USDOJ: Armenian Citizen Pleads Guilty for His Role in For-Profit U.S. Visa Fraud Scheme

 

Via USDOJ:

Armenian Citizen Pleads Guilty for His Role in For-Profit U.S. Visa Fraud Scheme

A man residing in Glendale, California, pleaded guilty today to conspiracy to unlawfully bring in aliens and visa fraud for his role in a multi-year visa fraud scheme that brought Armenian citizens into the United States for profit.

Hrachya Atoyan, 32, pleaded guilty before U.S. Magistrate Judge Sanket J. Bulsara in the Eastern District of New York.  Sentencing is scheduled for Feb. 20, 2020, before U.S. District Judge Margo K. Brodie.  According to the indictment, Atoyan allegedly participated in a transnational network of co-conspirators who engaged in a widespread visa fraud scheme to bring Armenian citizens into the United States by fraudulently claiming to the U.S. Citizenship and Immigration Services (USCIS) that the Armenians were members of performance groups, and thus qualified for P-3 “Culturally Unique Artist” visas.

“Exploiting the P-3 non-immigrant visa classification system for culturally unique artist and entertainers makes a mockery out of the legitimate performers for whom that visa was intended,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “We will work hand in hand with our law enforcement partners to rid the system of fraudsters, like Mr. Atoyan and his co-conspirators, who seek to take advantage of and profit from our immigration system.”

“Atoyan’s guilty plea brings down the curtain on an elaborate visa fraud scheme to falsely portray applicants as artists and entertainers in order to circumvent our country’s P-3 visa program,” said U.S. Attorney Richard P. Donoghue of the Eastern District of New York.

“The Diplomatic Security Service builds strong teams overseas and in the United States to protect the integrity of all U.S. visas and travel documents – especially those, like the P-3 visa, which allow for entertainers to visit the United States to perform in culturally unique events and deepen our understanding of different cultures,” said Todd J. Brown, Director of the Diplomatic Security Service.  “DSS values our partnership with the U.S. Attorney’s Office and other law enforcement agencies around the world to prevent and jointly combat U.S. passport and visa fraud. Deterring, detecting, and investigating U.S. passport and visa fraud is essential to safeguarding our national security.”

[…]

The P-3 nonimmigrant visa classification allows foreign nationals to temporarily travel to the United States to perform, teach or coach as artists or entertainers, under a program that is culturally unique.  A U.S. employer or sponsoring organization is required to submit a USCIS Form I-129 Petition for a Non-Immigrant Worker, along with supporting documentation, attesting that the performances in the United States are culturally unique.

In February 2018, Stella Boyadjian of Rego Park, New York; Atoyan; and Diana Grigoryan, aka “Dina Akopovna,” 42, of the Republic of Armenia were charged in a 15-count indictment with visa fraud and with conspiracy to: defraud the United States, commit visa fraud, and illegally bring aliens into the United States.  Boyadjian and Grigoryan were also charged with related money laundering charges, and Boyadjian was charged with aggravated identity theft.  Boyadjian previously pleaded guilty on March 4, 2019 in the Eastern District of New York.

As alleged in the indictment, Boyadjian ran a non-profit organization called Big Apple Music Awards Foundation (BAMA) based in Rego Park, New York.  Boyadjian used the Big Apple Music Awards Foundation as well as formal and informal music industry contacts in the United States and Armenia to perpetuate the scheme.  Atoyan, Boyadjian, and others solicited Armenian citizens who wanted to come to the United States and charged them between $3,000 and $10,000 to be included on the Form I-129 Petitions.  Boyadjian and other associates in Armenia then acquired fraudulent performer certificates and organized staged photo sessions where the aliens wore traditional Armenian folk outfits to make it appear as though they were traditional Armenian performers.  After being trained how to defeat U.S. visa interviews, the individual aliens presented these certificates and photos to U.S. consular officers during their visa interviews.  Once the Armenians entered the United States, some would pay Boyadjian and her associates additional money to be included in another fraudulent petition asking for P-3 visa extensions.  As alleged in the indictment, Atoyan himself came to the United States on a P-3 visa obtained in connection with a Form I-129 submitted by BAMA.

