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...