Elizabeth Krukova

Though USCIS is the body that approves regional centers, USCIS approval does not mean that the regional center has been vetted for securities compliance. In an attempt to warn against fraud, and to remind investors to perform due diligence, USCIS and the SEC issued a joint alert in October 2013, stating that“ the fact that a business is designated as a regional center by USCIS does not mean that USCIS, the SEC, or any other government agency has approved the investments offered by the business, or has otherwise expressed a view on the quality of the investment.” 1

USCIS’ s interest in deterring fraud and the SEC’ s sharper focus are likely to change how regional centers conduct business, especially since USCIS reaffirmed its commitment to fighting fraud in its most recent draft of the EB-5 adjudications policy memo. 2 This stated that its teams are collaborating with USCIS’ s Fraud Detection and National Security directorate. The North American Securities Administrators Association, which tracks securities fraud and manages collaborations of state securities agencies, listed EB-5 schemes as one of its top investor threats in 2012, due to the false guarantees made by its less scrupulous promoters. The Financial Industry Regulatory Authority, Inc.( FINRA), the largest independent regulator for securities firms in the United States, also appears interested in securities regulatory compliance in the EB-5 program.

The SEC has demonstrated that it will not shy away from scrutinizing EB-5 cases. In a recent case, SEC v. Marco A. Ramirez, et al., the SEC and USCIS worked together to stop an alleged investment scam in which the SEC claims that the defendants, including the USA Now Regional Center, falsely promised investors a 5 percent return on their investment and an opportunity to obtain an EB-5 visa, plainly contravening EB-5 regulations. The SEC alleged that the defendants misused the funds of investors, which were to be held in escrow until USCIS approved the business as eligible for EB-5. 3 In another case, SEC v. A Chicago Convention Center, et al., the SEC alleged that the defendants used false and misleading information to solicit investors in the hotel and conference center in Chicago, including falsely claiming that the business had acquired all necessary building permits and that the project was backed by several major hotel chains. 4 With all eyes on EB-5, it is all the more important for regional centers to ensure that they are running their business in compliance with securities laws and USCIS regulations.

1

http:// www. sec. gov / investor / alerts / ia _ immigrant. htm

2

http:// www. uscis. gov / sites / default / files / USCIS / Laws / Memoranda / 2013 / May / EB-5 % 20Adjudications % 20PM % 20( Approved % 20as % 20final % 205-30-13). pdf

3

http:// www. sec. gov / News / PressRelease / Detail / PressRelease / 1370539854731

4 http:// www. sec. gov / litigation / litreleases / 2013 / lr22615. htm

60 EB5 Investors Magazine