If your EB-5 project stalled, failed or lost track of your money, you may hold more than a visa application. A federal appeals court has held that EB-5 limited partnership interests are securities. Federal securities law and state law can give EB-5 investors claims against the people who sold and ran the investment, and the SEC and USCIS were already warning about EB-5 securities fraud in a 2013 investor alert.
This page starts a series on EB-5 investor claims and links to a post on each of seven problems.
Is an EB-5 investment a security?
For the limited partnership interests in a 2019 Ninth Circuit case, yes. In that SEC enforcement decision, 935 F.3d 721 (9th Cir. 2019), the Ninth Circuit held that EB-5 limited partnership interests were “investment contracts,” a type of security. The court relied on three features: the offering documents called the interests securities, the investors became limited partners, and they were promised a fixed rate of return. It rejected the argument that investors wanted only a visa: “An EB-5 investor’s interest in a visa is inextricably tied to the financial success of the regional center’s project.“
The Supreme Court said the same thing in passing. In a 2020 decision, 591 U.S. 71, a case about an EB-5 offering for a cancer-treatment center, the Court wrote: “Investments in EB-5 projects are subject to the federal securities laws.“
The SEC and USCIS warned investors back in 2013. Their joint investor alert explains that a USCIS regional center designation “does not mean that USCIS, the SEC, or any other government agency has approved the investments offered by the business.” It also states the risk: “If your investment through EB-5 turns out to be in a fraudulent securities offering, you may lose both your money and your path to lawful permanent residency in the United States.“
How do EB-5 projects go wrong?
This series groups the problems seen in SEC cases and investor lawsuits into seven patterns, and gives each one its own post.
1. Investor money is used for purposes other than those stated
In an SEC case involving a Vermont ski resort, the SEC alleged that more than $350 million was raised from EB-5 investors through a series of limited partnerships, and that more than $200 million was used for purposes other than those stated, including $50 million spent on the resort owner’s personal expenses and in other undisclosed ways (SEC Press Release 2016-69). A brokerage firm agreed, without admitting liability, to pay $150 million in a settlement with the court-appointed receiver and investor class counsel, according to the receiver’s motion for court approval (S.D. Fla. No. 1:16-cv-21301). Read more: EB-5 misappropriation.
2. Nobody checked whether the project could repay
In one case, investors who had not read their English-language offering documents lost on reliance. In a 2019 Fourth Circuit decision, 927 F.3d 177, 27 investors in an electric car venture lost on appeal. The court held that they had not pleaded reliance with particularity and also could not justifiably rely on media statements that their own offering documents contradicted. Investors fared better against a regional center that, they alleged, had promised oversight. In a Vermont Supreme Court decision, 2019 VT 71A, the court reversed the dismissal of negligence claims against the state agency that ran a regional center, which investors alleged had marketed its oversight of projects. That July 2020 ruling came at the pleading stage, with the allegations assumed true, and the court made no findings. Read more: EB-5 regional center due diligence.
3. Your money was moved into a worse project
When the first loan is repaid, investors who still need their capital “at risk” may see it redeployed, meaning loaned or invested again. The 2022 law directs DHS to allow it only under conditions, including that the capital is not put into passive investments such as stocks or bonds (8 U.S.C. § 1153(b)(5)(F)(v)). In a 2025 North Carolina Business Court decision, 2025 NCBC 46, investors alleged a general partner signed a $16.4 million promissory note to redeploy their capital into a startup formed in January 2024 with no operations or revenue. The court let their fiduciary duty claim against the general partner proceed past a motion to dismiss and dismissed the same claim against the individual defendants. As of the court’s August 2025 ruling, the case was at the pleading stage, and the court had made no findings of wrongdoing. Read more: EB-5 redeployment.
