United States District Court, N.D. Georgia, Atlanta Division
INTELLIGENT INVESTMENT INTERNATIONAL LLC, BRANNON CROSSING PARTNERS LLC, WALKS AT JOHN CREEK PARTNERS LLC, WINDWARD MARKET FOREST LLC, PALISADES WEST PACES PARTNERS LLC, GII SPALDING PLAZA LLC, PEACHTREE MED BUILDING PARTNERS LLC, and EASTSIDE MED PARTNERS LLC, Plaintiffs,
EMILY FU, CAPITAL INVESTMENT INTERNATIONAL, INC., JACOB FU, JOSHUA FU, NINA XU, and TOUCHMARK NATIONAL BANK, Defendants.
RICHARD W. STORY, UNITED STATES DISTRICT JUDGE
case comes before the Court on Defendants Jacob Fu and Joshua
Fu's Second Motion to Dismiss ; Defendant Touchmark
Nation Bank's Motion to Dismiss in Part ; ServisFirst
Bank's Motion to Intervene ; and ServisFirst
Bank's Motion for Relief from Order on Motion for TRO
. After reviewing the record, the Court enters the
case concerns Defendant Emily Fu's fraudulent real estate
investment scheme. Emily Fu pled guilty to mail fraud for her
role in this matter under 18 U.S.C.§ 1341 on July 12,
2018 and is currently in prison. See USA v. Fu,
2:18-cr-00023, Dkt. [18, 32] (N. D. Ga. July 12, 2018). She
has a default judgment against her in this action. Her
company Capital Investment International, Inc. and alleged
associate Nina Xu are also in default.
remains to be determined is the civil liability of her sons
Joshua and Jacob Fu, as well as Touchmark National bank,
which provided loans for many of the properties at issue. As
such, while the facts regarding Emily Fu's actions may
still be in dispute insomuch as they relate to the remaining
parties' involvement, the Court will focus on the facts
as they pertain to these three parties.
2014 and 2017, Defendant Emily Fu, the sole owner of
Defendant Capital Investment International, Inc.
(“Capital Investment”), assisted groups of
Chinese investors with purchasing and managing commercial
real estate properties in the metro-Atlanta area. Each of the
nine named Plaintiffs in this action is an entity created,
with Emily Fu's assistance, for the purpose of purchasing
a specific commercial property. For clarity, the Court
provides the below chart:
Intelligent Investment International LLC
Shoppes at Mall of Georgia (“Mall of
Wengang Yu, Kaiyou Lin, Deyin Li, Yi Wang, and
Brannon Crossing Partners LLC (“Brannon
Shoppes at Brannon Crossing (“Shoppes at
Walks at Johns Creek Partners LLC (“Johns
Sugarloaf Center (“Sugarloaf”)
(originally the Walks)
Jacob Fu, Larina Hsiu-Lan Lin, Wanjiong Lin, Tan-Yu
Lee, and Anni Lee
Windward Market Forest LLC (“Windward
Market Forest Shops
Yu Shi, Jiang Bian, Fangfang Guo, Kaiyou Lin, Deyin
Li, and Capital Investment
Palisades West Paces Partners LLC
North Atlanta Primary Care condominium
(“North Atlanta Primary Care”)
ChenChao Wang, Kaiyou Lin, Fangfang Guo, and Joshua
GII Spalding Plaza LLC
Spalding Plaza shopping center (“Spalding
Cooper Village Partners LLC (“Cooper
Cooper Village Retail Center (“Cooper Retail
Chang Yu, Wengang Yu, Kaiyou Lin, Qiongyang Li,
Chenchao Wang, Wenling Zhao, Tan-Yu Lee, Anni Lee,
and Emily Fu
Peachtree Med Building Partners LLC
Peachtree Corners Medical Building
SiGang Zhang, Fang Han, Wenling Zhao, Kaiyou Lin,
and Jacob Fu
Eastside Med Partners LLC (“Eastside
Eastside Digital Imaging building (“Eastside
Kaiyou Lin, Chang Yu, Fangfang Guo, Deyin Li, Yajun
Sun, Lina Xiao, Yu Shi, Xiaohua Yao, Yi Wang, and
2017, Plaintiffs grew suspicious that Emily Fu's prior
representations regarding their commercial real estate
properties were false. Plaintiffs subsequently discovered the
fraud scheme that is the basis for this action. Plaintiffs
allege Emily Fu defrauded them out of $20 million dollars
through various fraudulent acts. Emily Fu admitted that she
misappropriated approximately $930, 000 from Plaintiffs'
bank accounts for her personal use. Plaintiffs' members
also discovered that Emily Fu took out loans from Touchmark
for which the Shoppes at Brannon Crossing and Spalding Plaza
were provided as security.
