EB-5 Risk Alert: American Logistics launches new ventures while current investors still at risk
While American Logistics International’s first EB-5 projects are showing signs of trouble, it appears that its owners are branching out into new ventures.
Growing instability at first two EB-5 projects: American Logistics’ first two projects continue to face operational problems. These serious issues include:
- An apparent decline in business and number of employees, with the number of drivers at its transportation project plunging nearly 40% over the past year
- A protracted labor dispute that has gone unresolved for almost a year at its transportation project, recently erupting in a 24-hour strike in protest of federal charges that the company had violated labor laws
- An investigation of reported health and safety violations at its warehousing project
New ventures in the works: Meanwhile, it appears that ALI management may be preoccupied with new endeavors. Between May and July of 2013, American Logistics’ owner, Alireza Mahdavi, and top manager Ramin Bagherzadeh, created several new entities underneath the American Logistics International (ALI) umbrella, according to corporate filings with the CA Secretary of State. The entities are related to two businesses, ALI Cold Storage and ALI Fulfillment, both located at a warehouse in Compton, CA, 10 miles from their original EB-5 project facilities. It appears that they are already soliciting EB-5 investors for the cold storage project, which is featured on its website along with its first two projects, transportation and warehousing/distribution.
In addition, it appears that ALI management may be expanding into a whole new line of business. Over the past year and a half, Mr. Mahdavi created both an LLC and a limited partnership by the name of American Agricultural Products, and Mr. Bagherzadeh has established another company called American Food Processing & Packing LLC. These may be intended to become projects in a new EB-5 regional center altogether.
Original EB-5 investors hang in the balance: Given the state of ALI’s first projects, its owners’ foray into new lines of business may be premature. American Logistics’ first two projects, ALI Transportation, a port trucking business, and ALI Warehousing and Distribution, have not yet reached completion. At least eight of the investors in ALI Transportation – and all of the investors in ALI Warehousing & Distribution – filed their I-526 forms less than two years ago, and therefore have not yet reached the two-year mark to file their I-829 forms to adjust their immigration status. These investors are still dependent upon the success of the project – most importantly the continued creation and maintenance of jobs – in order to meet their investment and immigration goals.
Current EB-5 investors are at risk as long as the instability at ALI’s first projects remains unresolved. ALI management’s seeming preoccupation with setting up entirely new businesses raises further concerns for current and potential EB-5 investors:
- Is American Logistics’ management investing ample time and resources into ALI to ensure that its first EB-5 projects are a success?
- How will the development of new projects by American Logistics’ management affect current investors?
- Will the same apparent mismanagement that has beleaguered ALI’s first projects extend to the new related EB-5 projects?