The EB-5 visa provides hard-working and entrepreneurial individuals a pathway to U.S. citizenship while also benefiting U.S. Citizens and workers. The program provides foreign nationals a pathway to a green card and citizenship provided that they make a qualifying investment into a U.S. business and create at least 10 jobs. For Eb-5 projects not located in a targeted employment area (TEA), a minimum investment of $1 million is required. However for projects in a TEA, an investment of $500,000 is sufficient. Thus, an EB-5 project in a TEA is often a good fit for individuals in a country with strict capital controls such as China.  However, like with any investment, the EB-5 investment visa requires the intending investing immigrant to perform due diligence and ensure that the investment is a sound one. It is true that financial returns on an EB-5 visa are typically modest, but the real benefit is the ability to secure a green card for yourself and qualifying family members.

Recent Securities and Exchange enforcement actions against certain EB-5 projects and developers tells us two things. First, the SEC is watching the program and cracking down on individuals and organizations that make improper use of investor funds. Second, it tells potential investors that they should work with an attorney who handles these matters. A Orlando EB-5 visa lawyer can assist with the due diligence and filing obligations while working to detect foreseeable and potential issues with the project.

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The SEC’s EB-5 Action in Florida

In one recent SEC enforcement action, the SEC brought an enforcement action against the two founders of Ireeco. Ireeco is incorporated as Ireeco, Ltd. In Hong Kong and as Ireeco, LLC in Florida. The founders, Stephen Parnell, and Andrew Bartlett utilized the Florida and Hong Kong companies to secure investments from 158 EB-5 program applicants.

The decision seems to characterize the companies and founders as failing to go through the proper steps. The administrative law judge writes:

Respondents do not dispute these fees were paid to them by the EB-5 projects after their referred investors received conditional green cards, and, although certain documents call these fees “consultancy fees,” such fees were essentially commissions. These fees were unlawful because Respondents were not registered or associated with a registered broker-dealer

Unfortunately, the judge also finds that the company lacked a means to pay due to insolvency. “The reason why Respondents are insolvent is because, throughout the unlawful referral scheme, Parnell and Bartlett used the money to pay themselves, as “consultants” and “managers” of the entities.” The administrative law judge ordered each company, “to pay disgorgement of $1,700,000 plus prejudgment interest and Respondent Ireeco Limited to pay disgorgement of $1,479,633.85 plus prejudgment interest

EB-5 Enforcement Action in Washington

The SEC also engaged in an enforcement action concerning a lawyer, Linda Yoo, who was accused of violating  Section 15(a)(1) of the Exchange Act by acting as an unregistered broker-dealer in connection with her representation of clients who were seeking U.S. residency through the Immigrant Investor Program. Through her representation, Yoo received legal fees from her represented clients while also receiving a commission from the regional centers.

Rather than litigate the matter, Yoo submitted an offer in compromise to the SEC which the agency accepted. Terms of the settlement offer include the lawyer ceasing and desisting from committing any future violations of Section 15(a)(1) of the Exchange Act. Furthermore, she agreed to pay a civil penalty and disgorgement. The disgorgement is $205,000. Prejudgment interest is $23,169. Furthermore, a civil penalty of $50,000 was also imposed.

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Seek Guidance From Experienced Miami Investor Visa Lawyers

While the EB-5 visa provides a pathway to U.S. citizenship for certain individuals, it must be treated as an investment and a careful accounting of risks and rewards must be conducted. Furthermore, a review of the EB-5 entity one will invest into is also a key consideration before taking any action. Finally, one must thoroughly consider one’s choice of counsel and ask on-point questions regarding the individual’s credentials and certification before agreeing to representation. While nothing can guarantee a return on an investment, using common sense and engaging in a meticulous review can increase the likelihood that your application will be successful.

If you are seeking representation for your EB-5 investment, an Miami immigration attorney of Colombo & Hurd can assist. To schedule a confidential and no-obligation consultation at their Orlando or Miami law offices call (407) 478-1111. We can also arrange for an Skype or phone consultation.