What Are The Rumors Of Fraud Surrounding The Current EB-5 Program?


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Rumors of fraud surrounding the current EB-5 program are more than just rumors. There have been a number of cases brought by the SEC and by immigration that against projects, EB-5 projects that have turned out to be fraudulent. Some of these have been individual investments, meaning people who had invested in what are called direct investments where they’re one of the few investing as opposed to regional center where there are multiple investors. There have been both and a very easy way for people to find out is just Google fraud in EB-5 program or fraud in EB-5 project and get a list of the various ones where there have been issues. But as a comment on this, it is a minority, a small percentage of the total amount of project that are available. No one knows exactly how many are available but it’s at least 50 to 100. There are always some bad apples in any program and any profession.

These are the bad apples and unfortunately they get all the publicity. So I do get calls from people who are saying “I would really like to get a Green Card through an investment. However, I am really afraid about the investing. Do I ever get the $500,000 back?” What I tell my clients is that I recommend that they get their information and advice from licensed broker dealers who are licensed by the federal government and federal securities agencies to sell EB-5 limited partnerships. So this is a way you know that licensed and qualified individuals have done due diligence reports that you can actually look at regarding various projects as opposed to having to take the word of agents in China or other countries or trying to sell a specific project.

What Are The Areas In Which Changes Have Been Proposed To The EB-5 Program?

There are actually four main areas of proposed changes. What we’re talking about here is the USCIS proposed policy and rule changes because Congress has not been able to pass any legislation. A year ago, the end of September, which is the end of a government fiscal year, there was a bill in Congress. In 2016, they were supposed to change the minimum amount from $500,000 to $800,000 and the investment amount from $1 million to $1.2 million. There were many other changes as well but those were the most popular changes making the press. In other words, they increased the amount of a minimum investment to invest in a regional center project. Both times, the bills that were in congress to increase the amount didn’t pass. What they did is that they went with the current amount, which is $500,000.

In January, USCIS decided that they would propose their own rules and they went really above board. Instead of setting the minimum investment amount at $800,000 like Congress was going to do. USCIS went to a $1.35 million and $1.8 million for investments that were not high unemployment areas. Both of these were huge changes. They changed other rules as well which we’ll get into but let’s first talk about the one thing that they did that was positive. It’s something called the Priority Date, and what that means is when an individual files for an investor green card approval, they apply for an initial application called an I-526. Once that’s filed, then you have a priority date that’s based on the date of filing.

For all countries in the world except China, priority date is current, meaning whatever your priority date is, it is available. For China, it is now a backlog because 85% of all EB-5 cases are from China. So what’s happening now is for priority dates, if you file and get a priority date, you have to wait 10 years to get even a 2-year conditional green card. For all other countries it takes approximately 2 years to get a conditional green card.

What we are seeing is that if, for example, your first project was denied because there was a problem with the project. In order to get a Green Card, you have to file a new application and under the current law, you get a new priority date and you lose your old one. What USCIS has done with the new regulations is to say you can retain your first priority date on your second application. Let’s say you filed today and took 1.5 years to get that adjudicated. If you now file a second application you get the priority date now around the date of filing which was today. Under the previous regulations you get a priority date based on the first date of filing. This would be very good.

For more information on Fraud & Abuse In EB-5 Program, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (310) 477-3000 today.

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