Reformed Investor Visa Program Re-Emerges in Gold Card Shadow

Securities fraud cases related to a green card program for job creators likely declined following a congressional overhaul intended to increase transparency, lawyers in the field say.

No new EB-5 Investor Program cases similar to some high-profile ones involving misconduct have been filed after a major overhaul to the program three years ago, attorneys said. Cases that have trickled in concern investments predating Congress’ 2022 EB-5 Reform and Integrity Act, or RIA, which heightened transparency requirements while reauthorizing regional centers that facilitate the program supervised by the US Citizenship and Immigration Services.

“I don’t believe that post 2022, we’ve seen any major novel lawsuits in the EB-5 space,” said Mariza E. McKee, a partner at Kutak Rock LLP, adding that what enforcement actions there have been “were all based on legacy deals that will be fleshed out here in the next couple of years.”

“The market is becoming more competitive, and the cream is really rising to the top in terms of the folks who consistently show compliance throughout the offering and deal cycle,” she said.

The EB-5 program puts immigrants on a pathway to a green card if they invest at least $1.05 million into a commercial enterprise, or $800,000 in a rural or high-unemployment area project, to create 10 full-time jobs for US workers. The program re-entered the spotlight with President Donald Trump’s touting of a Gold Card visa program for immigrant investors injecting $5 million without a job requirement. It’s been floated as a replacement or an accompaniment to an EB-5 overhaul.

Aaron L. Grau, executive director of Invest in the USA, an EB-5 trade association, said the dual programs wouldn’t overlap—but discussions around the importance of immigrant investment have been encouraging. “The Gold Card is deficit reduction. The EB-5 program is economic development and job creation.”

2022 Overhaul Impact

Before those 2022 reforms, administration of the 35-year-old investor-immigrant program had gaps. The Securities and Exchange Commission cracked down on it in 2013. Regulators exposed fraudulent schemes including those of Jay Peak Vermont ski resort operators and a zero-carbon emission Chicago hotel and convention center plan.

Jay Peak resort owner Ariel Quiros and his associates claimed to be developing a biomedical plant with EB-5 funds for a never-built facility, prosecutors said. Quiros was sentenced to five years imprisonment in 2022 after pleading guilty to conspiracy to commit wire fraud, money laundering, and concealing material facts in relation to the scheme, facing other criminal and civil penalties. Two associates were each sentenced to 18 months.

The Chicago convention center scam drew about $156 million from 250 investors mainly from China. It was the SEC’s first EB-5 related enforcement action, ending in an almost $16 million judgment against the companies and their creator after regulators intervened in its application stage.

But, “Since the RIA, there’s been virtually no fraud activity, and the chances of fraud are down dramatically, because all the parties involved with the EB-5 program—the regional centers, the sponsors, marketing agents—are held accountable,” said Ronald R. Fieldstone, the chair of Saul Ewing LLP’s Global Immigration & Foreign Investment Practice.

The 2022 act aimed to root out bad actors and increased oversight of regional centers, elevating reporting and audit requirements and enabling enhanced background checks on program staff and affiliated developers. The RIA established the EB-5 Integrity Fund to conduct site visits, increased visibility into promoter compensation, and raised the minimum investment amount from $1 million and $500,000 for targeted unemployment areas, among other changes.

“Overall the program is much safer than it used to be, therefore innocent investors are less likely to be deported,” Fieldstone said.

Delayed Litigation

There’s a reason some EB-5 securities cases might still be filed, said Ali Jahangiri, an attorney and the CEO of EB5 Investors Magazine. Given the investment and green card process takes years to mature, it makes sense for securities litigation from investments pre-2022 to be brought later when investors are looking for their returns, Jahangiri said.

EB-5 investments inherently carry risks, and there are more attorneys and general awareness of legal remedies since the program boomed in the 2010s, he said.

“The industry is a lot cleaner, and it’s gotten a lot harder to raise money. The market right now is very tough with the tariffs, also with a global economy that has reduced,” he said. Most EB-5 investors hail from China—facing US tariff and other economic pressures—and other Asian countries, he said.

Often claims come from mismanaging foreign investors’ expectations, he said. “They’re taking a risk by investing in a different language, in a different country. And then on top of it, it doesn’t help when the marketing agent says it’s a safe deal,” Jahangiri said.

Managing Expectations

Just because someone puts money down doesn’t mean the project works out, like investing in public companies that go under, Fieldstone said. For EB-5 investors even if “you lose your money, but create the jobs, you get your green card.” Every industry has fraud, he said.

Many EB-5 projects involve real estate development deals, so the market and how investor expectations are managed might elicit litigation, McKee said. “I don’t know that reform can solve for market volatility, and so there might still be lawsuits, but I do think there will probably be more frequent settlements because of the more rigorous focus on compliance and disclosure,” she said.

“There’s a tendency to sensationalize litigation in EB-5 because of the immigration component, but the legal issues at stake are no different from what we see across private capital markets,” McKee said. “EB-5 litigation reflects investor protection working as it should and a compliance framework that’s now among the most rigorous in the private investment space.”