New York Bar: Foreign Migration Brokers CANNOT Be Paid EB-5 Referral Fees

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May 31, 2017 9:24 AM

After railing for the last few years about how Big EB-5 cheats via census tract “gerrymandering” in order to falsely qualify as a TEA, this has been a pretty great month for us here at AVSEB-5 and for the handful of TRUE TEA and rural projects having to compete against six page color spreads in glossy magazines:

First, IIUSA and Congressional leaders agree on EB-5 reform legislation which puts an end to the gerrymandering abuse. That means that, for the first time in the history of EB-5, the congressional mandate of the law – to create jobs in the poorest and most rural parts of America, will be realized. As I’ve said for the last six years since AVS was approved as a Regional Center, I have NO issues with competing against the slick boys in the big cities… AS LONG AS the price of admission to their projects reflects the wealthy urban area in which they are located and bona fide TEA projects like ours have the lower investment threshold price advantage Congress intended.
Next, thanks to the glaring spotlights on EB-5, the New York Times documents the names of the Regional Centers drag-netting in China and their shadowy migration agency partners, exposing the fact that 100% of said Regional Centers are unlawfully paying commissions abroad and now…
A recent New York Bar opinion strips the last of the EB-5 emperors’ new clothes off by spelling it out: U.S. EB-5 practitioners can absolutely NOT pay a “foreign migration agent for referrals”.

Consider that last fall the U.S. Government Accounting Office (GAO) audited the EB-5 program and definitively confirmed these numbers:

less than 3% of EB-5 investment funds went to rural parts of America
In the 3 month period GAO audited, it found that just 12% of investment dollars went to projects in true TEA area.
The rest of it went to wealthy urban areas, with 36% going to projects in America’s wealthiest areas with unemployment rates of under 4%!

BOTTOM LINE: the vast majority of EB-5 Investor dollars are going to the richest neighborhoods – primarily in New York -for projects built by the largest developers, which rely ENTIRELY on securing investors by paying fees to foreign immigration brokers…fees both the SEC AND, now, the New York State Bar, have said are unlawful.

Here is the decision, read it for yourself:

http://www.nysba.org/CustomTemplates/Content.aspx?id=72160