Fraud and misappropriation.

A. The common characteristics of EB-5 investments

Distance and language. The investors are usually overseas, often do not speak English, and rely on immigration agents — paid large, sometimes undisclosed, commissions — to place their money. They cannot walk the site and are conditioned to trust the promoter's story. The information is almost always asymmetric, with the investor on the outside looking in.

Concentration of control. The deals that go bad tend to share another trait: control is concentrated in a single set of hands. Time and again, one person controls the regional center, the NCE, the developer, and the bank accounts, moving money among them at will. Where a single hand signs every check, commingling and diversion are a keystroke away.

The lure that silences diligence. The promise of residency — for yourself or for a child — is a powerful thing, and it does two kinds of damage. It pushes people into deals they would never otherwise touch, and when trouble comes, it makes them afraid to raise a hand and demand an accounting, for fear of upsetting the very petition they are counting on.

B. The anatomy of an EB-5 fraud

Diversion from the approved project. The classic EB-5 fraud is easy to state: capital raised for the approved project is spent elsewhere. The damage then runs in two directions at once. It inflicts devastating financial losses and, because the money no longer sits where the petition says it does, it also puts every investor's green card at risk.

Submitting false documents to the government. Forged support letters and fabricated financing commitments sent to USCIS constitute a federal crime in their own right, separate from the securities violation — and often the cleanest count to prove.

Commingling and falsified books. Money shuttles among affiliated entities until no one can say whose dollar is whose, and fresh money covers old obligations. As the hole deepens, the books are doctored to secure the next loan or the next round of investors.

C. Three cases

In the Chicago Convention Center case, the SEC charged Anshoo Sethi in 2013 with raising about $145 million from more than 250 investors based on a bogus Hyatt “comfort letter” and a fabricated Qatar Investment Authority financing commitment. What made this one end well was speed. The SEC and USCIS moved in concert, froze the escrowed capital before it could scatter, and the court returned more than $147 million — essentially the entire principal — within months.

In Jay Peak, the largest EB-5 fraud on record, Quiros and Stenger raised more than $350 million and misused roughly $200 million. The lesson of the recovery is that the money returned not from the wrongdoers but from the institutions around them: a $150 million settlement with the brokerage that moved the money and a $32.5 million settlement with the law firm that had advised the principals.⁷

In Path America, Lobsang Dargey raised more than $140 million from some 280 immigrant investors for a Seattle tower and an Everett project, then diverted millions. Here the receivership's priority was to finish the buildings: completing the projects and creating the jobs was the investors' best chance to save their petitions, because the immigration test rewards sustained capital and job creation, not repayment. Even so, at Dargey's 2017 sentencing, none of the 281 defrauded investors had yet obtained permanent residence — a sober reminder that even when the building gets finished, the immigration outcome is neither automatic nor quick.

The through-line of all three is the same: when the promoter is judgment-proof, the money is usually held by the bank that moved it and the professionals who approved the deal. Jay Peak proved just how much can be recovered there.