Risk and compliance

Securities fraud

Also called investment fraud, EB-5 investment fraud.

Securities fraud in EB-5 is the offer or sale of an interest in a new commercial enterprise by means of an untrue statement or an omission of material fact, whether about the project, the returns or the immigration outcome, and it is the failure that can take the investor's money and immigration status together.

What it decides

The statute assumes these offerings are securities: 8 U.S.C. 1153(b)(5)(I)(i)(I) gives the United States jurisdiction, including subject matter jurisdiction, over the purchase or sale of any security offered or sold, or any investment advice provided, by a regional center or any party associated with one. The immigration consequence sits in 8 U.S.C. 1153(b)(5)(O): where a petition or benefit was predicated on or involved fraud, deceit, intentional material misrepresentation or criminal misuse, the Secretary shall deny or revoke it and may terminate the permanent resident status of the investor and of the spouse and children, and a knowing participant is barred from the program permanently. The 180 day rescue in 1153(b)(5)(M) is withheld from an investor the Secretary believes was a knowing participant. The joint SEC and USCIS alert, which USCIS now carries as archived and out of date, lists the warning signs: a promised or guaranteed visa, a guaranteed return or an offering said to carry no risk, returns that stay high whatever the market does, unregistered offerings, unlicensed sellers, and layers of companies run by the same individuals.

Governed by 8 U.S.C. 1153(b)(5)(I)(i)(I), (M)(vi) and (O), read verbatim from the govinfo copy of the 2024 edition of title 8. Joint SEC and USCIS Investor Alert, Investment Scams Exploit Immigrant Investor Program, release date 1 October 2013, last reviewed 1 October 2013. That alert is good for the warning signs and for nothing else: USCIS serves it under /archive behind a banner saying the information is out of date, it predates the 2022 Act, and the SEC copy on investor.gov is gone, so no clause of current law should be sourced to it.

Related terms

Securities and Exchange CommissionThe Securities and Exchange Commission is the five member federal agency established by 15 U.S.C. 78d that enforces the federal securities laws over EB-5 offerings alongside USCIS and independently of it, and neither its rules nor its silence amounts to approval of any offering.
Private placement memorandumA private placement memorandum is the disclosure document an EB-5 issuer gives an investor before subscription, setting out the deal terms, the people behind it, the fees taken out of the money and the ways the money can be lost, and since 2022 a regional center must file it with USCIS along with the rest of its offering documents.
Guaranteed returnA promise that the investor will earn a set return, or will get the principal back, which the EB-5 statute strikes out of the capital that counts, to the extent of the amount guaranteed.
Good faith investor protectionGood faith investor protection is the rule at 8 U.S.C. 1153(b)(5)(M) that keeps an EB-5 petition or conditional residence alive after USCIS terminates the regional center or debars the new commercial enterprise or job creating entity, provided the investor cures within 180 days of being notified and was not a knowing participant in the conduct behind it.
Due diligenceDue diligence in EB-5 is the investor's own independent check on the project, its business plan, its job model, its sponsor and its exit, and it answers a different question from whether the petition qualifies, because no government agency endorses or approves the offering behind a designated regional center.

Checked against primary sources on 10 August 2026. Back to the glossary