SEC Halts Husband and Wife Scheme Targeting Foreign Investors Seeking U.S. Residency; Commission Issues Investor Alert

The SEC filed fraud charges against a husband and wife in Texas for stealing funds from foreign investors under the guise of offering an investment opportunity to create U.S. jobs and a path to U.S. residency. The complaint alleges that Marco and Bebe Ramirez and three companies they own have fraudulently raised at least $5 million from investors by falsely promising that the money would be invested as part of the EB-5 Immigrant Investor Pilot Program. The EB-5 program enables foreign investors to make their investments either directly in a business or through EB-5 "regional centers" that are private entities organized to promote economic development in specific geographic areas and industries. Instead of investing the money as promised, the Ramirezes routinely diverted investor funds to other undisclosed businesses and for their personal use and, in one instance, created a Ponzi-like payment scheme to steal from an existing investor.

In light of these recent charges, the SEC and U.S. Citizenship and Immigration Services ("USCIS") issued a joint investor alert that provides additional information about the EB-5 program and cautions investors about fraudulent EB-5 schemes. The alert stated that, even though a business is designated as a "regional center" by a USCIS, this does not mean that any governmental agency has approved the investment offered by the business or expressed a view as to the quality of the investment. The alert offers numerous steps and warning signs regarding any offering that appears to be affiliated with EB-5, including:

• confirm that the regional center has been designated by USCIS;
• obtain copies of documents provided to USCIS;
• request investment information in writing;
• ask if promoters are being paid;
• seek independent verification;
• examine structural risk; and
• consider the developer's incentives.

See: SEC Complaint; SEC Press Release; Investor Alert: Investment Scams Exploit Immigrant Investor Program.