Warning Signs of fraud in EB-5 Investments

The first question on any EB-5 Investors mind is how to safeguard their Investment from fraud and bad projects. In this post, we will focus on fraud in EB-5. As many of you must have read or heard about fraud cases in EB-5 projects, it is very much a big challenge to ensure that an Investor is not taken for a ride. So what are the warning signs of fraud, some of them are quite obvious, some of them not so much, so here we go.

Verify EB-5 Advisor credentials

If you are using an advisor for your EB-5 project, check to make sure that the advisor is a FINRA registered representative. This can easily be done through Brokercheck. If you are in the US, it is imperative that you only use a Registered rep. as it is unlawful for non-registered reps. to solicit EB-5 investments. If you are outside the US, you might use agents/middlemen in your own country for finding an EB-5 project, but remember that your Investment should always be made directly from your bank account to the escrow bank account of the EB-5 Project’s Regional Center. If anyone is asking you to route the funds through them for currency exchange purposes or country restrictions, that is a red flag for EB-5 fraud. USCIS does check to make sure that your funds were transferred to the escrow account in compliance with all the rules and regulations of your country of residence.

Guarantee of a EB-5 Visa or Permanent residency

Investing through the EB-5 program makes you eligible for an EB-5 visa and the permanent residency after going through the steps of the EB-5 process. But any Regional Center/Project or Agent that guarantees it is obviously unaware of the USCIS EB5 rules which explicitly mention that EB5 investments should be “at risk investments”, which basically means that Projects cannot guarantee the return of Investment. Any agreement signed by the Investor and the Project guaranteeing the return of investment or green card will be disqualified by USCIS and the USCIS will reject the investors EB-5 petition. If a side letter is signed between the parties, those documents need to be filed with the EB-5 petition. So in effect there is no way any EB-5 project can guarantee it. This might seem like a small point, but this has happened in EB-5 investments and investors have been rejected.

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