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USCIS to Shrink Overseas Presence to Seven Locations

 

We almost missed a recent announcement from the U.S. Citizenship and Immigration Services (USCIS) dated August 9 concerning its “international footprint.” It will maintain its presence at seven locations but will close 13 field offices and 13 district offices within the next year.

U.S. Citizenship and Immigration Services (USCIS) announced today plans to maintain operations at its international field offices in Beijing and Guangzhou, China; Nairobi, Kenya; and New Delhi, India. Previously, Acting Director Ken Cuccinelli directed the agency to continue operating in Guatemala City, Guatemala; Mexico City, Mexico; and San Salvador, El Salvador, as part of a whole-of-government approach to address the crisis at the southern border.

While retaining these seven international offices, USCIS plans to close the remaining thirteen international field offices and three district offices between now and August 2020. The first planned closures are the field offices in Monterrey, Mexico, and Seoul, South Korea, at the end of September. These organizational changes will allow more effective allocation of USCIS resources to support, in part, backlog reduction efforts.

“This cost-effective and high value international footprint allows USCIS to efficiently adjudicate complex immigration petitions that require in-person interviews, to enhance integrity through fraud detection and national security activities, and to liaise with U.S. and foreign government entities to improve migration management capacity,” said Cuccinelli. “In the months ahead, USCIS will close its other international offices on a staggered schedule, ensuring a smooth transition of workloads to USCIS domestic offices and State Department consular sections, while mitigating impacts on USCIS staff who will rotate back to domestic positions.”

Many functions currently performed at international offices will be handled domestically or by USCIS domestic staff on temporary assignments abroad. As part of this shift, the Department of State (DOS) will assume responsibility for certain in-person services that USCIS currently provides at international field offices. In addition to issuing visas to foreign nationals who are abroad, DOS already performs many of these service functions where USCIS does not have an office. USCIS is working closely with DOS to minimize interruptions in immigration services to affected applicants and petitioners.

As of this writing, travel.state.gov’s newsroom remains pretty sparse with news.

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#USCIS Badly Written ‘Policy Alert’ on Citizenship Blows Up, Causes Wildfire

 

 

The U.S. Citizenship and Immigration Services published a Policy Alert on August 28, 2019 on “Defining Residence in Statutory Provisions Related to Citizenship.”  The same day, the agency had to issue a USCIS Policy Manual Update and the Acting USCIS Director Ken Cuccinelli subsequently had to issue a statement clarifying the policy update, “This policy update does not affect who is born a U.S. citizen, period.  This only affects children who were born outside the United States and were not U.S. citizens.  This does NOT impact birthright citizenship.  This policy update does not deny citizenship to the children of US government employees or members of the military born abroad.  This policy aligns USCIS’ process with the Department of State’s procedure, that’s it.”
That’s it! The end. But that doesn’t make it so. There was a hashtag trending already.
So, first, we need to point out that the Foreign Affairs Manual (see 8 FAM 301.1) already dispels the myth that birth on a U.S. military base outside of the United States or birth on U.S. embassy or consulate premises abroad constitutes as “birth in the United States:”

(1) Despite widespread popular belief, U.S. military installations abroad and U.S. diplomatic or consular facilities abroad are not part of the United States within the meaning of the 14th Amendment.  A child born on the premises of such a facility is not born in the United States and does not acquire U.S. citizenship by reason of birth;

(2)  The status of diplomatic and consular premises arises from the rules of law relating to immunity from the prescriptive and enforcement jurisdiction of the receiving State; the premises are not part of the territory of the United States of America.

Children born at U.S. military installations overseas or at U.S. diplomatic and consular premises are not born in the United States and do not/do not acquire U.S. citizenship by reason of birth in the United States or outlying possessions; they could acquire citizenship through one or both their U.S. citizen parents.  We’re throwing this out there because various reporting appears to perpetuate the misconception that birth in these premises accord children their U.S. citizenship; it doesn’t.
Now, we’ve read USCIS’s multiple justifications for this update (pages 9-10), and we still don’t understand the reasoning for rescinding the previous interpretation. What precipitated this update? If true that this affects only approximately a hundred annually, why is this update even necessary?  Supposedly, the original  policy determination was made in 2004, and there were changes in 2008, but the previous Administration did not clean it up or reconcile the conflicts in the various  parts of the Immigration Act so the current Administration is now updating the policy? That’s basically what USCIS is saying on the Alert.
Also, the previous policy apparently “produced confusion” which obviously, this policy update does not.
One blog pal who did consular work called it “messy and contradictory prior guidance.” But we think part of the problem is that this Administration has such a poor record on immigration that it even when it is providing a policy guidance to clean up or sort out the conflicts in the law, it causes a wildfire in our heads.
We have some thoughts about this updated USCIS policy; just that  – some thoughts based on the published regs because we’re nerdy that way and the wildfire caused by this interests us. That USCIS Policy Alert is frankly, a convoluted piece of work but it makes two points:  one, it makes a distinction between a “residence” and “physical presence” in the United States, and two, it talks about change specific to INA 320.

