On June 23, 2015, the Securities and Exchange Commission ("SEC") instituted public administrative and cease-and-desist proceedings pursuant to the Securities Exchange Act of 1934 ("Exchange Act") against Ireeco, LLC and Ireeco Limited, for illegally brokering investments by foreigners seeking U.S. residency through the U.S. government’s EB-5 Immigrant Investor Program.
According to the SEC, Ireeco LLC, originally located in Boca Raton, Florida, and its successor Ireeco Limited, a Hong Kong-based company and 100 percent owner of Ireeco, LLC, failed to register with the SEC and acted as unregistered broker-dealers in connection with sales of securities involving the EB-5 Program. The two brokers operated their business primarily through their website. Through the website, the brokers offered to assist foreign investors with choosing the right EB-5 projects, and took steps to direct potential investors to regional centers. (See http://www.sec.gov/litigation/admin/2015/34-75268.pdf.) The SEC found that these regional centers had entered into "referral partner agreements" with the brokers, and that the brokers received compensation from the regional centers based on a fixed portion of the "administrative fee" the investors paid to the regional center. According to the SEC, the brokers were paid fees for actively soliciting over 158 foreign investors who together invested a total of $79 million in the regional centers.
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