by David Hirson

In each issue of EB5 Investors Magazine , editorial board member David Hirson addresses developments in the EB-5 arena . With a mix of observation and analysis , attorney Hirson keeps readers up-todate with all things EB-5 . Here are some winter updates for the third and fourth quarters of 2013 .

David Hirson

As the year came to an end , changes continued without any real reform in the EB-5 world ; comprehensive immigration reform stalled in the House after the Senate passed a bill , and a meeting between legislators and USCIS fell through . A certain level of dishonesty has crept into a small number of cases , and unfortunately , these unscrupulous people have cast aspersions on the rest of a magnificent program ( and will be further discussed later ). Nonetheless , there have been many important developments in the field , and the EB-5 program remains a win-win-win : investors receive green cards ; projects get necessary funding ; and the U . S . economy is stimulated through job creation and increased spending , at no cost to the taxpayer . What follows are some of the highlights of the second half of 2013 .

USCIS I-526 project denials The SEC files second action centered on the EB-5 program

In September 2013 , the Securities and Exchange Commission brought its second enforcement action ( SEC v . Ramirez ) this year against a husband and wife in Texas for stealing funds from foreign investors under the guise of the EB-5 program . In 2010 , the defendants , Marco and Bebe Ramirez sought USCIS regional center designation for their company USA Now . The SEC alleged that the defendants began soliciting and accepting EB-5 investors prior to filing the application for regional center designation . The defendants falsely promised investors a 5 percent return on their investment and an opportunity to obtain an EB-5 visa . Investors were further told that their funds would be held in escrow until each investor received Form I-526 approval . To date , none of the at least 10 investors identified by the SEC have received a return of their investment or Form I-526 approval .

It is also worth mentioning that , in February 2013 , the

SEC filed its first action of the year against an individual living in Illinois , and his two companies , for utilizing the EB-5 program to defraud foreign investors . In this seminal case ( SEC v . A Chicago Convention Center , et al .), the SEC and USCIS coordinated to halt an alleged $ 156 million fraudulent investment scheme . The SEC alleged that Anshoo R . Sethi created A Chicago Convention Center (“ ACCC ”) and Intercontinental Regional Center Trust of Chicago to fraudulently sell more than $ 145 million in securities . The investors were led to believe that , by purchasing interests in ACCC , they would be financing construction of the “ world ’ s first zero carbon emission platinum LEED certified ” hotel and conference center near Chicago ’ s O ’ Hare Airport . The defendants — Sethi and two companies he created — collected $ 11 million in administrative fees from more than 250 investors .

The SEC ’ s complaint alleges that Sethi and his companies made a number of misrepresentations about the project to cajole investors , including misrepresenting franchise agreements in their offering materials , misrepresenting the construction and occupancy timelines of the project ; and misrepresenting the amount of experience held by the owner and developer of the project .

An important outcome of this case was that the U . S . federal court affirmed that the SEC has jurisdiction over the sale of EB-5 securities in foreign countries .

In light of these two cases filed by the SEC , some investors have become more wary of utilizing the EB-5 program to obtain their green cards . These cases illustrate the need for thorough due diligence of each project on the part of the regional center and EB-5 investor , as well as an understanding of why some projects fail .

18 EB5 Investors Magazine