EB-5 Investment Risks - How Investors Can Protect Themselves

Published Date: September 5, 2025

Part 5: Fraud & Mismanagement in the Industry

Why Fraud and Mismanagement Still Matter in EB-5

Even with today’s stronger regulations, EB-5 investors continue to face real exposure when projects are poorly managed or operated by groups that lack accountability. Over the years, we have spoken with families who were drawn to attractive marketing materials only to learn later that the project never secured proper permits, failed to follow its business plan, or misused investor funds. These situations don’t just create financial loss; they can jeopardize an investor’s entire immigration process.

Part 5 of the guide was created to help you recognize the warning signs early. By understanding how reputable projects organize their finances, document job creation, and maintain compliance with the Reform and Integrity Act (RIA), you can avoid the pitfalls that have harmed investors in the past. Our goal is to give you a realistic, experience-based view of how to protect your investment and keep your immigration goals on track.

The EB-5 program allows qualified investors to pursue U.S. permanent residency through a job-creating investment in the United States. The most significant threats have come from fraud and poor project oversight. When a Regional Center lacks strong management or when operators cut corners, investors can face financial loss and delays that put their immigration plans at risk.

The following are the top risks we see most often, along with safeguard initiatives investors should insist on.

1) Fraudulent Projects and Misrepresentation

Red flags include exaggerated or falsified:

Projections of job creation
USCIS compliance claims
Construction timelines
Financial stability

Things to check before investing

Verified USCIS approval for the Regional Center through Form I-956, along with documentation showing full compliance with the Reform and Integrity Act. 🔗 USCIS+1
Make sure that USCIS has approved the project offering, has received approval Form I-956F, or clear proof of filing; understand what constitutes “approvals” in reality. USCIS
Independent job-creation analysis, not just marketing decks.
An operating or completed business, not just a plan based on what might happen later.

Example The Canopy by Hilton – Minneapolis

Example: The Canopy by Hilton – Minneapolis already has USCIS I-956 approval (Regional Center) and approved I-526E petitions. The hotel is now complete, operating, and revenue-generating, with over 616 jobs created and verified by USCIS-approved reports, which exceeds USCIS requirements by 300%. Recent investors have received approvals in as little as 12 to 24 months, with our most recent investor on track to receive approval in less than 12 months.

Why this matters: The RIA gives USCIS authority to audit regional centers at least every five years and to take action against non-compliant operators, making verifiable compliance and clear documentation more critical than ever.

2) Mismanagement of Funds

Not all failures are fraudulent. Many projects falter because capital is diverted or used in ways that don’t create EB-5–qualifying jobs.

Safeguards

Independent escrow and third-party fund administration
A transparent capital stack showing exactly where EB-5 sits
Collateral or other security, where available under the structure
Regular, auditable financial reporting

Example

The Canopy by Hilton was financed through a $61.35M capital stack supported by $13.9M in government-awarded tax credits. As an added assurance, the EB-5 investment is protected by secured assets by both Sherman Associates and its CEO and founder, George Sherman, to safeguard every EB-5 investor. Funds are monitored through third-party oversight and escrow protections, ensuring capital is used exactly as intended. 🔗 InternationalCreativeCapital.com

3) Unapproved or Non-Compliant Regional Centers

Some entities market themselves as “regional centers” without USCIS designation, or they fail to maintain compliance. Investors tied to these projects risk denials and delays.

What to demand

Regional centers with active USCIS approval and RIA reauthorization.
Documented investor approvals already granted.
Evidence of annual audits and participation in the EB-5 Integrity Fund.

Example: ICC has been a USCIS-approved Regional Center since 2014 and was reauthorized under the EB-5 Reform and Integrity Act (RIA) in 2023. The Canopy by Hilton already has I-526E investor approvals, showing USCIS recognition of both the project and the center’s compliance.

Note: USCIS reports hundreds of approved regional centers nationwide, but being “approved” does not necessarily mean a project is low risk. Due diligence is still essential.

4. Lack of Transparency

Some projects provide little or no reporting on how funds are used or whether jobs are being created, leaving investors in the dark until it’s too late.

What to Look For:

Quarterly investor updates, audited financials, and job creation reports.
Open communication and visibility throughout the EB-5 process.
A culture of transparency – not secrecy.

Example: ICC offers quarterly updates, audited financials, and verified job creation records accepted by USCIS. In the Canopy by Hilton Hotel investment, the property is already operating and generating revenue. It has created over 600 jobs, 300% above USCIS requirements, so investors are not relying on future construction or projections.

On concurrent filing

EB-5 investors in the U.S. may file the I-485, green card application, together with the I-526E, the investor petition, and request an EAD/AP. However, processing times vary, but we are seeing a 60–90-day timeline.

5) Economic & Market Risks

Even legitimate projects can struggle due to weak planning or downturns. If jobs aren’t created, investors may not meet EB-5 requirements.

