removal proceedings, where they may lose their immigration status and face

deportation.


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C. The Transaction Documents

23. Before submitting an application to become an immigrant investor in Harbourside

Funding, the Counterclaim Defendants each prepared, signed and submitted an investor suitability

questionnaire. This certified that the Counterclaim Defendants were accredited investors with

more than $1 million of investable assets (exclusive of their residence) and otherwise qualified

both to invest in Harbourside Funding and to immigrate to the United States. Each Counterclaim

Defendant expressly certified in writing that they are millionaires, and both satisfied the

parameters to be an accredited investor.

24. After submission of an acceptable investor suitability questionnaire and

confirmation that the Counterclaim Defendants facially qualified for the EB-5 Program,

Counterclaim Defendants were given the opportunity to apply for membership in the Harbourside

Funding partnership by submitting a Subscription Agreement and other critical documents.

25. In order to ensure that each prospective investor had a single identifiable set of

investment information upon which both the investor and the Counterclaim Defendants would

rely, Harbourside Funding created a packet of offering materials, consisting of an Offering

Memorandum and other critical documents, including the Subscription Agreement and Limited

Partnership Agreement. Those documents contained investment information, explained the

investment and immigration process, disclosed risks and described the commitments and

obligations required of each investor.

26. Each Counterclaim Defendant signed and delivered to the Counterclaim Plaintiffs

the Subscription Agreement.

27. Each Subscription Agreement provides that as a “material inducement” for the

Partnership to enter into the Subscription Agreement and “to accept” each Counterclaim


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Defendant’s subscription, each Counterclaim Defendant expressly represented and warranted to

Counterclaim Plaintiffs as follows:

6.5 Independent Advice. The Subscriber has had the opportunity to consult with

competent and independent advisors of the Subscriber’s choice with respect to

the suitability of the investment based on the Subscriber’s individual

circumstances and is making an investment in Units solely on the basis of those

consultants and the Subscriber’s own analysis of the Partnership . . .

***

6.9 Accredited Investor. The Subscriber is an “Accredited Investor” as defined in

the Offering memorandum and is a sophisticated investor by virtue of Subscriber’s

education, training and numerous prior investments made on Subscriber’s own

behalf or through entities which Subscriber controls. The Subscriber is

knowledgeable and experienced in financial and business matters and is capable

of evaluating the merits and risks of an investment in the Units and has the

capacity to protect Subscriber’s own interests in connection with the purchase of

the Units, either alone or in conjunction with Subscriber’s professional advisors,

who are unaffiliated with and who are not compensated, directly or indirectly, by

the Partnership or any affiliate of the Partnership . . .

6.10 Risk Assumption. Subscriber has received and reviewed the Offering

Documents. The Subscriber assumes full responsibility for making an

investment in the Units and has received full independent advice regarding the

risks associated with this investment. The Subscriber acknowledges that (i) the

Partnership is a newly-formed limited partnership proposing to fund the purchase,

development, construction and operation of Harbourside Place, with all the

attendant business and financial risks of a newly-formed partnership, (ii) the

investment in the Partnership contemplated herein is a speculative investment and

involves substantial risks, including the potential loss of the Subscriber’s entire

investment. The Subscriber is able to hold the Units for an indefinite period of

time and can bear the economic risk of Subscriber’s investment in the

Partnership, including the loss of the Subscriber’s entire investment in the Units.

6.11 Access to Information. The Subscriber acknowledges the receipt of a copy

of the Offering Documents. The Subscriber reads and understands English or

has had the Offering Documents translated by a competent translator into a

language the Subscriber understands. The Subscriber has fully read all the

Offering Documents, including this Agreement, which describe certain material

information concerning the Partnership and has carefully reviewed them and

understands the information contained therein. The Subscriber acknowledges

that the Offering Documents do not purport to contain all the information that

would be contained in a registration statement under the Securities Act. The

Partnership has agreed to make, and has made, available to the Subscriber prior to

any acquisition of the Units all information necessary to enable the Subscriber to

evaluate the risks and merits of an investment in the Partnership. The Subscriber


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has received all information which Subscriber has requested regarding the

Partnership and its current and proposed business and operations, and the

Subscriber has been given reasonable opportunity to speak and meet with

representatives of the Partnership for the purpose of asking questions of, and

receiving answers from, such representatives concerning the foregoing and an

investment in the Partnership, and the Partnership has responded to all such

questions and inquiries to the satisfaction of the Subscriber. Notwithstanding the

foregoing, the Subscriber has not relied upon any representation or other

information other than as contained in the Offering Documents.

