A Major EB-5 Program fraud investigation is currently being conducted in Vermont.
The Securities and Exchange Commission (SEC) raised a massive investigation into businessmen Ariel Quiros' and William Stenger's Vermont ski resort developments. The two men have been charged with fraud for misusing EB-5 investor money.
In 2008, Stenger and Quiros began development on two hotel ski resorts projects, called Jay Peak Hotel Suites, in northern Vermont, using more than $350 million in funds raised through the EB-5 Program.
Stenger and Quiros diverted more than $200 million of the EB-5 investment money for unapproved projects as well as for personal use. Quiros diverted $50 million of those funds for personal expenses such as a $2 million dollar luxury apartment.
The $350 million raised through the EB-5 Program came from more than 700 foreign investors through the EB-5 Program, which allowed foreign nationals to invest $1 million or $500,000 in qualified U.S. projects that boost the economy and create jobs in exchange for green cards for themselves and their immediate family members.
Projects like Jay Peaks resorts sound glamorous and seem like they're too big to fail, but it's imperative that EB-5 investors not fall into fraudulent traps like these. How can an EB-5 investor avoid EB-5 fraud?
Here are a few things to consider when looking for an EB-5 project to invest in:
- Is your project a conservative investment in a major city?
- An example of one of these more conservative projects would be a hotel in New York City.
- Consider the more important reason for investing in the EB-5 Program. It's the ability to obtain a green card. Therefore, the more conservative the EB-5 project, the better the chances are that the project will get completed on time and that the project will create the required number of jobs the EB-5 investor needs in order to obtain their green card.
- Have you conducted thorough due diligence into the regional center?
- Are they USCIS designated and approved?
- Have you looked into their business plans, their track record, and their reputation?
- Find a knowledgeable and experienced EB-5 attorney to review all the documents from the regional center.
- Are there safeguards for the investor?
- While, yes, the EB-5 investor must invest in an "at-risk" project, there are still typically exit-strategies.
- What happens if your EB-5 petition is denied, will your investment be returned to you?
Conclusion: Avoid high-risk EB-5 projects and spend a considerable amount of time researching possible EB-5 investments.