Close
ThinkAdvisor

Regulation and Compliance > Federal Regulation > SEC

SEC Busts Firms in $79M Immigration Scheme

X
Your article was successfully shared with the contacts you provided.

The Securities and Exchange Commission said Tuesday that it has charged two firms with illegally brokering more than $79 million of investments from foreigners seeking U.S. residency through the government’s EB-5 Immigrant Investor Program.

The charges, the first against brokers handling investments in the EB-5 program, follow earlier SEC actions against fraudulent EB-5 offerings.

Ireeco LLC, originally of Boca Raton, Florida, and its successor Ireeco Ltd., a Hong Kong-based company operating in the U.S., were charged with acting as unregistered brokers for 158 EB-5 investors.

The EB-5 program, administered by the U.S. Citizenship and Immigration Services (USCIS), provides a path to legal residency for foreigners who invest directly in a U.S. business or private “regional centers” that promote economic development in specific areas and industries, the SEC states.

According to the SEC’s order, Ireeco LLC and Ireeco Ltd. used their website to solicit EB-5 investors, some of whom were already in the U.S. on a temporary visa. 

While the firms promised to help investors choose the right regional center to invest with, they allegedly directed most EB-5 investors to the same handful of regional centers, ones that paid them commissions of about $35,000 per investor once USCIS approved an investor’s petition for conditional residence (green card).

As the SEC order explains, to qualify for an EB-5 visa, the foreign applicant first must invest $1 million ($500,000 if in a targeted employment area) in a USCIS-approved U.S. commercial enterprise. USCIS defines a commercial enterprise as any for-profit activity formed for the ongoing conduct of lawful business. Once the investment requirement has been met, the foreign applicant then can apply for a conditional green card (I-526 Petition), which is good for two years from approval.

If the investment creates or preserves at least 10 full-time jobs during that time, the foreign applicant then may apply to have the conditions removed (I-829 Petition) from his or her green card and live and work in the U.S. permanently.

“While raising money for EB-5 projects in the U.S., these two firms were not registered to legally operate as securities brokers,” said Eric Bustillo, director of the SEC’s Miami Regional Office. “The broker-dealer registration requirements are critical safeguards for maintaining the integrity of our securities markets, and the SEC will vigorously enforce compliance with these provisions.”

Without admitting or denying the SEC’s findings, Ireeco LLC and Ireeco Ltd. agreed to be censured and to cease and desist from committing or causing similar violations in the future. They also agreed to administrative proceedings to determine whether they should be ordered to return their allegedly ill-gotten gains, pay penalties or both, based on their violations.

—Check out What Does It Mean to Be an American? on ThinkAdvisor.

More on this topic