Misuse of EB-5 investor funds or fraud are often the result of conflicts of interest. Thus, it is vital when the investment is structured that certain investor protections are implemented to mitigate the risks involved with any conflicts of interest.
Investors protections are often made with the involvement of third-party fiduciaries.
Investment due diligence should determine if the new commercial enterprise (NCE) or regional center and job-creating entity (JCE) are under common control; and if they are, what investor protections exist. To properly make this determination, there should be a review of the the ownership, the structure of the NCE and JCE, the subscription agreement, the escrow agreement, fund administration, and any other third-party agreements that may exist.
Investors should also proceed with caution and consider alternatives if their immigration lawyer also represents the regional center that sponsor the investment project. Investors will also want to know if their lawyer is receiving any fees from a regional center.