Serena Shi’s taste for luxury seemed insatiable.
She spent $ 133,000 on clothes at Valentino. Her two Mercedes-Benzers – a sports car and an SUV – cost $ 294,000.
Shi’s bills at a “lifestyle design” company in Beverly Hills, which advises clients on wardrobes, cosmetics and high-end shopping, reached nearly $ 800,000. A travel concierge service that caters to the jet set charged her $ 2.2 million for travel around the world.
Those features of the high life were gone when Shi, 37, mingled in a federal courtroom in Los Angeles one recent afternoon wearing a beige prison suit with resounding chains dangling from her wrist and ankle chains.
Speaking through a mandarin interpreter, Shi admitted that she had tricked dozens of investors in China into making $ 23 million in payments on condominiums in California. They thought they were buying units at a trendy resort that Shi allegedly built on a 47-acre desert in Coachella.
The project never broke down.
Shi, who ran a Beijing real estate firm with an office in Beverly Hills, confessed to having withdrawn the money to cover the lavish personal expenses that an FBI agent described in a lawsuit. She pleaded guilty to telecoms fraud.
The scale of Shi’s three-year fraud surprised investors who hired lawyers in California to file lengthy lawsuits to recover losses.
“I have sued crooks for living, and she was pretty far up on that audacity scale,” said Justin J. Shrenger, one of the attorneys.
Shi’s con also snatched Sam Nazarian, founder and CEO of SBE, a company in Los Angeles whose hotel, restaurant and nightlife brands at the time included SLS, Mondrian, Clift, Katsuya and Skybar.
In October 2015, the Nazarian met with Shi at his office in the SBE Tower on Wilshire Boulevard and signed a “letter of intent” that the company should build and operate her proposed apartment and hotel resort.
“Let’s get a press release out ASAP !!!” Nazarian wrote the same evening in an email to SBE’s development team.
The press release described Hyde Hotel & Residences Coachella Valley as a “lifestyle resort” with 350 rooms to be built by an SBE subsidiary in partnership with Shi’s “Beijing-based global real estate investment firm.”
It quoted Shi, who said she was excited to work with SBE, and Nazarian said he was excited to introduce an SBE leisure brand to the Palm Springs area. The suites would come with private swimming pools. Craft cocktails at the bar would follow stretching routines on the spa’s yoga terrace. The “vibe” would be carefree.
In a telephone interview, the Nazarian said the SBE poured time and money into the project and was “exploited.”
“From that perspective, it was also a very unfortunate situation for us,” he said.
Richard Goldman, Shi’s lawyer, declined to comment.
Days after the project was announced, SBE’s interior designers produced a glossy “look book” with examples of mid-century motifs that the resort wanted. Captions promised a desert oasis where affluent millennials could “party the night away.”
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Shi promoted the resort in forums on WeChat, the Chinese social media app. Green cards, she suggested, would be available to buyers who qualified for “EB-5” visas under a program to attract foreign investors into U.S. companies.
Shi also flew to Beijing to pitch the project in an extensive sales presentation at a prestigious hotel in November 2015. Elegantly dressed women playing the harp welcomed the participants. With Shi on the tour were an SBE director, the project’s LA architect and two Coachella city officials.
Investors soon began transferring payments to the bank accounts Shi would use for his personal spending trips, court records show.
At the time, Shi had given two $ 50,000 deposit checks to buy the vacant land she needed in Coachella. Both jumped.
Steven Hernandez, the mayor of Coachella, knew that SBE operated smart hotels in places like Miami Beach, Las Vegas and Beverly Hills. He was happy to hear about its plan to build a resort with Shi in his tough city of 40,000 inhabitants near the Salton Sea.
The Coachella Valley Music Festival attracted giant spring crowds just miles away in Indio, but there was still not a single hotel in the town of Coachella. The resort could give the city new tourist destination status, as could neighboring Palm Springs or Desert Hot Springs.
“Getting an SBE hotel – it was a pretty big brand,” Hernandez said. “It would have been a really cool project. It’s like SLS and Delano, so we were like, damn it, let’s make it happen. “
At the time, Shi was a 31-year-old Chinese citizen – her name is Ruixue, but she is from Serena in the United States – with limited English skills. She had run a real estate business in an upscale neighborhood in Beijing. With about 20 agents, it acted as a brokerage house that helped Chinese clients buy real estate in Australia, Europe and Canada, according to two people who worked for Shi.
Now she is trying to jump into the top tier of commercial development in the United States. She had previously researched possible Texas and California deals that could be funded by Chinese investors, but none as ambitious as the one in Coachella.
To assemble the project, she hired James D. Clark, a business consultant in Arizona. After an ugly breakup with Shi, Clark would become a key witness for the FBI.
Clark found three plots along 10 Freeways suitable for the resort that Shi could buy for $ 7.6 million. He helped lure SBE into the deal. And he navigated Coachella City Hall and introduced her to officials whose approval the project needed.
