The original developer of the Baha Mar resort in the Bahamas has won approval to proceed with a $2.25 billion fraud claim against China Construction America (CCA). New York State Supreme Court Justice Saliann Scarpulla allowed the case to move forward on Friday.

Sarkis Izmirlian, who invested $845 million as the original developer, claims he was forced out of the project through what he describes as "one of the largest construction-based frauds in this hemisphere."

The resort, envisioned in 2005 as a "Vegas by the sea," faced initial setbacks during the 2008 recession when the original development partner withdrew. The Export Import Bank of China (ExIm) then provided a $2.45 billion loan, installing CCA as both controlling shareholder and primary contractor.

The lawsuit alleges that CCA:

• Never intended to complete the project on time or within budget
• Used the project as a training ground for inexperienced workers
• Submitted fraudulent billings worth hundreds of millions
• Caused a severe liquidity crisis in early 2015

The project, now owned by Hong Kong-based Chow Tai Fook Enterprises (CTFE), finally opened in May 2017 after numerous delays. Justice Scarpulla noted that BML Properties lost its entire $845 million investment and expected future profits due to CCA's takeover in 2015, which was supported by the Bahamas government.

CCA's request to move the case to arbitration was denied, requiring them to file a defense by February 13, 2019. The case presents a potentially embarrassing situation for the Chinese government, which has recently reduced its investment in gaming industries abroad.

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