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U.S. immigration with EB-5 visa program – risks and critical steps to avoid falling victim to fraud



U.S. immigration with EB-5 visa program – risks and critical steps to avoid falling victim to fraud

By Russell Scarcella, Director,  PiotrPillardy, Research Manager and  Diana Xu, Associate Director, Exiger 

Too many EB-5 immigrant investors have fallen victim to scams that have put their personal wealth in jeopardy and taken away their opportunity to attain a U.S. green card. The EB-5 program has been prone to fraudsters, failures, and errors, yet hopeful immigrant-investors have had little recourse should the process take a wrong turn. Investors might hope that U.S. Citizenship and Immigration Services (“USCIS”) would help to direct investments toward opportunities that are compliant with regulations, or have a proven record of success. This is not the case. As of March 5, 2018,[i] USCIS has approved 919 regional centers for funding with the EB-5 program.[ii] However, this “approval” offers little in the way of investor protection. It is not a guarantee or an endorsement. Regional centers that are “USCIS approved” are not necessarily compliant with governing regulations or securities laws.[iii]

Without the ability to rely on USCIS for guidance on good investments, EB-5 investors must depend on independent background due diligence and ongoing background monitoring. Understanding the backgrounds of those individuals with critical roles in the success of an investment is an important step toward the goal of obtaining a U.S. green card.

Risks of Bad Actors 

There are several key risks involved in choosing a regional center that investors would be well advised to understand. If a regional center project fails within the first two years after a conditional green card is issued, an investor will be unable to remove the conditions, and subsequently lose the green c­­ard. This is also the case in circumstances where USCIS revokes the certification of a regional center. As of March 5, 2018, USCIS has revoked the certification of 166 regional centers.[iv]Risks can be dramatically reduced by gaining an understanding of the personal and professional backgrounds of all stakeholders involved with the regional center and the underlying development project through effective due diligence.

EB-5 investors, or their agents, are entirely responsible for vetting a regional center and its owners and management. The process of vetting should uncover specific risks based on beneficial ownership and the track-records of previous projects. Yet, vetting is no easy task. In many cases, it may be difficult to identify the ultimate beneficial owners of a regional center, much less their solvency, criminal history, or track records in managing investments, particularly those involving real property development. Proper due diligence includes background checks and ongoing background monitoring of the project developer, the regional center and possibly the general partner or manager of the new commercial enterprise.

Lawyers and agents may offer background check services, but better services exist. While immigration lawyers are a critical part of the EB-5 process for the immigrant investor, lawyers generally are not equipped to engage in thorough background due diligence investigations or ongoing background monitoring. In some circumstances, the same law firm may even represent both the regional center and the investor, posing a potential conflict of interest.

The Value of Proper Background Due Diligence

Fraudulent EB-5 projects would cause hundreds of EB-5 immigrant investors and their families to lose their investment funds and the opportunity to obtain a U.S. green card.A review of failed cases reveals that due diligence would have identified major red flags for the potential investors:

  • In February 2017, AnshooSethi, a regional center founder and administrator, was sentenced to three years in prison and ordered to pay $8.85 million in restitution for defrauding approximately $158 million from more than 290 investors.[v] The EB-5 offering documents for a hotel project in Chicago stated that Sethi was a “respected veteran of real estate” with “15 years of experience in real estate development and management.”[vi] However, background due diligence shows that Sethi would have had to enter the real estate industry at age 14 to have his purported 15 years of experience. Additionally, his development firm, Upgrowth LLC, which had a purported “more than 35 years of experience” and claimed a reputation as a premier nationwide hotel contractor, had only been organized in 2010, according to Illinois corporate records.[vii]

Proper background due diligence would also have revealed that Sethi’s regional center project was only recently granted permits for a tent for a “groundbreaking ceremony”, demolition, construction of a fence, and minor electrical wiring. This directly contradicted the project’s Offering Memorandum which claimed that all building permits had been secured.[viii]

  • In another matter, principals of Pacific Proton Therapy Regional Center were recently prosecuted by the SEC for misleading investors and diverting funds. Pacific Proton’s cancer center project had allegedly claimed the support of former President George H.W. Bush and former California Governor Arnold Schwarzenegger to garner investments. The support was false, however. Proper background due diligence could have disclosed these material misrepresentations and helped investors with the decision to seek out a different investment opportunity. Over $18 millions of funds raised from investors in this case was diverted to firms in China and personal bank accounts.[ix]
  • Elsewhere, an $8.5 million fraud perpetrated by Lily Zhong through EB5 Asset Manager LLC might have been foreseen if background due diligence had been undertaken on the project principal. The SEC’s complaint raised allegations that Zhong had misrepresented her “extensive history of developing real estate projects” and failed to disclose her personal and business bankruptcies to prospective investors. During the time Zhong was marketing the project to investors she was also the subject of an ongoing bankruptcy proceeding in New Zealand. Additionally, her role as a director and shareholder of a New Zealand real estate development company had resulted in a voluntary liquidation of the firm in 2008.[x]

