Dan Liu video that was aimed at easing investor apprehension
Dan Liu, an owner of the Chinese-funded Founders Group International, has told The Sun News that the 22 Grand Strand golf courses and numerous other properties and businesses that FGI has purchased in the past 20 months are not at risk because of a financial problem encountered by another company he is affiliated with in China.
But both a video posted in China last month featuring Liu and an internet letter posted on the Yiqian Funding company website last month that have been acquired by The Sun News imply otherwise.
Liu has told The Sun News in multiple interviews that he is solely a paid advisor to the Chinese peer-to-peer (P2P) lending company Yiqian Funding, which has had at least one branch office raided and temporarily shut down by authorities, who Liu confirmed froze assets of the branch in early April.
But in a video dated April 14 that attempts to allay possible concerns of investors in Yiqian, Liu introduces himself as the Yiqian chairman and states he is going to the United States to sell property to relieve the monetary shortage.
A letter posted on the Yiqian website in mid-April goes into further detail, naming FGI as a company with holdings in America, and reiterating that property in the U.S. will be sold to pay investors. Liu said he did not draft that letter.
A search of property records in Horry and Georgetown counties did not reveal any FGI property sold through Friday.
“I am a founder of Yiqian Funding and am viewed as a respected advisor,” Liu said in an email to The Sun News. “However, I have no power to make executive decisions for that company. I have no official role or responsibilities with Yiqian Funding. I am often referred to as ‘chairman’ but that is used as a sign of respect when I am addressed, much like ‘mister’ is used in the U.S. In this context, ‘chairman’ is not meant to be an indication that I am serving in an official executive management role.
“As for the video, Yiqian Funding asked me to shoot it while I was on vacation in Europe. They felt some words from one of their widely-respected founders would help to alleviate their customers’ concerns. They convinced me that I would be a reassuring voice.”
Liu contends that Yiqian Funding, which does business in China under both its Mandarin name and the English name “Easy Richness,” is not involved in any Grand Strand properties owned by FGI or affiliated companies because there are no common executives or owners. He is the primary connection, he says, and he is solely an advisor to Yiqian, and has been since its founding in 2010.
“There is no legal connection between Founders Group International and Yiqian Funding. The only connection is my personal affiliation with both companies,” Liu said. “Founders Group International is committed to the Myrtle Beach market and we are operating here as a normal business. … We will not be selling any of our assets simply to assist Yiqian Funding.”
Myrtle Beach Mayor John Rhodes has made several visits to China to attract investments in Myrtle Beach, and he and Horry County Council Chairman Mark Lazarus visited the Yiqian Funding headquarters in Nanjing during a two-week trip in January. Rhodes said employees treated Liu as their boss, and many Yiqian managers and employees attended Liu’s wedding in Myrtle Beach last spring.
“I don’t know what title he held, but to my understanding he was the main man, the main person,” Rhodes said. “He was the person that everybody looked to.”
Liu says he was a co-founder in 2009 of Jiang Su Tian Rui, a foreign trade and investment company that he says has just one other wealthy partner and has been the source of the FGI purchases. Liu is listed as the company’s legal representative on 2009 incorporation papers, according to Chinese government online records, and Tian Rui is listed on the sales agreements of some Strand properties.
Liu said last month that all of the approximately 300 Yiqian branch offices were operating normally, with the lone exception being an office in the Shaoxing area of the Zhejiang province that was inspected and closed.
He said computers and some paperwork were seized by police, and some employees were taken for questioning.
“It is my understanding that the Yiqian Funding office in Shaoxing is now open. No wrongdoing was found,” Liu said. “However, in the current political and cultural climate in China, there will undoubtedly be more investigations of companies throughout that city. These investigations are linked to the entire institution of Peer-to-Peer lending within China.”
Yiqian fraud suspicions
Several Chinese publications and websites have stories claiming Yiqian has been under suspicion of fraudulent business practices. Liu said the company has done nothing illegal that he is aware of, competitors have been fabricating stories of the alleged fraud, and Yiqian was the target of a blackmail attempt.
P2P companies are part of the nontraditional lending market known as the shadow banking industry in China, which has flourished over the past few years but has also come under increased scrutiny by Chinese officials who believe the industry could damage the economy if left unregulated.
