EB-5 Visa Fraud Alleged in SEC Complaint

A Complaint filed in United States District Court, Central District of California, by the Securities and Exchange Commission (SEC) on September 3, 2014 alleges that two Los Angeles attorneys and the wife of one of those attorneys defrauded 24 Chinese and Korean investors who thought they were investing in the construction and operation of an ethanol production plant located in a Targeted Employment Area (TEA) in Kansas. The Complaint alleges that the attorneys, using various limited liability company (LLC) and corporate entities to pool the investment funds, misappropriated $7.2 million of their clients’ money.

The clients allegedly invested a total of $11.455 million in hopes of obtaining EB-5 visas allowing them to immigrate to the United States.

The EB-5 program allows an immigrant investor to petition for two-year conditional residency status based on an investment of at least $500,000 in a commercial enterprise located in a TEA that will result in the creation of at least 10 full-time jobs for U.S. workers. Investors who can satisfy the job creation requirement are able to petition USCIS to remove the conditional nature of their residency and have their status converted to that of lawful permanent resident.

The SEC alleges that the defendants misused some of the monies on an off-shore investment and refunded other monies to investors who demanded the return of their principal. Defendants allegedly misrepresented that the plant was under development and staffed by employees when construction had actually been discontinued. Because the plant described in the Regional Center approval was allegedly never constructed, the investors could not establish that their investments generated at least 10 full-time jobs for U.S. workers.

Timothy D. Widman is a Immigration Attorney and the owner of the Law Office of Timothy D. Widman, with offices in San Jose and Cupertino.