Consumer Advisory: Colorado Division of Securities warns immigrant investors of EB-5 Fraud
DENVER — The Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA), has issued an investor alert specifically aimed at warning immigrant investors who plan to take advantage of the Employment-Based, Fifth Preference (EB-5) program about frauds that have been increasingly occurring. The EB-5 program was introduced in the early 1990s as a way for foreign investors who meet certain requirements to apply for conditional resident alien status, or a green card, in the U.S. by investing in the American economy.
“While the EB-5 visa program has been a useful tool for stimulating our economy and providing a non-traditional path to citizenship for foreign investors, unfortunately eagerness to begin this process coupled with a lack of knowledge or information about American companies and regulatory procedures makes these investors vulnerable to unlicensed activity by fraudsters,” stated Colorado Securities Commissioner Gerald Rome. “We want foreign investors who are considering this program to know how to protect themselves prior to entering into an agreement with companies or individuals promoting these investment opportunities.”
In many fraudulent EB-5 cases investigated in recent years, investors are solicited through the use of fake regional centers, which typically help direct funds into new or troubled businesses in need. Legitimate regional centers are approved by the U.S. Citizenship and Immigration Services (USCIS), so regulators are encouraging foreign investors to fully verify the legitimacy of any regional center or company who may reach out to them.
Among the resources listed in the advisory, issued as a joint effort with the North American Securities Administrators Association (NASAA), are research tools for verifying the legitimacy of investment opportunities, recommendations for documents and information to collect prior to signing anything, and red flags that might signal a fraudulent offering.