Apr 062013

The Securities and Exchange Commission today announced charges and an asset freeze against an individual living in Illinois and two companies behind an investment scheme defrauding foreign investors seeking profitable returns and a legal path to U.S. residency through a federal visa program.

The SEC alleges that Anshoo R. Sethi created A Chicago Convention Center (ACCC) and Intercontinental Regional Center Trust of Chicago (IRCTC) and fraudulently sold more than $145 million in securities and collected $11 million in administrative fees from more than 250 investors primarily from China. Sethi and his companies duped investors into believing 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. Investors were misled to believe their investments were simultaneously enhancing their prospects for U.S. citizenship through the EB-5 Immigrant Investor Pilot Program, which provides foreign investors an avenue to U.S. residency by investing in domestic projects that will create or preserve a minimum number of jobs for U.S. workers.

The SEC alleges that Sethi and his companies falsely boasted to investors that they had acquired all the necessary building permits and that several major hotel chains had signed onto the project. They also provided falsified documents to U.S. Citizenship and Immigration Services (USCIS) – the federal agency that administers the EB-5 program – in an attempt to secure the agency’s preliminary approval of the project and investors’ provisional visas. Meanwhile, Sethi and his companies have spent more than 90 percent of the administrative fees collected from investors despite their promise to return this money to investors if their visa applications are denied. More than $2.5 million of these funds were directed to Sethi’s personal bank account in Hong Kong.

Swift coordination between the SEC and USCIS has brought the scheme to a halt in its application stage at USCIS. The SEC filed its complaint under seal earlier this week and obtained an emergency court order to protect the remaining $145 million in investor assets that were at risk of being similarly misappropriated by Sethi and his companies. The case was unsealed this morning.

According to the SEC’s complaint filed in U.S. District Court for the Northern District of Illinois, the EB-5 program enables foreign investors to possibly qualify for a green card if they invest $1 million (or $500,000 in a “Targeted Employment Area” with a high unemployment rate) in a project that creates or preserves at least 10 jobs for U.S. workers, excluding the investor and his or her immediate family. Sethi and his companies used the lure of a pathway to U.S. citizenship to convince investors to wire a minimum of $500,000 apiece plus a $41,500 “administrative fee” to U.S. bank accounts. These administrative fees are separate from the investment capital that the EB-5 program requires to be deployed into a job-creating enterprise. More than $11 million in administrative fees were collected with the claim that they were fully refundable to investors if their visa applications are rejected. Sethi and his companies have instead been spending those funds.

The SEC alleges that Sethi submitted false claims about the project to USCIS.  Among the phony documentation that he provided to the agency in seeking preliminary approval for the project under the EB-5 program were a comfort letter from Hyatt Hotels that was not genuine, and a false backup financing letter from the Qatar Investment Authority.

The SEC’s complaint alleges that Sethi and his companies made a number of misrepresentations about the project to dupe investors. Offering materials stated that investors’ funds would help build “a convention center and hotel complex, including convention and meeting space, five upscale hotels, and amenities including restaurants, lounges, bars, and entertainment facilities.” Sethi and his companies prominently featured in their marketing materials the purported participation of three major hotel chains in the project: Hyatt, Intercontinental Hotel Group, and Starwood Hotels. However, none of these hotel chains have executed franchise agreements to include a brand hotel in this project as represented to investors in the offering materials. Two of the chains actually terminated prior deals with other Sethi-related entities more than two years before these offering materials were circulated to investors.

The SEC further alleges that the offering materials falsely stated that construction would begin in summer 2012 and occupancy of the first tower would occur in early spring 2014. A search of the Chicago Building Permits database for the project address shows that the only recent permits are for a tent for a purported groundbreaking ceremony held in November 2012, a demolition permit, construction of a fence, and a minor electrical wiring permit.

According to the SEC’s complaint, the 29-year-old Sethi misrepresented to investors in offering materials that he has “over fifteen years of experience in real estate development and management, specifically in the lodging area.”  Offering materials also misleadingly state that the project’s developer Upgrowth LLC has “more than 35 years of experience.”  Illinois corporate records show that Upgrowth was just recently organized in 2010.

