Monday, October 28, 2013

Regional centers are running scared of the SEC and are now refusing to sign up EB-5 visa investors in the US.

US Securities laws offer significantly enhanced protections to investors, and due to the recent surge in SEC driven enforcement action against regional centers and unscrupulous partnership promoters, a new business practice has emerged amongst regional centers and partnerships, where they are simply refusing to sign up EB-5 visa investors within the US in order to avoid prosecution and liability for fraud and violations of securities laws.

This afternoon, a prospective EB-5 visa investor, CR, called me to ask about EB-5 visas, and during the conversation, he mentioned that a NY based regional center is now insisting that it will only take on EB-5 visa investors OUTSIDE the US and wasn't sure why. The poor fellow wasn't aware WHY regional centers and unscrupulous partnership promoters are refusing to sign up EB-5 visa investors within the US. The reasons are simple: Within the US, the regional center and partnership promoters have two important factors that scare them:
  1. A failure to fully disclose ALL material facts to an investor is termed as securities fraud, and it is a criminal offence classified as a felony. Pretty much all regional centers and partnership promoters conceal material facts from EB-5 visa investors, and due to some recent enforcement activities by DHS, SEC, FBI and IRS, the regional center and partnership promoter community seem to have heard the message that securities fraud will not be tolerated any more. In order to avoid prosecution and litigation, most regional center and partnership promoters are now refusing to sign up EB-5 visa investors within the US.
  2. US Securities laws require CPA audited financial statements for securities offerings over a certain amount, and if regional center and partnership promoters were compelled to provide CPA audited statements, their lies and fraud would be immediately exposed. To avoid being exposed (and consequently prosecuted) in the act of committing securities fraud, regional centers and partnership promoters are now avoiding any and all actions that may subject them to the jurisdiction of US Securities regulators.
What can EB-5 visa investors do to avoid being defrauded? What is the safest, quickest and easiest way to get an EB-5 visa?

Just a few weeks ago, I just read this investor alert (see issued by the SEC warning EB-5 visa seekers about fraud committed by regional centers and other partnerships against EB-5 visa investors. It is common knowledge that almost every single partnership and regional center commits securities fraud, money laundering, securities law violations and tax fraud and other felonies. It is also common knowledge that most EB-5 visa seekers don't get their permanent green card if they've applied through a regional center or partnership, and that almost every single EB-5 visa seeker has experienced capital loss when investing in a regional center or partnership.

All EB-5 visa seekers should ask the following questions of regional centers and partnerships to detect and prevent fraud:

1) What is the mean and median amount of capital loss experienced by EB-5 visa seekers who invest in your regional center or partnership?

This is important because capital loss is very commonly experienced by EB-5 visa investors in regional centers and other partnerships, while none of our clients has experienced it, as we only offer Genuine Direct Investment Solutions to EB-5 visa seekers.

2) What is the mean and median processing time for regional center sponsored I-526 and I-829 petitions?

This is important as EB-5 visa petitions filed by regional centers and other partnerships now take about twice as long as Direct Investment businesses to get approved.

3) What is the mean and median lock in period for capital in regional centers?

This is important as EB-5 visa investors have easy exit strategies in our recommended businesses while they are stuck for years in regional centers.

4) What is the mean and median annual ROI that is offered by your partnership / regional center?

This is important as EB-5 visa investors usually earn a lot more in businesses recommended by us than in regional centers.

5) Are there ANY regional centers around where the promoters do NOT engage in conflict of interest? Hahaha.

6) Are the business founders, CFO and CEO willing to offer written guarantees of FULL disclosure of material facts on an ongoing basis as well as freedom from fraud and conflict of interest?

Avoid those who refuse to offer this guarantee in a notarised affidavit.

7) Are you offering and selling securities overseas in full compliance of US and overseas securities laws?

Avoid those who refuse to confirm this in a notarised affidavit.

8) What are the percentage of regional center filed I-526 and I-829 petitions that were approved by USCIS in each of the past 3 years?

