Local EB-5 VISA Fraud

Local EB-5 VISA Fraud SEC Complaint: 15-sec-v-dargey-complaint Recent Seattle newspaper headlines have informed us that Lobsang Dargey, a local real-estate developer, has agreed to plead guilty to EB-5 fraud allegedly involving at least $125 million from 250 Chinese investors. This type of fraud is a form of securities and immigration fraud and has become more common on both sides of the transaction: investors make fraudulent claims regarding their eligibility for the program and promoters misappropriate their investments. EB-5 was enacted by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot program enacted in 1992, and regularly reauthorized since then, investors may also qualify for EB-5 visas by investing through regional centers designated by U.S. Citizenship and Immigration Services (USCIS) based on proposals for promoting economic growth. On September 29, 2016, President Obama signed Public Law 114-223 extending the regional center program through December 9, 2016. Ten thousand visas are allocated each year and processing times can be two years. Not only does the investor and family need to be vetted for the visa (e.g. where did the money come from?). There are two investment amounts $500,000 and $1,000,0000. Both require creation of ten full time (35 hours per week) permanent jobs. The $500,000 is by far the most popular and is only available in rural and high unemployment area. This is where the developers get involved. They package a deal, arrange for USCIS processing, and arrange permanent management. Teams of well-paid sales agents sell the package in China and elsewhere. Since the package involves an investment with an expectation...

Cayman Islands Add New Ant-Fraud Protection

How to freeze assets in the Cayman Islands. Copy of new act: 141020-Cayman-Grand-Court-Amendment In many people’s minds, the Cayman Islands have been the place where fraudsters go to hide their money. Even we can prove the money was wired by the perpetrators into a Cayman Island bank, the ability to freeze the money prior to judgment was in doubt. The Cayman Islands have added a new anti-fraud protection for offshore victims. The Cayman Island court now clearly has the statutory power to appoint a receiver and grant other interim relief while the case is pending in another jurisdiction. The cases we see are something like this: The perpetrators defraud investors in a Ponzi scheme (or pump and dump) and we can trace the money to the Cayman Islands. We cannot sue the perpetrators in the Cayman Islands (either because of lack of jurisdiction or for tactical reasons) and begin the case in a state or federal court. Once we file the case and let the perpetrators know that we have found the Cayman Island money, they move the money to parts unknown. If we get an injunction freezing the money from the local court, the Cayman bank does not have to (and probably will not) honor it. The only practical solution is to obtain an order freezing the assets from the Cayman court. Prior to the passage of the amendment, it was not clear if the Cayman court could assist offshore plaintiffs prior to the time they obtained an offshore judgment. The plaintiffs would then need to take their judgment to the Cayman Islands and go through the process of...

Governing Law, Arbitation and Court Procedures in the Iranian Legal System

Introduction:  This article sets out one of the major issues which always play a vital role in doing business with Iran for Multinational Corporations i.e. contractual freedom of the contract parties relating to designation of governing law and arbitration procedure. The main purpose of this article is drawing your attention to the three important topics in this respect as hereunder:   Governing law Under Iranian law rules, the parties may agree to choose a foreign law as the governing law of a contract subject to mandatory provisions of Iranian law. In the absence of a treaty, to the extent that foreign courts reciprocate the enforcement of foreign judgments by Iranian courts, foreign final judgments which are not against public policy in Iran are enforceable. To establish whether a judgment is against public policy in Iran or its mandatory provisions, some review of the merits may take place. Under Iranian conflict of law rules, the law governing a contract is the law of the place of execution of the contract. For this reason, many Iranian attorneys advise their clients who wish to subject their contracts to a foreign law, to sign the contract abroad. Notwithstanding the adopted practice for the place of signature, it is usually advisable that contracting parties may decide to submit to foreign law to the extent that it is not contrary to Iranian public policy. However, the Iranian conflict of law rule is arguably not a mandatory rule to the extent that it applies to commercial transactions. Even if one of the parties to a contract happens to be Iranian, they may elect for the contract...