Shi initially seemed well placed to buy and develop the land, especially after the first sales event in Beijing, said Clark, who joined Shi on the trip.
“It was compelling when you looked at her operation in China,” he said. “Everyone came back and thought this was the right item.”
To Coachella officials, the team that Shi and SBE assembled looked impressive. DesignArc LA, the Los Angeles architectural firm that drew up the plans, was also designing two other major resorts: the Hotel Californian in Santa Barbara and the Kimpton Rowan Hotel in Palm Springs. The landscape architects, engineers and interior designers were also well established.
“There was no reason why we should think this was not entirely legitimate,” said former City Manager Bill Pattison, who traveled to Beijing with a Coachella planner for yet another Shi presentation to potential buyers.
Pattison remembered Shi as a professional and “well put together.”
“She played the role well,” he said.
But for Clark, the declined deposit checks were the first of many signs of the problems ahead. Deadlines to buy the three lots came and went. Shi repeatedly paid the sellers for extensions – more than $ 1 million in total, according to Clark.
It took Shi nearly a year to complete the $ 2.6 million purchase of the first 20-acre parcel. But it had no access to public roads and she never paid the $ 5 million it would cost to get the remaining 27 acres that the project required. Coachella refused to issue permits to build without proof of land ownership, Clark said.
Project delays alerted some of the Chinese buyers, who began demanding refund.
Shi tried to alleviate them with lies and assured them that she had bought all the land and got all the permits, government acts say. She sent them staged images of bulldozers and people in hard hats shoveling dirt into the desert to give them the false impression that construction was underway, according to the FBI.
Shi also told buyers that their payouts were kept securely in a blocked account while the money had actually been deposited into her personal bank accounts, the government claimed in court papers.
In mid-2016, Shi’s extravagant expenses aroused suspicion among Clark and others who worked for her. On a trip to Miami Beach, Clark said, she stayed at the five-star Faena Hotel, where the cheapest rooms can get more than $ 1,000 a night. In California, Shi liked to eat at Nobu Malibu and Spago in Beverly Hills, he said.
Her deleted Instagram account shows Shi posing in front of the pyramids of Egypt and relaxing on the deck of a boat on the Seine in Paris.
In Beverly Hills, Shi rented an office suite on the 11th floor of a tower with a curved black glass facade, just across Wilshire Boulevard from Neiman Marcus. Clark remembered walking with Shi down Rodeo Drive and stopping in Saint Laurent, Valentino and others highest mode stores where she spent tens of thousands of dollars on clothes she did not want to try.
“I want this, this, this,” she told sales assistants, Clark said.
He called her expenses “obscene and ridiculously flashy.”
“I’ve seen people who are very, very wealthy, legitimately wealthy, and they do not spend money that way,” he said.
Lawsuits from Chinese investors claim that Shi spent $ 250,000 in investor money to place a payout on a condominium in Beverly Hills and spent tens of thousands more on tickets to the Oscars and Grammys.
Clark accompanied her to the 2016 Grammys at the Staples Center. Shi asked him to pick her up in an Aston Martin and scolded him for appearing in a black SUV instead, he said.
Clark said he eventually concluded that she had wrongfully appropriated money from Coachella investors. He warned others on the development team and confronted Shi, sparking a barrage of litigation.
James T. Watson, a financial adviser hired by Shi months after Clark’s departure, claimed in court papers that he quickly discovered that the books for her real estate business were inaccurate and misleading.
Shi had defrauded investors, he wrote, by spending millions of dollars on “personal beauty, clothing, jewelry, a pregnancy surrogate agency”, a stylist and other expenses unrelated to the company. He protested the charges and was immediately fired, he said in an unfair dismissal case.
“Ms. Shi wanted to continue using her devices to fund her life and break the law,” Watson wrote in a court statement.
After Watson won the lawsuit, his attorney, Mark H. Wagner, sent an email to Shi in an attempt to recover the verdict and attorneys’ fees of more than $ 144,000. She brushed him off.
“Feel, I’m in China, you’re wasting mine and your time,” Shi replied. “Enjoy your life.”
Shi eventually returned to California, where she was arrested in June 2020 on a charge of electronic fraud.
For a few months, she was free on bail, but a judge signed an arrest warrant after prosecutors discovered she was trying to secure travel documents under a false name. She was jailed for more than a year before agreeing to plead guilty last month.
Shi risks a maximum sentence of 20 years in prison when she is convicted in March. In her appeals agreement with the prosecutors, she promised not to ask the judge for less than two years. Her deportation after release is “a virtual security,” the complaint agreement states.
Cara Chapman, a spokeswoman for Ennismore, which has acquired SBE’s hotel business, said the company was “shocked by the losses suffered by investors and also suffered losses from a resource and reputation POV from Serena Shi’s false representations.”
Today, the land where Shi and Nazarian imagined a resort that would define the cool of the desert is still barren as ever.
“She took everyone’s money and ran,” said Hernandez, mayor of Coachella. “Investor beware.”