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What recourse do EB-5 investors have in cases of fraud?

I have heard about cases where regional centers take the EB-5 investors' money without doing any work on the project they proposed. Beyond due diligence, can EB-5 investors get any insurance against having problems like this? In cases of regional center fraud, can USCIS step in and give the EB-5 investors their green cards anyways?

Answers

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    I do not think EB-5 insurance really exists; if it does, it will be very expensive and probably not worth it. In the event of fraud, it is likely that the SEC would be involved and perhaps assist in recovering all or at least some of your investment. As for the USCIS, it is really bound by the laws and regulations; if the EB-5 investor does not qualify, then USCIS does not have the power to grant lawful permanent resident (green card) status.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    You may file a complaint with SEC or litigate. You will not get a green card from USCIS in case of fraud. There are no legitimate EB-5 insurance coverage options as your investment must be fully at risk. It is advisable to conduct due diligence of a regional center and a project, carefully review all offering documents, and have them explained to you by your attorney before you sign and invest; get information on regional center management, developers, review the regional center track record for I-526 and I-829 approvals, etc.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    Little immigration recourse, but litigation may get you some or all of your money back depending on the terms of the agreements you signed and if there is any money to return. Best defense is thorough vetting of the regional center you invest in. Check out their immigration track record, managers, read all documents and have your attorney explain these to you before signing. If English is not your native language, insist they be translated for you.

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    John J Downey

    Immigration Attorney
    Answered on

    It is not likely that USCIS will grant a green card due to fraud by a regional center. The proverbial "buyer beware" will usually be invoked. Other than due diligence, there may be some type of insurance you could purchase which would help you recover your funds.

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    Ed Beshara

    Immigration Attorney
    Answered on

    An experienced EB-5 immigration attorney will have the expertise to provide immigration due diligence reports to you for review and analysis on the probability of being able to obtain permanent residency. Also you will be able to obtain a business and investment due diligence report on the likelihood of the business being operated by credible managers and of course the likelihood of fraud is diminished. You can bring a law suit against the project for fraud and the SEC most likely would as well.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    You may be able to file complaints with the Securities and Exchange Commission or file a law suit.

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    Howard Gould

    Securities Attorney
    Answered on

    I will respond on the fraud and "insurance" issues, but not the green card issuance. There is no "insurance" in the sense of a policy of insurance you buy from an insurance company. As you suggest, your own due diligence on the investment is really your insurance, and the terms of the particular deal you invest in. Without going into detail, the due diligence begins with the track record of the developer for quality construction projects or business operations and of the regional center for successful EB-5 projects with investments returned and immigration approvals. There is obviously a great deal that can be accomplished with investigating the particular project itself. On the terms of the deal, safeguards include such important issues as timing the release of the invested monies only after certain goals are achieved and using recognized and reputable service providers such as the escrow company holding the monies. If there is a failure to return monies or to proceed with the project, more than one legal theory may provide a grounds to seek return of the investment and other monies expended or damages suffered. Fraud is one theory if there have been misrepresentations. The investment offering is a securities transaction where U.S. securities laws will apply, both state and federal. Not only must the disclosures be accurate, but they also must be sufficient to advise of the risks you take on as an investor. In the special case of an EB-5 investment, these risks are both investment risks and immigration risks. There may be fiduciary duties owed, and issues of conflicts of interests or other breaches of duties, depending upon the specific facts.

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    Robert Cornish

    Securities Attorney
    Answered on

    USCIS cannot step in the shoes of the regional center for the purpose of creating jobs or completing a project. The rules specifically say invested funds have to be at risk. In the case of fraud, recourse is through the courts. You can check with a serious insurance broker to see if they'd issue you a policy through someone like Lloyd's of London, but it would likely be very expensive.

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    Yevgeny Samokhleb

    Immigration Attorney
    Answered on

    Fraud does not always involve a regional center. Sometimes it can be done by the project without the regional center's involvement. USCIS will NOT issue a green card in the event of fraud. The only way to get a green card is to satisfy all the requirements of the EB-5 program. While there are never any guarantees, some possible recourse for defrauded investors would be to file a civil lawsuit, file a complaint with the SEC, and possibly press criminal charges.

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    Sara Wang

    Immigration Attorney
    Answered on

    Unfortunately, it is no to both. To have insurance against your investment, this violates USCIS's definition of participating in an "at risk" investment. If the insurance is discovered, you will not be eligible for a green card. If the project failed due to fraud, and the failure occurred prior to your job creation numbers are met, then there is nothing USCIS can do since you did not meet all the requirements for the permanent green card. Investor's recourse in these type of situations is limited to legal remedies (i.e. litigation). Therefore, vetting the project, the project's assets, and last but not least, the project's owners (regional center and developers) before the actual investment is vital. Do not believe everything the immigration agencies are telling you. Look into their background, their histories, and actually visit the site.

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