***

6.13 No General Solicitation. The Subscriber is unaware of and is no way

relying on any form of general solicitation or general advertising in connection

with the Offering in the United States or in any other jurisdiction . . .

***

6.23 Survival of Representations, Warranties, Covenants and

Acknowledgements. The Subscriber makes the representations, warranties,

covenants and acknowledgments set forth in this Section 4 with the intent that

they be relied upon by the Harbourside Parties in determining the Subscriber’s

suitability as a limited partner in the Partnership, and the Subscriber hereby

agrees that all such representations, warranties, covenants and acknowledgments

shall survive the consummation of the transactions contemplated by this

Agreement.

(Emphasis added).

28. The Subscription Agreement expressly provides that the Counterclaim Defendants’

representations and warranties survive the consummation of the transactions described in the

Subscription Agreement.

29. Representations and warranties similar to those in Subscription Agreement were

made by each Counterclaim Defendant in the Limited Partnership Agreement, including at

Sections 19.13 and 19.14.

30. Additionally, in Section 10 of the Subscription Agreement, Counterclaim

Defendants specifically and unequivocally agreed to indemnify the Counterclaim Plaintiffs in any

suit or proceeding arising from or by reason of any misrepresentation or misstatement of facts


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made by Counterclaim Defendants concerning Counterclaim Defendants, in connection with the

offering and sale of the units in Harbourside Funding, whether actual or alleged:

10. Indemnification. The Subscriber shall defend, indemnify and hold harmless

the Harbourside Parties who were or are a party to, or are threatened to be made

a party to any threatened, pending or completed action, suit or proceeding,

whether civil, criminal, administrative or investigative, by reason of, or arising

from any actual or alleged misrepresentation or misstatement of facts, or

omission to represent or state facts, made by the Subscriber to the Partnership

concerning the Subscriber or Subscriber’s financial position, in connection with

the offering and sale of the Units, against losses, liabilities and expenses actually

incurred by a Harbourside Party (including without limitation attorneys’ fees,

judgments, fines and amounts paid in settlement) in connection with such action,

suit or proceeding.

(Emphasis added).

31. In reliance on the express representations and warranties set forth in the

Subscription Agreement, Harbourside Funding, acting through its General Partner, accepted each

Counterclaim Defendant as a limited partner in the partnership. Counterclaim Defendants’

investment was accepted, and each Counterclaim Defendant obtained the benefits of the

partnership and the EB-5 Program.

32. Shortly thereafter each Counterclaim Defendant submitted her I-526 Petition to

USCIS. In their I-526 Petitions, Counterclaim Defendants incorporated and attached a copy of the

Offering Documents, including the executed Subscription Agreements containing the Defendants’

(now known to be false) representations and warranties. Each I-526 Petition was sworn under

penalty of perjury by each Counterclaim Defendant:

I certify under penalty of perjury under the laws of the United States of America,

that this petition and the evidence submitted with it is all true and correct. I

authorize the release of any information from my records that U.S. Citizenship and

Immigration Services needs to determine eligibility for the benefit I am seeking.

33. Thereafter, each Counterclaim Defendant’s I-526 was approved by the USCIS,

each Counterclaim Defendant received her and her family’s conditional permanent residence in

the United States and each Counterclaim Defendant and her family received the ultimate


22

immigration prize—their coveted green cards, entitling them to permanent residency in the United

States of America. All thanks to their status as investors in the Partnership’s new commercial

enterprise, the development of Harbourside Place and the creation of thousands of new jobs.

34. Additionally, due to their status as limited partners of Harbourside Funding, each

Counterclaim Defendant has received contractual returns on her investment from the Partnership,

totaling, to date $53,608.31 to Ms. Peng and $56,955.66 to Ms. Fu.

