The allure of permanent residence offered through the EB-5 program is clear to both USCIS and the U.S Securities and Exchange Commission. It is also clear that the SEC is aware that fraud runs rampant through the industry. Under the EB-5 regional center program, business owners apply for their businesses to be designated as regional centers, which offers investment opportunities deemed to be new commercial enterprises by USCIS. These scams often exploit unaware and willing investors who are quick to trust developers, projects, or attorneys who promise amazing returns in a “too good to be true” scenario. Often, these projects misappropriate investment funds which are meant to be contributed to projects, and instead, exploit the investors for personal financial gain.
But why is the EB-5 Program attractive to foreign investors? A foreign investor can make a minimum investment (which currently can range from $500,000-$1,000.000) which is intended to create jobs in the U.S., and can lead to investors obtaining a green card without the need to show extraordinary ability or other benefit to the USA. The benefit is intrinsic in the money they invest which creates jobs for United States citizens. Another key factor is that each investor’s funds must be at risk. If all requirements are met, the investor will be granted a condition green card, in which the conditions will be removed if it can be proved that the minimum job creation requirements established by USCIS are met.
However, a green card is not guaranteed, because if these requirements are not met, then they will not be ultimately granted permanent residence. Many attorneys are trusted by willing investors to seek projects that meet the above requirements, but in the worst cases, end up misappropriating funds and conducting investment scams. These attorneys will solicit investors and state that their funds will be invested into projects and be held in escrow until USCIS approves the business to be eligible for EB-5. However, the attorneys misappropriate investor funds for personal gain. At times, innocent investors do not even obtain conditional green cards from their investments due to the mishandling of the funds.
For example, an attorney named Victoria Chan pleaded guilty to visa fraud, wire fraud, and money laundering in 2017. In this case, Chan admitted to filing hundreds of applications for visas in exchange for investments that were intended to be used for construction projects that were ultimately never built. Instead, Ms. Chan kept some of the investments for personal use and also used the money to buy real property for herself by defrauding trusting investors. Victoria Chan defrauded investors through a business called California Investment Immigration Fraud, in which Tat Chan, her father, was also involved with.
In sum, the EB-5 Program is a viable program that can benefit both the U.S. economy and investors who wish to seek permanent residence in the U.S. It may be easy for investors to quickly trust those who seem to have the means to help them attain their goal to obtain a green card in the U.S. However, investors need to be vigilant in choosing who to trust their valuable investments with. If investors are not aware of the dangers of fraud that can potentially exist in the program, they may lose valuable time and resources in securing their green card.
Our opinion. Every investor should take the time to review the project they invest in and take opportunities to visit the project if possible. Likewise, speak to an attorney who should understand both the project side and the immigration side. Your attorney should be able to fully describe the immigration process for EB-5. Follow up with the project regularly and ensure that the project is on track – if it is too far off track this indicates that something may be wrong. If an attorney is also the attorney who helped draft and create all the project documents for the regional center – be aware of conflicts of interest as they may also personally have an interest in the project.
Author: Gerard Arcilla, Esq., Associate at SMS Law Firm
The information contained in this article is not legal advice and is only intended for general information. Reading the provided content does not establish an attorney-client relationship with SMS Law Firm. If you seek legal assistance for immigration related legal issues, you should consult with an attorney.