Mur­der case high­lights China-US money trail

Wealth of ac­cused heiress has roots in prop­erty deals with Peo­ple’s Lib­er­a­tion Army

Financial Times USA - - INTERNATIONAL - LESLIE HOOK — SAN FRAN­CISCO LUCY HORNBY — BEI­JING

Record bail posted in a Cal­i­for­nia court for one of the ac­cused in a mur­der case has thrown the spot­light on a prop­erty for­tune that traces its roots to the Chi­nese mil­i­tary, in an il­lus­tra­tion of how money made in China has flooded over­seas real es­tate mar­kets.

Tif­fany Li is a Chi­nese-Amer­i­can heiress ac­cused of or­der­ing a hit on her exboyfriend in San Ma­teo county, a leafy sub­urb of San Fran­cisco where Tes­las are more common than vi­o­lent crime. In April she posted $4m in cash and $62m in Cal­i­for­nia prop­erty as bail — among the high­est ever posted in the US.

The eye-catch­ing amount has drawn un­wanted attention to her fam­ily’s busi­ness, a com­plex web of real es­tate interests whose ori­gins can be traced to con­struc­tion part­ner­ships with China’s armed forces. It shows how guanxi, or con­nec­tions, in China can trans­late into wealth in Amer­ica.

Cal­i­for­nia prop­erty mar­kets have boomed as China’s newly wealthy seek havens over­seas. Chi­nese home­buy­ers spent more than $28bn on US res­i­den­tial real es­tate in 2015, the most among for­eign buy­ers, ac­cord­ing to the Asia So­ci­ety.

Ms Li’s mother, Li Ji­hong, made her ini­tial for­tune in Bei­jing in the 1980s by en­ter­ing joint ven­tures with con­struc­tion com­pa­nies di­rectly owned by the pow­er­ful Gen­eral Lo­gis­tics depart­ment of the Peo­ple’s Lib­er­a­tion Army, ac­cord­ing to cor­po­rate records and court cases. By the 1990s, the el­der Ms Li’s prop­erty de­vel­op­ment com­pany had snapped up de­sir­able plots in the high-rent busi­ness dis­trict around the China World Ho­tel.

She owned a house in Cal­i­for­nia as early as the 1980s, un­usual for a mainland cit­i­zen of China in the early days of the coun­try’s mar­ket re­forms.

The younger Ms Li, now 31, stud­ied at the Univer­sity of San Fran­cisco. Like many fu’er­dai, or off­spring of the nou­veaux riches, she em­braced an os­ten­ta­tious life­style. “There was a lot of bling,” said a per­son close to her. “They utilised the wealth more than [the mother] did.”

Along the way she met Keith Green, an as­pir­ing chef, but they later sep­a­rated. Mr Green had been fight­ing for shared cus­tody of their two tod­dlers in April 2016 when his body was found dumped in the woods with a bul­let through his head.

Ms Li is ac­cused of con­spir­ing to kill him. Kaveh Bayat, who was dat­ing Ms Li, is charged with mur­der, and Olivier Adella, one of his friends, is charged with help­ing. Ms Li is plead­ing not guilty.

Both Ms Li and her mother de­clined re­quests for in­ter­views sub­mit­ted by the Fi­nan­cial Times through their lawyers and other fam­ily rep­re­sen­ta­tives.

The case has thrown a spot­light on the Li fam­ily busi­ness. The el­der Ms Li and her busi­ness partners buy and de­velop real es­tate in San Fran­cisco’s Bay Area, us­ing a net­work of com­pa­nies run by the same di­rec­tors. In at least two cases, these as­so­ciates established a com­pany, bought a prop­erty, then sold it to an­other en­tity they con­trolled (or ended up con­trol­ling), re­peat­ing this process sev­eral times.

One such prop­erty in Bel­mont was pur­chased in 2014 by a lim­ited li­a­bil­ity com­pany that listed Tif­fany and her brother as mem­bers — that is, the pub­licly listed own­ers. It was sold on, twice, to two other com­pa­nies with the same reg­is­tra­tion ad­dress. After these two trans­ac­tions, the LLC that ul­ti­mately owned the prop­erty shared most of its mem­bers with the first LLC.

While the names of the mem­bers are pub­licly avail­able, those of the other in­vestors in the LLCs are not. Trans­fers of a sin­gle prop­erty among LLCs al­low out­side in­vestors to buy in and cash out with­out any re­quire­ment to dis­close their iden­ti­ties, says Paul Gil­lis at Pek­ing Univer­sity’s Guanghua School of Man­age­ment. “It’s a typ­i­cal Chi­nese in­vest­ment pat­tern. This is how groups of Chi­nese of­ten in­vest in US real es­tate.”

The Li fam­ily worked closely with CHS De­vel­op­ment Group, now con­struct­ing the El Camino Real site. Asked why the prop­erty was trans­ferred mul- tiple times among LLCs, vice-pres­i­dent Mark Haes­loop de­nied the deals were “right hand to left hand . . . They are all sep­a­rate en­ti­ties. The pur­pose for any sale is eco­nomic.” He de­clined to give fur­ther de­tails.

Ms Li’s busi­ness fa­cil­i­tated real es­tate in­vest­ment by Asian buy­ers, Steve Wagstaffe, San Ma­teo County dis­trict at­tor­ney, said. “We know that the busi­ness she was os­ten­si­bly in was find­ing real es­tate for peo­ple from China and eastern [Asia].”

Mr Haes­loop dis­puted this. “She is not a bro­ker for Chi­nese money com­ing into the [US].” The iden­tity of the in­vestors in her projects and in CHS projects was “none of your busi­ness”, he said.

Mr Haes­loop added he be­lieved “most of them” were US cit­i­zens but ac­knowl­edged that, “frankly, some of these peo­ple I’ve never met, never laid eyes on”.

Pros­e­cu­tion wor­ries Ms Li might flee the coun­try led to the record bail amount. She is due to ap­pear in court in July. Ad­di­tional re­port­ing by Sherry Fei Ju in Bei­jing

Tony Ave­lar; Aaron Kin­ney/AP

Tif­fany Li leaves jail with a body­guard after post­ing bail. Top right, the man­sion where Ms Li lives in San Ma­teo county, Cal­i­for­nia. She is ac­cused of or­der­ing a hit on Keith Green, bot­tom right, her ex-boyfriend

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