EB-5 investment immigration is a major channel for wealthy Chinese families to immigrate to the United States. Due to the limited annual quota for investment immigration, applicants may have to wait for more than ten years, adding a lot of variables to their immigration plans and giving some unscrupulous individuals the opportunity to exploit loopholes. According to a U.S. law firm, many investment immigrants have seen the funds they previously invested fall into the hands of scammers, while they continue to wait anxiously in their home country for their turn.
Dr. Zheng Cunzhu, a legal expert at a law firm in Los Angeles, recently discussed with reporters the numerous cases of fraud prevalent in investment immigration projects.
Dr. Zheng mentioned that his law firm has been in contact with several investment immigration applicants from mainland China who have waited for years, only to find out that their green cards have not been issued as promised. Some discovered upon their arrival in the U.S. or through friends that the businesses they invested in no longer exist.
Some earlier investors in the immigration program have been more fortunate, having obtained temporary green cards and relocated their families to the U.S., even buying homes and enrolling their children in schools. However, the businesses they invested in no longer existing poses a challenge for their later applications for permanent green cards.
Furthermore, some applicants who arrive in the U.S. later find that the projects they invested in for the immigration purposes were fraudulent from the beginning.
“These types of investment immigration projects, as far as I know, exist in several locations in California,” Dr. Zheng noted. “For example, there are several cases of hotel renovations where upon inspection, the projects turn out to be non-existent. Everything is fabricated, even the addresses, leaving dozens of families with nothing.”
Upon discovering they have been defrauded, these investors begin to file lawsuits in the U.S., and although they may win civil cases, retrieving their assets proves to be challenging.
“Because these schemes were designed as frauds from the beginning, with funds already transferred through false contracts to contractors or other parties, who then abscond with the money or transfer property to spouses or children through divorce,” Dr. Zheng explained. “Therefore, even though many investors win lawsuits, they are unable to recover most of their investment.”
Similar cases have been exposed in other states, including New York, Florida, Chicago, Las Vegas, and Phoenix. Additionally, some failed investment immigration projects lead to unfinished constructions, affecting hundreds of families.
Dr. Zheng cited an example of an investment immigration project in Phoenix called “Phoenix Mall.” This project, located in the desert, had a few buildings under construction and a large parking lot, yet the construction site has since been abandoned. He stated, “These projects were poorly planned initially or had insufficient business considerations, which resulted in their quick failure.”
Failed investment immigration projects are not exclusive to Los Angeles. The infamous unfinished project in downtown Los Angeles, “Oceanwide Plaza,” utilized funds exceeding hundreds of millions of dollars from EB-5 investors. Due to the project’s constant delays, the U.S. immigration authorities have declined to issue green cards to these immigrant applicants.
Dr. Zheng believes that the intermediaries responsible for promoting investment immigration projects in China, often leading companies in the industry that appear reputable, still present problematic projects. Some of these projects have received basic approval from the U.S. government and immigration authorities, with some investors even obtaining temporary green cards.
“However, did the investors investigate whether these projects could succeed? Or did they overly rely on the so-called recommendations from these Chinese intermediaries?” Dr. Zheng noted. “Some intermediary companies, including the lawyers they work with, are allegedly defrauding customers during the promotion process; they’re essentially partners.”
Furthermore, even mammoth projects like Oceanwide Plaza, totaling around $2 billion in investments, can fail, indicating that investment immigration projects inherently carry risks.
Dr. Zheng believes that Regional Centers are naturally accountable. While early Regional Centers bore minimal risk, new policies now require them to assume some responsibility and pay annual management fees, akin to a security deposit; however, the small proportion of fees makes it challenging to serve as a deterrent.
He advises EB-5 applicants to personally investigate or hire professional lawyers to scrutinize the projects they plan to invest in, cautioning against excessive reliance on intermediary companies. Should any fraudulent activities be discovered, investors are advised to report to the U.S. Securities and Exchange Commission (SEC) or the Federal Bureau of Investigation (FBI).