Is your EB-5 investment a scam?

The U.S. EB-5 Immigrant Investment Program offers foreign investors and entrepreneurs permanent residence (a green card) in exchange for an investment of $1 million (or $500,000 for targeted employment areas) and job creation.  Over the years, EB-5 investment has virtually guaranteed its investors citizenship, even if it cannot guarantee a return on its high-risk investment.  However, recent years have revealed that many EB-5 marketing agencies, EB-5 regional centers, and EB-5 projects were nothing but utopian pyramid and ponzi schemes.

If you didn’t know about the warning…

Every year, the US releases 10,000 visas to EB-5 immigrant investors, but it wasn’t till 2013 that all 10,000 visas were claimed.  Since then, the government has released an official warning to investors regarding the prevalence of EB-5 fraud.  In the warning, the US Securities & Exchange Commission (SEC) reveals a few warning signs investors should steer clear of:

• guarantees of a visa, green card, or citizenship
• guarantees of a return on investment (5% in SEC v. Marco A. Ramirez, et al.)
• promises of “no risk” investment
• proof of overly consistent returns on investment
• agencies that promote a business before USCIS has designated it as a Regional Center
• promises to refund Regional Center administrative fees if the EB-5 visas are denied (SEC v. A Chicago Convention Center, et al.)
• unregistered investments
• unlicensed sellers
• many companies run by a handful of people

If you’re curious about past cases of fraud…

Other well-known EB-5 fraud cases include:

• USA v. Jennifer Yang, Daniel Wu – Californian (norcal) couple raised $4 million between 2009 and 2016 through the EB-5 visa program by defrauding the gov’t with fake reports, fake employees, etc.
• Edward Chen, Jean Chen – Californian Chinese-American couple raised $22.5 million through Chinese EB-5 investors and stole more than $12 million, misappropriating more than 91 percent of the investors’ funds, and defrauding the gov’t by issuing leases with fake information.
• Victoria Chan, California Investment Immigration Fund –  South El Monte-based father-daughter duo raised over $50 million from Chinese investors by submitting over 130 fraudulent EB-5 applications.
• Jay Peak, Inc. – A ski resort company raised $360 million between 2006 and 2016 for various construction projects that were not realized.
• Xin “Lisa” Wang, Charles C. Liu – Raised $27 million to build a proton-beam cancer treatment center, but 18 months later it was discovered the funds had just been divided among the agents (Los Angeles, 2016).
• Emilio Francisco, PDC Capital – Californian (OC) Attorney collected $72 million from investors to fund various projects from coffee shops to assisted living facilities only to divert at least $9.6 million for his personal use.
• Steve Qi – Alhambra-based attorney sued for pocketing money from both investors and regional centers while fraudulently promoting EB-5 projects based on personal gain.
• Anshoo Sethi, A Chicago Convention Center LLC – Chicago-based attorney raised over $158 million through over 290 Chinese investors for a hotel project that never took off.

If you’re looking to invest…

The SEC also offers helpful tips as to how to avoid EB-5 fraud:

• Confirm a Regional Center is on the official list
• Ask the Regional Center for official USCIS documents, such as the form I-924, and I-924A
• Ask for a copy of the written investment memorandum
• Ask if the agents/promoters are being paid
• Hire a third-party to verify the investment
• Weight the risk by reviewing the loan documents
• Confirm if the developers have also invested in the project
• Confirm a regional center can operate in your geographic location

If you’re worried…

If you have reason to believe an EB-5 investment project is a scam, or a Regional Center, agent, or seller is suspicious, you can report their activities to the SEC here. The SEC typically offers a monetary award to successful whistle-blowers. Scams can also be reported through Immigration (USCIS) or the Federal Trade Commission (FTC).

If you’ve already invested…

The attorneys at Lum Law Group has experienced business litigators with traditional EB-5 and class-action law suit experience.  If you believe your investment qualifies as EB-5 fraud, we can help you. In the end, EB-5 is nothing more than a business contract.