Find out what EB-5 securities risks you should be aware of.
The EB-5 Program presents a very attractive way for regional centers and broker dealers to raise capital investment which are structured as securities, but these EB-5 securities don't come without risks.
While the majority of EB-5 investments are professionally handled, there are a few companies that abuse the Program for personal gain.
The U.S. Securities and Exchange Commission (SEC) is getting tougher on regional centers and broker dealers for improper use of EB-5 investor funds. No investors want to get involved with these fraudulent businesses. And no regional center or broker dealer wants to get into trouble with the SEC over negligence.
So, what are the common EB-5 securities risks to watch out for?
Track the funds and make sure they actually go into the EB-5 project. Find out if the funds are being diverted to unknown accounts and are used for personal gain or unrelated businesses.
Have your EB-5 immigration attorney review all the relevant offering documents. An attorney will be able to tell if anything doesn't look right or if the documents are missing critical information. In addition to the reviewing the offering documents, an attorney can also review other relevant materials to determine if it's all in order. If any facts are missing, they will be able to either sort it out with the project manager, or they can advise the you not to invest in that particular project.
Any EB-5 project that has guarantees may be making false claims. All EB-5 projects must be at-risk projects.
Conduct due diligence into a project to see if it has falsified information regarding the project, the project's performance, the project team, or any other relevant aspect. This may involve fact checking data and contacting people who have used the developer before.