Residence vs. Physical Presence

The USCIS Policy Alert basically says that an individual may be physically present in the United States for summer camps or while visiting relatives for weeks or even months but those would not constitute a residence  for the purposes of transmission of citizenship. Page 4 of the Alert notes:

Residence is more than a temporary presence or a visit to the United States. Therefore, temporary presences and visits are insufficient to establish residence for the purposes of transmitting citizenship. For example, someone who resides along the border in Mexico or Canada, but works each day in the United States, cannot use his or her workplace to establish a residence.”

We found a similar language in the State Department’s 8 FAM 301.7-4(B)  Birth in Wedlock or of Wedlock to Two U.S. Citizen Parents, updated in June 2018, which notes the following:

Residence is not determined solely by the length of time one spends in a place, but also takes into account the nature and quality of the person’s connection to the place.  This is a very fact-specific test.  However, at all times and in all cases, residence involves the connection to a specific physical place.  Residence is not a state of mind that travels with a person.  Department guidance clearly states that residence is more than a temporary presence and that visits to the United States are insufficient to establish residency for the purposes of citizenship transmission under INA 301(c).

8 FAM 301.7-4(B) also notes that “a child born abroad to two U.S. citizens acquires U.S. citizenship at birth if, before the child’s birth, one of the parents had a residence in the United States or its outlying possessions.  No specific period of residence is required.”
Is that why USCIS want to clarify this? The USCIS Policy Alert description of documents required to demonstrate residence is almost identical to the State Department’s list enumerated in the 8 FAM 301.7-4(B) section, by the way.
This FAM citation also helpfully points out:

The concept of “residence” should not be confused with the term “physical presence” which is used elsewhere in the INA as the test for transmitting citizenship, and which is a more literal concept that may be easier to apply.  INA 301(g), for example, requires that when only one parent is a U.S. citizen, that citizen parent must have a specific duration of physical presence — not residence–in the United States prior to the birth of the child in order to transmit U.S. citizenship to the child.  Unlike in INA 301(g), in INA 301(c), Congress chose to use the term “residence,” and not set a time requirement.  The rationale being that the nature of a residence presupposes the sort of relationship to a place that mere physical presence does not.

INA 320/INA 322

The USCIS Policy Manual Update explains the Policy Alert better:
      • Clarify that temporary visits to the U.S. do not establish U.S. residence;
      • Explain the distinction between residence and physical presence in the United States; and
      • Explain that USCIS no longer considers children who are living abroad with a parent who is a U.S. government employee or U.S. service member as “residing in the United States” for purposes of acquiring citizenship under INA 320.
That’s simple enough when put that way. It also links to Automatic Acquisition of Citizenship after Birth (INA 320) and the  General Requirements for  Genetic, Legitimated, or Adopted Child Automatically Acquiring Citizenship after Birth.
So we looked up INA 320 in the FAM. Per 8 FAM 301.10-1(A), the Child Citizenship Act of 2000 (CCA), Public Law 106-395, which took effect February 27, 2001, amended INA 320 to extend U.S. citizenship automatically to certain foreign-born children of U.S. citizens.  It extended citizenship to three categories of children:

(a)  Children of naturalized citizens;
(b)  Children adopted abroad by U.S. citizens; and
(c)  Children born abroad to a U.S. citizen and who do not otherwise acquire U.S. citizenship at birth under INA 301 as made applicable by INA 309.

