Some EB-5 investors hired an immigration lawyer for the green card and later learned the lawyer was also being paid by the regional center, or owned part of it. If that happened to you, the conflict waiver you signed may not protect the lawyer. A federal appeals court has treated hidden regional center commissions as securities fraud, and another held that a lawyer’s EB-5 conflicts could not be waived even with the client’s signed waiver.
How does an immigration lawyer end up with a conflict in an EB-5 case?
An EB-5 investor puts capital into a new commercial enterprise (the NCE) sponsored by a regional center. In the Ninth Circuit case discussed below, the regional centers structured these investments as limited partnerships. A regional center is an economic unit, public or private, involved in promoting economic growth (8 C.F.R. § 204.6(e)) that USCIS has designated to take part in the EB-5 program (8 U.S.C. § 1153(b)(5)(E)(i)). The Ninth Circuit has described per-investor commissions as “an EB-5 industry practice.” Some of those payments went to the investors’ own immigration lawyers, and in that case the court held that such a commission created a conflict the lawyer had to disclose.
On December 7, 2015, the SEC announced settled orders against seven people, most of them lawyers, and some of their firms, that according to the SEC took these payments while acting as unregistered brokers. They agreed to the orders without admitting or denying the SEC’s findings. Two of the respondents were based in Los Angeles. In the SEC’s words: “These payments were separate from legal fees received to provide legal services to the same clients.“
Ownership is the other version. In two cases below, the SEC alleged that the lawyer secretly owned the regional center (the San Jose case) or controlled the projects and their developers (the Chicago case), then offered those projects to investors, including their own clients. The 2022 EB-5 Reform and Integrity Act now requires offering documents filed with USCIS to refer, as appropriate, to conflicts of interest involving “the principals, attorneys, or individuals responsible for recruitment or promotion” of the project entities (8 U.S.C. § 1153(b)(5)(F)(i)(IV)(bb)).
What happened when the SEC sued an immigration lawyer over hidden commissions?
In a 2019 Ninth Circuit decision, 935 F.3d 721, the court decided an EB-5 commission case the SEC brought against an immigration lawyer.
The lawyer, who then practiced immigration law in New York City, led about 150 clients, most of them Chinese nationals who did not speak English, through the EB-5 process between 2010 and 2016. Each paid him an upfront fee of $10,000 to $15,000. He also signed marketing agreements with ten regional centers, which agreed to pay him $15,000 to $70,000 per client once USCIS approved the client’s I-526 petition. He did not tell clients about those commissions unless they asked.
When some regional centers refused to pay U.S. lawyers who were not registered brokers, the lawyer named relatives as overseas “referral partners.” Later he set up a Hong Kong company to collect. Regional centers paid him and his overseas entities $1.268 million in all.
On appeal, the Ninth Circuit affirmed summary judgment for the SEC on every claim. The EB-5 interests were securities, and the lawyer was an unregistered broker. The court rejected any lawyer exemption: “Attorneys who provide only legal advice to clients about the EB-5 program are not required to register. Attorneys who act as brokers in the EB-5 context may legally do so only if they register with the SEC.“
The Ninth Circuit also affirmed the district court’s finding that the lawyer engaged in securities fraud, including by not disclosing the commissions to his clients. As an immigration lawyer he owed his clients fiduciary duties, and “Those duties included the obligation to disclose conflicts of interest.” He argued his clients were not harmed. The court called that the wrong standard, because conflict rules address the risk that a commission pulls a lawyer toward the project that pays more. It affirmed disgorgement of the full $1.268 million.
Can a signed waiver cure the conflict?
Sometimes. Not always.
Under California Rule of Professional Conduct 1.7(b), a lawyer may not take on a client if there is a significant risk that the lawyer’s own interests will materially limit the representation, unless the client gives informed written consent. Rule 1.0.1(e) defines informed consent as agreement after the lawyer explains the relevant circumstances and the material risks, including reasonably foreseeable harms.