Had potential investors conducted background due diligence and sustained ongoing monitoring, information on Zhong’s bankruptcies would have been uncovered. The misrepresentations of Pacific Proton and Sethi would also have been found. These investors could have retained their funds andtheir dreams of immigration to the U.S. 

Better Protection for Investors 

Recent fraud cases and failed projects have shown that engaging background due diligence on investment stakeholders is a necessary, yet often overlooked, step in the EB-5 process. Background due diligence involves the credential verification and comprehensive investigation into the personal history of key individuals. This can surface noteworthy red flag issues concerning financial history, litigation history, past and current insolvencies, bankruptcies, false claims of SEC and FINRA licensing, prior business and investment successes (and failures), false claims of specialized or industry expertise, and other potential concerns surrounding the regional center and the project developers. Paired with an advanced technology platform for ongoing background monitoring, an EB-5 investor can significantly reduce the risks of fraud, deception,and project failure with respect to their EB-5 investment not only at inception, but throughout the course of the extensive EB-5 process. Prudent investors will take this step.

For EB-5 investors, the life-cycle of the investment is long, increasing the risks. The potential motivations and opportunities for fraud will change over time, along with the regulatory landscape, and the economy. Enhancing the pre-investment due diligence process by incorporating comprehensive background checks of the project developer and the regional center’s main principals will allow investors to understand who is managing their money, and their immigration dreams. Ongoing, automated background monitoring of these stakeholders, through experienced industry professionals,is a prudent approach to mitigate the risks of a changing landscape and will create the greatest possibility for a successful path to U.S. EB-5 immigration.


[ii] Private firms, approved by USCIS, that match EB-5 investors with development projects and job creation. Each EB-5 investor must demonstrate at least 10 jobs created because of the investment funds.





[vii] Ibid.

[viii] Ibid.



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UK seeks G7 consensus on digital competition after Facebook blackout



UK seeks G7 consensus on digital competition after Facebook blackout 1

LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies exploiting their dominance, warning that there can be no repeat of Facebook’s one-week media blackout in Australia.

Facebook’s row with the Australian government over payment for local news, although now resolved, has increased international focus on the power wielded by tech corporations.

“We will hold these companies to account and bridge the gap between what they say they do and what happens in practice,” Britain’s digital minister Oliver Dowden said on Friday.

“We will prevent these firms from exploiting their dominance to the detriment of people and the businesses that rely on them.”

Dowden said recent events had strengthened his view that digital markets did not currently function properly.

He spoke after a meeting with Facebook’s Vice-President for Global Affairs, Nick Clegg, a former British deputy prime minister.

“I put these concerns to Facebook and set out our interest in levelling the playing field to enable proper commercial relationships to be formed. We must avoid such nuclear options being taken again,” Dowden said in a statement.

Facebook said in a statement that the call had been constructive, and that it had already struck commercial deals with most major publishers in Britain.

“Nick strongly agreed with the Secretary of State’s (Dowden’s) assertion that the government’s general preference is for companies to enter freely into proper commercial relationships with each other,” a Facebook spokesman said.

Britain will host a meeting of G7 leaders in June.

It is seeking to build consensus there for coordinated action toward “promoting competitive, innovative digital markets while protecting the free speech and journalism that underpin our democracy and precious liberties,” Dowden said.

The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada, but Australia has also been invited.

Britain is working on a new competition regime aimed at giving consumers more control over their data, and introducing legislation that could regulate social media platforms to prevent the spread of illegal or extremist content and bullying.

(Reporting by William James; Editing by Gareth Jones and John Stonestreet)


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Britain to offer fast-track visas to bolster fintechs after Brexit



Britain to offer fast-track visas to bolster fintechs after Brexit 2

By Huw Jones

LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at high-growth companies after a government-backed review warned that financial technology firms will struggle with Brexit and tougher competition for global talent.

Finance minister Rishi Sunak said that now Britain has left the European Union, it wants to make sure its immigration system helps businesses attract the best hires.

