The SEC is charging Ireeco LLC and Ireeco Limited with serving as unregistered brokers for over 150 foreign investors. The two firms are accused of illegally brokering over $79M of investments by those who wanted to become U.S. residents under the EB-5 Immigrant Investor Program.
The program offers a way for foreigners to invest money in a U.S. enterprise or a designated, private regional center in exchange for legal residency in this country. The SEC contends that the two brokerage firms went online to solicit foreign investors, promising to help them select a regional center. Instead, the firms allegedly directed most of them to the centers that paid commissions of approximately $35,000/investor once the U.S. Citizenship and Immigration Services (USCIS) approved a green card petition. The SEC said that participants invested $79 million in the regional centers.
The SEC said that Ireeco LLC and Ireeco Ltd. raised money for immigrant investment projects without being registered to legally operate as securities brokers. The two firms agreed to settle without denying or admitting to the findings.
The EB-5 Visa Program
To qualify for an EB-5 visa, a foreign applicant must either invest $1 million in a US commercial enterprise or $500,000 in a designated regional center that the USCIS has approved. Upon fulfillment of the investment requirement, the applicant can then apply for a conditional green card.
In 2013, the SEC issued an investor alert warning of scams exploiting this immigrant investor program. The SEC’s Office of Investor Education and Advocacy and USCIS warned of investment schemes in which allegedly fraudulent security offerings were made through the EB-5 Program. In one case the two agencies stopped an alleged scam in which the defendants are accused of falsely promising investors a 5% return on investments and a chance to get an EB-5 visa.
According to the SEC, the promoters solicited investors before USCIS had even marked one business as a regional center. The defendants raised at least $5 million from investors, allegedly misusing the funds for their own spending. Meantime, the foreign investors did not receive a conditional visa.
Shepherd Smith Edwards and Kantas, LTD LLP is a securities fraud law firm.
Read the SEC Order (PDF)
More Blog Posts:
$5M Texas-Based Securities Fraud Scam Pursued Foreign Investors Wanting US Residency Via EB-5 Program, Stockbroker Fraud Blog, October 1, 2013
Morgan Stanley and Scottrade to Pay FINRA $950K FINRA for Inadequate Supervision of Third Party, Customer Account Transfers, Institutional Investor Securities Blog, June 23, 2015