D. Counterclaim Defendants’ Sworn Deposition Testimony in this Action

35. Counterclaim Defendants’ sworn deposition testimony in this action reveals the

following misrepresentations and breaches of warranty:

i. Contrary to the express representations and warranties that each Counterclaim

Defendant received, read and understood English or had the Offering Materials

translated, each Counterclaim Defendant now claims that she did not read or

understand English and did not have the Offering Materials translated prior to

signing the Subscription Agreement. [Dkt No. 91-1, Fu Tr. 15:21-17:7, 18:2-4,

22:12-17; Dkt. No. 91-2, Peng Tr. 34:16-35:12].

ii. Contrary to the express representations and warranties that each Counterclaim

Defendant relied only on the Offering Materials when deciding to invest, each

Counterclaim Defendant now claims that she did read the Offering Materials and

therefore could not have relied on the Offering Materials in deciding to invest in

Harbourside Funding. [See id.]

iii. Contrary to the express representations and warranties that they were each

accredited investors who had conducted their own analysis of Harbourside

Funding, each Counterclaim Defendant testified that she was not capable of


23

conducting, and did not conduct, her own analysis of Harbourside Funding. [See

id.]

36. Each Counterclaim Defendant, under oath at deposition, provided confirmation of

her deception.

37. Had Counterclaim Defendants not provided the express representations and

warranties in the Subscription Agreement, neither would have been admitted into the Harbourside

Funding partnership. Thus, through their deceit, Counterclaim Defendants were admitted into the

partnership, received contractual distributions totaling in excess of $100,000 and obtained green

cards for themselves and their families.

COUNT I - FRAUD

38. Each Counterclaim Defendant, through the execution and delivery of the

Subscription Agreement made the representations and warranties to Counterclaim Plaintiffs

described above in ¶¶ 26-31, to induce Counterclaim Plaintiffs to sign the Subscription Agreement

and to accept each Counterclaim Defendant into the partnership.

39. Counterclaim Plaintiffs reasonably relied on each Counterclaim Defendant’s

representations and warranties, and entered into the Subscription Agreement and accepted each

Counterclaim Defendant into the partnership.

40. Each Counterclaim Defendant thereafter swore to the USCIS that the evidence

attached to her I-526 petition was “true and correct,” including the Subscription Agreement.

41. As now admitted in Counterclaim Defendants’ deposition testimony, the

representations and warranties above were false.

42. Counterclaim Plaintiffs were harmed by the misrepresentations by accepting each

Counterclaim Defendant into the partnership, paying each Counterclaim Defendant a return on


24

their investment and assisting the Counterclaim Defendants and their families in obtaining their

green cards.

43. As a result of the foregoing, Counterclaim Plaintiffs are entitled to and hereby

demand judgment against the Counterclaim Defendants for such affirmative and/or offset relief as

is appropriate, including but not limited to, money damages, including the refund of contractual

returns or partnership distributions made and damages relating to and arising from the Plaintiffs’

breaches, disassociation from Harbourside Funding, and such other relief as is just and equitable.

COUNT II – NEGLIGENT MISREPRESENTATION


Subscription Agreement and the Partnership Agreement, made the representations and warranties

to Counterclaim Plaintiffs described above in ¶¶ 26-31, to induce Counterclaim Plaintiffs to sign

the Subscription Agreement and to accept each Counterclaim Defendant into the partnership.






47. As now admitted in the Counterclaim Defendants’ deposition testimony, the

representations and warranties above were false.

48. Counterclaim Plaintiffs were harmed by the misrepresentations by accepting each

Counterclaim Defendant into the partnership, paying each Defendant a return on their investment

and assisting the Counterclaim Defendants and their families in obtaining their green cards.




25


returns or partnership distributions made and damages relating to and arising from the

Counterclaim Defendants’ breaches, disassociation from Harbourside Funding, and such other

relief as is just and equitable.

COUNT III – BREACH OF WARRANTY











representations and warranties above were breached.

