The United States is perhaps the most stable and highly sought-after economic market in the world. Many foreign investors flock to the United States for opportunities to seek stable returns on their investments. However, the process for finding such investments is not as simple as it seems for new investors.
U.S. Citizen and Immigration Services (USCIS) issues a certain number of visas to foreign investors looking to make investments in the U.S. There are a number of requirements for investment eligibility: some business opportunities are eligible, while others are not. For instance, a qualifying investment must normally create a minimum of 10 full-time employment positions, and the minimum investment amount can vary between $900K and $1.8M USD depending on the type of investment.
Although the requirements may seem straightforward, the general process of finding an appropriate investment can be complicated. This is especially true when dealing with unknown firms that solicit EB-5 clients. There are a number of firms that specifically offer services to foreign investors looking to apply for a visa under the EB-5 program. However, some firms are notoriously known for providing misleading information to foreign investors.
The Securities and Exchange Commission (SEC) has an updated, searchable list of firms that make a number of false claims in helping foreign investors obtain EB-5 visas. This list is called the Public Alert: Unregistered Soliciting Entities list, or simply the PAUSE Program. Here, the SEC includes over 1,000 firms by name that are either unregistered solicitors, fictitious regulatory entities, or impersonators of legitimate firms. The SEC cautions foreign investors about these firms before deciding to do business with them, since foreign investors can be more susceptible to potential fraud than the average U.S. investor.
Although the firms on the PAUSE list may not have necessarily violated U.S. law, the SEC issues guidance to investors on the potential dangers of dealing with unregistered firms. As most financial advisors, investment brokers, and investment firms are required to register with certain government agencies, EB-5 firms are also required to register with the SEC for financial, regulatory, and record-keeping purposes.
Doing business with unregistered investment firms and professionals is problematic for a number of reasons, many of which stem from potential fraud. Similarly, doing business with unregistered EB-5 firms may lead to similar issues and concerns. It is more difficult to determine the legitimacy of the party that solicits your business when they have no affiliation or status with government agencies. Consequently, there is a higher chance of potential issues arising from such failure for firms and individuals to register with regulatory authorities.
EB-5 Fraudulent Activity
Unfortunately, the EB-5 program is not free of fraudulent activity and misleading firms. Some EB-5 firms and individuals entice foreign investors with great investment opportunities on paper, only to find that the opportunities were completely misleading and/or fraudulent. Since foreign investors may not be familiar with the program, there is an opportunity for dishonest firms to take advantage of unsuspecting investors.Thus, if you are looking into a potential EB-5 investment, it is crucial to complete proper third-party due diligence to ensure that your money is protected from potentially fraudulent activities. Vernon Litigation Group provides personalized EB-5 due diligence services for foreign investors throughout the world. We provide confidential, no-cost consultations to discuss your EB-5 investments. Call our firm today at (239) 319-4434 or contact us online if you are outside the U.S. Hablamos español.