EB-5 Fraud

The EB-5 Investor Visa Program offers foreign nationals a chance to invest in U.S. enterprises and secure a future in America.

However, this opportunity comes with substantial risks, such as the complexity of investment and immigration regulations, and the threat of fraudulent activities within the program.

Importance of Experienced Legal Guidance

Navigating the EB-5 program demands comprehensive legal understanding and experience in both immigration and investment laws.

Law firms with seasoned experience, like Dilendorf Law Firm, provide essential advice to ensure investors make informed decisions, comply with the law, and safeguard their investments against common pitfalls and fraud.

Overview of the EB-5 Investor Visa Program

The EB-5 program permits foreign investors to pursue U.S. residency by investing a designated amount into new commercial enterprises that are expected to create at least 10 full-time jobs for U.S. workers.

Investments can be direct or through Regional Centers that manage larger-scale projects.

Recognizing Pitfalls and Fraud in EB-5 Investments

Investors should be aware of several risks, including:

• Project Misrepresentations: Some projects might exaggerate their stability or job creation potential.
• Misuse of Investor Funds: Cases of improper use or theft of investor funds by project managers or Regional Centers have been reported.
• Opaque Operations: A lack of clear information regarding the business operations and job creation can be concerning.
• Regulatory Non-Compliance: Not adhering to EB-5 requirements and securities laws can endanger both the investment and immigration efforts.
• Dependence on Regional Centers: Investors may face increased fraud risk if they cannot directly oversee their investment.

Legal guidance is imperative to avoid the pitfalls of the EB-5 program.

Attorneys with extensive experience can offer the due diligence necessary to protect an investor’s interests and facilitate a successful immigration and investment experience.

Signs of EB-5 Investment Fraud

When you’re investing in an EB-5 project, you have to be careful to avoid scams. Knowing what to watch out for is important if you want to keep your investment safe.

Here are some warning signs:

Red Flags in EB-5 Projects and Promoters

• Guaranteed Returns or No Investment Risk: Investment always carries risk; promises of guaranteed returns are deceptive.
• Lack of Transparency: If project developers or promoters are reluctant to provide detailed information or open their books for due diligence, it’s a red flag.
• Unregistered Investments: All EB-5 projects should comply with securities laws, including registration requirements, unless a valid exemption applies.
• Pressure Tactics: Aggressive sales techniques or pressure to invest quickly should raise concerns about the legitimacy of the project.
• Complex Business Models: Overly complex project structures can be designed to confuse investors and mask underlying risks.
• Unusual Payment Structures: Payments that do not follow standard business practices, such as unsecured loans or payments to unusual entities, can signal fraudulent activity.

Due Diligence Failures

• Inadequate Background Checks: Failure to conduct extensive background checks on the promoters, developers, and the project itself is a cause for concern.
• Poor Documentation: Incomplete or unprofessional documentation regarding the investment, business plan, or job creation forecasts.
• Non-Compliance with EB-5 Regulations: Projects not adhering to the specific requirements set by the USCIS for EB-5 investments, such as job creation metrics.

Misrepresentation of Information

• False Advertising: Claims about the project or potential immigration benefits that are not supported by evidence.
• Inconsistent Communications: Discrepancies in information provided over time or between different documents.
• Changes to Project Scope Without Notice: Alterations to the business plan or project scope without investor consent or proper notification.

Recognizing these signs and seeking legal assistance is essential for any investor considering an EB-5 project.

Our team can help investors perform due diligence and evaluate the credibility of an EB-5 investment, providing a layer of protection against fraudulent schemes.

Legal Recourse for EB-5 Fraud Victims

Victims of EB-5 fraud have several legal options to seek justice and potentially recover their investment.

If you’ve been defrauded in an EB-5 investment, it’s essential to understand the avenues for recourse:

1. Civil Litigation: Investors can file a lawsuit against the fraudulent parties. This can lead to monetary damages if the court finds in favor of the investor.
2. Arbitration: Some EB-5 investment contracts include arbitration clauses, which require disputes to be resolved through arbitration rather than court litigation.
3. Securities and Exchange Commission (SEC) Actions: The SEC can file enforcement actions against individuals or entities that have committed securities fraud within EB-5 offerings.
4. Immigration Remedies: If fraud affects the immigration process, USCIS may offer remedies. Although USCIS is not a law enforcement agency, they work with others like the FBI and SEC to address fraud in the EB-5 program.