The SEC’s complaint alleges that Sethi, ACCC, and IRCTC violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. In addition to the temporary restraining order and asset freeze granted by the court, the SEC’s complaint seeks permanent injunctions and other monetary relief.

The SEC’s investigation, which is continuing, has been conducted by Mika M. Donlon and Adam J. Eisner under the supervision of C. Joshua Felker. Patrick M. Bryan will lead the litigation. The SEC acknowledges the substantial assistance of the USCIS.

Source: U.S. Securities and Exchange Commission

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Jul 192012

If the EB-5 regional center pilot program is not extended by September 30, 2012, pending regional center applications and individual EB-5 applications could be severely impacted.  The following bullet points are meant to outline the impact that a sunset of the program would have on both pending I–924, Applications for Regional Center Designation and amendments as well as on I-526, Immigrant Petitions filed by Alien Entrepreneurs.

I-924 Applications: 

  • New applications for initial regional center designation will not be accepted beyond the date of the Pilot Program’s sunset.
  • Amendments to existing regional center designations requesting additions or changes to industry or NAICS codes, change in geographic scope, changes in economic methodology will not be accepted.
  • Those applications that are currently under review by USCIS will be held for an indeterminate period of time pending further action by Congress to renew the program.

I-526 Applications:

  • Pending EB-5 applicants could no longer benefit from indirect or induced job creation.
  • To be approved, the I-526 petition would need to include evidence that the project resulted in the creation of ten DIRECT jobs per investor.  The jobs would need to last two years or more to be considered permanent and would need to be full-time i.e. 35 hours per week or more.  At the I-829 stage, the applicant would need to prove that these jobs were held by qualified U.S. workers which includes: U.S. citizens, lawful permanent residents, refugees, asylees or persons granted cancellation of deportation from the U.S.  USCIS would either render decision on evidence already submitted to the Service with the initial application or through the issuance of a Request for Evidence (RFE) requesting documentation of direct job creation.
  • USCIS defines direct jobs as those created by the new commercial enterprise.  Presumably, jobs created by the project company, thought they are defined as direct jobs by economists, would be disallowed under EB-5 program standards.  This in effect would render the debt or equity model from EB-5 Investment Vehicle or Fund (“New Commercial Enterprise”) to Project (“Job Creating Enterprise”) obsolete.  Instead, the new commercial enterprise would need to be the project company and create direct jobs to create qualifying jobs.  This would make the program less attractive to many companies who would not want foreign investors to be directly involved in the project company.
  • All I-526 petitions received prior to the expiration of the program will be held in abeyance absent action by Congress.

We have received reports that many agents abroad, particularly in China, are communicating to investors that they must file their application prior to September 30th to qualify for the EB-5.  The same advice is being given to projects and regional center applicants.  Unfortunately, based on guidance issued by USCIS in 2009 at the time of the previous sunset, the only way that applicants could qualify would be as described above.

Source: EB5Investors (K.K.)

Jul 122012

USA has been a preferred destination country for many immigrants from India. In the past, many Indians especially from the States of Punjab, Maharashtra, Gujrat, Haryana, Rajasthan, Delhi have successfully immigrated to USA and are now U.S. Citizens, living a life they always dreamt of for their family & themselves.

Eligible immigrants have various options in which one can legally immigrate, live, work and retire in USA; and Employment Based Fifth Preference (EB-5) is one of the fastest & easiest way to secure U.S. Green Card for the whole family, usually within a timeframe of 6-12 months.

As of May 2012, there are 224 Regional Centers (RC) in USA which are undertaking EB-5 based investment projects. We at Law Offices of RKNA with an experience of more than 15 years, having a dedicated network of EB-5 Research Team, Lawyers and Economists in USA, can help you choose the best of the lot EB-5 programs, offering better Principal Protection, Return on Investment, and ease of Green Card Application & Approval and Exit Routes (principal payback after 5 years lock-in).

To know your Eligibility to invest in EB-5 Program and secure a U.S. Green Card for your family and yourself, please fill the free Investor Evaluation Form online below, we will get back to you with best options suiting your eligibility criteria and needs.