54. Counterclaim Plaintiffs were harmed by the breaches of warranties by accepting

each Counterclaim Defendant into the partnership, paying each Counterclaim Defendant a return

on their investment and assisting the Counterclaim Defendants and their families in obtaining their

green cards.




returns or partnership distributions made and damages relating to and arising from the


26

Counterclaim Defendants’ breaches, disassociation from Harbourside Funding, and such other

relief as is just and equitable.

COUNT IV – INDEMNIFICATION





57. In Section 10 of the Subscription Agreement, each Counterclaim Defendant

specifically and unequivocally agreed to indemnify the Counterclaim Plaintiffs, including for legal

fees, in any suit or proceeding arising from or by reason of any misrepresentation or misstatement

of facts made by Counterclaim Defendants concerning Counterclaim Defendants, in connection

with the offering and sale of units in Harbourside Funding, whether actual or alleged:

10. Indemnification. The Subscriber shall defend, indemnify and hold harmless

the Harbourside Parties who were or are a party to, or are threatened to be made

a party to any threatened, pending or completed action, suit or proceeding,

whether civil, criminal, administrative or investigative, by reason of, or arising

from any actual or alleged misrepresentation or misstatement of facts, or

omission to represent or state facts, made by the Subscriber to the Partnership

concerning the Subscriber or Subscriber’s financial position, in connection with

the offering and sale of the Units, against losses, liabilities and expenses actually

incurred by a Harbourside Party (including without limitation attorneys’ fees,

judgments, fines and amounts paid in settlement) in connection with such action,

suit or proceeding.

(Emphasis added).


representations and warranties made by Counterclaim Defendants in the Subscription Agreement

and the Partnership Agreement concerning Counterclaim Defendants were false.

59. As a result, Counterclaim Plaintiffs are entitled to recover from Counterclaim

Defendants their costs and attorneys’ fees in defending this action.


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COUNT V – DECLARATION OF DISSOCIATION OF LIMITED PARTNERS

60. Counterclaim Plaintiffs repeat and re-allege each of the allegations set forth in

paragraphs 1-59 of the Counterclaims.

61. The conduct described above by each Counterclaim Defendant was wrongful and

adversely affected the Partnership’s activities.

62. Additionally, as described above, each Counterclaim Defendant violated the

obligation of good faith and fair dealing under § 620.1305(2) Fla. Stat.

63. As a result of the foregoing, each Counterclaim Defendant should be declared to be

a disassociated limited partner under§ 620.1601(e) Fla. Stat. and deprived of her right to vote as a

limited partner or receive the benefits of partnership, including but not limited to, any return of her

investment in the partnership, because each Counterclaim Defendant joined the partnership under

false pretenses.

RELIEF REQUESTED

WHEREFORE, Defendants and Counterclaim Plaintiffs respectfully request this Court

enter a final judgment in favor of Defendants and Counterclaim Plaintiffs dismissing the remaining

Counts of the Complaint with prejudice, together with an award against Plaintiffs and

Counterclaim Defendants for (i) compensatory damages in an amount to be determined at trial,

including but not limited to $53,608.31 for Ms. Peng and $56,955.66 for Ms. Fu, plus interest at

the maximum rate allowable; (ii) indemnification and payment of Counterclaims Plaintiffs’ costs

and attorneys’ fees in defending this action; and (iii) an award of a declaration of dissociation as

limited partners of Harbourside Funding, along with such other relief that the Court deems just

and proper.


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Dated: May 17, 2021

AKERMAN LLP

777 South Flagler Drive

Suite 1100, West Tower

West Palm Beach, FL 33401

Tel.: (561) 653-5000 / Fax: (561) 659-6313

By: s/Eleni Kastrenakes Howard _

David P. Ackerman (FBN 374350)

Primary Email: [email protected]

[email protected]

Eleni Kastrenakes Howard (FBN 0073073)

[email protected]

[email protected]

and

Richard G. Haddad (Admitted Pro Hac Vice)

[email protected]

William M. Moran (Admitted Pro Hac Vice)

[email protected]

OTTERBOURG P.C.

230 Park Avenue

New York, New York 10169

Tel: (212) 661-9100/ Fax: (212) 682-6104

Counsel for Defendants


mailto:[email protected]

