04/09/2012

Chinese Court Decision a Game Changer for EB5 Visa Marketers

Current Articles |

RSS Feed

Chinese Court Decision a Game Changer for EB5 Visa Marketers
Posted by Michael Gibson on Sun, Nov 06, 2011 @ 12:58 AM

The Chinese Supreme People's Court and the China Banking Regulatory Commission have handed down a new interpretation of Chinese law that will have a significant impact on those marketing the EB5 visa program to investors. When it comes to the selling of securities in China, there was already law on the books meant to regulate marketing activity. According to Brian Su, however, the court's latest decision was rendered specifically to clarify many existing regulations. He calls the move by China's government "extremely serious" in its implications for brokers selling securities in that country, and he believes EB5 visa practitioners should know what the new ruling may mean for their business activities. Until a full English translation is available, the details of the court's decision are not fully known. Still, Su says there are some high-level components of the decision of which we are already aware: 1. All brokers must meet licensing and registration requirements. 2. EB5 marketers will no longer be able to use "public media" – television, radio, internet, etc. – to promote the sale of securities. 3. Marketers will be barred from promising (or perhaps even discussing) any form of return on an investment. 4. Marketers will be unable to promote financial products to the general public. Some of those elements, in particular the last three, may be cause for alarm among some brokers promoting EB5 visa investments in China, and regional center operators should be vigilant about how their projects are presented abroad. "It is now very risky for regional centers to ignore" the activities of brokers marketing their projects in China, said Su. If investors experience massive losses on a project, "the authority will go after not only brokers, but also trace to the regional center in the U.S." Concern over the sale of securities by unscrupulous organizations transcends those transactions made between Chinese EB5 brokers and investors. During the last few years, several investment-related schemes – some having to do with immigration and others not – have sprung up in China. Many investors lost money, and provincial governments have become increasingly concerned. An article in China Daily dated January 5 states that "about 5,400 suspects [have been] arrested in 5,000 cases" of illegal fundraising since 2008. What's more, Chinese police "investigated 10,000 illegal fund-raising cases involving about 100 billion yuan" between 2005 and 2010. Given the prevalence of such activity, it's little wonder why the Chinese government has become concerned. "At this point, the brokers have to be very very careful about their contact with the investors," said Su. "The brokers should focus on selling the immigration side as opposed to talking too much about investment itself. Any time you are talking about the EB5 investment, you might be in violation." More news on the EB-5 program can be found here and guidance on how to properly structure an EB-5 visa offering to be in compliance with both U.S. and foreign securities laws can be found here. info.eb5info.com/bid/95540/Chinese-Court-Decision-a-Game-Changer-for-EB5-Visa-Marketers 1/4

the unit illegally or disguised deposits from the public. Real content (d) does not have the sales of goods or rendering services or selling products. violation of state financial administration law. after-sales charter. the application of law by the 1502 meeting of the Judicial Committee of the Supreme People's Court was November 22. is not unlawful by absorption or disguised deposits from the public. should be in accordance with the provisions of Article 70 26. equity return within a certain period. and absorption of funds to the public (including the units and individuals) have the following four conditions. (Xi) other illegal acts of the absorption of capital.04/09/2012 Chinese Court Decision a Game Changer for EB5 Visa Marketers A translation of the Chinese document is here: PRC Supreme People's Court Notice The Supreme People's Court interpretation of the illegal fund-raising on the trial of criminal cases.com Deposits from the public to punish the illegal fund-raising fraud and illegal fund criminal activities. the amount of over $ 1 million. (F) does not have real content to raise funds illegally under the guise of offshore funds. (C) commitment to debt service or payment of money. presentations. in addition to the criminal law as otherwise provided.eb5info. info. SM S and other means publicity. 2011 implementation. Article one of the following acts. providing services as the main purpose of the commodity repurchase Storage outlets such as illegal absorption of funds. the sale of fictitious fund of funds. 2010. (G) does not have the true contents of the sale of insurance. on hearing the specific application of the law in such criminal cases are explained as follows: The first act.com/bid/95540/Chinese-Court-Decision-a-Game-Changer-for-EB5-Visa-Marketers 2/4 . forged insurance documents illegally funding. shall be determined as the provisions of Article 70 256 "illegal deposits from the public or disguised deposits from the public: (A) without the relevant approval according to law or to absorb funds borrowed in the form of legitimate business. and illegally funding the false transfer of ownership. Article illegally absorbing deposits from the public in disguise. one of the following circumstances shall be investigated for criminal liability: (A) Personal illegally or disguised deposits from the public. fake insurance companies. the amount of 200. the sale of fictitious bonds. relatives and friends or Internal absorption of funds for a specific object. (D) to the public that society does not a specific object to absorb funds. flyers. bonds. a joint cultivation (aquaculture) and other illegal absorption of funds. real content. (I) the trust management of illegal absorption of capital. rent cultivation (aquaculture). (E) does not have the issue of stocks." "community" organizing illegal absorption of capital. Not publicized to the community. to illegally convicted and punished in public deposits: (A) does not have a real estate sales or real estate sales to back sales. sale of real estate share illegally funding. (B) to the public through the media. (C) on behalf of cultivation (farming). agreed to repurchase. is hereby published since January 4. according to the relevant provisions of the Penal Code. (10) using folk "would. in kind. December 13 for Hongkongpost. (B) the transfer of forest tenure and on behalf of the management and protection of illegal absorption of capital. in line with the conditions of the first paragraph of this interpretation. (H) of the investment shares illegally funding.000 yuan or more.