It’s critical to act quickly if you suspect fraud. Contacting a lawyer experienced in EB-5 matters can help navigate the complexities of these cases and work with the appropriate agencies to address the wrongdoing.

Contact Us

If you suspect you’ve been a victim of EB-5 investment fraud or have any concerns regarding your EB-5 visa application, don’t hesitate to reach out to us at (212) 457-9797 or via email info@dilendorf.com for legal guidance.

Our experienced attorneys are prepared to analyze your situation, advise you on the best course of action, and support you through every step of the process.

Resources and Samples

1. Immigrant Investor Program:Opportunities Exist to Improve Fraud and National Security Risk Monitoring
2. EB-5 Immigrant Investor Visa
3. A BILL To reform the EB–5 Immigrant Investor Program, and for other purposes
4. Commission Auditor’s Informational Research
5. Investor Alert: Investment Scams Exploit Immigrant Investor Program
6. Beware of EB-5 Fraud
7. Understanding EB-5 Securities – NYU Stern Database of SEC EB-5 Securities Enforcement Actions
8. Too Porous for Protection? Loopholes in EB-5 Investor Visa Oversight Are Cause for National Security Concern
9. A Dive Into EB-5: A Need for Complete Modernization of U.S. Investor-Based Immigration Program or EB-5
10. Improving the EB-5 Investor Visa Program: International Financing for U.S. Regional Economic Development
11. How to invest in U.S. real estate through an EB-5 Regional Center to obtain U.S. permanent residency
12. Developing Affordable Housing with EB-5
13. State-Level Determinants Of Eb-5 Investment: A Cross-Sectional Analysis
14. Splitting the EB-5 Program: A Proposal for Employment-Based Immigration Reform to Better Target Immigrant Entrepreneurs and Investors
15. The Impact of EB-5 Ownership on Employee Job Satisfaction and Guest Satisfaction in the Hospitality Industry: A Case Study

We stay up to date and track cases involving EB-5 Fraud Cases:

1. Vermont reaches $16.5 million settlement with EB-5 investors | EB-5 Investors

The State of Vermont agreed to a settlement amount of $16.5 million  to resolve all existing and potential lawsuits filed by approximately 850 investors in the Jay Peak EB-5 projects scandal. The case has been called the largest fraud in Vermont’s history.

2. EB-5 FRAUD SUIT TIED TO FAILED HOTEL SEES KEY SETTLEMENT | Zebersky Payne Shaw Lewenz

A Florida federal judge has approved a settlement between a group of Chinese investors and a man they say aided a fraud scheme that duped them into investing in a failed hotel with the hopes of securing EB-5 visas, with the man poised to assist the litigants in exchange for claims against him being dropped.

3. EB-5 Immigrant Investors’ Class Action Suit against Law Firms Raises Anti-SLAPP Defense | Certified Translation, Interpreters, Apostilles

EB-5 program has been used as a tool for scammers to lure prospective investors in search of a green card to invest fortunes in fraudulent commercial enterprises. The most recent class action civil litigation to address this issue was in Zhao Hui Shi v. Wolfsdorf Rosenthal, LLP, decided on October 29, 2019, in the California Court of Appeals.

4. Settlement Allows Previous EB-5 Regional Centers to Sponsor New Investors | Baker Donelson

Two lawsuits were brought against USCIS by different RCs and were joined by Invest in the USA (IIUSA), the industry association of RCs, challenging USCIS’s initial interpretation of RIA that previous designations of approximately 900 RCs were void.

5. Class Action Alleges EB-5 Immigrant Investors Defrauded by Luxury Queens Hotel/Convention Center Developers | ClassAction.org

A proposed class action alleges at least 110 EB-5 immigrant investors were defrauded into pouring hundreds of thousands of dollars into what they were led to believe was a project to build a nearly 1.2 million-square foot, 29-story luxury hotel and convention center in Queens County, New York.