The law also amended INA 322 to apply only to children who reside outside the United States and who do not have Lawful Permanent Resident (LPR) status; amended INA 322 to provide for expeditious naturalization to children born outside the United States and who do not have LPR status.;  and stepchildren cannot avail themselves of the CCA unless they have been adopted by the U.S. citizen step parent.
The FAM notes that children acquiring U.S. citizenship under the Child Citizenship Act are not eligible for form FS-240, Consular Report of Birth Abroad of Citizen of the United States of America or form DS-1350, Certification of Birth, which are processed by consular sections at US embassies and consular posts overseas.
The acquisition of U.S. citizenship under the revised INA 320 or revised INA 322 is a form of expedited administrative naturalization.  The FAM cite further notes that Section 322 INA is administered exclusively by U.S. Citizenship and Immigration Services (USCIS).
So it looks like what this policy update does in attempt to clarify what “residence” means, and it removes the exception  under the Child Citizenship Act of 2000 (CCA) for children of U.S. government employees and U.S. armed forces members residing outside the United States. One of the requirements under INA 320 is that “The child is residing in the United States in the legal and physical custody of the U.S. citizen parent. [5]  
One source who did consular work told us that it may be that U.S. military serving overseas are considered resident on, for instance, a U.S. base in Germany. Well, in fact, the USCIS still has this in their footnotes as of this writing: 

“5. [^] See INA 320. See 8 CFR 320.2. Children of U.S. government employees temporarily stationed abroad are considered to be “residing in the United States” for purposes of acquisition of citizenship under INA 320. 

We borrowed another head which happens to be a consular one, and he/she thought that with this policy change of what is a “residence,” U.S. citizens could not just be on TDY to the United States or on a visit to obtain citizenship for their children, they have to be residing in the United States. Whereas in the past, military members or FS members may be able to arrive in the US. and get naturalization for their children then return overseas to continue their assignment, it appears that this new update would make it so that U.S. citizen parents have to do the naturalization on behalf of their minor children at the end of their overseas tours and when they are permanently relocating to the United States. At least, that’s how we’re reading this policy update at this time. We’re happy to entertain other interpretations.
We’ve checked the USCIS website to see what this means in terms of processing fees and time.  The USCIS website which has not been updated yet as of last night notes that per INA 320, the child must be under 18 years of age and must be a legal permanent resident in order to qualify. In order to obtain a Certificate of Citizenship, a child who has automatically acquired citizenship must follow the instructions on the Application for Certificate of Citizenship (Form N-600). This cost $1,170 and the fee applies even if the applicant is filing as an adopted child or as a child of a veteran or member of the U.S. armed forces. Processing time for an N-600 case according to USCIS is between 5 Months to 24.5 Months (same for Newark, NJ, and WashDC but may vary for other areas).
Effective October 29, 2019, USCIS no longer considers children of U.S. government employees and U.S. armed forces members residing outside the United States as “residing in the United States” for purposes of acquiring citizenship under INA 320, but they may still apply under INA 322.

In general, INA 322 provides that a parent who is a U.S. citizen (or, if the citizen parent has died during the preceding five years, a citizen grandparent or citizen legal guardian) may apply for naturalization on behalf of a child born and residing outside of the United States who has not acquired citizenship automatically under INA 320. The child must naturalize before he or she reaches 18 years of age.

See Children of Service Members Residing Abroad (INA 322). (Form N-600K) This also cost $1,170. Processing time for an N-600K case in El Paso, TX is between 6.5 Months to 28.5; same processing time for Los Angeles, CA, although the time may vary in other locations; we haven;’t checked all the locations).
Based on USCIS info, the processing fees are the same either way, but applications under INA 322 may take slightly longer than applications INA 320.  Are there any other ways where the INA 322 process is different or more challenging to applicants? We’ll update this post if we learn anything more.

 

Related items:

301.7 IMMIGRATION AND NATIONALITY ACT OF 1952

301.1 (U) ACQUISITION BY BIRTH IN THE UNITED STATES

8 FAM 301.10 ACQUISITION OF U.S. CITIZENSHIP BY THE CHILD CITIZENSHIP ACT

 

Consular Officer Asks Visa Applicant: “Why don’t you have a Pulitzer Prize?”

Other questions to ask:

  • Why are you not a super model?
  • Why are you not a MacArthur Fellow?
  • Why are you not a 10?
  • Why don’t you have swagger like Shakespeare?

