New EB-5 Fraud Charges Raised

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American Corporate Services, Inc. strongly defends the EB-5 investment immigration program. We believe that, from time to time, allegations of fraud have been both unwarranted and over publicized, which has led many people to believe that the program itself invites fraudulent activity. On the other hand, we are also realists. We know that there are always people who will lie, cheat and steal, especially when it comes to their own financial gain. Three such stories have begun to surface in the past few days.

The Securities and Exchange Commission has brought charges against Ireeco LLC of Boca Raton, Florida, and Hong Kong. According to the South Florida Business Journal, the companies were charged with brokering more than $79 million in EB-5 funds from a total of 158 investors without being licensed by the SEC. The companies settled without admitting or denying guilt and agreed to SEC censure/cease-and-desist order. Although the amount of the settlement was undisclosed, Ireeca collected approximately $5.5 million in fees and commissions from Regional Centers in return for acting as their broker.

In a separate case in California, the former CFO of SolarMax Technology, Inc. has sued the company for wrongful dismissal, claiming that he was terminated for having exposed the executive management team of financial improprieties and fraud involving some $60 million of EB-5 investments, as well as attempts to commit fraud against the Social Security Administration.

Finally, a story broke on 24 June that the SEC also has the Jay Peak Ski Resort EB-5 projects under investigation. Details are not available because it is an ongoing investigation. However, reports indicate that the developers are fully cooperative.

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