USCIS Warns of Scams Exploiting EB-5 Immigrant Investor Program

The U.S. Securities and Exchange Commission's (SEC) Office of Investor Education and Advocacy and the USCIS have jointly issued a warning to individual investors about fraudulent investment scams that exploit the EB-5 immigrant investor program.

In cooperation with the USCIS, which administers the EB-5 program, the SEC has taken emergency enforcement action to stop allegedly fraudulent securities offerings made through the EB-5 program. The USCIS explained that business owners apply to the USCIS to have their businesses designated as "regional centers" for the EB-5 program. Regional centers offer investment opportunities in new commercial enterprises that may involve securities offerings. The fact that a business is designated as a regional center by the USCIS does not mean that the USCIS, the SEC, or any other government agency has approved the investments offered by the business, or has otherwise expressed a view on the quality of the investment. The SEC and USCIS are aware of attempts to misuse the EB-5 program as a means to carry out fraudulent securities offerings. For example, in a recent case, SEC v. Marco A. Ramirez, et al., the SEC and USCIS worked together to stop an alleged investment scam in which the SEC claimed that the defendants, including the "USA Now" regional center, falsely promised investors a 5 percent return on their investment and an opportunity to obtain an EB-5 visa. The promoters allegedly started soliciting investors before the USCIS had designated the business as a regional center. The SEC alleged that while the defendants told investors that their money would be held in escrow until the USCIS approved the business for EB-5 investments, the defendants misused investor funds for personal use, such as funding their Cajun-themed restaurant. According to the SEC's complaint, the investors did not obtain conditional visas as a result of their investments through the USA Now regional center.

In another case, SEC v. A Chicago Convention Center, et al., the SEC and USCIS coordinated their efforts 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, including falsely claiming 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 be refunded any administrative fees that 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 USCIS notes that, as with any investment, it is important to research thoroughly any offering that purports to be affiliated with the EB-5 immigrant investor program.  If an investment made through the EB-5 immigrant investor program turns out to be in a fraudulent securities offering, the investor may lose both his or her money and a path to lawful permanent residence in the United States. The USCIS said that any EB-5 offering should be carefully vetted before making an investment.

The USCIS alert is available at http://www.uscis.gov/news/alerts/investor-alert-investment-scams-exploit-immigrant-investor-program. That page also has links to the alert in Chinese, Korean, and Spanish.