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Fake University Sting Nets 21Alleged #Visa Fraudsters and 1,076 Foreign Individuals in “Pay to Stay” Scheme

Posted: 2:14 am ET
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The State Department issued 278,992 F-1 visas to students from China and 77,375 F-1 visas to students from India in FY2015 alone.  It’s a good thing that DHS is going after visa brokers, recruiters, and employers who allegedly conspired with more than 1,000 foreign nationals in a “pay to stay” scheme that circumvents U.S. immigration laws but — we suspect that this is a tiny drop in a bucket.

Via USDOJ:

21 Defendants Charged With Fraudulently Enabling Hundreds Of Foreign Nationals To Remain In The United States Through Fake ‘Pay To Stay’ New Jersey College

“College” created as part of Homeland Security Investigations sting operation 

NEWARK, N.J. – Twenty-one brokers, recruiters, and employers from across the United States who allegedly conspired with more than 1,000 foreign nationals to fraudulently maintain student visas and obtain foreign worker visas through a “pay to stay” New Jersey college were arrested this morning by federal agents, New Jersey U.S. Attorney Paul J. Fishman announced.

The defendants (see chart below) were arrested in New Jersey and Washington by special agents with U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) and charged in 14 complaints with conspiracy to commit visa fraud, conspiracy to harbor aliens for profit, and other offenses. All the defendants, with the exception of Yanjun Lin, will appear today before U.S. Magistrate Judge Steven C. Mannion in Newark federal court.  Lin will appear before U.S. Magistrate Judge Karen L. Strombom in the Western District of Washington federal court.

“‘Pay to Stay’ schemes not only damage our perception of legitimate student and foreign worker visa programs, they also pose a very real threat to national security,” U.S. Attorney Fishman said. “Today’s arrests, which were made possible by the great undercover work of our law enforcement partners, stopped 21 brokers, recruiters and employers across multiple states who recklessly exploited our immigration system for financial gain.”

“While the United States fully supports international education, we will vigorously investigate those who seek to exploit the U.S. immigration system,” said ICE Director Sarah R. Saldaña. “As a result of this operation, HSI special agents have successfully identified and shut down multiple operations which have abused the student visa program.”

“Individuals engaged in schemes that would undermine the remarkable educational opportunities afforded to international students represent an affront to those who play by the rules. These unscrupulous individuals undermine the integrity of the immigration system,” said ICE Homeland Security Investigations Special Agent in Charge Terence S. Opiola. “Our special agents are committed to addressing, identifying fraud in order to better protect the system as a whole.”

According to the complaints unsealed today and statements made in court:

The defendants, many of whom operated recruiting companies for purported international students, were arrested for their involvement in an alleged scheme to enroll foreign nationals as students in the University of Northern New Jersey, a purported for-profit college located in Cranford, New Jersey (UNNJ). Unbeknownst to the defendants and the foreign nationals they conspired with, however, the UNNJ was created in September 2013 by HSI federal agents.

Through the UNNJ, undercover HSI agents investigated criminal activities associated with the Student and Exchange Visitor Program (SEVP), including, but not limited to, student visa fraud and the harboring of aliens for profit.  The UNNJ was not staffed with instructors or educators, had no curriculum, and conducted no actual classes or education activities. The UNNJ operated solely as a storefront location with small offices staffed by federal agents posing as school administrators.

UNNJ represented itself as a school that, among other things, was authorized to issue a document known as a “Certificate of Eligibility for Nonimmigrant (F-1) Student Status – for Academic and Language Students,” commonly referred to as a Form I-20.  This document, which certifies that a foreign national has been accepted to a school and would be a full-time student, typically enables legitimate foreign students to obtain an F-1 student visa.  The F-1 student visa allows a foreign student to enter and/or remain in the United States while the student makes normal progress toward the completion of a full course of study in an SEVP accredited institution.

During the investigation, HSI special agents identified hundreds of foreign nationals, primarily from China and India, who previously entered the U.S. on F-1 non-immigrant student visas to attend other SEVP- accredited schools.  Through various recruiting companies and business entities located in New Jersey, California, Illinois, New York, and Virginia, the defendants then enabled approximately 1,076 of these foreign individuals – all of whom were willing participants in the scheme – to fraudulently maintain their nonimmigrant status in the U.S. on the false pretense that they continued to participate in full courses of study at the UNNJ.

