Receiver wants to sell off 3 of Dargey’s biggest projects

EVERETT — A court-appointed receiver wants to sell off Potala Place and Farmer’s Market and three other real estate projects belonging to an Everett-based developer accused by federal authorities of committing fraud.

The U.S. Securities and Exchange Commission is suing Lobsang Dargey for allegedly defrauding foreign nationals who invested in his real estate ventures. Meanwhile, the FBI has been investigating.

Dargey, 42, of Bellevue, has denied any wrongdoing and said it is the result of sloppy — but innocuous — bookkeeping.

In August, the SEC filed a civil lawsuit against Dargey and his myriad companies. U.S. District Court for Western Washington froze his assets and those of his companies. In October, U.S. District Judge James Robart handed control of his companies to a court-appointed receiver, Michael Grassmueck of the Portland-based Grassmueck Group.

Grassmueck recently told the court that he wants to sell three of Dargey’s four biggest projects as soon as possible, including Potala Tower, a planned 40-story skyscraper in downtown Seattle. Excavation work for the building stopped when the SEC filed its lawsuit, leaving a 60-foot-deep hole surrounded by fencing.

He could ask the court to OK a sale of Potala Tower soon, according to a report he filed with U.S. District Court on Wednesday.

He plans to ask the court to approve sale of two smaller projects — Potala Shoreline and Potala Village Kirkland — in the next few months, he said.

Work never began on those projects. Earlier this month, Robart approved Grassmueck’s request to knock down four vacant buildings that have attracted squatters to the Shoreline property.

Work on the fourth project — Potala Place and Farmer’s Market in Everett — is nearly complete. Its 122-room hotel and 220 apartments have long been finished. And its groundfloor shopping space is nearly done.

The shops should be completed and leased out. And then the project should be sold, he said.

That would take about nine months if he can raise enough money to pay for the remaining work, Grassmueck said.

Seventy-nine Chinese nationals invested $39.6 million in Potala Place and Farmer’s Market. Of that, Dargey moved more than $15 million to his other companies, Grassmueck said in a report filed in November.

Dargey is accused of bankrolling the projects in large part with money from Chinese citizens via the federal EB-5 program, which offers a shortcut to a green card in exchange for investing in projects creating jobs in the U.S.

The SEC alleges that Dargey misused and misappropriated as much as $46 million of foreign investors’ money, spending millions of dollars on a luxury house, shopping sprees and trips to casinos, according to court documents.

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.

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