Feds say a Utah resort developer bilked investors. He blames construction delays.

Bear Lake • The shores of Bear Lake are dotted with housing developments, condos and restaurants that cater to the roughly one million tourists who visit the turquoise-blue oasis each summer.

At Garden City’s Water’s Edge Resort — which claims it’s becoming the lake’s first and only truly waterfront resort community — guests can browse a vintage-inspired candy store or a surf shop that evokes California’s Ventura Beach. They can relax at a spa or grab burgers and one of the region’s famous raspberry shakes at Cody’s Gastro Garage.

But just behind that up-and-running front of Water’s Edge is a half-finished condo building with an exterior of exposed plywood and tattered house wrap.

The unfinished building is a far cry from the expansive vacation units and glitzy amenities — including a hotel, indoor water park, valet boat service and an outdoor concert stage — promised in the resort’s renderings.

And now, the Securities and Exchange Commission is accusing developer Utah Regional Investment Fund, led by Christofer Shurian, of fraud — pointing to the wide gap between what Water’s Edge is today and what investors and the U.S. government were promised it would be by now.

The SEC’s lawsuit, filed last month in Utah’s federal court, claims Shurian and his company lied to more than 30 foreign investors and the federal government about the resort’s progress — while Shurian used some of the $18 million it raised to pay for a vacation home in Mexico, $180,000 worth of vehicles and Shurian’s house in Mapleton.

”In total, defendants spent at least $5 million in commingled investor funds on expenses unrelated to the development and construction of the Water’s Edge Resort,” the complaint alleges.

According to the filing, Shurian told 36 foreign investors, all Chinese nationals, that their $500,000 investments would directly fund the resort’s construction, and that the project would be completed by 2017. The investors expected to reap profits — and a fast track to permanent residency in the United States, the SEC said, under an investment incentive program that the federal government offers with businesses in rural areas.

The SEC alleges that Shurian and his company submitted falsified reports to the program, misrepresenting where the investment money was going and how many jobs it had created.

Shurian and his attorney deny the charges. The resort is behind schedule, Shurian said, due to logistical challenges beyond his control — including disputes with contractors — and investor funds have all been used to pay for development expenses.

“It’s just been a bootstrap situation,” Shurian told The Salt Lake Tribune. “There have been a handful of delays over the years. And here we are. It is what it is.”

Justin Elswick, Shurian’s attorney, said in a statement that the Water’s Edge development has continued “despite the significant economic and other challenges caused by the COVID shutdown,” and “largely due to Mr. Shurian’s oversight and effort.”

Investors and federal government allegedly ‘deceived’

Bear Lake’s deep, blue waters straddling Rich County, Utah, and Bear Lake County, Idaho, have drawn tourists for decades. In 2021 alone, more than one million people visited the lake, and around 80% of them were from Idaho and Utah, according to a 2022 study from the Conservation Economics Institute.

But guests have historically only visited in the warmer months, leading many shops to close up until spring. Eighty percent of all the residences in Garden City are seasonal homes, according to the same study.

“When fall hits, [Garden City] just turns into a ghost town,” Shurian said. “The first couple of times I came up here in the winter, you couldn’t get a meal.”

With an elevation of nearly 6,000 feet, and Bear Lake often acting as an ice cube cooling everything around it when it’s frozen, Garden City is among the coldest towns in Utah during the winter. Many visitors get to Garden City — located along the lake’s southeastern shore — by driving the steep, winding road through Logan Canyon, which can become a bigger challenge when snow and ice fill the roadway.

Shurian said he envisioned Water’s Edge Resort as a year-round destination, a resort community that could serve as both a beach getaway and a cozy winter escape. Beaver Mountain Ski Area is 13 miles away.

To help fund the enterprise, Water’s Edge developers turned to a federal program that would let them offer investors a unique return: Legal permanent residency in the United States.

This visa program, EB-5, makes foreign investors eligible for permanent residency if they put enough money into a U.S. commercial business. The program is intended to inject money and jobs into rural or economically unstable areas.

Utah Regional Investment Fund raised $18 million from 36 Chinese investors to build the Bear Lake resort, after the fund was approved to participate in the program. (At the time Shurian started making deals through the EB-5 program, the minimum investment threshold was $500,000 to qualify in rural areas. It has since increased to $800,000.)