Acting as recruiters, the defendants solicited the involvement of UNNJ administrators to participate in the scheme. During the course of their dealings with undercover agents, the defendants fully acknowledged that none of their foreign national clients would attend any actual courses, earn actual credits, or make academic progress toward an actual degree in a particular field of study.  Rather, the defendants facilitated the enrollment of their foreign national clients in UNNJ to fraudulently maintain student visa status, in exchange for kickbacks, or “commissions.”  The defendants also facilitated the creation of hundreds of false student records, including transcripts, attendance records, and diplomas, which were purchased by their foreign national conspirators for the purpose of deceiving immigration authorities.

In other instances, the defendants used UNNJ to fraudulently obtain work authorization and work visas for hundreds of their clients.  By obtaining this authorization, a number of defendants were able to outsource their foreign national clients as full-time employees with numerous U.S.-based corporations, also in exchange for commission fees.  Other defendants devised phony IT projects that were purportedly to occur at the school.  These defendants then created and caused to be created false contracts, employment verification letters, transcripts, and other documents.  The defendants then paid the undercover agents thousands of dollars to put the school’s letterhead on the sham documents, to sign the documents as school administrators, and to otherwise go along with the scheme.

All of these bogus documents created the illusion that prospective foreign workers would be working at the school in some IT capacity or project.  The defendants then used these fictitious documents fraudulently to obtain labor certifications issued by the U.S. Secretary of Labor and then ultimately to petition the U.S. government to obtain H1-B visas for non-immigrants.  These fictitious documents were then submitted to the U.S. Customs and Immigration Services (USCIS).  In the vast majority of circumstances, the foreign worker visas were not issued because USCIS was advised of the ongoing undercover operation.

In addition, starting today, HSI Newark is coordinating with the ICE Counterterrorism and Criminal Exploitation Unit (CTCEU) and the SEVP to terminate the nonimmigrant student status for the foreign nationals associated with UNNJ, and if applicable, administratively arrest and place them into removal proceedings.

The chart below outlines the charges for each defendant. The charges of conspiracy to commit visa fraud and making a false statement each carry a maximum potential penalty of five years in prison and a $250,000 fine. The charges of conspiracy to harbor aliens for profit and H1-B Visa fraud each carry a maximum penalty of 10 years in prison and $250,000 fine.

The charges and allegations contained in the complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of U.S. Immigration and Customs Enforcement, under the leadership of Director Sarah R. Saldaña; HSI Newark, under the leadership of Special Agent in Charge Terence S. Opiola; U.S. Immigration and Customs Enforcement, Counterterrorism and Criminal Exploitation Unit, under the leadership of Unit Chief Robert Soria;  U.S. Citizenship and Immigration Services, Fraud Detection and National Security Section, under the leadership of Associate Director Matthew Emrich; the Student and Exchange Visitor Program, under the leadership of Deputy Assistant Director Louis M. Farrell; U.S. Citizenship and Immigration Services, Vermont Service Center, Security Fraud Division, under the leadership of Associate Center Director Bradley J. Brouillette; U.S. Department of State, Bureau of Consular Affairs, Office of Fraud Prevention Programs, under the leadership of Director Josh Glazeroff; and the FBI, Joint Terrorism Task Force, under the leadership of Timothy Gallagher in Newark, for their contributions to the investigation.

He also thanked the Accrediting Commission of Career Schools and Colleges (ACCSC), under the leadership of Executive Director Michale S. McComis, and the N.J. Office of Higher Education, under the leadership of Secretary of Higher Education Rochelle R. Hendricks, for their assistance. In addition, U.S. Attorney Fishman thanked the N.J. Motor Vehicle Commission and the New York State Department of Motor Vehicles, as well as the U.S. Attorney’s Offices for the Central District of California, Eastern District of New York, Eastern District of Virginia, Southern District of New York, Central District of Illinois, Peoria Division, and the Northern District of Georgia for their help.

The government is represented by Assistant U.S. Attorney Dennis C. Carletta of the U.S. Attorney’s Office National Security Unit, and Sarah Devlin of the Office’s Asset Forfeiture and Money Laundering Unit.

Click here for the list of defendants.

