The flurry of federal suits filed by the U.S. Securities and Exchange Commission (SEC) in the past few months against several companies and individuals for alleged fraud and false statements in soliciting foreign investors under the EB-5 Immigrant Investor Program shows that the government is taking a tougher approach to enforcement in the EB-5 space. Recent SEC suits include SEC v. Luca International Group, LLC, SEC v. Path America, LLC, SEC v. EB5 Asset Manager, LLC and SEC v. Robert Yang et al. Although the SEC’s complaints in these cases describe extreme situations involving the defendants’ misuse of investor funds to fund their own personal purchases, the securities laws invoked by the SEC have broad coverage and can be used to sanction less egregious conduct. Indeed, in some cases merely negligent misstatements to investors can trigger liability.
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