2 Different EB-5 Cases in Which Asians Apparently Conned other Asians

By David North on January 7, 2014

We suggested in an earlier blog that the EB-5 (immigrant investor) program keeps attracting a number of interesting and controversial people, because of the lure of apparently easy money.

This is the DHS-run program in which an alien can secure a family-size collection of green cards for placing either half a million dollars, or one million, into a government-approved (but not guaranteed) private-sector investment.

Now we have two more cases, not mentioned by CIS before and separate from each other, in which an American resident or residents of a given national background has been charged with conning an alien, from the same national background, through the EB-5 program. Both cases are based in California, and both are still being litigated.

The accused parties, of course, are to be regarded as innocent until proven guilty.

Both stories appear to be reflective of an under-reported underside of immigration: how sometimes earlier arrivals learn the ropes in America, and then prey on newer arrivals from the same nation. I am not saying that most immigrants who prosper do so at the expense of their compatriots, but some do, and some of the latter use the EB-5 program in the process.

In neither case is USCIS, the agency that runs the program, involved in seeking to correct the situation. In both cases the alleged victims are using other means in an effort to recoup their fortunes.

In these cases the investments were to be $550,000 in an ethanol factory and $1,080,000 in an unspecified banking venture. The investors were, respectively, a couple from China, and a successful businessman from Iran.

Those being sued are, again respectively, Justin Moongyu Lee, a LA lawyer, and several EB-5 middlemen, all with Iranian names. The California bar is in the throes of a disbarment procedure against Mr. Lee, and the one alien Iranian is suing all the other Iranians in federal court in the Northern District of California.

In both cases, as in many EB-5 situations (in which the set of visas is the star attraction, not the financial prospects of the investment), the aliens did not engage in a sufficient amount of due diligence initially, but in these instances they later took action against the middlemen. In many cases duped EB-5 investors do not sue.

The Ethanol Plant. The Chinese couple retained Lee as their EB-5 lawyer; he then took their $550,000 and invested it in a planned ethanol plant in the little rural town of Ulysses, Kan. This was done as, or just after, the enthusiasm for ethanol peaked, a feeling which has since lapsed. The money was spent, the plant was not finished, no ongoing jobs were created, as Kansas Watchdog reported. Meanwhile, Lee turned out to be the owner of both the plant and of the USCIS-licensed EB-5 regional center used in the transaction.

The couple was lucky for those venturing into EB-5 waters; they sued and got their money back. They then sought Lee's disbarment for, among other things, conflict of interest. It is not known whether they got green cards, too. For more on the disbarment proceedings see here.

The Not Quite Regional Center. More recently there is the case of Saeid Mohebbi, an Iranian businessman. He appears, according to the complaint in the case, to have lots of money in Iran, no English, a trusting nature, and a strong desire to get out of that country. He learned about the EB-5 program on a Farsi language website and got in contact with U.S. Immigration Investment Center (USIIC), an entity he gathered was a USCIS-approved regional center.

It was not an approved center, and remains to this day only an applicant for that status. Mohebbi was attracted to USIIC's pitch that it was the only such entity to seek to use the EB-5 program to work in the financial sector (most EB-5 programs deal with real estate.)

The story is a complicated one – there are 22 different charges in the complaint – but the bottom line is that Mohebbi trusted his fellow Farsi speakers, signed various documents in English based on verbal assurances by the middlemen, and invested $1,080,000 in USIIC ventures. Once he perceived that these investments would not lead to a green card, he sued. For a detailed account of the suit, see this article in EB5 News.

One of the complications with the EB-5 program for all would-be Iranian investors is that they must (because of the sanctions we have laid on that nation) secure a sign-off from the Office of Foreign Assets Control of the U.S. Treasury Department that the money for the EB-5 investment is not tied to sanctions-blocked Iranian financial institutions. OFAC approvals are apparently not easy to obtain, and must be in hand before an EB-5 petition can be considered. Mohebbi said that he was hoodwinked on these matters. For more on OFAC operations see here.

One wonders how this case will turn out. USIIC, presumably the entity Mohebbi is suing, continues to describe itself in terms of the EB-5 program; its Facebook page says: "USIIC delivers sound investments with growth potential to foreign investors to enable them and their families to obtain Green Cards through the EB-5 Visa Program." This despite the lack of a regional center certification.

Further, Michael Shadman, the second listed defendant in the EB-5 suit, has just emerged from a multi-million-dollar bankruptcy proceeding, something Mohebbi says he knew nothing about when he made his investment. Neither item helps the defendants.

On the other hand, Mohebbi's lawyer has presented the court with a long complaint that is chock-full of typos and indications that it was written by someone with limited knowledge of the English language; in fact the complaint opens with a typo "Fist [presumably First] Amended Complaint..." I am not a lawyer, but would imagine that such a document would not help someone's cause.

In addition – and the name Saeid Mohebbi may be a common one, the John Smith of Iran – I noted in PACER, the electronic files of California's federal courts, that a few years ago a person with that name was sued for non-payment of a multi-million-dollar loan; the citizenship of that Mr. Mohebbi was not noted. The same person?

The next step in the EB-5 case will be a case management conference on February 13, 2014, in the San Jose Division of the federal courts.

Those with access to PACER will find the file on the EB-5 Mohebbi at 5:13-cv-03044-LHK; the file on the non-loan paying Mohebbi, a bankruptcy case, is at 1:09-ap-01215.