Recent EB5 Related Litigation

Recent litigations over EB5 investment are on the rise. Investors are often bringing litigations against EB5 projects due to failure to obtain either conditional or permanent residency or face wiping out of their invested fund due to possible illegal acts.

Recent Cases:

In January 2017, two cases were filed by Chinese EB-5 investors in United States District Court, W.D. Washington. Seattle Division, against U.S. Bank National Association; Quartzburg Gold, LP; ISR Capital, LLC; Idaho State Reginal Center, LLC; and Sima Muroff, alleging that defendants disbursed investors’ escrow fund before the agreed conditions, such as approval of petition, were met.

In November 22, 2017, a group of Chinese EB5 investors brought class action in Chinese Investors Vs. Terry Mcauliffe, Anthony Rodham and others in Fairfax County, Virginia court, claiming that they were swindled out of about $560,000 per investor as a result of misrepresentations made by Terry McAuliffe and Anthony Rodham who face a $17 million fraud lawsuit from Chinese investors in GreenTech Automotive, an electric car company that appears to be struggling to survive.

On November 30, 2017, a group of Chinese Eb-5 investors filed a class action against the American Dream Fund LLC and Henry Global Consulting in the Federal District Court for the Central District of California, claiming several causes of actions, including fraud, breach of fiduciary duty, breach of contract, accounting, etc. The case involved 60 Chinese nationals who invested in the SLS Hotel & Casino Las Vegas are suing the casino resort, claiming that none of the promises made to them during its development phase materialized. Currently, none of the 60 investors have received their permanent resident cards. Some have only received temporary resident cards. On an investment perspective, the claimants also argue that SLS Las Vegas will be violating a requirement in the EB-5 Program if it pushes through with the sale of the hotel.

Most causes of actions of such cases are federal securities fraud, breach of fiduciary duty, breach of contract and others.