“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow,” Sunak said in a statement.

Over 40% of fintech staff in Britain come from overseas, and the new visa scheme, open to migrants with job offers at high-growth firms that are scaling up, will start in March 2022.

Brexit cut fintechs’ access to the EU single market and made it far harder to employ staff from the bloc, leaving Britain less attractive for the industry.

The review published on Friday and headed by Ron Kalifa, former CEO of payments fintech Worldpay, set out a “strategy and delivery model” that also includes a new 1 billion pound ($1.39 billion) start-up fund.

“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.

Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.

The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector’s future in Britain is not assured.

It also recommends more flexible listing rules for fintechs to catch up with New York.

“We recognise the need to make the UK attractive a more attractive location for IPOs,” said Britain’s financial services minister John Glen, adding that a separate review on listings rules would be published shortly.

“Those findings, along with Ron’s report today, should provide an excellent evidence base for further reform.”


Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.

“It’s a question of knowing who to call when there’s a problem,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.

A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.

“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” Swinburne said.

The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).

“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.

($1 = 0.7064 pounds)

(Reporting by Huw Jones; editing by Jane Merriman and John Stonestreet)


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G20 to show united front on support for global economic recovery, cash for IMF



G20 to show united front on support for global economic recovery, cash for IMF 3

By Michael Nienaber and Andrea Shalal

BERLIN/WASHINGTON/ROME (Reuters) – The world’s financial leaders are expected on Friday to agree to continue supportive measures for the global economy and look to boost the International Monetary Fund’s resources so it can help poorer countries fight off the effects of the pandemic.

Finance ministers and central bank governors of the world’s top 20 economies, called the G20, held a video-conference on Friday. The global response to the economic havoc wreaked by the coronavirus was at top of the agenda.

In the first comments by a participating policymaker, the European Union’s economics commissioner Paolo Gentiloni said the meeting had been “good”, with consensus on the need for a common effort on global COVID vaccinations.

“Avoid premature withdrawal of supportive fiscal policy” and “progress towards agreement on digital and minimal taxation” he said in a Tweet, signalling other areas of apparent accord.

A news conference by Italy, which holds the annual G20 presidency, is scheduled for 17.15 (1615 GMT)

The meeting comes as the United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies going despite COVID-19 lockdowns.

But despite the large sums, problems with the global rollout of vaccines and the emergence of new variants of the coronavirus mean the future of the recovery remains uncertain.

German Finance Minister Olaf Scholz warned earlier on Friday that recovery was taking longer than expected and it was too early to roll back support.

“Contrary to what had been hoped for, we cannot speak of a full recovery yet. For us in the G20 talks, the central task remains to lead our countries through the severe crisis,” Scholz told reporters ahead of the virtual meeting.

“We must not scale back the support programmes too early and too quickly. That’s what I’m also going to campaign for among my G20 colleagues today,” he said.


Hopes for constructive discussions at the meeting are high among G20 countries because it is the first since Joe Biden, who vowed to rebuild cooperation in international bodies, became U.S. president.

While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.

The recovery is fragile elsewhere too – factory activity in China grew at the slowest pace in five months in January, hit by a wave of domestic coronavirus infections, and in Japan fourth quarter growth slowed from the previous quarter with new lockdowns clouding the outlook.

“The initially hoped-for V-shaped recovery is now increasingly looking rather more like a long U-shaped recovery. That is why the stabilization measures in almost all G20 states have to be maintained in order to continue supporting the economy,” a G20 official said.

But while the richest economies can afford to stimulate an economic recovery by borrowing more on the market, poorer ones would benefit from being able to tap credit lines from the IMF — the global lender of last resort.

To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by then U.S. President Donald Trump.

Scholz said the change of administration in Washington on Jan. 20 improved the prospects for more IMF resources. He pointed to a letter sent by U.S. Treasury Secretary Janet Yellen to G20 colleagues on Thursday, which he described as a positive sign also for efforts to reform global tax rules.

Civil society groups, religious leaders and some Democratic lawmakers in the U.S. Congress have called for a much larger allocation of IMF resources, of $3 trillion, but sources familiar with the matter said they viewed such a large move as unlikely for now.

The G20 may also agree to extend a suspension of debt servicing for poorest countries by another six months.

($1 = 0.8254 euros)

(Reporting by Michael Nienaber in Berlin, Jan Strupczewski in Brussels and Gavin Jones in Rome; Andrea Shalal and David Lawder in Washington; Editing by Daniel Wallis, Susan Fenton and Crispian Balmer)


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