P2P companies provide money to borrowers and act as an intermediary between the borrower and either individual or institutional investors hoping to make a profit on the loans. The P2P businesses connect the two online. The third-party investors take on the loan risk, though borrowers only interact with the P2P companies for acquisition and repayment of the loan.
The letter posted on the Yiqian website in mid-April states that because of the actions of a few employees, the local police in the Zhejiang province began an investigation that led to part of Yiqian’s assets being frozen. It states that two offices including one in Nanjing, where Yiqian is headquartered, are embroiled in the investigation.
It continued that the frozen funds have kept some clients from retrieving their invested money, so Jiang Su Tian Rui will guarantee Yiqian’s financing and will acquire it. It states Tian Rui is the parent company of FGI in America and Tian Rui will sell part of its American properties, which it values at $1.2 billion, and Yiqian will sell holdings in China worth $750 million to pay investors.
The letter states that Tian Rui will purchase Yiqian and management is being reorganized, as past Yiqian president Shen Jia and vice president Huang Yiren have been fired, and new president Cao Jianrong and acting president Wang Sihai have been appointed. A small committee will be established to focus on monetary issues and will report its work to the media and public, and an accounting firm, law firm and investors will be consulted to assist in the payback plan.
The letter states Yiqian invites the government to monitor its activity and implores investors to trust the company, be patient and not overreact, and Tian Rui promises to start paying back investors once the frozen account is unfrozen, with all payments completed no later than March 31, 2018.
The letter concludes that the crisis is not caused by company mismanagement, the company has never missed a payment in the past, and following the reorganization clients won’t lose a single penny.
FGI’s Grand Strand properties
Founders Group International or affiliated companies purchased 22 courses between September 2014 and April 2015, as well as the Prime Times golf membership program, tee time call center, two golf package companies and a few popular golf- and tourism-related websites.
FGI investors purchased 29.1 acres of Myrtle Beach oceanfront property from Grande Dunes owner LStar Communities in January for $25.6 million, according to Horry County records, and a luxury high-rise hotel is a probability for the property.
FGI or subsidiary companies also own more than 300 acres of undeveloped land at Wild Wing Plantation, TPC Myrtle Beach and International World Tour Golf Links; 200 lots at Wild Wing; 80-resident multifamily Stonewall Villas development in Longs; and other tracts. FGI partner Xian “Nick” Dou said all of the purchases are debt-free.
FGI is creating a real estate division to market and sell some of the non-course property it has acquired.
Like many on the Strand, Rhodes is waiting to see what happens to FGI’s local properties.
“I’m concerned about the situation, but as far as the Myrtle Beach properties I don’t know,” Rhodes said. “I have no clue what the future holds for the properties, but I assume they’ll be operating as usual. I don’t know what they’re going to do with their properties whether they’re having problems in China or not.”
Translated transcript of Dan Liu’s video (should not be considered verbatim):
“I am the chairman of the board of Yiqian. There is a monetary crisis, it’s not because of mismanagement. First, I would like to thank all my customers and all my employees for their support of Yiqian.
“We have prepared enough capital and properties to handle this crisis. There is no reason to be panicking and I am going to go to the U.S. to sell part of our properties. So please be patient there is no reason to be irrational.
“We are going to continue our business. We are not going to run away. I hope you will continue to support us. We apologize for all the inconvenience this has brought to you.”
A piece of the market
Some of the Grand Strand holdings of Founders Group International and affiliated companies:
Aberdeen Country Club
Long Bay Club
River Hills G&CC
International World Tour Golf Links
Pine Lakes Country Club
Grande Dunes Resort Course
MBN King’s North
Wild Wing Plantation
TPC Myrtle Beach
Litchfield Country Club
Founders Club at Pawleys Island
Tee Time Central call center
Ambassador Golf packager
Myrtle Beach Golf Trips packager
Prime Times golf membership program
29 oceanfront acres in Myrtle Beach
About 300 acres of undeveloped land at Wild Wing Plantation, TPC Myrtle Beach and International World Tour Golf Links
About 200 lots at Wild Wing Plantation
Stonewall Villas development in Longs