Originally created by Congress in 1990, the EB-5 program was intended to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by the United States Citizenship and Immigration Services, based on proposals for promoting economic growth. Unscrupulous parties have on occasion taken advantage of interested parties and perpetrated schemes in this area on people who are understandably keen to take part in this otherwise very beneficial program.

Our colleagues at the EB-5 Matters blog have written an interesting post on one such case in Florida. Check it out here.

 

This summer the SEC has been aggressively pursuing claims against developers and others involved in the EB-5 Immigrant Investor Program, which permits foreign citizens to apply for U.S. residency if they make a qualified investment in a specified project that creates or preserves at least 10 jobs for U.S. workers.  The latest example is a securities fraud suit by the SEC against Lobsang Dargey, a Bellevue, Washington-based real estate developer, who also happens to be a brother-in-law of tennis star Andre Agassi.  According to the SEC, Dargey and his companies obtained investments from 250 Chinese investors under the auspices of the EB-5 program, misled those investors about their prospects for obtaining permanent residency, and diverted millions of dollars from their investments for unrelated projects and Dargey’s personal use, including a home purchase and cash withdrawals at casinos.   Adam Sisitsky and Doug Hauer analyze the case in depth in this post for our sister blog, EB-5 Financing Matters.

The Dargey case is just the latest in a series of recent actions brought by the SEC involving the EB-5 Program.  Other recent examples include SEC v. Luca International Group, LLC , which charged the defendants with defrauding Chinese investors in their oil and gas ventures under the EB-5 program, and In re Ireeco, where the SEC charged two companies with securities laws violations for failing to register as brokers in connection with advising foreign citizens about potential EB-5 investments.  To learn more about these cases check out the posts on EB-5 Financing Matters here and here.    

Our colleague Doug Hauer has launched a new Mintz blog about the federal EB-5 Immigrant Investor Program, EB-5 Financing Matters.  Check it out for a comprehensive review of pending legislation to extend and reform the EB-5 Program.  You will also find two posts discussing recent SEC actions involving the EB-5 Program: (1) a federal suit alleging that the defendants made fraudulent statements in soliciting EB-5 investors for an unprofitable oil company; and (2) an SEC enforcement action against two brokers that solicited investment for EB-5 projects in the United States without registering as securities brokers with the SEC.

The EB-5 Program, administered by the U.S. Citizenship and Immigration Services, offers foreign investors an opportunity to become permanent residents in the United States by making capital investments that create jobs in the U.S.  In the coming weeks we will be working with Doug and other colleagues on a series of posts analyzing the interplay between the EB-5 Program and the securities laws.