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Jun 132012

AMONG the most popular tools for attracting foreign investment to the United States is the EB-5 program. It seems like the perfect win-win: any foreigner who invests between $500,000 and $1 million here, and creates at least 10 domestic jobs from that investment within two years, gets a green card.

Given how many high-worth investors are clamoring to enter the United States, the program could have a significant effect on American unemployment. Indeed, it has brought in some $1 billion over the last fiscal year, and the President’s Council on Jobs and Competitiveness has called for the program to be radically expanded over the next few years.

Unfortunately, the program is so rife with fraud and corruption that it could actually have the opposite impact and deter investment. To regain its credibility, the program must make a number of changes to enable more transparency and demand more competence from its operators.

The most egregious problems with the EB-5 program can be found in its 218 regional centers, which work with private-sector brokers to identify local investments and direct foreign participants to them. Examples abound of centers and brokers playing down risky investments and misrepresenting how the program works, including a promise that EB-5 investments are guaranteed by the federal government — when the government in fact does nothing of the sort. Many investments have failed to create the required 10 jobs and even gone bankrupt, leaving the investor without his money or his green card.

While many EB-5 regional centers have solid records, a disturbing number have directed investor money to risky projects and companies that pay little to no return, overseen by brokers who get a commission regardless of how the investment plays out.

Aside from accusations of outright fraud, there is also a clear lack of understanding among government administrators about how to manage an investment program. As a result, they often approve businesses that are simple to understand, like a condo development or a grocery store, but whose business models don’t generate enough profit to hire workers, while rejecting more sophisticated businesses that stand a greater potential of generating profits and jobs.

For the time being, these problems haven’t turned the tide of interest in the EB-5 program. But that could change: recent high-profile investigations by Reuters and Businessweek, as well as a warning against fraudulent brokers by the Chinese Supreme People’s Court, could start having a significant deterrent effect, especially since other countries, like Canada, are following America’s lead with their own versions of the program.

Fortunately, the solutions are straight forward. The federal government needs to rein in freewheeling brokers with heavier penalties for misrepresenting investments, hire more business-savvy administrators and make the entire process more transparent, so that applicants know why their money was accepted or rejected.

The EB-5 program has a lot of promise to reduce unemployment, and the White House is right to call for its expansion. Rather than end it, let’s fix it.

Availing services of an experienced attorney or law firm for EB-5 Investment Immigration program is a must and an investor should avoid falling into agent traps, who are bothered about commission payouts and personal interests only.

Source: NYTimes

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Jun 112012

Good riddance, Eduardo.

Facebook co-founder Eduardo Saverin drew public ire last month following the revelation that he had renounced his U.S. citizenship, a move widely seen as a tax dodge. But thousands of wealthy foreigners are lining up to replace him, making investments here and putting themselves on a path to citizenship in the process.

The State Department expects to issue over 6,000 “investor visas” in the current fiscal year, which would be an all-time record. Other countries, meanwhile, are following the U.S.’s lead, keen to spur growth in lean economic times.

“Our goal is certainly job creation, and that’s what this program is all about,” said Bill Wright, a spokesman for U.S. Citizenship and Immigration Services. “At the same time, it’s allowing somebody from a foreign country to come and invest in our nation.”

Under the government’s EB-5 Immigrant Investor program, foreign investors can get conditional visas that allow them and their families to live, work and attend school in the U.S. To qualify for the visa, they must invest at least $1 million in a new or recently created business, or $500,000 for businesses in rural or high-unemployment areas.

The investment must be demonstrated to have created or preserved at least 10 full-time jobs for U.S. workers within two years. Assuming this condition is met, investors and their families graduate to permanent resident status, and can apply for full citizenship three years later.

While the EB-5 program has been around since 1990, demand has been surging as of late, fueled in large part by China’s growing elite, who accounted for 70% of the roughly 3,500 investor visas issued last year. State Department officials expect the program’s quota of 10,000 visas per year, which includes visas given to the spouses and children of investors, to be filled for the first time ever within the next year or two.

Some critics of the U.S. program question the fairness of letting wealthy immigrants pay for special treatment, while others say investments and job creation claims need stricter vetting. Immigrants who arrive via the program have no guarantee of recovering their investments, and may face deportation if they don’t produce the required number of jobs.

