Serena Shi cheated Chinese investors in Coachella resort

A woman speaks into a microphone against a red background

Nov. 23, 2021 5 AM PT

Serena Shi’s taste for luxury seemed insatiable.

She spent $133,000 on clothes at Valentino. Her two Mercedes-Benzes — a sports car and an SUV — cost $294,000.

Shi’s bills at a Beverly Hills “lifestyle design” business that advises clients on wardrobe, cosmetics and high-end shopping hit nearly $800,000. A travel concierge service that caters to the jet set charged her $2.2 million for trips around the world.

Those trappings of the high life were gone when Shi, 37, shuffled into a federal courtroom in Los Angeles one recent afternoon wearing a beige jail jumpsuit with clanking chains dangling from her wrist and ankle shackles.

Speaking through a Mandarin interpreter, Shi admitted that she’d duped scores of investors in China into making $23 million in down payments on condos in California. They thought they were buying units in a trendy resort that Shi was supposedly building on a 47-acre patch of desert in Coachella.

The project never broke ground.

Shi, who ran a Beijing real estate firm with an office in Beverly Hills, confessed to siphoning the money to cover the lavish personal expenses an FBI agent detailed in a court filing. She pleaded guilty to wire fraud.

The scale of Shi’s three-year swindle stunned investors, who hired lawyers in California to file long-shot lawsuits to recover losses.

“I’ve been suing crooks for a living, and she was pretty far up there on the brazenness scale,” said Justin J. Shrenger, one of the attorneys.

Shi’s con also snagged Sam Nazarian, the founder and chief executive of SBE, a Los Angeles company whose hotel, restaurant and nightlife brands at the time included SLS, Mondrian, Clift, Katsuya and Skybar.

In October 2015, Nazarian met with Shi at his office in the SBE tower on Wilshire Boulevard and signed a “letter of intent” for the company to build and operate her proposed condo and hotel resort.

“Let’s get a press release out ASAP!!!” Nazarian wrote that evening in an email to SBE’s development team.

The press release described the Hyde Hotel & Residences Coachella Valley as a 350-room “lifestyle resort” to be built by an SBE subsidiary in partnership with Shi’s “Beijing based global real estate placement company.”

It quoted Shi saying she was thrilled to work with SBE, and Nazarian saying he was excited to introduce an SBE leisure brand to the Palm Springs area. Suites would come with private plunge pools. Craft cocktails at the bar would follow stretch routines on the spa’s yoga patio. The “vibe” would be carefree.

In a phone interview, Nazarian said SBE poured time and money into the project and was “taken advantage of.”

“From that perspective, it was a very unfortunate situation for us as well,” he said.

Richard Goldman, Shi’s attorney, declined to comment.

Days after the project’s announcement, SBE’s interior designers produced a glossy “look book” with sample photos of mid-century motifs the resort would feature. Captions promised a desert oasis where well-to-do 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 in U.S. businesses.

Shi also flew to Beijing to pitch the project in an elaborate sales presentation at a posh hotel in November 2015. Elegantly dressed women playing harps greeted attendees. Accompanying Shi on the trip was an SBE executive, the project’s L.A. architect and two Coachella city officials.

Investors soon began wiring down payments to the bank accounts Shi would tap for her personal spending sprees, court records show.

By then, Shi had provided two $50,000 deposit checks to buy the vacant land she needed in Coachella. Both of them bounced.

Steven Hernandez, the mayor of Coachella, knew that SBE ran chic hotels in places like Miami Beach, Las Vegas and Beverly Hills. He was happy to hear of its plan to build a resort with Shi in his hardscrabble city of 40,000 near the Salton Sea.

The Coachella Valley music festival drew giant springtime crowds just a few miles away in Indio, yet there was still not a single hotel in the city of Coachella. The resort could give the city new status as a tourist destination like its neighbors Palm Springs or Desert Hot Springs.

“To get an SBE hotel — that was a pretty big brand,” Hernandez said. “It would have been a really cool project. It’s like the SLS and the Delano, so we were like, hell yeah, let’s make this happen.”

The rural outskirts of Coachella in February 2020.

At the time, Shi was a 31-year-old Chinese citizen — her name is Ruixue, but she goes by Serena in the U.S. — with limited English skills. She’d been running a real estate firm in an upscale neighborhood of Beijing. Employing about 20 agents, it functioned as a brokerage helping Chinese customers buy real estate in Australia, Europe and Canada, according to two people who worked for Shi.

Now she was trying to leap into the upper tier of commercial development in the United States. She previously had explored possible Texas and California deals that could be funded by Chinese investors, but none as ambitious as the one in Coachella.

