Would you be able to recognize the warning signs of fraud in in this EB-5 story? This story is extremely rare in EB-5! Most Licensed Immigration Consultants in China, Regional Centers and attorneys are truly committed to their client’s immigration goals and the safety of their investment. But these facts illustrate why it is so critical to have a trusted advisor guiding you through the EB-5 investment process.
Justin Moongyu Lee, his wife, Rebecca Taewon Lee, and his law firm partner, Thomas Edward Kent were charged on September 4, 2014 with securities fraud by the Securities and Exchange Commission. The alleged perpetrators attracted foreign investors to a defunct regional center program, collecting close to $11.5 million from 23 EB-5 foreign investors.
Faced with a glaring conflict of interest, Justin Moongyu Lee and Thomas Edward Kent were partners in a private law firm processing EB-5 cases, as well as owners of an EB-5 regional center. Their USCIS-approved regional center, established in 2006 in Ulysses, Kansas, had initially planed to build and operate an ethanol plant.
Early on, the project was unsuccessful, becoming economically unfeasible in mid-2008. Construction was halted soon after. According to allegations, the Lees withdrew funds from investors’ escrow accounts, undisclosed, in order to deal with regional center related financing issues and also for the financing of other unrelated projects. In a final attempt to conceal the failure of the project, they submitted falsified documents to USCIS, as they continued to attract foreign investors to their program.
Since 2008, Kent and the Lees continued to mislead investors about their regional center. Though the regional center had clearly ceased regular operations, the Lees hosted investor seminars in Los Angeles, California for the purpose of attracting potential investors to the ethanol plant project. Dishonest activities continued through mid 2010, when a business plan published in June of that year falsely stated that the ethanol plant could begin business operations by November of 2011.
The SEC is filing complaints against the group for violating certain provisions of securities law. Additionally, the U.S. Attorney’s Office for the Central District of California filed criminal charges against Justin Lee.
In light of these events, it is clear that selecting the right advisor is of the utmost importance. Make sure you choose someone who you can trust. You will be working closely with your Licensed Immigration Consultant and immigration lawyer, and you should be able to speak freely with them about your questions and concerns. Choose a Licensed Immigration Consultant and lawyer who has a history of successful EB-5 immigration cases. Your Consultant and attorney should be forthcoming with explanations of the EB-5 process and should include you in all aspects of your case.
In a word, the alleged crimes carried out by the Lees and Kent were abusive of the investors and of the EB-5 program. The EB-5 program, which benefits both the investor and the United States, has many highlights. While abuses like these are few and far between, they do occur. This case is a reminder of the necessity for us as participants in the EB-5 process to stay alert to warning signs of fraudulent activity and to take the steps necessary to protect ourselves and investments.
If you or someone you know is considering immigrating to the United States through the EB-5 program there is a book you should read. Order your free copy of The EB-5 Investor’s Guide to a Green Card by sending an email to Rachel@EB5Law.cn with your complete mailing address.