The EB-5 Investor Visa Program, established by Congress in 1990, allows foreign nationals to qualify for permanent resident status in the US by making investments of at least $1,000,000 in new commercial enterprises that create jobs, according to a FINRA letter published in 2013. EB-5 investments are often structured as private placements of unregistered securities. Given their special status, FINRA requires broker-dealers to document heightened reasonable basis and customer-specific suitability analyses for EB-5 investments than for non-EB-5 investments. Specifically, broker-dealers must examine the immigration compliance features of such investments—for instance, whether they create jobs—and also to weigh the “visa motivations” of potential investors, in addition to its normal suitability analyses.
According to a 2014 report in the Washington Times, “high profile incidents of EB-5 fraud” have raised concern about the EB-5 Investor Visa Program. One EB-5 regional center operator, for instance, was indicted by a federal grand jury on charges of fraud “for allegedly conning 290 Chinese investors into contributing $160 million for a hotel and convention center near O’Hare International Airport.” The individual’s project in fact had no building permits or construction plans. A 2015 report in Forbes deals with a similar case of “fraud artists” who “looted” an EB-5 project.
A significant concern with EB-5 investments, according to Forbes, is that they will not create the promised jobs or deliver other promises. This is why broker-dealers are required to perform additional due diligence and suitability analyses into EB-5 investments.
If you have complaints regarding an EB-5 investment, call the securities and investment fraud law firm Fitapelli Kurta at 877-238-4175 without delay. You may be entitled to recoup your losses. We accept all cases on contingency: Fitapelli Kurta only gets paid if and when you collect money. Time to file your claim may be limited, so we recommend you avoid delay. Call 877-238-4175 now to speak to an attorney for free.