The fund’s website touts EB-5 visas as an easy way to establish permanent residence in the United States. Investments are “passive” — investors do not need to buy or manage a business once they’ve invested in it, it notes. And investors can “live and work ANYWHERE” in the United States,” the site says.

Each year, businesses are required to report how much investment money has been spent on a project and how many jobs that money has created — and the SEC alleges Shurian and his firms misrepresented both figures. In annual filings from 2015 to 2019, the SEC alleges, Shurian and his firms submitted false or fabricated invoices to support their deceit, so they could keep collecting money from investors in China.

Instead of using EB-5 investment money to build Water’s Edge, as promised, Shurian funneled roughly $10 million of it into an LLC that he “exclusively controls,” according to the complaint. He then used the funds to pay a firm to find more EB-5 investors, the complaint alleges, and pay for his own personal expenses. According to the complaint, Shurian used $1.6 million in funds to pay for an unrelated property in Heber, and more than $500,000 to pay personal credit card payments over five years. Over $700,000 was also paid directly to Shurian’s personal bank account between 2014 and 2019, the complaint alleges.

By 2017, when investors had been told the full resort community would be complete, just the resort’s first phase of shops and condos was done. The restaurant opened that year. The spa, candy store and surf shop opened a year later.

All the businesses are in a central building located between the lake and Garden City’s main drag. Upstairs, a handful of condos are available for rent. The office on the lake-facing side of the building includes a three-dimensional rendering of what’s promised to be the community’s “largest and newest” resort.

By 2021, with the resort still nowhere near complete and development hardly started on any of the remaining features, the SEC said, Shurian started pre-selling condos in 2021 to fund construction.

He had continued to tell investors he had access to private equity money that “never materialized,” the SEC said. “Other than some bridge loans from community banks,” the agency said, the developers had not secured any additional funding to finish the project.

The unfinished oasis

Shurian said all of the disputed expenses are among the costs of business. He’s been cooperating with the SEC since he learned the commission was investigating him, he said, long before the complaint was filed against him in September.

“It takes money to keep this project alive,” Shurian said. “All these bills I have to pay to keep this running, you know, when they bring in all this money for investment, that’s not $18 million in two-by-fours and concrete. It’s all the things that have to happen to keep this thing running.”

The project has faced its share of setbacks, Shurian said, including the COVID-19 pandemic and a string of developers who he said did not, or could not, finish what they started. Shurian said he fired one contractor because he was unsatisfied with the quality of work, pointing to newly laid concrete outside the partially completed condo complex that was unlevel and cracked.

“It’s been difficult, but here we are,” Shurian said.

The presales were part of his business plan all along, he said, but construction delays have also stalled sales.

As of late October, the Water’s Edge website was still offering ownership opportunities for different residences and suites at the resort. Waterfront condos are listed starting at around $850,000; hotel suites, which Shurian says will be rented and managed by Water’s Edge, are listed starting at roughly $550,000.

Shurian denied making any false representations to investors, and said none of his investors have complained to him about the project’s progress.

The SEC did not respond to The Tribune’s questions about whether any of Shurian’s investors have gained permanent residency or what the project’s delays could mean for them. Shurian said, as far as he knows, none of his investors have gained residency — but said he believes the delay is due to processing delays with federal immigration officials.

The SEC has asked for a permanent injunction, barring Shurian from selling any securities related to the businesses he controls and from serving as an officer or director of a public company. It is also seeking punitive damages and for Shurian and associated entities to give back any “ill-gotten gains.”

Shurian and Elswick are asking for a jury trial. Elswick said they are confident the evidence will “exonerate Mr. Shurian and the other defendant entities.”

The first phase of the resort has already started to live up to its intended purpose, Shurian said. Other businesses have started to stay open year-round. Locals visit the spa in the colder months for manicures or massages.

Cody’s offers local specials in the fall and winter. Shurian said the restaurant’s industrial metal tables, underneath the classic cars and Shurian’s first motorcycle that are suspended by garage lifts, fill to the brim on weekends with local diners, even if the restaurant is slower on weekdays.

“If we break even in the winter,” he said, “we’re happy.”

Shannon Sollitt is a Report for America corps member covering business accountability and sustainability for The Salt Lake Tribune. Your donation to match our RFA grant helps keep her writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.