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How to invest in the USA and not lose all the money

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Despite the somewhat tarnished image of the American dream, a tight tax regime and serious consequences that threaten to violate the US are not diminishing, and the green card continues to be the cherished dream of many people on the planet.

Those who were interested in the question of possible ways to obtain a residence permit in America know that one of the prepared options that immigration attorneys offer to potential clients at the first consultation is the investment visa ЕВХNUMX. For a busy person who does not want to drastically change their lifestyle and part with sources of income at home, the attractiveness of EB5 is obvious: it is a passive investment that does not require investor efforts in running a business in the United States.

The idea of ​​buying and selling green cards is not new: the EB5 program appeared as early as 1990, when the US Congress aimed to stimulate the economy, spur foreign investment, create additional jobs, and EB5 seemed to be an excellent mechanism to achieve it. Until 2008, it was not very popular, but after the collapse of the markets and the banking crisis, it became very popular as a saving straw for developers suffocating from the lack of financing.

How it works

The program really works. It is safe to say that the construction boom of recent years, which has engulfed metropolitan areas like New York, Miami, Los Angeles, is not the least of America's responsibility for affordable foreign investment, through which the most ambitious projects are implemented.

For a million dollars invested in a new commercial enterprise and creating 10 jobs, a foreign investor is rewarded with the opportunity to quickly become a permanent resident of the United States, beating a huge number of years of waiting people. The investment level is reduced to five hundred thousand, if the project is located in a territory that especially needs new job creation (in this case, as a rule, this is a deaf province and economically lagging areas of the country).

Equity must be acquired legally, and the investment cannot be guaranteed, but must be at risk. According to approximate estimates, from 2012, about $ 8,7 billion has been poured into the American economy through such investments.

The annual quota for EB5 - 10 is thousands of applications, about 90% of which are now accounted for by investors from Asia, where the process of attracting potential customers is put on a big foot. Echelons of representatives of real estate companies, which evaluated the possibilities of practically free EB5 capital, are constantly heading east to China and Vietnam.

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In such marketing, even relatives of President Trump, the Kouchner family, who were very successful in real estate development, were noticed. Jared Kushner’s sister, the President’s son-in-law, recently personally visited Beijing and advertised a potential investor audience in New Jersey, which again attracted attention to the program from the press and the legislative branch of government.

Green Card Scandals

Russia, although not leading in terms of the number of EB5 investments, is also not bypassed by the concern of project owners. Their representatives, often in a team with lawyers specializing in the processing of an investment visa, regularly visit Moscow and the regions in search of those who want to obtain a relatively cheap green card in America. Presentations, conferences, advertising brochures - a lot of money is willingly spent on all this marketing by lawyers and developers. But a series of scandals that erupted over the past few years around the EB5 industry revealed the shortcomings of the existing system.

The largest of these is associated with the Vermont project. Jay peakwhich has long been considered the “gold standard”, an exemplary example of the effect of the investment program, and enjoyed a high degree of trust from immigration lawyers. Jay peak Vermont Governor Peter Shumlin and Senator Patrick Leahy patronized the project in the press and promoting it at various events. The governor even personally appeared in a promotional video, where he assured investors that Jay peak successfully passed the audit.

The project turned out to be a pyramid. The thread that triggered the investigation was the complaint of the investor, whose share was suddenly converted into debt without agreement with him.

This car dealer from London proved to be a competent person, having shown the wonders of perseverance in searching for information and analyzing the current situation. About $ 200 million, owned by the same foreign investors, disappeared.

Urgently organized checks revealed that accounting in Jay peak It was conducted negligently, without proper control by the state oversight bodies, and much of the money was used for the personal needs of the owners. One of them, a businessman from Miami Ariel Quiros, according to the charges, bought the plane and real estate with the money of investors. The prospect of depositors receiving immigration status, which was the main purpose of their participation in the project, was put at risk. The project itself was in bankruptcy proceedings and could have been buried under a mountain of unpaid bills, if the competent court manager (trust) had not been appointed by a Florida court. Various individuals, organizations, and even the state of Vermont, who, like an avalanche, covered with lawsuits, were involved in the outbreak of scandal.

Particularly noteworthy is the story of the investment company Raymond James, which recently agreed to put an end to litigation by paying the plaintiffs $ 150 million for servicing the accounts with which fraudulent operations were conducted. The settlement was reached after the battles that broke out in the federal court of South Florida, where a group of investors, represented by a team of experienced lawyers, attacked the position of a financial company. Despite the fact that the role of “Raymond James” in this case was limited (the company did not take part in advertising the project, raising capital and did not have direct contact with investors), the plaintiffs insisted that she entered into a criminal conspiracy with the co-owner Jay peak Ariel Quiros, and that the fact of this conspiracy made it possible for him to build a financial pyramid of the Ponzi type.

“The cherry on the cake” was certainly the fact that the manager of the Raymond James office in Florida was Quiros’s former son-in-law, Joel Burstein, who was also the target of the suit. By order of the judge, a special fund in the amount of $ 25 million was established, from which the due fees will be paid to all thirteen law firms that took part in the case.

Along the way, it turned out that some immigration lawyers who referred their clients to Jay peak, received from the owners of the project "rollback" in the amount of $ 25 000 for each.

