EB-5 Investment Fraud
The EB-5 Immigrant Investor Program gives eligible foreign investors an opportunity to receive a green card. In exchange for investing in an American business—and thereby creating jobs—the investor may be able to obtain permanent U.S. residency.
Although for some investors this “golden visa” program may be too good to pass up, its track record is not so bright and shiny. EB-5 investment scams continue, as does litigation seeking relief on behalf of defrauded immigrant investors.
This year alone saw a string of class actions and other cases involving EB-5 schemes, such as Gan v. ADC Downey LP, No. 18-cv-9729 (C.D. Cal. Nov. 19, 2018) (suit by nine plaintiffs who invested in a $27.5 million project); SEC v. Chen, No. 18-cv-06371 (N.D. Cal. Oct. 18, 2018) (claiming securities law violations on the part of a lawyer and her husband, who collected over $12 million in commissions from investors in various projects); and Daccache v. People’s United Financial, Inc., No. 18-cv-00163 (D. Vt. Oct. 5, 2018) (class action suit against bank and attorneys for alleged participation in Jay Peak resort fraud).
EB-5 schemes have drawn the attention of government regulators as well as skilled class action attorneys. One SEC enforcement action, for example, involved three Texas-based companies that raised $49.5 million from 90 immigrant investors through EB-5 offerings. Rather than use the funds as intended—to finance a mixed-use real estate development project—the perpetrators used $20.5 million to fund other, unrelated real estate projects. The companies settled today with the SEC on charges of Securities Act violations, agreeing to pay $51 million in penalties.
Prospective immigrants turning to the EB-5 program in the hopes of getting a green card should do their due diligence before investing. The SEC publishes useful investor alerts.
If you think you might be the victim of EB-5 investment scam, please contact us.
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Girard Sharp LLP is a top-tier national law firm that represents investors in class actions and other complex litigation nationwide. Our experienced securities fraud lawyers have successfully represented thousands of individual and institutional investors in a broad range of financial and investment fraud matters, including class actions involving investments in public securities markets, private offerings, and non-traded REITs. We have recovered more than $1.2 billion in investment losses for our clients.
Angelica Ornelas is an associate with Girard Sharp LLP in San Francisco, California.