L.A. - Based Attorneys Charged with Defrauding Foreign Investors Seeking EB-5 Green Card

L.A. - Based Attorneys Charged with Defrauding Foreign Investors Seeking EB-5 Green Card

On September 3, 2014, the Securities and Exchange Commission (SEC) and the U.S. Attorney’s Office for the Central District of California charged three immigration attorneys based in Los Angeles, CA for defrauding immigrant investors who were seeking to obtain green card through the EB-5 Regional Center program.

It has been alleged that these three attorneys raised nearly $11.5 million from two dozen immigrant investors who sought to participate in the EB-5 Regional Center program. The EB-5 Regional Center program provides immigrant investors a chance to obtain a green card in exchange for $500,000 investment in a domestic project that creates jobs for U.S. workers.

Per SEC’s and FBI’s complaints, in 2006, the attorneys began constructing an ethanol production plant in Ulysses, Kansas. Two of the three attorneys applied to USCIS for designating the ethanol plant as a “regional center” under the EB-5 program, claiming that it would bring “substantial economic benefit” and “thousands” of new jobs for Ulysses, Kansas and surrounding areas. The three attorneys promoted the ethanol plant and told immigrant investors that they were eligible for a green card if they each invest $500,000 in the ethanol plant. In 2008, construction of the ethanol plant came to a halt as it was no longer economically feasible. However, long after all construction had ceased, the attorneys continued to tell investors that the plant construction was ongoing. They also concealed the project failure by submitting false documents to USCIS.

It has been further alleged that when one of the three attorneys encountered financial difficulties, he took money out of the investors’ escrow accounts without their knowledge and misappropriated several million dollars of investment money for the ethanol plant for other purposes.

The EB-5 Regional Center program attracts many investors from Asia because it gives immigrants an opportunity to obtain a U.S. green card, requires $500,000 investment (as opposed to $1 million) in an area of high unemployment, and does not require active management on the part of investors. However, as investors do not (and cannot) play an active role in managing theEB-5 Regional Center Project, the EB-5 Regional Center program is also susceptible to fraud and poor management. Immigrant investors must very carefully vet any Regional Center in which they plan to invest. EB-5 investors may also look into starting a business of their own in the U.S. to avoid the risk of losing their investment to fraud and poorly managed EB-5 Regional Center programs. Alternatively, immigrant investors who have management skills and own a business overseas may want to consider an L-1 Visa as it has a lower initial investment requirement than EB-5 and gives the immigrant investors the ability to manage their business and a path to green card under the EB-1C Multinational Manager or Executive preference category.

At Verma Law Firm, our attorneys have substantial experience in preparing L-1 and other types of investor visas. If you have any questions, please schedule a legal consultation