Investing overseas: Find the right balance

Of the roughly 12,000 immigrants who’ve arrived on the EB-5 investor visa, just 39% have earned permanent residency, according to USCIS data.

There’s also the lengthy application and approval process — a 2005 study by the Government Accountability Office said the program’s reputation for red tape had dampened interest among foreigners in the preceding years.

USCIS press secretary Christopher Bentley said in an email that the agency “continues to take steps to enhance [the EB-5 program’s] efficiency and integrity.” USCIS recently expanded the team of analysts responsible for evaluating EB-5 projects and proposals, he said.

Whatever the program’s problems, interest has been growing in recent years, and meanwhile, the U.S. has faced increasing competition from other countries trying to woo well-heeled foreigners with the promise of residency or citizenship.

In January, Ireland announced a new residency program for immigrant investors, and Australia unveiled a similar program last month.

“Governments are reinvigorating their policy and their resources around this,” said Eric Major, the CEO of Henley & Partners Ltd, an international consulting firm based on the European island of Jersey that specializes in immigration assistance for the wealthy.

Around 20 countries currently offer residency or citizenship by investment, Major said, a figure that may soon grow with economies struggling in much of the developed world. Major said he had met with five governments in the past eight months to discuss such programs.

Demand shows no sign of slowing down, either. International travel, banking and communication have become increasingly easy, while Asia, in particular, is minting new millionaires at a rapid pace.

“At no time in human history have we ever been so mobile and has there been so great a wealth effect from China and India,” Major said.

In the U.S., the immigrant investor program has been responsible for at least 46,810 jobs and more than $2.3 billion in investments since its inception in 1990, according to U.S. Citizenship and Immigration Services.

That’s a small fraction of overall foreign investment in the U.S., but it comes at no cost to the government. Were the EB-5 program to meet its 10,000-visa quota, it would contribute more than $4.4 billion to GDP and create or preserve nearly 75,000 jobs annually, according to a 2010 report prepared for the government by consulting firm ICF International.

The EB-5 program is up for renewal in the fall, and while USCIS says it has “no indication” that the initiative will be allowed to expire, some supporters are more wary.

“We can’t let our guard down,” said David Andersson, an immigration attorney and president of the Association to Invest In the USA. “The deadline approaches and Congress just demonstrates a reluctance to get things done.”

For foreign investors, Andersson said, the main appeal of immigration to the U.S. is access to good schools for their children or other family-related concerns.

5 projects financed by EB-5 investors

That was the case for Jordan Gagner, a Canadian investment manager who came with with his wife and three children to Arizona in 2009. His wife had come down with a serious case of rheumatoid arthritis, a condition exacerbated by Vancouver’s cold, wet weather.

“We just thought, we’ve got to get down to a climate that’s more conducive to this disease,” Gagner said.

Gagner invested in an assisted-living complex being constructed in Washington. He and his family now have green cards giving them permanent resident status, and plan on applying for citizenship as soon as they’re able.

“We’re fiercely proud about Canada, but there’s things we love about the U.S. that Canada just doesn’t provide,” Gagner said.

View this article on CNNMoney

Jun 092012

Toronto and Vancouver – may soon be yesterday’s news for many investors, majorly Chinese and Indians, now turning their attention to the U.S. ahead of a crucial deadline.

Thousands of wealthy foreign nationals, most from China and India, are now queuing up at American embassies in an effort to add their names to the U.S. Investor Immigration program, or EB5 visa.

The government must re-authorize it in September, making for an uncertain future given the November election two months later. That, at least, appears to be the thinking of investor immigrants eager to submit their applications to program officials before the deadline, securing a spot in line, even if the program is ultimately changed or cancelled.

Under the program, applicants and any immediate family garner permanent U.S. residency for an investment of $1 million. It must lead to 10 full-time jobs within two years.

Those prospective investors are just as keen to purchase second homes and investment properties in the U.S., a place many ultimately hope to migrate.

Winning that kind of re-location is increasing challenged in Canada, something zapping its appeal for many.

The Canadian investor program — where applicants post an $800,000 interest-free loan for government – has been temporarily closed until late this summer because of a three-year backlog.

