EB5 INVESTORS M AGAZINE
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O t he r l i a ble p a r t ie s c o u ld b e d e v e lop e r s t h at
received funds for ult imate job-creat ing ent it y
pur poses. G enera l cont ractors re ceived no-bid
contracts. Expect, at a minimum, a subpoena into
re cords a nd p ossible i nc lusion or i nter pleader
by e x ist i ng defenda nts. At tor neys who dra f ted
documents or received payments without disclosing
t he potential conflicts of interest are also
commonly named in these actions. Immigration
agents who may have a U.S. presence are targets for
being named in the suit. Clearly if the agents are
tak ing funds, there is cause to accrue additional
liability for lack of transparency.
Bank or escrow agents who physically processed
i nvest ment funds a l l have var y i ng levels of
i nte r a c t ion . The f a c tor s to c on s ide r w ou ld b e
based on the types of accounts, escrow accounts or
providing documents of perceived escrow account
features. Depending on the size of the bank and
insurance, they may be quick to settle privately.
Escrow agents who may be within the bank or third
parties that work closely with banking institutions.
They receive sometimes significant funds as a fee
but may not have performed to the agreement.
Finally, any related business ow ners, vendors or
anyone who benefited from the EB-5 funds may be
liable for recourse to the investor if they can prove
that the services weren’t rendered or prices were
inflated.
WHY ARE SUITS BEING FILED?
A lawsuit is a powerful, expensive tool to force action.
If there is a significant delay in the project, a lawsuit
may be effective at motivating the developer to finish
on time and create the requisite number of jobs.
Therefore, clients can be asked if the project is behind
schedule, what is causing the delay, and if those delays
were disclosed in the investment documents. They can
also ask about third party or market conditions.
Delays in the project may not always mean a delay in
job creation. If the project is in progress or funds were
substantially spent, then a strategy to raise this issue
can be effective. However, if the delay produces changes