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EB-5 fraud; SEC announces investigation

EB-5 Fraud in the Chicagoland region; SEC is investigating

September 4, 2015

by: Matthew Kriezelman, Esq.

In an important development, the SEC and USCIS are currently investigating the operations of a Chicago-based EB-5 investment center called the Intercontinental Regional Center Trust of Chicago (IRCTC) and its promoter, Mr. Anshoo Sethi, in connection with the promotion of its offering for the “Chicago Convention Center LLC” investment. The investment promised to build the world’s first zero carbon emission platinum LEED certified hotel and conference center near O’Hare Airport in Chicago.

The Complaint filed by the SEC alleges that Mr. Sethi and his associates fabricated agreements with hotels. The project sold more than $145 million in securities through limited partnership interests to EB-5 investors. The project was particularly heavily marketed in China, and more than 90% of the estimated $11 million in administrative fees collected from investors are estimated to have been spent. It is alleged that Mr. Sethi himself transferred $2.5 million to his personal bank account in Hong Kong.

The claims and documents provided by the IRCTC and Mr. Sethi, in hindsight, contain several obvious discrepancies. Mr. Sethi, at the age of 29, claims to have 15 years of experience in real estate management and development. The agreements between the project and many hotels such as Starwood, the Hyatt, and the Intercontinental Hotel Group were all forged.

A complaint has been filed in the federal district court for the Northern District of Illinois: http://www.sec.gov/litigation/complaints/2013/comp-pr2013-20.pdf

This unfortunate situation once again highlights the importance of conducting due diligence and retaining qualified immigration counsel for an EB-5 investment, even where such investments are to be made in regional centers.

Employment-based Immigration Updates

Proposed work authorization of H-4 dependent spouses:

September 2, 2015

by: Matthew Kriezelman, Esq.

The Department of Homeland Security has proposed an amendment of its regulations to extend the availability of employment authorization to H-4 dependent spouses of principal H-1B nonimmigrants who have begun the process of seeking lawful permanent resident status through employment, and have extended their authorized period of admission or “stay” in the U.S. under section 104(c) or 106(a) of Public Law 106-313, also known as the American Competitiveness in the Twenty-First Century Act of 2000 (AC21).

Allowing the eligible class of H-4 dependent spouses to work encourages professionals with high demand skills to remain in the country and help spur the innovation and growth of U.S. companies.

This proposed amendment must go through a lengthy review process and it may take a few more months before the Department of Homeland Security issues proposed regulations, which require notice and comment before they can then become final regulations.

H-1B visa filing dates for FY 2014:

H-1B visas subject to the annual cap of 65,000 to be filed for FY 2014 can be submitted to USCIS on April 1, 2013. The earliest start date for new H-1B applications is October 1, 2013, but of course not all applications are subject to the quota.

The cap has been exhausted earlier and earlier in recent years, and early preparation is critical to obtaining an approved H-1B petition for FY 2014. LCA processing times are currently at least 7 business days, and small employers in particular will need to ensure that they have adequate documents to warrant a timely approval.

Employers should identify all employees who may need H-1B work authorization and may be subject to the cap. Current F-1 or J-1 employees, individuals seeking to change to H-1B from another work status, and individuals who are presently outside the United States may all require cap-subject H-1B applications.

Employers who meet the USCIS’s requirements for exemptions from the quota, including institutions of higher education, related or affiliated nonprofit entities, nonprofit research organizations, or governmental research organizations, can submit H-1B petitions at any time during the year.

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