Attorneys Henry Handler and William Berger of the law firm of Weiss, Handler & Cornwell, P.A. in Boca Raton, Florida have filed a memorandum of law in support of the motion to intervene on behalf of EB-5 visa applicant and investors in the IRCTC Chicago Convention Center project.
The one investor named was Dong Mei Xu, but the motion includes the other investors that were subscribed to the IRCTC Chicago Convention Center project promoted by Anshoo Sethi that was recently the subject of an SEC action.
"This case is about much more than his $500,000 investment that the SEC has sued to recover. Xu and the investors stand to lose their chance at United States citizenship if the court does not act to protect their interest when it fashions any relief in this matter. To be clear, Xu does not bring this motion so that he or the investors can conduct their own investigation of the alleged fraud, or to try to gain some additional recovery from the defendants."
The argument states that not only are the investors seeking to recover the funds wired to IRCTC, but "to intervene in this action as of right under Federal Rule of Civil Procedure 24(a)(2) to protect his ability to use the Escrowed Funds to pursue U.S. citizenship through the EB-5 program."
The action appears to be a plea to allow the investor's funds, once recovered, to remain in escrow and then to re-apply in another project rather than just having the funds, or whatever portion of the funds the government can recover, returned to the investors in order to continue their petition for residency with USCIS, rather than have those applications withdrawn or revoked for lack of investment.
"Xu understands that the SEC has already gathered substantial evidence of the false
statements used to lure Xu and the investors into investing in the fraudulent EB-5 program. Xuagrees that the SEC must conduct a full investigation into defendants’ conduct and prove thatconduct to the court. If the SEC is able to do so, Xu and the investors will have a direct andimmediate interest in how assets are recovered and distributed. Accordingly, Xu respectfully requests that this Motion to Intervene as of right be granted."
Further, "Xu is not asking this court to determine where his money should be invested. That will be between Xu and USCIS. Xu merely asks this court to maintain jurisdiction over the Escrowed Funds so they can be released from escrow at Xu’s direction in the event the SEC prevails."
It is not clear who has contracted with Weiss Handler to file the memorandum and do the legal work but sources in China speculate that they were retained by a large Chinese migration agent whose clients they signed up to this fraud and are now facing pressure from their investors and Chinese authorities to fix the mess they helped create.
We have since been contacted by Henry Handler the attorney whose firm filed the motion with this statement:
I would like to thank Henry for the clarification and update that is appreciated. I would also like to add to this that we sent him several emails and made phone calls asking to see if we could get clarity on what the motion was about which, if returned, might have helped avoid our misunderstanding and reporting on the subject.
I did have a very nice chat with his secretary who confirmed that they had received our attempts to communicate but unfortunatley we did not have a response by the time we published the story. In any event we stand clarified and hope that if there are any further developments in this case we will be able to report those more accurately.
this contiunes with my opinion on the state of the market, investors and agents:
If the Chinese clients truly want relief, they should take action against the agents, EB-5 service providers, finders and promoters who convinced them to put their trust and capital into such a bogus, worthless offering and not look to the U.S. government for help as federal agencies are under no obligation to assist or protect them from making stupid investment decisions or helping Chinese agents unwind a mess they helped create.
This plea sounds like a cry for help from promoters who were caught with their pants down when the project they were promised millions of dollars in commissions for marketing got caught up in an SEC action.
Typically, these agents would not care once the I-526s had been approved and the projects failed as they would have collected much of their commissions (except for the lost payments on the back end), but in this case the I-526s were not approved by USCIS so they lost the only things they care about: face (their reputation) and money. They are also possibly facing action by Chinese authorities, hence this case to show everyone in China that they are doing something to "help" their clients.
It will be interesting to see if an action will ever be taken by investors against not only the developers, but against those in the industry that supported and promoted the fraud both here and overseas.