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Federal Regulators Freeze Assets of South Florida Woman who Ran Alleged Immigration Scam

house-under-constructionThe EB-5 immigrant investor program has provided considerable benefits to legitimate investors, immigrants and the communities where those investments take place. When, for example, an EB-5 investor uses the program to create affordable housing, everyone wins. Unfortunately, not all of the entities that have sought to participate in the program conduct themselves in an aboveboard manner. In one recent case, the US Securities and Exchange Commission went to court seeking a restraining order to freeze the assets of a Broward County limited-liability company that, the agency claimed, was actually a scam. Late last year, the US District Court for the Southern District of Florida issued that order, according to a SEC press release.

The person and business that was in the SEC’s cross-hairs was Lin Zhong and her Oakland Park-based company, EB5 Asset Manager, LLC. According to the original lawsuit document, which the SEC filed in federal court last November, Zhong used her company as part of an elaborate fraud designed to abuse the EB-5 program. Zhong allegedly told potential investors many falsehoods in order to secure their investment. Zhong communicated to investors that the money they put in would go for such things as a mixed-use commercial project along US Highway 1 in Port St. Lucie.

What the roughly $8.5 million really went to was a variety of items for Zhong and her family, including luxury cars, a boat, a $2.5 million home and tuition payments. Zhong did all of this without any communication with investors, despite the requirement that someone in Zhong’s position inform investors of transactions benefiting her or affiliated companies, and obtain those investors’ consent before going through with the transactions. In addition to Zhong’s purchasing luxuries for herself and her family with the money investors gave to EB5 Asset, the company also bought out Zhong’s interest in another entity and facilitated the purchase of real estate by another company that Zhong partially owned, according to the SEC’s complaint.

Investors were told that annual meetings would take place, giving them the opportunity to have an active role in management decisions. Zhong’s entity also promised investors that any funds they paid in would be held in escrow until the investor’s Form I-526 immigrant petition was processed and approved by USCIS. According to the SEC, this statement, along with many of the other things communicated to investors, was untrue or at least “materially misleading.” The promised annual meetings never took place, and financial reports that would have exposed Zhong’s alleged misconduct were never created by EB5 Asset. While the $8.5 million investors had entrusted to EB5 Asset was placed into escrow, only $2 million of it remained there by the investors sought the USCIS’s approval of their I-526 forms.

The court also took action to protect the investors’ money. Once EB5 Asset stopped working on the investors’ visa petitions, those immigrants’ applications were likely to fail. In the event of a failed application, an investor was entitled to get his/her investment funds back from EB5 Asset. The court appointed a receiver to oversee the return of investor funds, rather than leaving it to Zhong. Zhong agreed to stipulate to the asset freeze and the receiver, according to the SEC.

If you are seeking to obtain a visa as an investor in the EB-5 program, it is important to work with experienced immigration counsel. Your immigration attorney can help you navigate the process, including helping you in selecting the right investment for you. The knowledgeable Florida immigration attorneys at Stok Folk + Kon have many years of helping investors like yourself navigate the system and achieve a successful outcome.

Contact us online or by calling (305) 935-4440 to schedule your consultation.

More blog posts:

Temporary Extension of EB-5 Visa Program Triggers Action in South Florida, Florida Business Lawyers Blog, Nov. 4, 2015

SEC, Homeland Security Launch Probes in EB-5 Visa Application Practices, Florida Business Lawyers Blog, March 20, 2015