4. The project was worth less than the offering said
In a 2025 California Court of Appeal decision (No. B338133, unpublished), an investor alleged that project land represented as worth $22 million was worth about $660,000. He lost anyway. The court held his claims were time-barred because a 2017 notice of an almost two-year delay should have prompted him to investigate. Inflated numbers also show up in SEC cases. The SEC alleged one California design center developer gave investors a fake lease that overstated the space five-fold (Litigation Release 23944). The defendants later consented to final judgments without admitting or denying the allegations (Litigation Release 24366). Read more: EB-5 project overvaluation.
5. Your immigration lawyer had a stake in the project
Some immigration lawyers took commissions from regional centers or, according to SEC complaints filed in 2018, controlled the projects they recommended or secretly owned the regional center behind them. In the 2019 case, the Ninth Circuit held that a lawyer’s failure to disclose regional center commissions was a material omission. In a 2018 Seventh Circuit decision, 883 F.3d 716, the court held that a lawyer’s conflicts could not be waived even though the client signed a waiver. Read more: EB-5 immigration attorney conflicts.
6. The promised collateral protection was overstated
In a 2024 Court of Appeals of Virginia decision (Record No. 0523-23-4, published), a brochure said investors had a “first-ranking mortgage” on the project’s collateral, and the project’s principal testified that statement was untrue, while denying that he made the marketing statements at issue. The investors still lost because their fraud claims were time-barred: the court held that the offering memorandum they signed in 2012 and 2013 put them on notice. The Supreme Court of Virginia refused their appeal (Record No. 241117). Read more: EB-5 foreclosure and investor rights.
7. An agent sold you the investment for a commission
Migration agents and other finders were frequently paid by regional centers for each investor they brought in. In the 2019 case, the Ninth Circuit noted that “Payment of a commission is an EB-5 industry practice.” In 2015 the SEC brought what it called “the first against brokers handling investments in the government’s EB-5 Immigrant Investor Program,” against two related firms paid an average of about $35,000 per investor out of the investor’s own administrative fee. The firms settled without admitting or denying the SEC’s findings. Read more: EB-5 migration agents and unregistered brokers.
Who can be held responsible?
In the cases above and others, claims have been brought against:
- the regional center (the Vermont case) and the general partner of the investment fund (the North Carolina case);
- developers and their related companies, as in the SEC’s Queens case, where the SEC alleged that companies owned by the developer acted as developers and contractors and received investor money; the developer and his company later consented to a final judgment without admitting or denying the allegations (Litigation Release 26067);
- individuals who controlled the entities, such as the “control person” charge the SEC brought in 2017 against a Chicago immigration attorney (Litigation Release 23866), who in 2022 consented to a judgment without admitting or denying the SEC’s allegations (Litigation Release 25328);
- lawyers, agents and brokers paid to bring in investors (the 2019 Ninth Circuit case; the 2015 broker case);
- financial firms connected to the money, as in the ski resort settlement.
Two obstacles appear in these cases. First, a claim may belong to the partnership rather than to each investor. In the 2019 Fourth Circuit case, the district court dismissed the investors’ fiduciary duty claims because “any alleged injury that was suffered was suffered by the Limited Partnership and not by the [p]laintiffs directly,” and the Fourth Circuit affirmed. Second, a defendant may be beyond a given court’s reach. In the ski resort’s investor class action, the federal court in Miami dismissed the escrow bank for lack of personal jurisdiction (S.D. Fla. No. 1:16-cv-21575, ECF 287).
What protections did Congress add in 2022?
The EB-5 Reform and Integrity Act of 2022 (Pub. L. 117-103, div. BB) rewrote the regional center program. Provisions that bear on investors, all in 8 U.S.C. § 1153(b)(5), include these.
