Investor wins claim against would-be AM&A developers for breach of contract | Business Local

Five years ago, Weiping Cao thought she had found a way to obtain an immigration “green card” to come to the United States as a permanent resident.

Weiping, a Chinese national, had met Xiaomei “Sally” Lu and Jinneng “Bally” Bao, a married couple from Glen Cove, N.Y., who were trying to raise money from foreigners to invest in their real estate redevelopment project – to convert the former AM&A’s Department Store building on Main Street in Buffalo into a new hotel.

Weiping in March 2017 invested $500,000 in the project under the federal EB-5 visa program, designed to spur investments in redevelopment projects. She then filed with U.S. Citizenship and Immigration Services for conditional permanent alien resident status.

Then, when the project faltered and started running out of cash, she invested another $6.5 million, this time as a loan guaranteed by Lu and Bao, to ensure the project went through. But that still wasn’t enough, and now the project is in limbo, without funding and stuck in litigation. Meanwhile, Weiping is no closer to emigration, let alone getting her money back with the interest she says she is owed.

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But now a federal judge in Brooklyn is taking her side, at least in part, rejecting arguments by Lu and Bao that they may not have had the authority to enter into the loan agreement.

While a bitter legal battle continues between two groups of Chinese investors over who owns and can redevelop the AM&A building, U.S. District Court Judge Eric N. Vitaliano in Brooklyn says that’s irrelevant for Weiping’s separate lawsuit seeking to recover her investment from Lu, Bao and Landco H&L – one of two companies that claims title to the property and project.

A legal battle is being waged among three downstate investors that has left the future of the landmark downtown complex in limbo.

Citing the “precise and unambiguous” language of the signed loan documents, as well as the perception and claims of authority by Lu and Bao at the time, Vitaliano granted Weiping’s request for summary judgement for breach of contract, and breach of personal guarantees on the loan.

The amount of damages owed to Weiping must still be litigated, Vitaliano said, but the ruling is still a setback for Lu and Bao. The couple had tried unsuccessfully to use a separate state court dispute over the building’s ownership as a defense against Weiping’s claims, saying the loan agreement would be unenforceable if they lose the other case – even as they argue in state court that they should win. 

Vitaliano called that argument “more the red herring than the shield.”

For Buffalo, though, it’s another chapter in the long-delayed effort to redevelop one of Buffalo’s oldest and best-known downtown buildings, which has sat largely empty and neglected at 377 Main St. for more than 24 years since the last business moved out.

It was purchased in late 2014 by Landco H&L, a Chinese and American investor group based in Flushing, Queens, led by Li “Lily” Li. The group unveiled plans for a $70 million makeover, initially into an unbranded 300-room hotel for Asian tour groups visiting Niagara Falls. That plan for the 375,000-square-foot building later shifted into a general-purpose Wyndham Buffalo Hotel, as control of Landco shifted in December 2015 from Li to Lu.

But Li claimed that Lu breached the contract by improperly transferring most of her ownership in Landco to Lu’s own company, Buffalo Hotel Management, without permission from Li. In turn, Li said, that change in control triggered a provision that returned more than half of the shares to Li.

Landco then sold the entire property in late January 2020 for $2 million to Elena Fu Yiyao’s 377 Main Realty. Two weeks later, Landco – back under Lu – sued 377 Main Realty and Li for fraud in state Supreme Court in Erie County.

That’s also when Cao filed her lawsuit. 


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