Fu further deceived Plaintiffs by not purchasing Sugarloaf
Center, North Atlanta Primary Care, and Eastside Building, on
behalf of their respective LLCs, despite representing to
members that she had. She also inflated the purchase price
for Market Forrest Shops, Cooper Retail Center, and Peachtree
Corners. Plaintiffs consequently believe Emily Fu converted
the unused cash funds provided for those purchases to her own
bring this action for recovery of the missing funds from
Emily Fu, as well as her alleged accomplices: the Defendants
in default, Defendants Joshua and Jacob Fu, and Touchmark.
The Court will now detail the specific background facts as
they pertain to the remaining Defendants.
and Jacob Fu
to Plaintiffs, Emily Fu's sons, Jacob and Joshua Fu
(“Fu brothers”) acted as her accomplices in
certain transactions that played a central role in the
scheme. They were both members of Capital Investment during
the fraudulent transactions, with Joshua as the company's
registered agent, and Jacob as the CFO and
secretary. Further, on more than one occasion, each
brother failed to contribute agreed upon funds for certain
real estate purchases and withheld that information from the
other LLC members, while accepting profit distributions.
Plaintiffs allege Jacob executed this scheme as a member of
Johns Creek and Peachtree Med LLCs. Joshua did the same as a
member of the Palisades LLC. As an LLC member, Plaintiffs
allege, each brother agreed to contribute a certain amount of
money for the purchase of a previously designated commercial
real estate investment. Yet, neither brother contributed any
money. Plaintiffs maintain the LLC members never knew about
these missing payments and the brothers collected profits
from the investments as if they had contributed funds.
Further, Emily Fu never purchased any property for Johns
Creek or Palisades LLC, despite telling members she had.
allege Touchmark National Bank participated in Emily Fu's
scheme as a strategic partner. The two had a symbiotic
relationship, with Emily even describing Touchmark as her
official “Strategic Partner” in a presentation to
prospective buyers. This relationship, Plaintiffs argue,
allowed Emily to take out the two unauthorized loans
undetected and involved a fraudulent kickback scheme.
main contact was Stacy Cooke, a Vice President/Commercial
Relationship Manager at Touchmark until his sudden death in
2017. Plaintiffs believe he facilitated the unauthorized
loans taken out with the Shoppes at Brannon Crossing and
Spalding Plaza as security. While Plaintiffs admit Emily made
false representations and presented forged documents to
Touchmark to obtain the loans, they maintain the bank is at
fault because it failed to conduct a proper investigation
into Emily's authority to take out the loan or the
authenticity of the documents, despite what Plaintiffs claim
fact, Touchmark did not follow it's own written
procedures for confirming authorization of representatives.
The Limited Liability Company Authorization Form was not
completed properly. For the Brannon Crossing loan, Emily
signed the document, but did not provide attestation by an
LLC Manager or Designated Manager, as required. The Spalding
Plaza loan lacked any attestation signature. She was not the
Manager of either LLC for which she obtained the loans. Emily
also requested loan notices be sent to her office, while the
IRS notice submitted with each loan application had the LLC
owner's local address. Plaintiffs argue this should have
been a red flag.
also allege that Emily and Touchmark engaged in an illegal
kickback scheme in which Emily was an agent of Touchmark.