Offering documents filed with USCIS must refer, as appropriate, to material risks and to conflicts of interest involving principals and attorneys. They must also refer to fees paid to agents, finders and broker-dealers (subparagraph (F)). Regional centers must file annual statements accounting for investor capital and fees, and must give an investor a redacted copy within 30 days of a request (subparagraph (G)). Promoters, including migration agents, must register with USCIS, and each regional center investor petition filed under the new law must include an investor-signed disclosure of fees and other compensation the regional center or new commercial enterprise knows were paid, or will be paid, in connection with the investment, including to agents and finders (subparagraph (K)). Each new commercial enterprise must hold investor money in a separate account, and must retain an independent fund administrator who approves every transfer, unless an exception applies (subparagraph (Q)).
Subparagraph (M) protects good-faith investors after USCIS terminates a regional center or debars a project entity. An investor’s petition or conditional status can remain valid if, within 180 days of notice, the project associates with an approved regional center or the investor makes a qualifying investment elsewhere, with different steps for a debarred enterprise. Investors who knowingly took part in the misconduct get no protection. The USCIS Policy Manual, as posted October 27, 2026, applies these rules to petitions filed before the 2022 law as well. Under (M), USCIS may count funds an investor recovers from claims against third parties as the investor’s capital.
Subparagraph (J) creates an “EB-5 Integrity Fund.” It is funded by annual regional center fees, a fee on each regional center petition, and certain fines and late-payment penalties, and the statute directs it to investigations, audits and site visits. Compensating investors is not among the uses the statute lists.
Investment amounts changed too. As of October 2026, the statute sets $1,050,000, or $800,000 for targeted employment areas and infrastructure projects, and provides for automatic adjustment beginning January 1, 2027. The 2025 edition of the federal regulation still printed older figures of $1.8 million and $900,000 from a 2019 rule, but a federal court vacated that rule in 2021 (N.D. Cal. No. 20-cv-09263).
Court or arbitration?
EB-5 offering documents can contain arbitration clauses. In a 2025 Eleventh Circuit decision, 131 F.4th 1295, the investors’ purchase agreement had one, and a developer whom the lawsuit accused of diverting investor money moved to compel arbitration of an investor’s lawsuit. The district court denied the motion because the developer was “not a signatory to the Purchase Agreement and, therefore, to the arbitration clause,” and sent the case back to state court. The Eleventh Circuit dismissed the developer’s appeal for lack of jurisdiction.
Does suing affect my immigration case?
USCIS has addressed recoveries in one setting. After a regional center is terminated or a project entity is debarred, the statute and the USCIS Policy Manual (as posted October 27, 2026) say funds an investor recovers from claims against third parties may count as investment capital (8 U.S.C. § 1153(b)(5)(M)(iii)(II)(bb)). How a lawsuit or a recovery would affect your own petition is a question for your immigration attorney, before anything is filed.
Frequently asked questions
Is my EB-5 investment protected by the securities laws if I invested from abroad?
It can be. The 2022 law gives the United States jurisdiction over securities offered or sold by any regional center or party associated with one (8 U.S.C. § 1153(b)(5)(I)). Where a claim can be brought still depends on the facts.
Can I recover my money through the SEC?
Sometimes, in part. In an SEC case over a Chicago hotel project, the court allowed investors’ frozen principal to be returned early in the case, but investors were left with more than $11 million in unrefunded administrative fees and a fund of about $1.47 million to share, according to the court-approved distribution plan notice (N.D. Ill. No. 13-cv-00982). An SEC judgment is not a promise of repayment.
Do I need to read my offering documents now?
Yes, and get them translated if you need to. In the 2019 Fourth Circuit case, the court held investors could not justifiably rely on statements their offering documents contradicted. In the 2024 Virginia case, the court held that the offering memorandum the investors signed started the clock on their fraud claims.
What to do now
- Gather the offering documents: the private placement memorandum (PPM), subscription agreement, limited partnership agreement and any translations.
- Save marketing materials, seminar slides and messages from agents, the regional center and any lawyer who recommended the project.
- Write down what you were told, by whom and when.
- Keep annual statements, fund administrator reports and USCIS notices, and request the regional center’s annual statement if you do not have it.
- Talk to your immigration counsel about I-526 and I-829 effects before taking action.
- 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.
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