The EB-5 Immigrant Investor Program created in 1990 allows eligible foreign nationals to obtain a green card of the United States as an investor in a new commercial enterprise (NCE) which creates at least 10 full-time employment for American workers. Unfortunately, the program has been fraught with instances of fraud especially in the cases of some promoters who defrauded investors of millions of dollars not to mention the denial of immigration benefits to numerous investors. It is of great importance for one to familiarize him or herself with the predominant types of fraud and how to avoid the trap of the EB-5 fraud projects.

Understanding EB-5 Fraud

EB-5 fraud mostly relates to the provision of fabricated employment information, creating false documents or utilizing the investors’ deposit unlawfully. Some common forms of fraud include:

  1. Misrepresentation of Investment Opportunities: Some developers may claim to have potential high returns or guarantee for more investment profits; most of which are mere illusions. They also may give the wrong indication of the number of jobs that have been generated or even the status of the project.
  2. Falsification of Documents: Fraudulent projects may present fake or partially provided documents to the investors hence leading to problems with the investment.
  3. Misuse of Investor Funds: Sometimes developers have misused the EB-5 funds or for other purposes than the intention of the USCIS rules in the project.
  4. Ponzi Schemes: New investor funds are used to pay returns to earlier investors instead of using the funds to finance the commercial enterprise as the program requires.
  5. Identity Fraud: Applicants applying under other people’s identification or immigration benefit fraud through incorrect presentation of the number or the kind of jobs that have been created.

Identifying Fraudulent Projects

To avoid falling victim to fraudulent EB-5 projects, it is essential to conduct thorough due diligence on the project, its developers, and regional centers. Here are some key steps to take:

1. Engage in Thorough Due Diligence

2. Carefully Account for Fund Disbursement

3. Seek Third-Party Reviews and Assistance

4. Avoid Red Flags

5. Monitor the Project

Conclusion

Thus, the possibility to get the U. S. residency through the investment into EB-5 project is very attractive for the investors, however, such investment has a lot of risks as well. Knowing the types of frauds that exist and following the best prevention measures, you will be able to save your money and immigration opportunities. Identify the project and perform a background check, properly document the fund’s dispersion, look for an outside opinion, watch out for warning signs, and pay close attention to the project. Adopting these guidelines you can make a rational decision and secure the investment for the program requirements.

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