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Investors Alleging EB-5 Fraud; Seeking Funds via Federal Lawsuit

Jan. 16, 2019

The EB-5 visa program is classified as a type of employment-based visa that allows foreign investors an opportunity to secure a visa and then permanent residency. Though this visa has supported many successful projects here in New York, it has its share of critics. Many of these opponents state that examples of EB-5 fraud have tainted the visa program.

Recently, 65 foreign investors sought reimbursement of their funding through the filing of a lawsuit in federal court. The judge in this case sent back several questions that need to be clarified by the state Supreme Court where the project is located. The judge stated that there is currently no set precedent for whether individual guarantors of a development company’s loan can be named individually as being responsible for repayment of investments.

The 65 Chinese investors are seeking a return of their $32.5 million for a successful casino and hotel complex. According to the contract agreement, investors were to be repaid by 2015 with an extension granted until 2016. The corporation purportedly defaulted on that agreement. The federal judge has purportedly already found in favor of the investors and is seeking clarification on whether to find that the individuals named as guarantors can be named separately as being responsible for repayment of the principal and interest fees.

The court has not viewed the EB-5 visa favorably, and the judge has alluded to wrongdoing in the past that involved state officials and another individual who could potentially profit from a ruling in favor of the investors. Once the South Dakota Supreme Court resolves the federal court’s questions, the final verdict will be announced. Of the investors involved in this project, all but one received their legal residency status. Investors who are currently residing in New York and have concerns over potential EB-5 fraud and whether their immigration status could be affected are entitled to seek the guidance of an experienced attorney.