Consent also has a ceiling. Rule 1.7(d) allows the representation only if the lawyer reasonably believes they can provide competent and diligent representation, and the official comment says that in some matters even informed written consent may not be enough. Rule 1.8.6 bars a lawyer from accepting compensation for representing a client from someone other than the client unless several conditions are met. Two of them: nothing may interfere with the lawyer’s independent professional judgment, and, subject to limited exceptions, the client must give informed written consent. Rule 1.8.1 adds separate requirements when a lawyer enters into a business transaction with a client: fair and reasonable terms disclosed in writing, written advice to seek an independent lawyer, and the client’s informed written consent. The text is in the State Bar’s 2026 edition of the rules.
In the Chicago case, a Chicago-based immigration lawyer created EB-5 funds for senior living projects in Illinois and Florida. The SEC sued him in June 2017, alleging that he misused part of about $88.7 million raised from at least 226 investors (Litigation Release 23866). One investor, identified in court as John Doe, was challenging a USCIS denial with the lawyer’s own three-lawyer firm as counsel.
In a 2018 Seventh Circuit decision, 883 F.3d 716 (No. 17-2040), the court disqualified the firm even though Doe had signed a waiver. The court reasoned that the lawyer would not advise Doe to allege fraud. According to the SEC, he also controlled other projects that lacked money to finish, and the court reasoned that this gave him competing loyalties to investors in each. The court held: “This case presents at least two concurrent conflicts of interest, neither of which can be waived by informed client consent.” The Illinois rule the court applied, like California’s Rule 1.7(d)(1), allows a conflicted representation only if the lawyer reasonably believes they can provide competent and diligent representation.
In the SEC’s own case (N.D. Ill. No. 1:17-cv-04686), the lawyer first won a round. In 2017 the district court denied the SEC’s request for a preliminary injunction (276 F. Supp. 3d 852), partly because the offering documents disclosed conflicts arising from his role as a lawyer and warned that other conflicts might not be disclosed. After a 2019 dismissal of an amended complaint for lack of particularity, the SEC filed a second amended complaint. In January 2022 the lawyer and two of his companies consented, without admitting or denying the allegations, to a judgment for $1,172,000 in disgorgement, $108,161 in prejudgment interest and a $320,000 civil penalty. He also agreed to a suspension from practicing before the SEC, with the right to seek reinstatement after five years (Litigation Release 25328).
The same lawyer’s written conflict disclosures helped him at the preliminary injunction stage of the SEC case. In the Seventh Circuit decision, a different court held that his conflicts toward a client could not be waived.
Have California immigration lawyers faced these cases?
Yes, in federal courts in California.
A Central District of California case. According to the SEC, a California-based immigration lawyer and his firm promoted EB-5 offerings to their own immigration clients, more than 70 of whom invested. The complaint alleges the firm received over $1.6 million in transaction-based pay from issuers without fully disclosing it, and used the lawyer’s overseas relatives as nominees to receive over $1 million in such pay (Litigation Release 24006). In November 2018 the court (C.D. Cal. No. 2:17-cv-08856) entered a final judgment on consent ordering $1,317,248 in disgorgement, $180,835 in prejudgment interest and a $160,000 civil penalty. He agreed to a permanent suspension from practicing before the SEC (Litigation Release 24358).
The San Jose case. In October 2018 the SEC sued a San Jose immigration lawyer and her then-husband, alleging over $10 million in undisclosed commissions from selling EB-5 securities to hundreds of her clients. The complaint also alleges that they “secretly acquired and operated an EB-5 regional center,” then advised clients to invest in its projects without disclosing their ownership. As of October 21, 2026, the court docket showed the SEC’s civil case still open, with no judgment listed against her (N.D. Cal. No. 3:18-cv-06371). Her then-husband and the regional center consented to judgments in the same case in 2024 and 2023.