That’s expected to slow the number of foreign nationals looking to buy homes in Vancouver and Toronto in hopes of immigrating there.

The U.S., on the other hand, has kept hope alive for thousands of would-be immigrants with pockets deep enough to fund that dream, say U.S. analysts.

Jun 072012

Investment based family immigration to USA under EB-5 category is helping many potential immigrants from India to realize their dream of living an American life in USA.

In this category High Networth Individuals & Families from India have been investing in a USCIS approved project and  benefiting from the various advantages of being a U.S. Green Card holder and U.S. Citizen. Read more about Green Card benefits.

Let us analyze the statistics of Indians Citizens applying for EB-5 category visa & green card during the period 01/2006 to 03/2012 (source U.S. Department of State and IIUSA)

Number of applicants applied for EB5 category visa successfully: –

  • Year 2006 : 2
  • Year 2007 : 19
  • Year 2008 : 19
  • Year 2009 : 72
  • Year 2010 : 62
  • Year 2011 : 37
  • Year 2012 : 38 (till 03/2012)

Though the numbers are growing, but as compared to China it is still very less, which alone successfully filed more than 1500 applications as of 03/2012 as compared to 38 from India.

Jun 032012

WASHINGTON (Thursday, May 24, 2012) – Senator Patrick Leahy (D-Vt.) introduced legislation Thursday to make permanent the charter for a successful, job-creating immigrant visa program that has brought economic development and job growth to Vermont since 1997.

After months of negotiation, the legislation introduced Thursday by Leahy will grant a permanent authorization to the EB-5 Immigrant Investor Regional Center program.  Vermont’s Regional Center has been a successful private-public partnership between the State of Vermont and several Vermont businesses.  The bill introduced Thursday will also extend the voluntary E-Verify program, as well as two visa programs for religious workers and the so-called “Conrad 30,” or rural doctors, visa.  The bill is co-sponsored by the Senate Judiciary Committee’s Ranking Member Senator Chuck Grassley (R-Iowa).

“Vermont has been a model for the success of the EB-5 Regional Center Program, and I want to see that great success continue for Vermonters, and those who wish to pursue business opportunities in our great state” said Leahy. “I am grateful that Senator Grassley has worked with me to craft this legislation, and I am optimistic its introduction marks the beginning of a strong bipartisan effort to make these long-standing programs permanent.  When enacted, the measure we introduce today will also pave the way for my efforts to improve and build upon the EB-5 Regional Center Program to ensure stability for investors and entrepreneurs, and to ensure that U.S. Citizenship and Immigration Services has the tools it needs to keep this program a strong, secure, and vital part of our economy.”

Leahy has successfully steered short-term extensions of the pilot program through Congress.  The current authorization will expire in September 2012.  Earlier this week, Leahy secured a three year extension of the programs during the Appropriations Committee’s consideration of the Department of Homeland Security appropriations bill.

Vermont’s Regional Center was re-chartered in 2007.  Two Vermont ski resorts, Jay Peak and Sugarbush, are active participants in the Regional Center pilot program and have been engaged in ambitious development projects.  Other capital investment projects are in the works around the state.  Vermont’s Regional Center projects have drawn business and tourism to the state, fueling local economies and creating jobs.

Since it was created in 1993, the regional center program has attracted more than a billion dollars in foreign investment to the United States, and created thousands of new domestic jobs – hundreds, in Vermont.  There are now over 220 Regional Centers across the country, with new applications pending.

The Regional Center program attracts foreign investors seeking legal permanent residency and a chance to invest in the American economy.  Investors must pledge a minimum of $500,000 to a project within an approved regional center and independently apply for an EB-5 visa.  If approved by U.S. Citizenship and Immigration Services (USCIS), foreign investors are granted a conditional two-year green card.  After two years, the investor must provide proof that they have created at least ten jobs as a result of the investment and have met additional investment requirements set by USCIS.  As a result of the program’s popularity, additional applications are pending with USCIS to establish new Regional Centers in several states.

source: www.leahy.senate.gov/press/press_releases/release/?id=5f6b467d-0b7e-47a6-b0d4-6b8f765e825b