Investors Sue Developers, Bank Alleging EB-5 Fraud Over Project
July 19, 2018
The establishment of the EB-5 visa was intended as a way of obtaining foreign investment capital for certain projects that met the program’s parameters. In exchange for the minimum $500,000 investment, a foreign national who met the qualifications would then be eligible to apply for a green card. Many states, including New York, have benefited from this particular visa program though it has been the target of many EB-5 fraud attempts.
In 2012, a development corporation purportedly began soliciting foreign investors to help finance a 12-story hotel in a southern state popular with tourists. According to a recent lawsuit that has been filed on behalf of 21 Chinese investors, the development company and the bank involved in the project defaulted on the project. The investors further alleged that part of the deal they entered into included the provision that each investor would be granted a unit in the hotel as collateral.
The development group filed to have the property placed up for auction to be held in a few weeks. The group apparently defaulted on their loan in the estimated amount of $36.9 million. There have been bids that have been received that exceed the amount owed on the principal. Once the auction goes through, the new owner would be granted the title free from any liens.
The investors’ lawsuit seeks to ensure that they are reimbursed for their monies before the bank receives payment. They further allege that the contracts they received omitted the provision that granted them collateral. The suit has not yet been scheduled and it is unknown whether the investors will receive any of their investments or whether they received their visas. Current New York residents who are concerned about the possibility of being a victim of EB-5 fraud are entitled to seek the assistance of an attorney who is experienced in protecting the rights of immigrant investors.