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Beware Investment Scams Take Advantage of US Immigrant Investor Scheme!

Abhinav Information Sheet
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It has come to light that many fraudulent elements are exploiting the US Immigrant Investor Programme, also called EB-5 at the cost of hapless and gullible investors. Against this backdrop, the concerned organizations, namely, the U.S. Securities and Exchange Commission's Office of Investor Education and Advocacy and U.S. CITIZENSHIP AND IMMIGRATION Services (USCIS), have together come-up with an Investor Alert to warn individual investors about the INVESTMENT scams that make use of the programme.

Allegedly, on the radar of investment scams are overseas people who try to find the prized US Permanent Residency (PR) status, via the EB-5 Programme. The scheme proffers certain specific investors from abroad--who can prove that their investments are generating employment breaks in the nation--with a potential avenue to legally recognized PR in the nation.

Business owners submit an application to the USCIS to be chosen as "regional centers" for the scheme. These provide investment breaks in "new commercial enterprises" that may concern securities offerings.  Via the EB-5, an investor from abroad--who makes an investment of a specific amount that is placed at risk, and generates or preserves a bare minimum number of employment opportunities in the nation--is qualified to present an application for conditional officially recognized PR in the US.

On the way to the end of the two-year period of conditional residency, the overseas investor is qualified to submit a petition to have the conditions on their lawful PR done away with, in case he can show that the conditions for job creation have been fulfilled. But, overseas investors--who make an investment, via the EB-5--are not guaranteed a permit, or to become officially recognized permanent residents of the nation.
 
The truth that a business is selected as a regional center by the USCIS does not denote that the USCIS, the SEC, or for that matter, any other US organization has sanctioned the investments provided by the business, or has otherwise aired an opinion on the overall quality of the investment.
It is vital to research methodically any offering that claims to be associated with the EB-5.

Major Steps to Follow

Verify if the USCIS has really the designated regional center

In case you wish to make an investment, via a regional center, certify the center is mentioned on the list of the present regional centers on the website of the USCIS, namely, www.uscis.gov. In case the list does not carry the name of the regional center, be alert. And, even if the same is on the list, it needs to be understood that the USCIS has not sanctioned the regional center or any of the investments the same provides.


Get hold of reproductions of papers given to USCIS

It is necessary that Regional centers present an initial petition (Form I-924) to get approval and designation of the USCIS, and present an information collection supplement (Form I-924A) towards the close of each calendar year. Look for copies of these forms and supporting papers given to the USCIS.
Demand investment details in black & white
Request the issuer for a reproduction of the investment offering memorandum or private placement memorandum. Thoroughly check it and research comparable projects in appraising the offer. Duly follow up with any questions that may strike you. In case you fail to comprehend the facts furnished in the document--or the issuer is not ready, or in a position to respond to your queries--desist from investing.


Check in case promoters are being given money

In case there are allegedly unaffiliated agents, consultants, attorneys, or agencies either advocating or sanctioning the investment, ask how much money or what kind of gains they look forward to obtain in connection with advising the investment.


Look for independent substantiation

Check if the claims made about the investment are really correct. In case the investment involves the building of commercial real estate, check county records to find-out if the issuer has really gained the right permits, and if state & local property tax appraisals match with the values the regional center pins on the property. In case new firms have allegedly signed onto the mission, go straight to those firms for corroboration.
 

Scrutinize structural dangers

You need to comprehend that you could be making an investment in a fresh money-making venture with nil assets, and has been set up to loan funds to a firm that will utilize the funds to build up missions. Cautiously scrutinize loan papers & offering statements to find-out whether the loan is secured by any collateral promised to investors.


Consider the developer's motivations

Over and over again, the EB-5 regional center principals and developers make what is called CAPITAL INVESTMENTS in the ventures they run. Be aware of the fact that in case principals and developers fail to make equity investment in the mission, their financial incentives may not be associated with its success.

Major Warning Signals

Assurances of a permit or getting legitimate permanent residency rights

Despite the fact that investing, via EB-5, entitles you to submit an application for a conditional visa, there is no assurance whatsoever that the USCIS will give you a conditional permit, or later eliminate the conditions on your legally recognized permanent residency. The USCIS watchfully appraises each case even as it refuses cases where the rules for eligibility are not catered to. Assurances of either the receipt or specific timing of a permit or Green Card are clear warning indications of scam.


Definite investment returns or nil investment dangers

The funds invested, via the EB-5, ought to be at risk for the object of producing a return. In a situation where in you are assured investment returns, or informed that you will get back a section of the funds you duly invested, be distrustful.


Excessively steady soaring investment returns

It is a fact that investments are liable to fluctuate over time, mainly those that provide high returns. Be highly skeptical of an investment that claims to offer, or keeps on producing, high rates of return in spite of general market situations.


Unlisted investments

Despite the fact that a regional center may be chosen as a regional center by USCIS, it is a fact that majority of new money-making enterprise investment opportunities, provided via regional centers, are not listed either with the SEC, or for that matter, any state regulator. And when an offering is unlisted, it is just not achievable for the issuer to furnish investors with access to important details related to firm’s administration, goods, services, and finances that registration necessitates. In such situations, it is vital that investors get hold of extra facts/details related to the organization to aid make certain that the investment break is 100% genuine.


Unapproved sellers

Laws of federal and state securities necessitate investment experts and their firms which provide and dispose-off investments to be duly listed or registered. And description as a regional center does not fulfill the condition. Several fake investment plans involve unlicensed people or unregistered organizations.


Several organizations managed by the same people

Some specific EB-5 regional center INVESTMENTS are structured, via several layers of dissimilar firms that are run by the similar people. In such specific situations, corroborate that conflicts of interest have not only been completely revealed but also are reduced.

In case your investment, via EB-5 turns, proves to be in a fake securities offering, you may lose both--your money & your pathway to the officially recognized permanent residency in the US. Cautiously vet any EB-5 offering, prior to making either an investment of your money or your expectation of gaining officially recognized permanent residency rights in the US.