Specifically, Plaintiffs claim Touchmark represented that the
“loan/broker” fees were higher than they should
have been. First, with the Mall of Georgia purchase loan,
Touchmark represented that the “loan/broker” fee
was 4% of the loan or $76, 000. Second, for the Brannon
Crossing unauthorized loan, Touchmark represented that the
“loan/broker” fee was 2.5% of the loan or $150,
000. Third, while less specific, Plaintiffs also claim
Touchmark charged exorbitant fees in connection with the
unauthorized Spalding Plaza loan and loans on Cooper Village,
Peachtree Med, and Windward Market.
assert that Touchmark has represented that the normal range
of fees for commercial real estate loans is 0.5% to 1%.
(Touchmark's Resp. to TRO, Dkt.  p. 4.) They argue
that Emily and Touchmark conspired to inflate the fees, with
Capital Investment receiving the excess portion of the fee.
As evidence, they point to Touchmark's admission that it
kept only $60, 000 of the $150, 000 loan/broker fee for
Brannon Crossing, (Id.) and that Touchmark did not
disclose that it split the fee with Capital Investment.
Further, neither Emily Fu nor Capital Investment is licensed
in Georgia as a mortgage broker or otherwise authorized to
receive loan fees.
filed this suit  on December 20, 2017, as well as a Motion
for Temporary Restraining Order , the following day. The
Court granted Plaintiffs a TRO  on December 27, 2017 and
subsequently converted it to a Preliminary Injunction .
Plaintiffs then filed a First Amended Complaint , as well
as a motion for a second TRO  soon thereafter. The Court
granted Plaintiffs a second TRO , which is currently in
effect, along with a discovery stay , until resolution of
these pending motions. ServisFirst Bank moves to intervene
 in this action and prematurely moves for relief from the
second TRO . Defendants Joshua and Jacob Fu, and
Touchmark move separately to dismiss claims against them. The
Court now considers these motions in turn.
Motions to Dismiss
Motion to Dismiss Legal Standard
8(a)(2) requires that a pleading contain a “short and
plain statement of the claim showing that the pleader is
entitled to relief.” While this pleading standard does
not require “detailed factual allegations, ” mere
labels and conclusions or “a formulaic recitation of
the elements of a cause of action will not do.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). To withstand a motion to dismiss, “a complaint
must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.'” Id. (quoting Twombly, 550
U.S. at 570). A complaint is plausible on its face when the
plaintiff pleads factual content necessary for the court to
draw the reasonable inference that the defendant is liable
for the conduct alleged. Id. “At the motion to
dismiss stage, all well-pleaded facts are accepted as true,
and the reasonable inferences therefrom are construed in the
light most favorable to the plaintiff.” Bryant v.
Avado Brands, Inc., 187 F.3d 1271, 1273 (11th Cir.
1999). However, the same does not apply to legal conclusions
set forth in the complaint. Sinaltrainal v. Coca-Cola
Co., 578 F.3d 1252, 1260 (11th Cir. 2009). Nor will the
Court “accept as true a legal conclusion couched as a
factual allegation.” Twombly, 550 U.S. at 555.
Jacob and Joshua Fu's Second Motion to Dismiss
Jacob and Joshua Fu (“Fu brothers”) move to
dismiss the federal RICO violations against them in Counts I
and II, as well as the Georgia RICO violation in Count VIII.
Further, the Fu brothers request the Court decline to
exercise supplemental jurisdiction, after dismissing the only
federal claims against them. The Court will address the
federal and Georgia RICO violations in turn, but will reserve
jurisdictional analysis for section II of this Order.
Federal RICO Claims (Counts I & II)
brothers advance two alternative dismissal theories regarding
Plaintiffs' civil RICO claims under 18 U.S.C. §
1962(c) and (d). They first argue both claims are barred by
section 107 of the Private Securities Litigation Reform Act,
18 USC §1964(c) (the “PSLRA” or “RICO
Amendment”) because they involve securities. In the