Beware EB-5 Fraud — Take These Precautions

While the EB-5 Program is a fantastic program that boosts the U.S. economy by rewarding green cards to qualifying foreign immigrants who invest $1,000,000 or in most cases $500,000 into a new commercial enterprise that creates jobs for U.S. workers, EB-5 fraud still persists.

Sometimes, foreigners and or U.S. developers abuse this program and commit fraud. An example of this would be when a developer takes EB-5 capital meant for projects and uses it for their own interests.

In order to fight the fraudulent EB-5 projects offered, it’s important for the EB-5 investor to take an active role in finding and researching the projects they’re interested in.

Things to look for:

• This could mean seeking out an immigration attorney for advice. An experienced immigration attorney can decipher the complex EB-5 petition forms and conduct due diligence on the projects you’re interested in.
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• Doing your own due diligence is critical. For more information about what to look for in a regional center click here. Find out what independent verification you need and what you should look for in a developer.
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• If you’re interested in regional centers, confirm that the one you’re interested in has been designated by the USCIS. Check out the USCIS website for an approved list of regional centers.
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• Obtain documents of proof that the regional center you’re interested in has USCIS designation. Each year regional centers submit Form I-924 for USCIS designation. Contact your chosen regional center to obtain copies of all of these forms for your files.
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• Acquire copies of the regional center project’s offering memorandum or private placement memorandum. Compare your chosen project’s offering memorandum to similar projects in order to evaluate the information. Make sure everything makes sense to you, if not, ask the issuer of the documents any questions. If they are unwilling to speak to you, that is a red flag. Make sure you obtain everything in writing. Never commit to anything verbally. Also go over the documents with an EB-5 attorney.
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• Are there promoters who are being paid to promote this project? Find out what benefits promoters receive for recommending or endorsing the project. Is it consistent with other projects or is it a red flag?
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• Make a list of pros and cons of the project.
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• Find out little known information that could help you in your EB-5 process. This includes why you don’t want to be the first or last investor on an EB-5 project.

Red Flags:

-Guaranteed returns on your investment or no risk on your investment.

-Promises of a visa in return for your investment.

-Unusually high returns on your investment.

-The regional center is not registered with the SEC or state regulators.

 

For more information about getting a green card through investment click here.

For more information about the professional resources recommended for EB-5 applicants click here.