Wednesday, November 13, 2013

EB-5 visa investors need to take 3 important steps to significantly reduce the potential for fraud against themselves.

There is no shortage of crooks who will try to get EB-5 visa investors to invest in truly terrible deals for either regional centers or partnerships, which are usually regional centers in disguise, and have the same characteristics of conflict of interest, failure to disclose material facts, terrible exit strategies, really low (or often no) return on investment, high rates of EB-5 visa petition rejection, etc.

EB-5 visa investors should remember that since April 2013, crooks have been scrambling to avoid having a US presence while dealing with EB-5 visa seekers and have also been scrambling to ensure that the securities offering does NOT exceed $500,000.

EB-5 visa investors may wonder WHY is that?

Generally speaking, the SEC does not have jurisdiction over securities offerings and sales activities that occur exclusively overseas; that is, if a finder's selling activities are conducted solely overseas, the finder is not a U.S. person, and the finder otherwise has no jurisdictional nexus with the United States.

Why should you choose Direct Investments instead of partnerships or regional centers?

As a rule of thumb, the safest, fastest and usually most profitable way to get an EB-5 visa is to start a business using either a premium franchise in businesses such as fast food, auto parts, family entertainment centers, child care, car rentals, etc. or non-franchise businesses such as skating rinks, produce markets, banquet halls / conference venues, used car lots, etc. Even if an EB-5 visa investor wishes to travel back and forth between the US and abroad, they can still put in place a good management team to operate their business and remotely monitor and manage their business in a far safer and usually VERY profitable manner.

1) Direct Investment based EB-5 visa petitions usually get approved in about half the time it takes to get approved based on regional center based petitions.

2) You will usually NEVER find conflict of interest or fraud in Direct Investment Businesses owned solely by an EB-5 visa investor, but you will almost always find conflict of interest and fraud in partnerships and regional centers.

3) The ANNUAL ROE in Direct Investments is usually 20-35% while the annual ROE in regional centers & partnerships is either NOTHING or a measly 1%.

4) It easy to sell and exit from a Direct Investment Business and quite hard to sell and exit from regional centers and partnerships. The easy exit strategy helps an investor in Direct Investment Businesses have full control of their funds, their business and their lives.

What can an EB-5 visa investor do to avoid exposure to fraudulent securities offerings?

In a small minority of cases, an EB-5 visa investor may decide that they wish to just take a huge risk and invest their funds in a partnership or regional center, both of which are actually bad choices due to conflicts of interest, etc.

In this case, it is important that an EB-5 visa investor take 3 important steps to avoid fraud:

1) The EB-5 visa investor should insist that the securities offering document is MAILED from the US and returned to the US, in order to get the same high standard of protection under US securities laws that US investors get.

2) An EB-5 visa investor should insist on investing at least $500,001 in the venture, as that would force the regional center or partnership to include CPA audited financial statements, and this helps to significantly reduce the potential for fraud.

3) The EB-5 visa investor should also demand that the officers and promoters of the partnership or regional center as well as the marketing agents offer the following guarantees in a notarized affidavit:

a) 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 on an ongoing basis, as failure to do so is classified as SECURITIES FRAUD.

b) 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.

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

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

An honest service provider will never expect a client to pay for the mistakes and negligence of the service provider, and will always agree to fully disclose all facts. We believe in honesty, transparency and accountability, and we always put our client's interests ahead of our own, which is why we offer an unconditional guarantee that in case our client is denied due to our fault, we will cheerfully refund their fees. Our professional approach is why our clients have never suffered losses (be it operating loss or capital loss) and is also the reason why our clients have never been rejected.

If you're an EB-5 visa investor interested in getting your green card in a safe, quick and usually profitable manner without any conflict of interest and with easy exit strategies, please contact us. You'll be really glad you did.

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

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