The EB-5 Regional Center Program is run by the U.S. Citizenship and Immigration Services agency to “stimulate the U.S. economy through job creation and capital investment by foreign investors.” Companies in need of capital get approved to seek funds from foreign investors, who in turn can receive U.S. visas and permanent residency. The program was created by Congress in 1992 and is set to expire in 2015 unless extended or made permanent.
Critics of the EB-5 program argue that minimal government oversight and lax regulations create an environment where foreign investors and local communities can be easily duped by unscrupulous businesses. While most EB-5 businesses are responsible actors, one should be on the lookout for companies headed into extremely risky territory.
- Only 54% of immigrants who seek permanent residency through EB-5 actually succeed according to a 2010 special report by Reuters.
- The EB-5 program was named a “Top Investor Threat” by the North American Securities Administrators Association (NASAA).
- In February 2013, the SEC stepped in to stop a $150 million scam by a Regional Center in Chicago that took advantage of over 250 foreign investors whose visas are now in jeopardy.
- According to a recent LA Times report, there has been a rise in fraud within the EB-5 program as participation has increased.
Reporting EB-5 Fraud
Individuals can report EB-5 fraud or misrepresentations to the U.S. Citizenship and Immigration Services at firstname.lastname@example.org.
The U.S. government states that reports should provide “specific information relating to the allegations of fraud or misrepresentation, supported by documentation if possible.” All allegations of malfeasance are reviewed by EB-5 program staff and may be referred to the Fraud Detection and National Security Directorate.