How to Increase the Odds of Spotting Fraud in EB-5 Schemes

 

April 2018

 

​Kathy Bazoian Phelps, Financial Fraud Litigator,

Diamond McCarthy, LLP

kphelps@diamondmccarthy.com

 

Jon D. Fleming, Receiver and former principal of an EB-5 Regional Center

Legacy Receiver

Jon.Fleming@LegacyReceiver.com

 

For foreigners looking to become citizens of the United States, the EB-5 Immigrant Investor Visa program can be an extraordinary gift if handled lawfully, or a financial nightmare if ripped apart by fraud. While foreign investors are primarily interested in gaining resident status in the United States, some EB-5 operators or agents are more interested in attracting and misappropriating the money. If the project or the money goes sideways, that can doom the entire immigration application process, leaving investors without both visa and cash.

 

The investor’s immigration lawyer is often the primary point of contact for the investor and may be the first one to sense that something has gone amiss. This article will discuss the importance of vetting an EB-5 program at the outset and continually monitoring the investment through to conclusion. The opportunities for theft or misdirection of investor funds are unfortunately too tempting and oversight over the funds is often not tight enough.

 

There are far too many well-publicized cases of misappropriation by developers, immigration brokers, and others who either steal investor funds or spend them in a manner inconsistent with EB-5 requirements. Even when a project is successfully completed, there is a risk that the funds may be stolen before the full adjudication of the visa application. On occasion, rather than redeploying the funds to keep them at risk, the fraudster misappropriates them. A few recent examples demonstrate the ease with which investor funds can end up in the wrong hands and potentially destroy the EB-5 immigration process.

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For the full article download link: https://tinyurl.com/ybzxft7j