Sunday, August 30, 2015

The SEC and FINRA may cause regional centers to exit the EB-5 visa program.

About 6 weeks ago, I'd predicted that regional centers are unnecessarily working towards trying to get an extension in the EB-5 visa program when securities regulators were anyway going to shut them down for securities law violations and securities fraud, and 2 days ago, I read the news release by FINRA at, which states that under FINRA rule 2040,  regional centers will HAVE to make FULL Disclosure of Finder's Fee payments to Foreign Agent if they're using broker dealers. If regional centers are directly marketing and selling securities through unlicensed agents, they may face even more enforcement actions.

So, in effect, regional centers can't operate anymore and they'll be wasting their time if they are still bothering to fight for extension of regional centers in the EB-5 visa program, as the SEC and FINRA have made it practically impossible for regional centers to LEGALLY offer and sell securities within and outside the US.

The question is, will regional centers try to continue the illegal offering and sale of securities or will they simply shut down and exit the EB-5 visa program?

In a nutshell, now the major problem for regional centers is that NONE of their foreign agents will want the payments made by regional centers to them to be disclosed BECAUSE these records can and will be used to prosecute them for tax evasion and illegal offering of securities.

So, if Mr. Ajmera or Mr. Advani in India or Ms. Sarkar or Ms. Malik in the UAE are ILLEGALLY marketing and selling regional center securities in India and the UAE respectively WITHOUT getting prior approval from Indian and Emirates regulators, they will be exposed to criminal charges in those countries for illegally offering and selling securities AND committing securities fraud, when these payments are disclosed.

As such, regional centers can either REFUSE to disclose their payments to migration agents and risk prosecution OR continue to commit securities fraud and violate securities laws, as ALL issuers of securities are now required to disclose to investors the amount of fees paid to foreign agents (finders) and receive written acknowledgement from the investors of  the fees paid. A document disclosing the total compensation paid by the issuer to the finder, and each investor's acknowledgement of the same, must be retained by the securities issuer (such as a regional center) and made available for inspection by FINRA.

This regulation WILL transform the regional center industry from one of non-disclosure and fraud to a transparent and less fraudulent industry if complied with. The BIG question is, will Regional Centers actually comply with this new regulation?

The fact is. none of the overseas agents wish to disclose how much compensation they are getting from Regional Centers, which ranges from $30,000 to over $220,000 per investor (6-44%+ brokerage fee for a $500,000 investment) when the upfront administrative (JUNK) and commission percentage fees are combined. These huge commission payments are THE NUMBER ONE REASON that regional centers are unable to profitably generate 10 jobs and also the biggest reason that most investors in regional centers experience capital losses.

EB-5 visa investors need to remember that the ONLY safe way to get a permanent green card in the EB-5 visa category is by investing in Genuine Direct Investment Businesses. At present, there is very little chance of either of the regional center extension bills being written into law due to stiff Congressional and law enforcement opposition.
Some of the important reasons that EB-5 visa investors should ALWAYS choose Genuine Direct Investment Businesses and avoid regional centers are:

1.    In a Genuine Direct Investment Business, it is quite unusual to encounter fraud or conflict of interest. This alone is THE biggest reason why EB-5 visa investors usually experience capital loss if they opt for regional centers or unsafe Direct Investments (such as Voodoo BBQ or Marcos Pizza), while those who opt for Genuine Direct Investment Businesses usually NEVER experience capital loss.

2.    EB-5 visa investors who choose Genuine Direct Investment Businesses usually earn annual ROI of 15% to 40%, while those who select regional centers usually earn 0-2% annual ROI.

3.  Genuine Direct Investment Businesses offer easy exit strategies to EB-5 visa investors while those who invest in regional centers see TERRIBLE exit strategies.

4.    Regional Centers usually commit securities fraud and securities law violations while this is usually unheard of in Genuine Direct Investment Businesses.

5.    EB-5 visa investors usually get capital gains if they invest in a Genuine Direct Investment Business and almost NEVER get capital gains if they invest in a regional center.

6.    EB-5 visa investors in Genuine Direct Investment Businesses usually see faster processing and approval of their petitions, while it takes much longer for EB-5 visa investors to get their immigrant visa through regional centers.

7.    EB-5 visa investors in Genuine Direct Investment Businesses have a higher chance of getting their permanent green card, while those who opt for regional centers have a lower chance of getting their green card. 
If you are a business owner or high net worth individual interested in migrating to the US without getting cheated, please contact us for a free consultation as we offer a guarantee of freedom from fraud and conflict of interest.
We offer a turnkey solution and have a 100% fee refund guarantee if a client is denied due to our negligence or incompetence.

For more information, please contact: 
Mohammed Shaikh, MBA (Accounting), CFE, Licensed Business & RE Broker (CA & FL) 
Phone: +1 407 535 0616

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