This is important information as it exposes the regional centers at their most vulnerable point in the argument, and proves conclusively why EB-5 visa investors should avoid them.

The above are questions that illustrate in objective and easy to understand numbers just why it is unsafe for EB-5 visa investors to use regional centers to apply for their green card.

It is quite common for honest and diligent RE brokers to offer a guarantee of freedom from conflict of interest and fraud, while crooks who try to lure EB-5 visa investors into investing in worthless regional center securities / partnerships / third rate franchises will always refuse to offer the following safeguards to EB-5 visa investors:

1) A written guarantee by the top 5 officers of the regional center / partnership firm AND the marketer, confirming that they will clearly disclose all material information at the very onset and on an ongoing basis. In the US, failure to disclose material information by sellers of securities is classified as SECURITIES FRAUD.

2) A written guarantee that the marketer and regional center / partnership officers will NOT engage in conflict of interest, and will procure goods / services and hire employees in a transparent and competitive manner.

3) A written guarantee that they will fully refund an investor's fees in case the investor's petition is rejected due to the fault of the regional center.

4) A full disclosure of what is the amount of capital that the firm's founders and investors have invested and what is the percentage of ownership stake and profits that they will get.

EB-5 visa investors need to remember that Direct Investment Businesses that choose blue chip franchises (such as BK, 5 Guys, KFC, etc.) wholly owned and controlled by the EB-5 visa investor usually offer a safer, faster and very profitable way to get the EB-5 visa, and those who opt for regional centers or partnerships or third rate franchises will usually end up with delayed processing, capital lossess and low (or no) ROI caused due to extensive fraud, nepotism & conflict of interest, terrible exit strategies and high rate of denial of I-829.

Our EB-5 investor clients who opted to start Direct Investment Businesses in quality franchises such as 5 guys, KFC, McDonalds, etc. as opposed to regional centers / partnerships / bottom tier franchises such as Voodoo or Marcos offered by our unscrupulous competitors, usually find that they have the following advantages:

1) Great annual profits, averaging 22% annually, and usually ranging from 20% to 30% annually. The lowest amount any of our clients has ever earned is 15% annual profit, and that was a special case.

2) Capital gains: Our recommended businesses usually appreciate while Marcos pizza locations or other third rate franchises will usually sell for a massive capital loss. In 10 years, none of my clients have had a capital loss, and most investors in regional centers have suffered full or partial capital loss.

3) Easy exit strategy: You will find more buyers for 5 guys / KFC restaurants in comparison to Voodoo BBQ offered by Joe Sloboda or Marcos Pizza or any regional center.

4) Easy approval with USCIS and with banks: Bank underwriters are very picky, and they won't approve Voodoo BBQ locations easily, but will easily approve premium franchises such as 5 Guys / KFC / etc. because of their track record and market reputation. USCIS will also easily approve known and reputed brands with solid track records, while they won't do so with our competitors.

5) Full disclosure of material facts: Unlike David Tashroudian or the Voodoo promoters Joe Sloboda & Fred Burgess or Regional Center promoters, we clearly and fully disclose material facts to our clients, which is why we confidently offer written guarantees of full and clear disclosure of material facts.

6) Fee refund guarantee: We know that we do a thorough job, and therefore confidently guarantee our work, while our competitors refuse to stand behind their work. This shows EB-5 visa investors who is a professional and who is not.

7) Full control of the investment and invested funds: As our EB-5 visa seeker clients own and control their own business and funds, they are able to avoid fraud and are also able to avoid being at the mercy of the crooks who operate regional centers and partnerships. EB-5 visa seekers who invested in regional centers usually find themselves at the mercy of unscrupulous regional center promoters.

If you're an EB-5 visa seeker interested in getting your EB-5 visa in a quick, safe and usually profitable manner, please call us.

Yours truly
Mohammed Shaikh, MBA, CFE, Licensed Business & RE Broker (CA & FL)
Phone: +1 407 535 0616 

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