Monday, October 14, 2013

EB5 Projects Possible Scams

EB5 program enables foreign Investors to obtain conditioned green card via investment in designated regional center who creates 10 direct and indirect jobs for each investor based on a feasible business plan.  Conditions can be removed if actual 10 jobs are created using the investment. Worthy of note though, foreign investors who invest through EB-5 are not guaranteed a visa or to become lawful permanent residents of the United States.

The fact that a business is designated as a regional center by USCIS does not mean that USCIS has endorsed the project and has made a promise of green card to investors of such project. Instead, approval of a EB5 regional center is simply an approval on investment plan submitted by business owners to USCIS. As a matter of fact, the SEC and USCIS are aware of attempts to misuse the EB-5 program as a means to carry out fraudulent securities offerings.

,SEC v. Marco A. Ramirez, et al., the SEC and USCIS alleged the USA Now regional center falsely promised investors a 5% return on their investment and an opportunity to obtain an EB-5 visa. The promoters allegedly started soliciting investors before USCIS had designated the business as a regional center. The SEC alleged that while the defendants told investors their money would be held in escrow until USCIS approved the business as eligible for EB-5, the defendants misused investor funds for personal purpose such as funding their Cajun-themed restaurant.

SEC v. A Chicago Convention Center, et al., is another case which the SEC and USCIS coordinated to halt an alleged $156 million investment fraud. The SEC alleged that an individual and his companies used false and misleading information to solicit investors in the “World’s First Zero Carbon Emission Platinum LEED certified” hotel and conference center in Chicago, falsely claimed that the business had acquired all necessary building permits and that the project was backed by several major hotel chains. According to the SEC’s complaint, the defendants promised investors that they would get back any administrative fees they paid for their investments if their EB-5 visa applications were denied.  The defendants allegedly spent more than 90 percent of the administrative fees, including some for personal use, before USCIS adjudicated the visa applications.

The El Monte Regional Center story isn't a happy one neither.  El Monte received USCIS approval to raise money for the project via the EB-5 investor visa program. A detailed economic blueprint of the project from 2008 offers a good overview of the city's plan. Unfortunately, things turned sour quickly. In 2009, project executives John Leung and Jean Lang were arrested for alleged fraud and embezzlement.

As with any investment, it is important to research thoroughly any offering that purports to be affiliated with EB-5. You need to contact a trustworthy and capable immigration attorney for assistance in due diligence. You are more than welcome to contact us at 954 892 5517.