Beware of EB-5 Immigrant Investor Visa Scams
November 7, 2013
If you are a foreign national interested in taking advantage of the immigrant investor visa program, before you invest your $500,000 or your $1 million, be careful that you do not become an EB-5 scam victim. The US Securities and Exchange Commission (SEC) and the US Citizenship and Immigration Services (USCIS) have recently become aware of investment scams targeting foreign nationals who make investments through the EB-5 immigrant investor program.
The EB-5 investor visa program allows a foreign national to make a capital investment of $1 million in a new US commercial enterprise that will create jobs in the United States. This investment minimum is lowered to $500,000 if the investment is made in a targeted employment area. As a result of making this investment, the immigrant investor receives US lawful permanent resident status with a conditional green card. After a two year period, the conditional residency may become permanent if certain job creation requirements are met.
EB-5 regional centers can be very beneficial to the immigrant investor in several ways, so long as the regional center is legitimate. It is important to be aware of that just because a business has been designated as a regional center by the USCIS, this does not mean that the federal government has analyzed and approved the investments being offered by the regional center.
The scams identified by the SEC and the USCIS involve certain EB-5 regional centers who allegedly abused the investor visa program to entice foreign national investors to invest in fraudulent securities scams. Alleged investment scams have been recently uncovered and prosecuted by the SEC and the USCIS. One such case is SEC v. Marco A. Ramirez, et al. In this case, the government alleged that the defendants made false promises to immigrant investors and assured them they would receive a 5% return on their investments and get eligibility to apply for the EB-5 visa. The defendants allegedly promised investors that their capital investments would be kept in escrow until the USCIS approved their EB-5 visas. However, the government alleged that the defendants misused those funds to buy luxury cars for themselves and for other personal use. The investors not only lost their investments, they did not receive their EB-5 visas.
In order to avoid being the victim of an EB-5 scam, you should thoroughly research any investment opportunity offering made in connection with the EB-5 visa program. Confirm that the USCIS has designated the entity as a regional center. Ask the regional center to provide you with supporting documentation of its USCIS regional center designation. Ask for all investment offers to be made in writing. If the investment is being recommended by unaffiliated consultants, lawyers, or agencies, be skeptical and ask how much money or benefits they are receiving from promoting the investment. Independently verify that the investment opportunity is legitimate. For instance, for foreign investment opportunities involving commercial real estate construction, check the county records and tax assessments. Realize that your investment may be in a new commercial enterprise that does not have assets, so look at loan documents and offering statements to verify whether loans are secured by collateral. Understand that if the project’s developers and principles have not made an investment as well, their financial interest may not be dependent on the project’s success.
These are just some of the ways that can help you avoid a scam. A skillful and experienced attorney may be able to assist you in locating a successful and legitimate EB-5 regional center and help you avoid scams.