Her criminal case is separate. Federal prosecutors indicted her in 2019 on visa fraud, obstruction and related charges. According to the U.S. Attorney’s Office, she left the country and was extradited in March 2025 (U.S. Attorney’s Office, N.D. Cal.). The criminal docket shows that she pleaded guilty in November 2025 to one count of visa fraud and two counts of obstruction of justice, and that on January 27, 2026 the court sentenced her to 30 months in custody and a $20,000 fine, and dismissed the other counts against her on the government’s motion (N.D. Cal. No. 5:19-cr-00111, Dkts. 27, 157, 169).
Can the State Bar’s Client Security Fund pay you back?
Possibly, for part of a loss, in narrow situations. In the State Bar’s description, “The Client Security Fund (CSF) is a discretionary fund that reimburses people who have lost money or property because of a California lawyer’s theft or dishonest conduct.“
Under the Fund’s rules, the maximum reimbursement for losses on or after January 1, 2009 is $100,000 (Rule 3.434), so an EB-5 investment of $500,000 or more will not be fully covered. Payment is discretionary (Rule 3.420), and the State Bar says the Fund does not cover losses caused by negligence or malpractice. A failed investment alone does not qualify: “Failure of an investment to perform as represented to or anticipated by a client is not dishonest conduct under these rules.“
A loss on an investment the lawyer proposed counts only if it arose out of the lawyer-client relationship and could not have happened without it (Rule 3.436). Deadlines apply. The lawyer generally must also have been disciplined, resigned, convicted or held liable to the applicant in a contested case, though the Fund can waive that requirement under its guidelines (Rule 3.432).
Read the release language before applying. By applying, “the applicant acknowledges that he or she may be giving up the right to pursue a civil action for the same recovery against a third party.” (Rule 3.440(A)).
Frequently asked questions
My lawyer had me sign a conflict waiver. Does that end the matter?
Not necessarily. California’s rules define informed consent as agreement after the lawyer explains the relevant circumstances and material risks (Rule 1.0.1(e)), and Rule 1.7(d) adds conditions that consent cannot replace. In the 2018 Seventh Circuit decision, a signed waiver affidavit did not save the representation.
Is it illegal for an immigration lawyer to take money from a regional center?
In the 2019 Ninth Circuit decision, the court held that a lawyer who recommended projects and took per-investor commissions from regional centers was acting as a broker who had to register with the SEC, and that his failure to tell clients about the commissions was a material omission.
How would I know whether my lawyer was paid?
Check the offering documents and any fee disclosures you signed. If your petition was filed under the 2022 law, whose regional center provisions took effect 60 days after its March 15, 2022 enactment (Pub. L. 117-103, div. BB, § 103(b)(2)), it should include an investor-signed disclosure of fees and other compensation the regional center or NCE knew were paid in connection with your investment, including to agents, finders or broker-dealers, unless already identified in the business plan (8 U.S.C. § 1153(b)(5)(K)(iv)). Older petitions may have no such disclosure. A regional center must also give an investor a redacted copy of its filed annual statement within 30 days of a request.
What to do now
- Gather the offering documents: the private placement memorandum (PPM), subscription agreement, limited partnership agreement and any translations.
- Find your engagement letter with the immigration lawyer, every invoice and any conflict waiver or acknowledgment you signed.
- Save marketing materials and messages from the lawyer, the regional center and any agent, and write down what you were told, by whom and when.
- Keep annual statements, fund administrator reports and USCIS notices.
- Talk to your immigration counsel about I-526 and I-829 effects before taking action. If your immigration lawyer is the one with the conflict, consult a different, independent one.
- Consult a securities lawyer promptly.
Rosenberger + Kawabata does not give immigration advice. Before taking legal action, talk with your immigration attorney about how a lawsuit or a recovery could affect a pending I-526 or I-829 petition.
Rosenberger + Kawabata represents investors in securities fraud and investment loss cases, including claims by EB-5 investors against regional centers, developers and the professionals around them. Consultations are confidential.
Call Rosenberger + Kawabata at (310) 894-6921.
This post is attorney advertising. It is general information, not legal advice, and reading it does not create an attorney-client relationship. Prior results do not guarantee a similar outcome.