A federal judge in Washington State, as part of a broader decision, has decided that an EB-5 development firm and its president must pay $450,000 each in civil penalties in a suit brought by the SEC and, more importantly, are to be permanently barred from the program. There were other penalties as well.
The debarment, but not the fines, may be a first. While the U.S. Labor Department sometimes (but rarely) bars misusers of some of the H programs for, usually, periods of one to three years, I do not recall ever reading about an EB-5-debarment. (If I am wrong, let me know at [email protected] and we will run a correction.)
The case is otherwise typical of the all-too-many EB-5 scandals. It is on the West Coast; it deals with real estate; the Securities and Exchange Commission plays (effectively) the role of the cop on the beat rather than any immigration agency; and the investors are probably Chinese, as is the developer, Andy Shin Fong Chen. He is said to have raised $14.5 million from investors and, according to a Law360 report, “used at least of $6.5 million ... for personal expenses including payments on his BMW and financial obligations of family members.”
The presiding judge is James L. Robart; the case is Securities and Exchange Commission v. Chen et al, and is in the PACER files as 2:17-cv-00405 in the federal court for the Western District of Washington State.
The EB-5 program provides a family-sized set of green cards to alien investors who bankroll DHS-approved, but not DHS-guaranteed investments, such as this one. We cannot tell from the Law360 article whether or not these investors got their green cards. The minimum size of investments was $500,000 for this case; it has since been lifted to $800,000.