Even well-intentioned projects can fail if they:

Cannot complete construction
Fail to generate sufficient revenue
Fail to create jobs

How to reduce this risk

Choose completed/operating assets where possible
Look for projects in areas with strong, proven demand
Seek capital stacks that are not overly dependent on EB-5 fundraising

Example

The Canopy by Hilton – Minneapolis sits in one of the strongest locations downtown, surrounded by major attractions such as U.S. Bank Stadium, the Guthrie Theater, and the Mill District riverfront. Because the hotel is already open and running, the jobs required for EB-5 eligibility have been created, reducing reliance on future construction or projections. Its bridge-loan structure and stand-alone investor arrangement also shield investors from delays that can arise when projects depend on raising additional capital. 🔗 InternationalCreativeCapital.com.

How EB-5 Investors Can Protect Themselves

EB-5 requires that investments be “at risk,” but that does not mean investors should accept reckless or unnecessary risk. By focusing on projects that are transparent, completed, and compliant, investors can significantly reduce exposure to fraud or mismanagement.

Prioritize projects with:

Completed construction or demonstrably near-term operations
Job creation exceeds required levels and is fully documented
Third-party fund control and clear disbursement conditions
Documented USCIS compliance: I-956 for Regional Center; I-956F for the offering; timely I-956G USCIS+2USCIS+2
Transparent, regular reporting, independent oversight, and full financial clarity
Secured capital stack with collateral and guarantees.

Example Summary: Canopy by Hilton – Minneapolis Mill District

The Canopy by Hilton – Minneapolis Mill District is situated in one of the strongest downtown districts, steps from U.S. Bank Stadium, the Guthrie Theater, and the Mill District’s major attractions, ensuring steady year-round demand.
The hotel is fully operational, generating revenue, and has already created the qualifying EB-5 jobs.
Its bridge-financing structure and independent investor model also reduce exposure to fundraising delays, giving investors added protection and a more reliable path through the EB-5 process.

Final Thoughts

EB-5 fraud, false claims, and poor oversight still appear in the industry, but investors can avoid these problems by applying careful due diligence and relying on the stronger protections built into the RIA such as mandatory audits, the Integrity Fund, and enforceable penalties.

Before investing, ask:

Has the project already created jobs? If so, can you review the documentation?
Ensure the Regional Center maintains an active USCIS designation and meets all RIA requirements, including I-956/I-956G reporting, audits, and Integrity Fund fees.
What protections and oversight are in place for investor funds, such as escrow, third-party administration, or other financial controls?
Do they have verifiable USCIS project approvals that directly relate to the current offering?
Does the pro forma depend on unrealistic fundraising targets or overly optimistic projections?

EB-5 offers a powerful path to U.S. permanent residency. When investors select a solid project and conduct thorough due diligence, they can protect their funds while advancing long-term immigration goals.

Top 5 EB-5 FAQs

1. How can I tell whether an EB-5 project is safe?

A safe project generally has:

Construction completed
Jobs already created and documented
Third-party fund administration
Compliance by USCIS under the Reform & Integrity Act

The risk is higher when a project relies heavily on future fundraising or construction.

2. Can an EB-5 project be USCIS-approved yet still fail?

Yes. That approval means it has satisfied USCIS’s compliance requirements. USCIS may approve a project, yet it can be a money loser or fail to create jobs, so job-creation evidence and financial due diligence are critical.

3. Does investing in a TEA make my EB-5 safer?

No. TEA status only reduces the minimum investment amount to $800,000. The risk is primarily related to job creation, construction progress, capital structure, and developer experience, rather than TEA location.

4. Do completed or operating projects reduce my risk?

Yes, by a wide margin.

When a project is already built, generating revenue, and has documented job creation, investors are not relying on future construction or uncertain projections. This dramatically lowers EB-5 risk and provides far more stability than a project still in development.

5. What are some things I should ask before selecting an EB-5 project?

Ask for:

Evidence of new jobs being created
Meeting USCIS regional center standards
Securities held by an escrow or a third party
Reports on finances and updates every three months
Proof of getting the investor’s consent

If a developer refuses to provide these documents, consider it a warning sign.

In case you missed earlier parts of this series, you can catch up here:

🔗 USCIS Backlogs and Retrogression

🔗 Complexity of Source-of-Funds Documentation

🔗 Project Risk and Job Creation Requirements

🔗 Policy Changes and Regulatory Shifts

References:

🔗Approved EB-5 Immigrant Investor Regional Centers
🔗 EB-5 visa
🔗 EB-5 Reform and Integrity Act of 2021
🔗 USCIS – Concurrent Filing of Form I-485
🔗 USCIS – EB-5 Immigrant Investor Process
🔗 USCIS – EB-5 Integrity Fund

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Top EB-5 Investment Risks and How Investors Can Protect Themselves