October 24, 2020

Volume X, Number 298

Advertisement

October 23, 2020

Subscribe to Latest Legal News and Analysis

October 22, 2020

Subscribe to Latest Legal News and Analysis

October 21, 2020

Subscribe to Latest Legal News and Analysis

“The Cold Never Bothered Me Anyway!” SEC Again Uses Its Power To Freeze An Alleged EB-5 Scam

Like Elsa, the Princess in Disney’s classic Frozen, once again the Securities and Exchange Commission (SEC) has utilized its power to freeze. In this case, the freezing of assets. In what has become an increasingly common tactic, the SEC successfully sought to freeze assets of several individuals and corporate entities in a complaint it recently brought alleging fraud in connection with securities offerings for projects under the EB-5 immigration program. As we have reported previously, particularly in the EB-5 space, the SEC has in recent years utilized the asset freeze as an enforcement tool. The EB-5 program allows foreign investors to apply for green cards in exchange for a minimum $500,000 investment in a job-creating enterprise.  

In its case against Edward and Jean Chen, both residents of Arcadia, California, the SEC alleged that the Chens engaged in a “staggering” misappropriation of investor funds – diverting to themselves at least $8.6 million of the $9.5 million they raised from investors in one project, and another $3.5 million of investor funds from a second project. Rather than use the investors’ money for the EB-5 approved projects, the SEC claimed that the Chens took it for their own use, purchasing numerous foreclosed residential real estate properties.

Last week, Judge Anderson in the US District Court for the Central District of California agreed with the SEC, “that good cause exists to believe that, unless restrained and enjoined by order of this Court, Defendants will dissipate, conceal, or transfer assets which could be the subject to an order directing disgorgement or the payment of civil money penalties in this action” and froze 16 separate bank accounts controlled by the Chens. In addition, Judge Anderson appointed a receiver to take control of the several related corporate entity defendants the Chens controlled and also ordered the Chens and the corporate defendants to submit an accounting of all property valued at $5,000.00 or more.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume VII, Number 284
Advertisement

TRENDING LEGAL ANALYSIS

Advertisement
Advertisement

About this Author

Adam Sisitsky, Mintz Leving Law Firm, Boston, Corporate and Litigation Law Attorney
Member

Adam is an experienced trial attorney and litigator whose practice encompasses a wide range of matters focusing on business and securities litigation, internal investigations, and government enforcement actions. Adam represents corporations, officers, directors, accountants, and other individuals in SEC investigations and enforcement proceedings, as well as in civil litigation. He routinely counsels public and private companies and others in matters involving compliance issues, including matters arising under the Foreign Corrupt Practices Act (FCPA).

...
617-348-1689
Douglas Hauer, Corporate Immigration Attorney, Mintz Levin, Immigration EB-5 Financing Securities & Capital Markets Israel
Member

Doug is a noted authority on the EB-5 investor visa program, which gives developers a path for securing capital for real estate, hospitality, and infrastructure projects. His fluency with the program makes Doug an essential resource for companies looking for financing from offshore sources. International entrepreneurs and companies also rely on him when launching a business within the borders of the US. He is ideally positioned to advise clients on immigration and corporate law issues that arise in doing business in the US. 

Doug is a Member in the firm's Corporate & Securities Practice and Immigration Practice. On the corporate side, he focuses on private offerings and related securities work. Doug serves as counsel to developers and businesses seeking capital from offshore sources including through the EB-5 investor visa program. He also works with entrepreneurs, new ventures and established businesses on setting up operations in the US, providing advice on entity formation and on the legal risks of expanding into the US. In the immigration law space, Doug represents corporate, institutional, and individual clients in routine and complex immigration matters. He has in-depth experience advising companies on the immigration consequences of corporate restructuring, as well as representing clients in immigration-related investigations involving the US DOL, USCIS and FBI. Doug frequently speaks, writes and is often quoted in the press about immigration, corporate and securities law, and foreign investment.

617-348-3044
Advertisement
Advertisement