- August 3rd, 2015
SEC Charges Unregistered Brokers in the EB-5 Visa Program
The U.S. Securities and Exchange Commission recently charged two individuals with illegally brokering more than $79 million in investments by foreigners seeking U.S. residency under the EB-5 program. The charges are the first of its kind against brokers handling investments under this program.
The two individuals formed a Limited Liability Company, which, as promoted through their website, worked with individuals to determine if the EB-5 visa program could work for them. After a series of contacts with potential investors, the LLC representatives would provide the investors with one or more EB-5 regional center projects, as possible choices, claiming to have performed “due diligence” on each of the regional centers it selected for their customers.
After the investors identified which of the regional centers they were most interested in, the LLC representatives registered the investors with the regional center and then dealt with it directly. The investors had no direct relationship with the regional center and would occasionally follow up with the LLC representatives.
The LLC representatives did not collect fees directly from the investors. Instead, they received an average commission of $35,000 each from the regional centers once the investors’ conditional green card petitions were approved. Over a period of 4 to 5 years, the LLC representatives received over $5.5 million in commissions.
The SEC has charged the two individual LLC representatives with willfully violating Section 15(a)(1) of the Exchange Act by inducing the purchase of securities by others without registering as a broker-dealer or without associating with a registered broker-dealer.