Complaint dismissed sua sponte on forum non conveniens grounds

Mashreqbank PSC v Ahmed Hamad Al Gosaibi & Bros. Co., 101 AD3d 1, Decision: 2014_02381-NY-Mashrequbank-v-Gosaigi April 8, 2014 The court had held in VSL Corp. v Dunes Hotels & Casinos (70 NY2d 948 [1988]) that it was error for the Appellate Division to dismiss a complaint sua sponte on forum non conveniens grounds, adding that such a dismissal may occur “only upon the motion of a party” (id. at 949). This case represents an apparent change of heart made with a wave to VSL Corp. “The case arises out of a transaction between Mashreqbank PSC (Mashreq), a bank located in Dubai, United Arab Emirates, and Ahmed Hamad Al Gosaibi & BrothersCompany (AHAB), a partnership with its headquarters in Khobar, Saudi Arabia. According to Mashreq’s complaint, Mashreq and AHAB agreed to a “foreign exchange swap transaction of US Dollars for Saudi Arabian riyals.” Mashreq agreed to, and did, transfer $150 million to AHAB on April 28, 2009, wiring the money to AHAB’s account at Bank of America in New York. AHAB, according to Mashreq, agreed to pay Mashreq an equivalent value in riyals on May 5, 2009, but the riyals were not paid. Mashreq sued AHAB to collect the alleged debt. It chose to do so in New York Supreme Court, believing (mistakenly, as it turned out) that it would be able to reach AHAB assets here. AHAB filed an answer (including a counterclaim) and a third-party complaint, naming as third-party defendants a citizen of Saudi Arabia, Maan Abdul Waheed Al-Sanea (Al-Sanea), and Awal Bank BSC (Awal), a bank, headquartered in the Kingdom of Bahrain, that Al-Sanea controlled. AHAB’s pleading alleged that...

UK Bribery Act

The UK Bribery Act of 2011 How the Bribery Act Can Apply to US Businesses International bribery (payments to grease the wheels of business) is a major problem all over the world. The United States has limited its laws against bribery to primarily reach payments to public officials, allow facilitation payments, and rarely prohibits kickbacks and bribery in private industry. The federal Anti-Kickback Act of 1986 (41 U.S.C. § 8701 et seq) covers payments to government contractors. The Foreign Corrupt Practices Act of 1977 (FCPA) prohibits illicit payments to foreign officials. After the US led the way with the FCPA, the international community became involved through the 1997 Organization of Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“OECD Convention”). The Convention became effective in 1999 and had been ratified by 38 countries including the US and the UK. More I. Jurisdiction under the Bribery Act Individual countries are beginning to enact their own versions of the FCPA. The UK’s version, the Bribery Act, became effective on July 1, 2011 and is commonly referred to as the “FCPA on steroids”. There are a number of provisions that greatly expand the transactions covered by the FCPA and its jurisdiction. US companies with international sales are potentially covered by the Bribery Act. Unlike the FCPA which limits its reach to issuers of securities of securities registered with the SEC, the Bribery Act’s jurisdiction is more expansive. It is divided into two parts. Part I of the Bribery Act applies to all businesses that have a “close connection” to the UK. The mostly likely...

Japanese law fails to protect whistleblowers

Olympus takes whistle-blower to highest court Japanese Whistleblower not Protected By YURI KAGEYAMA – Associated Press Japan isn’t a nation of whistle-blowers, but Masaharu Hamada is among that rare breed. The 50-year-old salesman for camera and precision-equipment maker Olympus Corp. is about to become rarer still. His case alleging he was demoted in reprisal for merely relaying a supplier’s complaints is headed to the Supreme Court. It would be the first whistle-blower case to reach that level. “Somebody has to do it,” Hamada said last week. “It’s a miracle I even came this far.” Japan is behind some Western nations in protecting whistle-blowers. Corporate loyalty is king and outspoken employees are often subjected to bizarre punishments, such as assigning them closet-size offices. A law to protect whistle-blowers was enacted only in 2006 and critics say it is inadequate because it doesn’t penalize companies that lash out at their accusers. To pursue legal action, whistle-blowers must also stay with the company as the law only applies to employees. Major companies provide lifetime employment, although they more freely fire contract and part-time workers. That means employees such as Hamada become targets of cruel harassment designed to silence them or make them quit. Hamada was shunted to a corner of the office and ordered to take rudimentary tests on quality control designed for new hires. Sometimes the supervisor would give a grade that was minutely short of the passing level, just to get on his nerves, Hamada recalled. “It is no wonder people commit suicide at Japanese companies,” he said, acknowledging he was nearly driven to a breakdown. Only a handful of...