The two most notorious EB-5 fraud cases are Jay Peak in Vermont and the Chicago Convention Center in Illinois, and both ran on one trick: capital raised for a project that could never produce the promised jobs, then spent somewhere else. At Jay Peak the SEC alleged in April 2016 that the resort owner and its president had run a Ponzi like scheme across a chain of limited partnership offerings, misusing more than $200 million of the more than $350 million raised from over 700 investors in at least 74 countries. In Chicago the agency froze more than $145 million in February 2013 after a promoter sold over 250 investors a hotel and convention complex whose building permits did not exist.
Neither scheme was clever. Both were sold for years to investors who had lawyers and glossy offering documents.
Jay Peak: eight raises, one hole in the middle
Ariel Quiros and William Stenger sold interests in Jay Peak Resort, in the Northeast Kingdom of Vermont, through a chain of offerings. Each phase was its own limited partnership attached to a hotel, a water park or another piece of resort infrastructure. The SEC's complaint described money from later phases plugging shortfalls in earlier ones, which is the difference between a Ponzi like scheme and ordinary mismanagement. A final raise for a biotechnology plant called AnC Bio Vermont took in tens of millions and produced almost nothing on the ground.
A federal court appointed a receiver, who took over the resort and eventually sold it. Settlements with third parties that had handled the money returned a substantial sum to the estate, so the loss was not total for everyone. Years were gone regardless.
For many of those investors the immigration damage outran the financial damage. Where capital disappears before the enterprise creates jobs, there is nothing to document on Form I-829, the petition that removes conditions from a two year green card. The EB-5 Reform and Integrity Act of 2022 later gave good faith investors a 180 day window to cure their position after a regional center is terminated or a project is found to have committed fraud. Jay Peak investors had no such rule to lean on.
Chicago Convention Center: a fraud a phone call would have exposed
Anshoo Sethi was 29 when the SEC shut down his venture, A Chicago Convention Center, sold through a regional center he controlled. More than 250 investors, most of them from China, sent over $145 million of investment capital plus $11 million in administrative fees. The SEC filed an emergency action in February 2013 and froze the accounts before the capital was deployed, and the bulk of the $145 million went back to investors. Fee money was largely spent. Sethi later pleaded guilty in federal court.
Now consider how cheap the detection would have been. The city had issued no building permit for the site. Hotel brand agreements the offering leaned on had either lapsed or never existed at all. Anyone searching for an EB-5 visa attorney in Chicago because a local sponsor has approached them should hire someone who will place those calls, and should refuse counsel recommended by the project itself.
Why resort deals keep appearing in enforcement files
People searching for terms such as peak mammoth EB-5 or Jay Peak EB-5 are usually trying to work out whether a mountain resort raise ended badly. Resort and hospitality projects appear often in EB-5 enforcement history for structural reasons. They come in phases, so a sponsor can keep raising after the first phase disappoints. Seasonality explains away weak revenue for a year or two. And the photographs sell.
Four patterns that repeat across every case
- A promised return or a promised repayment date. Capital must remain at risk under 8 CFR 204.6, the EB-5 eligibility regulation. A guarantee of principal defeats that requirement, and a sponsor willing to offer one has told you what else it is willing to do. Our page on EB-5 guarantees and insurance sets out the narrow arrangements that survive review.
- Claimed government blessing. USCIS approval of a project filing on Form I-956F confirms the paperwork meets program requirements. It says nothing about whether the developer is honest or the numbers hold. The SEC keeps a standing investor alert about claims that it has approved an offering because the line works so well on newcomers.
- Fees out of proportion to the work. The $11 million in administrative fees sat alongside the Chicago raise, separate from the investment capital, and the SEC alleged more than 90 percent of it had already been spent. Since 2022, promoters must register with USCIS on Form I-956K and their compensation has to be disclosed. Ask for that number in writing.
- One person over the bank account. Where the developer and the regional center principal are the same individual, and that individual signs on the account, nothing stands between your wire and their spending. Escrow that releases on the sponsor's own instruction is not escrow.
What the 2022 Act changed, and what it left untouched
Oversight was rebuilt. Regional centers now file annual statements on Form I-956G, submit to a USCIS audit at least once every five years and pay into an EB-5 Integrity Fund, at $20,000 a year for centers with more than 20 investors and $10,000 for smaller ones. Principals attest to their background on Form I-956H. Project documents go to USCIS on Form I-956F before any investor files.
None of that tells you the project will work.
Program authorization runs to 30 September 2027, and petitions filed by 30 September 2026 are grandfathered against a lapse, which manufactures its own sales pressure. Urgency is a tool. Read how fund misuse plays out for your green card and your money before you let a filing deadline make the decision for you.
Run these checks before the wire leaves
- Pull the permit record from the municipal building department yourself, searching by street address.
- Search federal court records for the principals by name, and ask the sponsor directly about prior litigation.
- Require audited financial statements for the job creating entity rather than a summary prepared by the sponsor.
- Confirm how much senior debt sits ahead of the EB-5 loan, and who holds it.
- Read the redeployment clause in the subscription agreement and check where your capital is allowed to travel.
A structured version of this work sits in our beginner checklist for EB-5 due diligence, and the interview script worth using on a sponsor is in questions to ask a regional center or developer.
If you already suspect something
Move fast and in writing. Send the regional center a written demand for the current use of proceeds and the job creation report, dated, with a deadline. Report suspected immigration benefit fraud through the USCIS fraud reporting channel, and take securities questions to the SEC, whose record in this program is covered in how US regulators police EB-5 fraud. Investors who wait politely for the next quarterly update are usually the ones who recover least.
One more lesson from both cases. The investors who came out best were the ones who had their own lawyer reading the documents, paid by them, answerable to nobody in the deal.