By itself, this fact did not shock anyone, as lawyers had been whispering about EB5 commissions for a long time, and there was even a certain presumption that the lawyer, besides the fee paid by the client for accompanying the visa, has the right to apply for “encouragement” from the project.

In 2015, the Securities Commission harshly imposed a whole group of EB5 lawyers with fines and penalties, qualifying them as illegal brokerage. In addition to violations of federal laws requiring that any person engaged in attracting investments for EB5 be registered as a broker, the problem in this scenario is the abuse of client confidence in light of the apparent conflict of interest. This is especially acute in cases (and their absolute majority) when the client is not aware of the financial relationship between his lawyer and the company with which the client enters into a partnership.

Excessive investment and deception customers

The role of lawyers in the design of EB5 has recently become the object of close attention. Recently, the already mentioned federal court in South Florida filed a lawsuit by a Russian investor against Mona Shah, a well-known and successful lawyer and speaker at EV5 at numerous international conferences. The essence of the claim is the embezzlement of investment funds held in the trust account of her company, or rather, the unauthorized transfer of the entire amount of the investment by Mona Shah to the account of the beneficiary company without the permission of the depositor and prior to receiving a positive decision from the immigration authority.

The case is a Russian-speaking lawyer from Brooklyn, Vladislav Syrota, whose firm has collaborated with Mona Shah. The facts presented in the lawsuit raise many questions to the competence and powers of the fiduciary persons and should make potential EB5 investors alert.

A few months earlier, Tet and Victoria Chan, father and daughter (the latter is a lawyer), were searched in California and were accused of laundering their clients' money, as well as stealing more than $ 50 million of their investments. Federal prosecutors petitioned to confiscate real estate owned by Chen and affiliated structures of 9 for an amount close to $ 30 million. An enterprising family worked smoothly between the United States and China, actively “recruiting” investors.

The list of their clients even included people on the lists of dangerous criminals who were wanted in the country and escaped from justice.

In 2016, another California lawyer, Emilio Francisco, was brought to justice for defrauding investors. According to the accusation made by the Securities Commission, Francisco appropriated more than $ 9,5 million, which he sent to his own business and personal expenses, instead of the cafes and houses promised to investors for the care of the elderly.

Before that, in 2014, another Californian attorney, Justin Lee, was accused of embezzling investor funds. Investments that were intended to be placed in a biofuel plant in Texas, he willfully led into a mine enterprise in the Philippines.

Constant vigilance

The American Immigration Lawyers Association (AILA) is deeply concerned about the state of affairs in EV5. At various specialized forums and publications for immigration lawyers, emphasis is placed on discussing issues of deception, pyramids, and possible conflicts of interest. A memorandum was recently published, in which lawyers were urged to be more careful and strictly follow the rules of ethics, which would be beneficial and seductive if there were no options under which a conflict of interest is possible.

A classic example of such a scenario is the possession of a lawyer of the regional center / EB5 project, in which the client’s investment is placed, and simultaneous legal support of a transaction involving fiduciary duties. Of course, the client itself must be vigilant and not be shy to ask questions, no matter how awkward they may appear.

It is difficult to consider reinsurance to obtain additional legal opinion or even control of the process by an independent lawyer.

The cost of such a service may in the future seem quite insignificant compared to the fees of attorneys working at the trial stage. It should also be extremely critical to the proposals of persons with limited experience in organizing EB5 projects, even if they come from close friends or relatives. The EB5 fever that has gripped the US in the last 8-9 years is associated with some people living in America with the ability to easily improve their business and get maximum profit with the help of someone else's easily accessible capital.

Unfortunately, the lack of clear agreements, a carefully planned structure, legal support and strict control often leads to loss of funds. Court registries abound in cases of this kind, and participation in them further convinces us that transactions on trust here are unacceptable.

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In 2016, the Florida authorities arrested a certain Igor Tikhonov on charges of embezzling more than $ 500 000 from a Russian citizen Sergey Danilchenko under the pretext of placing an EB5 investment. Tikhonov’s work scheme was simple: under the name of Harry, on behalf of his company Alcor Service, registered in South Florida, placed ads on the Internet for various concierge services, including receiving a green card through EB5 investments.

A resident of Sochi, Danilchenko, hoping to relocate to the United States and treat his sick child, transferred the company more than $ 500 000, in exchange for promises of a green card and 60% of profit from real estate management, in which Tikhonov allegedly intended to put the capital of his victim.

In response to a request for corporate documents confirming the fact of purchase, Danilchenko received a pile of postcards. The scammer transferred all the money to a personal account. The investor in this case was able to achieve the intervention of criminal justice, but the proceedings of this kind can last for years. The list of such cases can be continued.

Transitional period

Weak control mechanisms, coupled with the temptation to make quick money, create fertile ground for fraud. Legislators are well aware of the costs and side effects of EB5. There are discussions in Congress about the complete abolition of the program, as well as its reform. The most irreconcilable position is occupied by Democratic Senator from California Dian Feinstein. She insists that it is not for America to sell citizenship, but her voice is in the absolute minority.

Once having tasted the charms and conveniences of EB5, it will be difficult for America to abandon the attractive and affordable foreign investment. The most likely is a compromise option in which the minimum amount of investment will be increased and control tightened.

In the meantime, during the transition period, the fate of investors wishing to use EB5 at the old price depends on their own vigilance and awareness. America does not lack talented and honest lawyers, in whose competent hands an investment program can become an excellent strategy for a client.

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