EB-5 Investment-for-Visa Schemes

An immigration program linked to job-creation is growing in popularity, but investors must beware of promoters who falsely claim that an investment in their venture is safer or guaranteed due to an influx of foreign cash.  The EB-5 immigration category is a 20-year-old program that grants a U.S. visa to foreign nationals who invest a minimum of $500,000 into a new commercial enterprise.  This job-creation effort has attracted investors from around the world, and as with any investment approach, increased interest has been accompanied with new challenges.  All investments with an EB-5 component are subject to traditional securities laws, and investors need to be alert to the foreign-funding feature.  Unscrupulous promoters may seek to prop up the plausibility of their scheme by highlighting a connection with a federal jobs program.  Similarly, investors may be intrigued by the prospect of big funding from investors in foreign countries with stable or growing economic power. 

In a recent case, the developer of a failed artificial sweetener factory planned for a small Missouri town sought Chinese investors through the EB-5 program, and made that a key component in pitching and then selling the underlying government bonds issued for the project.  While the existence of Chinese funding may have seemed promising to the city issuing the bonds and the investors who bought them, the developer defaulted on the first bond payment, leaving the city and investors out millions of dollars.  Investors considering any enterprise with an EB-5 feature should make sure to obtain full information on every component of the venture, including all funding sources and the background of all promoters.

Department Contacts

Enforcement Contact (Kelly)

Kelly Mathias

Supervisor Investigations & Examinations
600 East Boulevard Avenue State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone:
(701) 328-2929
Toll Free:
(800) 297-5124
Fax:
(701) 328-0149
Enforcement Contact (Doug)

Doug Smith

Investigator
600 East Boulevard Avenue State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone:
(701) 328-2926
Toll Free:
(800) 297-5124
Fax:
(701) 328-0148
Enforcement Contact (Rachel)

Rachel Rice

Investigator
Grafton Satellite Office
701 W. 6th Street, #312
Grafton , ND 58237
Phone:
(701) 352-4592
Fax:
(701) 328-0126
Email:
Enforcement Contact (Michael)

Michael F. Daley

Attorney/Deputy Commissioner
600 East Boulevard Avenue State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone:
(701) 328-4701
Toll Free:
(800) 297-5124
Fax:
(701) 328-0127