Overseas EB-5 “Commissions”: The SEC Elephant in the Room

Over the course of the six years since the USCIS graciously approved American Ventures Solutions as an EB-5 Regional Center, I’ve witnessed competitors raise more EB-5 money in a single trip to China than I can raise in six months of globetrotting.  So why?  Are their EB-5 projects better than mine? Nope.  (Well, to be fair, our projects involve rock mining and heavy trucking in the boonies; shiny skyscraper models play better visually…)   Could it be the U.S. operating partners have a better track record and are more reputable than mine? No way, not even CLOSE.   So then: WHY?

The reason for this glaring discrepancy in AVS’ comparative ineffectiveness in EB-5 fundraising boils down to a single issue: AVS plays by the both the letter and the spirit of U.S. securities law.  While the vast majority of EB-5 Regional Centers depend on foreign migration agents who are neither registered securities broker/dealers nor qualified immigration attorneys for the bulk of their investors, we’ve done it the hard way, one investor at a time.   Working exclusively with leading global migration firms who transparently charge investors for the legal services associated with the very complex emigration process, we don’t pay commissions to migration agents.  U.S. law clearly prohibits ANY such payments to anyone who is not a licensed securities broker dealer…whether in the U.S. or anywhere else in the world.

Our law firm partners worldwide – reputable industry leaders in their juridictions (and I’d name some here but they’d kill me because like ALL great law firms, they value discretion more than anything) – refer investors to us not for a kickback..but because their clients MATTER to them.  They want to make sure their client selects the right EB-5 investment.  They don’t want thinks to go wrong for the client’s family.  And I should add that by behaving ethically, our foreign law partners invariably make substantially more on the collateral legal services they provide to emigrating clients  than they ever would receiving an unlawful EB-5 commission.

Therein, folks, appears this MASSIVE elephant in the room:  for the past few years, we’ve seen U.S. lawyers and migration agents sanctioned by the SEC for receiving unlawful commissions for EB-5 referrals.  But everyone has conveniently forgotten the $1M settlement accepted by the SEC when it was prosecuting one of the largest and oldest EB-5 Regional Centers for the act of paying finders fees to unlicensed broker/dealers.  Hiding behind a simplistic, self-serving analysis which boils down to “well, the SEC doesn’t have jurisdiction overseas…”, the bulk of the EB-5 sector continues the practice of kicking back referral fees despite historical SEC prosecution against such actions.  The purpose behind the law is to create a fiduciary responsibility for those referring an investment to someone, to insure that the referral isn’t prompted by “under the table” payments for the referral.  Whether the money is handed over under the table, over the table, or wired from a third country, the great majority of U.S. EB-5 purveyors are, at best, purposefully avoiding the obvious intent of U.S. securities laws; at worst, they are deliberately repeating what the SEC has already condemned and sanctioned in at least one published EB-5 Regional Center prosecution.

It wasn’t easy, but Elon Musk found a way to sell Tesla’s directly to the consumer. It hasn’t been easy, but AVS has found a way to offer our EB-5 investment opportunities directly to investors and through their bona fide, trusted, and truly disinterested legal counsel, without hidden fees, kickbacks, or games.  AVS offers EB-5 investors TRUE transparency, not obfuscated efforts to circumvent that which the SEC has already condemned.

AVS will never compromise true transparency to secure more EB-5 investors faster.