Intending immigrant-investors and others familiar with the EB-5 visa investment program are well aware that while the program provides a much-needed alternative source of investment capital, it is replete with legal requirements involving not only the immigration aspect of the investment, but also the financial considerations and transactions that give life to the program. Thus, aside from satisfying the regulations, standards and requirements set forth by United States citizenship and Immigration Services (USCIS), EB-5 investments and the developers handling them must also maintain full compliance with securities regulations as set forth by the Securities Exchange Commission (SEC). The EB-5 program provides significant job-creating investment into the United States. Furthermore the program encourages immigration of foreign entrepreneurs and others who are likely to build on the resources provided in the United States and create more jobs and wealth for all U.S. citizens. However, it is important for investors to perform their due diligence before making an EB-5 investment because all investments must be placed “at risk.” While reminders of this fact were present elsewhere, such as in the case of the South Dakota EB-5 program, enforcement action by the SEC has now been taken in South Florida. Intending immigrant-investors must perform their due diligence if they wish to preserve their chances of securing the immigration benefit of an EB-5 investment. The EB-5 lawyers of Colombo & Hurd can assess a program and guide immigrant investors through all steps of the EB-5 or regional center process. To schedule a confidential consultation at our Miami or Orlando offices call 800-659-7142 or contact us online today.
SEC Freezes Assets of Lin Zhong Including EB-5 Investments after Alleged Material Misrepresentations
In late November 2015, the SEC announced that it had frozen the assets of a prominent South Florida woman who owned and operated U.S. EB-5 Investments LLC. Lin Zhong, also known as Lily Zhong, is accused of improperly diverting EB-5 investor assets to cover personal expenses including luxury purchases and educational expense for family members. According to allegations advanced by the SEC, Ms. Zhong and her business venture secured at least $8.5 million in investments through the EB-5 program. However, rather than using these funds for their intended purpose, the SEC charges that Ms. Zhong diverted these funds for improper uses. According to court documents filed by the SEC, prosecutors allege that Ms. Zhong:
- Used investor funds to make luxury purchases including a BMW, a Mercedes, and a boat. Other improper uses, as claimed by the SEC, include they payment of her own real-estate taxes and family educational expenses. The SEC believes at least $1 million of the $8.5 million raised was diverted for improper uses.
- Investors were made to believe that their investment funds would be used to develop a mixed-use commercial development located in the city center of Port St. Lucie, Florida.
- Investors relied on representations that the company would provide unaudited financial records and reports.
- Ms. Zhong and others concealed or misrepresented how funds were being spent to investors.
- Ms. Zhong failed to make disclosures, concealed, or misrepresented conflict of interest.
- Ms. Zhong misrepresented the location of the development project.
- Ms. Zhong inaccurately claimed that investments would be held in escrow pending the approval of their EB-5 petition by USCIS.
The SEC alleges that Ms. Zhong’s actions and representation violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Ms. Zhong agreed to the asset freeze following a court hearing. Incidences like these underscore the importance of requesting detailed financials from EB-5 entities and performing due diligence on any EB-5 or regional center entity before making an investment. Immigrant investors who fail to take these essential steps increase the likelihood that some or all of their investment may be lost and that they will be unable to obtain a permanent green card through their investment.
Attorneys Provide EB-5 Guidance in Miami & Orlando
If you are seeking assistance in making sense of the legal requirements of the EB-5 program, the experienced and dedicated attorneys of Colombo & Hurd can provide trusted guidance on an array of Eb-5 concerns. Working with our experienced team can increase the likelihood that your EB-5 investment proceeds smoothly and that you are able to successfully securer a permanent U.S. green card. To schedule a confidential consultation with an experienced Miami investor visa attorney call Colombo & Hurd or contact us online today.