 

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Asset Freeze Against Former Monk Accused of Defrauding Chinese Investors Highlights EB-5 Visa Program

Posted: 12:38 am EDT
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Via Securities and Exchange Commission:

Washington D.C., Aug. 25, 2015 —The Securities and Exchange Commission today announced an asset freeze obtained against a man in Bellevue, Wash., accused of defrauding Chinese investors seeking U.S. residency through the EB-5 Immigrant Investor Pilot Program by investing in his companies.

The SEC alleges that Lobsang Dargey and his “Path America” companies have raised at least $125 million for two real estate projects: a skyscraper in downtown Seattle and a mixed-use commercial and residential development containing a farmers’ market in Everett, Wash.  But Dargey diverted $14 million for unrelated real estate projects and $3 million for personal use including the purchase of his $2.5 million home and cash withdrawals at casinos.

“We allege that Dargey promised investors their money would be used to develop specific real estate projects approved under the EB-5 program, but he misused millions of dollars to enrich himself and jeopardized investors’ prospects for U.S. residency,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.

According to the SEC’s complaint filed yesterday in U.S. District Court for the Western District of Washington:

  • Under the EB-5 program, foreign citizens may qualify for U.S. residency if they make a qualified investment of at least $500,000 in a specified project that creates or preserves at least 10 jobs for U.S. workers.
  • Dargey and his companies obtained investments from 250 Chinese investors under the auspices of the EB-5 program.  Path America SnoCo and Path America KingCo operated as regional centers through which EB-5 investments could be made.
  • Dargey told U.S. Citizenship and Immigration Services (USCIS) and EB-5 investors that he would use investor money only for the Seattle skyscraper and Everett, Wash., projects.
  • Dargey and his companies misled investors about their ability to obtain permanent residency by investing in the Path America projects.  For example, Dargey knew that USCIS can deny investors’ residency applications if investor money is used for a project that materially departs from the approved business plan presented to USCIS.  Dargey failed to tell investors that he and his companies had departed from the business plan by using investor money for personal expenses and unrelated projects.

Late yesterday, the court granted the SEC’s request for an asset freeze and issued an order restraining Dargey and his companies from soliciting additional investors.  The SEC also was granted an order expediting discovery, prohibiting the destruction of documents, and requiring Dargey to repatriate funds he transferred to overseas bank accounts.

The SEC’s investigation was conducted by Brent Smyth and Michael Foley of the San Francisco office and supervised by Steven Buchholz.  The SEC’s litigation will be led by Mr. Smyth and Susan LaMarca.  The SEC appreciates the assistance of the USCIS.

According to the Seattle Times, citing a civil fraud suit filed Monday by the Securities and Exchange Commission (SEC), Dargey, a former monk, allegedly diverted millions to spend on a $2.5 million home, other real-estate investments and gambling at 14 casinos across the West. The report notes that the EB-5 visa program allows wealthy foreigners to invest at least $500,000 in a commercial enterprise that creates at least 10 full-time jobs, in exchange for a permanent-residency visa or green card. China dominates the list of countries from which immigrant investors hail.

Department of Homeland Security’s USCIS administers the Immigrant Investor Program, also known as “EB-5,” created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by USCIS based on proposals for promoting economic growth. As of August 3, 2015, USCIS had approved approximately 697 regional centers. Regional centers can operate in multiple states.

In its adjudication policy memorandum dated May 30, 2013, USCIS writes on how adjudication of EB-5 petitions and applications must only adhere to the “Preponderance of the Evidence Standard“:

As a preliminary matter, it is critical that our adjudication of EB-5 petitions and applications adhere to the correct standard of proof. In the EB-5 program, the petitioner or applicant must establish each element by a preponderance of the evidence. See Matter of Chawathe, 25 I&N Dec. 369, 375-376 (AAO 2010). That means that the petitioner or applicant must show that what he or she claims is more likely so than not so. This is a lower standard of proof than both the standard of “clear and convincing,” and the standard “beyond a reasonable doubt” that typically applies to criminal cases. The petitioner or applicant does not need to remove all doubt from our adjudication. Even if an adjudicator has some doubt as to the truth, if the petitioner or applicant submits relevant, probative, and credible evidence that leads to the conclusion that the claim is “more likely than not” or “probably true”, the petitioner or applicant has satisfied the standard of proof.

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