Path America founder Lobsang Dargey and a chorus of others are asking a federal judge to reject a court-appointed receiver's proposal to sell the unfinished Potala Tower in downtown Seattle, according to filings in federal court Tuesday.
Grassmueck has told the court he intends to sell the 40-story Potala Tower project, now just a deep hole in the ground at 2116 4th Ave., as soon as possible. That could dash the hopes of about 170 Chinese nationals who invested $500,000 each in the project, aiming to obtain permanent residency in the United States through the EB-5 visa program.
At least 15 of those investors asked the court Tuesday to deny the receiver's request or require that the project be sold to a buyer who will complete the project as originally envisioned -- a 344-unit apartment complex atop a 142-room hotel.
Selling the Potala Tower unfinished would "almost certainly be fatal" to the investors' ability to obtain permanent resident status, and would harm "any possibility" of them getting a return on their investment, wrote Steven Fogg, one of the investors' attorneys.
For his part, Dargey told the court he's working on a rescue plan of his own: Chinese real-estate firm Binjiang Tower Corp., which earlier invested $30 million in Potala Tower, and The Molasky Group of Companies, a Las Vegas real-estate firm, would take over his 80 percent ownership stake and provide the capital necessary to complete the project.
"Lobsang Dargey is eager and anxious to make all the investors whole," his attorney, Peter Ehrlichman, said Tuesday in an interview. Under the proposed deal, Dargey would get 15 percent of profits ultimately derived from the tower project.
Molasky would take over as the tower's developer. The firm has handled several EB-5 projects, such as a Federal Bureau of Investigation building in San Diego with $49.5 million in capital from immigrant investors, the company said in a separate filing with the court.
An appraisal by Cushman Wakefield concluded the project has retained its earlier appraised value of $253 million if it is completed and leased up -- but only about $20 million if sold as is.
The construction lender, Voya Financial, has extended its commitment to a $66.4 million construction loan five times at no cost, demonstrating its confidence in the project, said George Mitsanas, a principal at commercial mortgage broker Newmark Realty Capital, in a court filing Tuesday.
The fifth loan extension expired in December, Mitsanas said, even though he asked the receiver if he would like another no-cost extension.
"The response from the receiver was essentially 'no thank you,' " Mitsanas wrote. As a result, the receiver forfeited $830,000 that would have been refunded to the tower project if the loan had closed, he said.
Dargey, 42, of Bellevue, fueled his ambitious plans with capital raised through the EB-5 visa program.
Construction on Potala Tower came to a halt in August after the U.S. Securities and Exchange Commission filed a civil fraud lawsuit against Dargey. The SEC has alleged in court last year that Dargey siphoned off more than $17 million invested by his immigrant clients. Dargey denies wrongdoing.
In December, U.S. Citizenship and Immigration Services notified Path America it intended to terminate its license to participate in the EB-5 program.
That by itself shouldn't prompt a rush to liquidate Path America's assets, wrote Fogg, an attorney for some of the investors.
The receiver has until Friday to respond to Dargey, court records show. Reached late Tuesday, Grassmueck declined to comment.
Sanjay Bhatt: 206-464-3103 or email@example.com On Twitter @sbhatt