The “Repayment Guarantee” Trap: Legal Risks in EB-5 Investment Promises
In EB-5 investment immigration, promises of “repayment guarantees” or “free property” may seem reassuring but directly violate the...
Under EB-5 regulations, all qualifying investments must be placed “at risk” — meaning there can be no guaranteed return of capital. If a regional centre or project sponsor offers a direct repayment guarantee to an investor, the investment fails the core eligibility test and will be deemed invalid by USCIS.
For example, a promise such as “If repayment is not made, we will return the full $800,000” or “Failure to repay will be compensated with a property transfer” effectively reduces the “at-risk” investment to zero. In USCIS terms, the guaranteed amount is subtracted from the total investment — leaving nothing that qualifies under EB-5 rules.
The only lawful form of guarantee permitted is from the regional centre to the New Commercial Enterprise (NCE) — not directly to the individual investor. Understanding this distinction is a baseline legal requirement when structuring any EB-5 project.
Hidden Agreements: The “Shadow Contract” Tactic
Because overt guarantees are prohibited, some schemes conceal them in private agreements.
“Drawer agreements”: No repayment terms appear in documents submitted to USCIS, but a separate, private contract promises repayment or property in case of default.
Family proxy agreements: The guarantee is signed with a relative of the investor, creating an illusion of separation from the EB-5 transaction.
In both cases, the intent is to mislead federal authorities by omitting material investment terms — an act that may constitute conspiracy to defraud the US government.
The Consequences: Immigration Fraud Is Permanent
Under US law, any immigration benefit obtained through fraud is grounds for denial, revocation, and criminal prosecution.
Investors caught in such arrangements risk having their permanent residence revoked.
Even naturalised citizens can be stripped of US citizenship if the fraud is discovered later.
Crucially, investors are not treated purely as victims; signing a concealed or misleading agreement makes them co-conspirators in the eyes of the law.
Why Some Developers Still Offer Guarantees
Legitimate EB-5 developers work with experienced securities and immigration lawyers who know repayment guarantees are prohibited. When a project still offers such terms, it often signals:
Severe financing difficulty — the project cannot attract investors without “sweeteners.”
Lack of respect for legal compliance — relying on investors’ fear of jeopardising their immigration status to avoid whistleblowing.
In short, it’s a calculated gamble that the investor will remain silent, even if the deal turns sour.
The Investor’s Dilemma: When the Guarantee Becomes a Threat
When the investment term ends and the developer defaults — failing to repay or transfer the promised property — the investor faces a lose-lose choice:
Sue: Which may require revealing the hidden agreement and admitting to participation in an illegal arrangement.
Stay silent: Losing the investment entirely to avoid immigration consequences.
The “Broker Guarantee” Variant
A more deceptive variation involves brokers or migration agents offering personal guarantees on EB-5 investments. In practice, this is highly irregular — genuine brokers would not assume direct liability for project performance unless:
They are, in fact, the actual project principals; or
They have undisclosed control over the investment vehicle.
Either scenario raises further compliance and disclosure issues, and if exposed, could involve multiple parties in fraud and conflict-of-interest violations.
Final Word: No Green Card Is Risk-Free
The EB-5 programme is designed with inherent investment risk — this is not a flaw but a deliberate feature of US immigration law. Any pitch that offers “principal protection,” “free property,” or “guaranteed returns” is signalling non-compliance.
Investors tempted by such offers risk far more than financial loss; they may jeopardise their immigration status, future citizenship, and legal standing. In EB-5, as in all long-term immigration strategies, compliance isn’t just advisable — it’s essential.
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