Due diligence is obviously required for any substantial investment, but when it comes to making an EB-5 investment, extraordinary precautions should be taken. This is because an EB-5 investment not only puts a significant amount of capital at risk, like any other big investment, it must also satisfy all of the strict requirements of the EB-5 Program. In other words, if an EB-5 investment turns out to be fraudulent, investors risk losing both their money and their path to permanent residency.
An excellent illustration of what can happen to unwary EB-5 investors is the recent case involving the Intercontinental Regional Center Trust of Chicago (IRCTC). The Securities and Exchange Commission (SEC) alleges that Anshoo R. Sethi fraudulently sold more than $145 million in securities in the IRCTC, and that he collected $11 million in administrative fees from more than 250 investors that were primarily from China. Each investor put up a $500,000 investment, plus $41,500 in “administrative fees.” Sethi allegedly duped investors into believing that by purchasing interests in a company known as “a Chicago Convention Center” (ACCC), they would be financing construction of a major hotel and conference center near Chicago’s O’Hare Airport.
Verify the satisfaction of the job-creation requirement
The USCIS requires that an EB-5 project demonstrate that the requisite number of jobs be created within 2.5 years of the approval of the I-526. One of the benefits of investing in a Regional Center is that this job-creation requirement can be satisfied through the creation of indirect jobs, which are jobs created collaterally or as a result of capital invested in a commercial enterprise affiliated with a Regional Center.