To pull the project together, she hired James D. Clark, an Arizona business consultant. After a nasty break with Shi, Clark would become a key witness for the FBI.

Clark found three lots along the 10 Freeway 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, introducing 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 convincing when you looked at her operation in China,” he said. “Everyone came back thinking this is the real deal.”

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: Hotel Californian in Santa Barbara and Kimpton Rowan Hotel in Palm Springs. The landscapers, engineers and interior designers were also well established.

“There was no reason for us to think that this wasn’t completely legitimate,” said former City Manager Bill Pattison, who traveled to Beijing with a Coachella planning official for another Shi presentation to potential buyers.

Pattison remembered Shi as professional and “well put together.”

“She played the part well,” he said.

But for Clark, the bounced deposit checks were the first of many signs of the trouble ahead. Deadlines to purchase the three lots came and went. Shi repeatedly paid the sellers for extensions — more than $1 million in all, according to Clark.

It took Shi nearly a year to finalize the $2.6-million purchase of the first 20-acre parcel. But it had no access to public roadways, and she never paid the $5 million it would cost to get the remaining 27 acres that the project required. Coachella declined to issue permits to build without proof of land ownership, Clark said.

Project delays alarmed some of the Chinese buyers, who began demanding refunds.

Shi tried to assuage them with lies, assuring them she had purchased all the land and obtained all the permits, government court filings say. She sent them staged photos of bulldozers and people in hardhats shoveling dirt in the desert to give them the false impression that construction was underway, according to the FBI.

Bulldozers and people in hardhats sticking shovels into the ground in the desert.

Shi also told buyers their down payments were being held safely in an escrow account, while the money had actually been wired into her personal bank accounts, the government alleged in court papers.

By the middle of 2016, Shi’s extravagant spending was arousing suspicions of 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 fetch more than $1,000 a night. In California, Shi liked to dine at Nobu Malibu and Spago in Beverly Hills, he said.

Her deleted Instagram account shows Shi posing in front of the pyramids in Egypt and lounging on the deck of a boat on the Seine in Paris.

In Beverly Hills, Shi leased an office suite on the 11th floor of a tower with a facade of curved black glass, just across Wilshire Boulevard from Neiman Marcus. Clark recalled walking with Shi down Rodeo Drive and stopping in Saint Laurent, Valentino and other haute couture stores where she spent tens of thousands of dollars on clothes she did not bother to try on.

“I want this, this, this, this,” she would tell sales clerks, Clark said.

He called her spending “obscene and ridiculously ostentatious.”

“I’ve seen people that are very, very wealthy, legitimately wealthy, and they don’t spend money like that,” he said.

Lawsuits by the Chinese investors allege that Shi used $250,000 in investor money to put a down payment on a Beverly Hills condo and spent tens of thousands more for tickets to the Oscars and Grammys.

Clark accompanied her to the 2016 Grammys at Staples Center. Shi asked him to pick her up in an Aston Martin and scolded him for showing up instead in a black SUV, he said.

Clark said he eventually concluded she was misappropriating money from Coachella investors. He warned others on the development team and confronted Shi, setting off a flurry of court disputes.

James T. Watson, a financial advisor hired by Shi months after Clark’s departure, alleged in court papers that he quickly discovered that the books of 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 surrogacy agency,” a stylist and other expenses unrelated to the business. He objected to the spending and was promptly fired, he said in a wrongful-termination suit.

“Ms. Shi wanted to continue to use her entities to finance her life and break the law,” Watson wrote in a court declaration.

After Watson won the lawsuit, his lawyer, Mark H. Wagner, emailed Shi in an attempt to collect on the judgment and legal fees of more than $144,000. She brushed him off.

“Mark I am in China you are wasting my time and yours,” Shi replied. “Enjoy your life.”

Shi eventually returned to California, where she was arrested on a wire fraud charge in June 2020.

For a couple of months, she was free on bail, but a judge signed a warrant for her arrest after prosecutors discovered she was trying to secure travel documents under a false name. She was jailed for more than a year before agreeing last month to plead guilty.

Shi faces a maximum penalty of 20 years in prison when she is sentenced in March. In her plea deal with prosecutors, she vowed not to ask the judge for less than two years. Her deportation upon release is “a virtual certainty,” the plea agreement says.

Cara Chapman, a spokeswoman for Ennismore, which has acquired SBE’s hotel business, said the company was “shocked at the losses suffered by the investors and also suffered losses from a resource and reputational POV from Serena Shi’s false representations.”

Today, the land where Shi and Nazarian envisioned a resort that would define desert cool remains as barren as ever.

“She took everybody’s money and ran,” said Hernandez, the mayor of Coachella. “Investor beware.”

How a high-living thief reaped millions from a Coachella resort she never built

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