EB-5 Investment Fraud is a type of scheme that exploits the Immigrant Investor Program and targets foreign investors hoping to gain United States citizenship.
The EB-5 Immigrant Investor Program gives foreign investors and entrepreneurs the opportunity to gain a green card and permanent residency in the United States if they make a significant investment in a United States commercial venture that results in the creation of full-time jobs for United States workers.
Fraudulent businesses market themselves as EB-5 qualifying investment opportunities and recruit foreign investors hoping for a path to U.S. citizenship. Investors who are victims of these scams are not only in danger of losing their investments, but they also risk having their immigration petitions denied.
How Does EB-5 Investment Fraud Work?
Business owners apply to have their businesses designated as “regional centers” for the EB-5 program. These regional centers sponsor capital investment projects for EB-5 investors. Foreign investors look to regional centers to supply legitimate, EB-5 qualifying investment opportunities.
However, these businesses are not necessarily vetted by U.S. government agencies to ensure they are legitimate. Other businesses market themselves as EB-5 qualifying investments without being designated a regional center at all. These fraudulent businesses collect foreign investors’ money and misuse it for their own purposes. The money does not go towards creating jobs for United States workers or towards stimulating the United States economy, and thus does not qualify for the EB-5 immigration program. Foreign investors are left without their money and without the means of qualifying for United States residency.
EB-5 Investment Scam Alert
The United States Securities and Exchange Commission (SEC) has issued an alert concerning EB-5 investment scams. The SEC has urged foreign investors to be cautious of fraudulent investment opportunities. The SEC alert outlines the warning signs of EB-5 Investment Fraud:
- Promises of a guaranteed Visa or permanent residency
- Guaranteed investment returns/Promises of no Investment Risk
- Overly consistent high investment returns
- Investments that are not registered as regional centers
- Unlicensed sellers (Designation as a regional center does not make a seller licensed)
- Layers of companies run by the same individuals
EB-5 Fraud Class Action Lawsuits
In the past few months two large EB-5 Fraud cases have recieved public attention.
Jay Peak, Inc. Investigation
The Jay Peak, Inc. lawsuit was filed by the SEC on April 12, 2016. Jay Peak, a Vermont ski resort controlled by Ariel Quiros and William Stenger, raised $350 million in investor funds since 2006. Jay Peak raised the money from over 700 investors around the world through the EB-5 Immigrant Investor Program. The investments were supposed to fund the construction of certain projects related to Jay Peak Ski Resort or a Vermont biomedical facility.
However, most of the money was distributed among Jay Peak’s affiliates. Over $50 million of the money raised by EB-5 investors was misused by Jay Peak’s owners to purchase luxury condos, pay the owner’s income taxes, and pay off loans.
Cancer Treatment Center Investigation
On June 2, 2016, another EB-5 Investor fraud case was announced by the SEC. The SEC filed a complaint against Xin “Lisa” Wang and Charles C. Liu for misusing investors’ money that was raised for the purpose of building a cancer treatment center. Wang and Woo raised over $27 million from Chinese EB-5 investors to build a center that would treat cancer through proton beam radiation.
However, after 18 months there has been no construction at the proposed site, and Liu has transferred $11 million of investor funds to firms in China and diverted another $7 million of investor funds to his wife’s personal account.
Contact us for a free consultation
Our securities fraud lawyers have successfully represented consumers across the nation in securities fraud litigation against Lehman Brothers, Sallie Mae, Peregrine Financial Group, and others. Currently, we are investigating EB-5 Fraud allegations against Jay Peak, Inc.
To get a free, confidential consultation with one of our securities attorneys, call toll-free (866) 981-4800 or fill out the form.