The increasingly popular EB-5 program faced some serious scrutiny earlier this week, in an article published by the Houston Chronicle, mainly for the program's risky investment opportunities offered through some Texas regional centers. The Chronicle claims that many of the centers have "dubious track records or are engaged in questionable practice."
Questionable Track Records?
One example of such practices includes a Dallas company whose funding was provided through the North Texas Regional Center. The company is accused of "advertising multi-million dollar development projects on land in Farmers Branch tied up in a civil lawsuit and bankruptcy filing," reports the Chronicle. A $70 million dollar lawsuit is currently pending against one company executive and officers.
In Houston, another company allegedly broke EB-5 rules by offering deeds to waterfront property as a way to present investors with something to fall back on if their investment didn't prove profitable. It's a well-known fact that all EB-5 investments must legally offer no guarantee of investment return. Foreign investors who are found to be in violation of EB-5 program rules risk losing their EB-5 investment visa and being denied an EB-5 green card in the future.
More Regional Centers
Such questionable ethics may have something to do with the recent increase in the number of regional centers emerging nationwide. The playing field for EB-5 regional centers is exploding with competition, a situation which may encourage some centers to use "creative" tactics in their marketing to prospective investors.
According to EB-5 due diligence experts, Texas has yet to prove its regional centers are viable opportunities for the EB-5 immigrant investor. Only time will tell if Texas regional centers can turn things around.
Michael Gibson, Managing Director at USAdvisors.org, insists that there are many EB-5 regional centers across the country that do present immigrant investors with feasible investment opportunities.
?There are quite a few projects with great fundraising and good managers, using best practices and doing it correctly,? Gibson said. ?It?s just hard to find them through all the noise from the other competing centers.?