should be identified as a huge amount. Article personal financial fraud and the amount of $ 100.000 yuan shall be regarded as "huge amount". Behavior of the implementation of man-made financial fraud and paid advertising costs. should be recognized as a "huge amount". corporate bonds total more than 200 people shall be determined as provided for in Article 79 of the "unauthorized issue of shares. or for the cost of bribe. received two or more of the administrative penalty. etc. One of the following circumstances. in serious cases. corporate bonds. to the absorption of funds by the behavior of people in full calculation. crime. the amount of more than 500. depositors caused direct economic loss of the amount of more than 2. the deposits from the public objects more than 150 people. Fraud illegal fund-raising. Article 8 Advertising operators and advertisement publishers violation of state regulations. (B) causing serious harm to the consequences or adverse social impact.000. Before and after the incident has been the return of the amount can be used as the discretion of the punishment fits the crime. the unit illegally or disguised deposits from the public to the depositor. fees. disguised issue of shares or the company. the unit illegally or disguised deposits from the public to the depositor. (E) flight. can be identified as "illegal possession for the purpose of: (A) to raise funds not used for production and business activities. in accordance with the provisions of the deemed to have committed 20 2. (D) raised funds for the illegal and criminal activities. it should be convicted and punished in accordance with the provisions of Article 192. companies. " Financial fraud and the amount of calculation. Unit to raise funds fraud. the amount of 150 million yuan.5 million yuan . the part of the illegal fund-raising behavior of the raised funds for financial fraud conviction punishment. should be included in the amount of fraud. (C) to carry the raised funds go into hiding. Part of the perpetrator of illegal fund raising behavior with the purpose of illegal possession.. (C) illegally or disguised deposits from the public. or for the production and business activities and to raise funds significantly out of proportion to the scale resulting in raised funds can not be returned. convicted and punished the crime of false advertising : (A) the amount of illegal gains of more than $ 100. (D) caused by a particularly bad social impact. for financial fraud. causing direct economic loss of the amount of $ 100.eb5info. (D) result in adverse social impact. (C) illegally or disguised deposits from the public. convicted and punished in accordance with the provisions of Article 225. mainly for the normal production and business activities.04/09/2012 Chinese Court Decision a Game Changer for EB5 Visa Marketers (B) Individuals illegally or disguised form of deposits from the public objects of more than 30 units illegally or in disguised form. convicted and punished for financial fraud. destruction of accounts. belonging to the provisions of Article 70 which stipulate that "large amounts. it should be recognized as a "large amount". the ability to repel the absorption of capital. financial fraud. unless the principal is not returned may be set off against the principal. shall not be deducted. depositors caused direct economic loss of the amount of 500. (C) within two years the use of advertising to make false propaganda. the amount of more than 1 million yuan unit illegally or disguised deposits from the public. it should be recognized as a "large amount". Article 7 violation of state regulations. can be exempted from criminal punishment. Constitute a crime. (B) the profligacy of the raised funds. Article to the illegal possession for the purpose of fraud method to implement the provisions of Article II of the acts listed in this interpretation. amount in more than one million yuan shall be determined as as a "huge amount".000 yuan. (7) refusing to account for where the money goes to escape the return of funds. one of the following circumstances. or other serious circumstances": (A) Personal illegally or disguised deposits from the public. or other serious consequences. the crime of illegal business. the behavior of the actual amount defrauded the incident prior to the return of the amount should be deducted. (F) concealment. not dealt with as offenders. (B) individuals illegally or in disguised form.000. intermediary costs. corporate bonds. the deposits from the public objects more than 100 people. such as stocks or corporate. convicted and punished. a distinction should be drawn between the situation specifically identified. the unit illegally or in disguised form. the deposits from the public objects more than 500 people.000. causing direct economic loss of the amount of more than 500. to Whoever issues shares. the amount of more than 300. issued to a specific object. The behavior of man-made implementation of financial fraud and the payment of interest. and behavior with the purpose of illegal possession. the amount of deposits from the public. the circumstances are obviously minor. or other particularly serious consequences. transfer of funds or hiding property to evade the return of funds.000 yuan. false close down to escape the return of funds. the use of advertising to make false propaganda for illegal fund-raising activities related to goods or services. resulting in raised funds can not be returned.000 or more . The purpose of illegal possession. info. Without the 6 approved by the relevant state departments issue not specific to the object in disguise issue of transfer of ownership. Illegally or in disguised form. one of the following circumstances. the amount of 500 million yuan. corporate bonds. or creating false bankruptcy. the amount of 500 million yuan. Illegally or disguised deposits from the public. the company. (Viii) other purpose of illegal possession of situations can be identified. illegal fund-raising as part of the common criminal purpose of illegal possession and other actors is not illegal possession of the funds raised common intent and behavior.com/bid/95540/Chinese-Court-Decision-a-Game-Changer-for-EB5-Visa-Marketers 3/4 . gift. rebates. without legal approval of the unauthorized distribution of fund shares to raise funds.

com/bid/95540/Chinese-Court-Decision-a-Game-Changer-for-EB5-Visa-Marketers 4/4 . this interpretation shall prevail. to provide advertising and other publicity related crimes handled as accomplices. leadership pyramid schemes. Knowing that others engaged in the fraudulent issue of shares.eb5info. EB-5 China Post Comment Name * Email * Website (optional) Comment * Allowed tags: <a> link. EB-5 Promotion. fund-raising fraud or organization. bonds. Post Comment © 2012 USAdvisors. EB5 visa news. and other fund-raising and criminal activities. EB-5 visa. Subscribe to this blog by email. EB-5 Regional Centers.04/09/2012 Chinese Court Decision a Game Changer for EB5 Visa Marketers (D) other circumstances of a serious. illegal deposits from the public. EB5. bonds. Tags: EB-5.org info. without authorization to issue shares. <b> bold. <i> italics Receive email when someone replies. Article IX previously issued judicial interpretation is inconsistent with this interpretation. EB5 visa.