2 Oyster Bay residents charged in $27M fraud case

Two Long Island business partners were arrested Monday at their Oyster Bay home on federal charges that they orchestrated a $27 million nearly decade-long scheme to defraud investors of a fictitious project to develop an upstate educational institution and used the ill-gotten gains to make illegal campaign contributions to elected officials, including former President Donald Trump, federal prosectors said.

Sherry Xue Li, 50 and Lianbo "Mike" Wang, 45, both of Centre View Drive, have been charged in a complaint with wire fraud conspiracy and money laundering conspiracy in connection with the scheme in which prosecutors say they used their proximity to powerful elected officials to continue the fraud. Li is also charged with conspiracy to defraud the United States. 

Federal prosecutors allege more than 150 victims invested at least $27 million in the fake "Thompson Education Center" or TEC in Sullivan County and, in exchange, were promised green cards, access to political figures and dividends on their investments. In addition to donating campaign funds, the pair also used the proceeds of their alleged fraud to pay for clothing, accessories, jewelry, fine dining, vacations and to pay the mortgage on the Oyster Bay home where they live, prosecutors said. Li was the president of the TEC project and Wang was the marketing director and general manager.

 “As alleged, the defendants enticed their victims to invest in a fraudulent scheme aided by misleadingly claiming that their fictitious project had the support of prominent politicians,” U.S. Attorney for the Eastern District of New York Breon Peace said in a statement. “The defendants were able to perpetrate this fraud by then selling access to U.S. politicians by unlawfully contributing foreign money to political campaigns in their own names and bringing foreign nationals as their guests to fundraising events."

Both defendants were ordered to be detained without bail at their initial appearances Monday afternoon in federal court in Brooklyn. Prosecutors said they were flight risks because of their potentially long prison sentences, if convicted, and their frequent trips to China, which doesn't have an extradition agreement with the United States. 

Li's defense attorney Nora Hirozawa had argued for a $500,000 bond, saying her client "has not fled to China. ...She has remained exactly where she’ s been for the last 11 years. And I think that demonstrates her willingness to return to court and resolve these charges against her." 

James Roth, the attorney representing Wang, did not seek bail but reserved his right to in the future. 

By law, non-U.S. citizens are not permitted to contribute to American politicians. But Li and Wang, according to federal prosecutors, charged 12 foreign nationals $93,000 per person to attend at June 28, 2017, for then-President Donald Trump. Neither the Trump campaign nor any others that received donations from Li and Wang are accused of any wrongdoing.

According to news reports at the time, Trump kicked off his ultimately unsuccessful 2020 reelection campaign with the fundraiser, which was held at the Trump International Hotel in Washington, D.C., just blocks from the White House and charged attendees $35,000 each. The event grossed about $10 million. 

Li and Wang, acting as "straw donors," donated $600,000 in campaign contributions in their own names—$270,500 from Li and $329,500 from Wang — to the joint fundraising committee hosting the Trump re-election fundraiser, prosecutors said. 

Li posed for a photograph with the former president and first lady Melania Trump and later used the photo to solicit more donations for the fake upstate project, prosecutors said. 

A co-conspirator, according to prosecutors, sent a brochure to one of the investors with photos of Li and Wang with several elected officials, including then-New York Gov. Andrew M. Cuomo with the caption: "the project has received the governor's strong support." 

In a bail letter to the judge, prosecutors argued that the pair need to post " substantial and meaningful assets, including personal assets by family members or friends living in the United States," surrender their passports and adhere to location monitoring in order to qualify for bail.

The government cited Li's Oyster Bay home as "an inappropriate asset for bond purposes," in the letter, saying the home has operated as the primary business location for the fraudulent TEC scheme and Li has used the proceeds from her alleged crimes to make its mortgage payments. Also, prosecutors said the home is subject to government seizure per the criminal asset forfeiture statute.

By Nicole Fuller

nicole.fuller@newsday.com@NicoleFuller

Nicole Fuller is Newsday's senior criminal justice reporter. She began working at Newsday in 2012 and previously covered local government.