On March 5, 2018, the Securities and Exchange Commission announced that it had charged a New York-based company with illegally brokering dozens of investments by foreign nationals seeking residency in the United States. Between April of 2014 and March of 2017, Edwin Shaw LLC solicited investments in securities issued by a taxi and limousine company based in Queens, New York from foreign nationals.
The investments were marketed for investors looking to apply for legal residency through the government’s EB-5 Immigrant Investor Program. This program provides a path to legal residency for foreigners, who invest in a United States business or private regional centers that provide economic development in specific industries or areas.
The SEC’s order alleges that Edwin Shaw was not registered with the SEC as a broker dealer when engaging in these solicitations and effectuating these securities transactions. Therefore, the SEC alleges that Edwin Shaw violated Section 15(a) of the Securities Exchange Act of 1934. Edwin Shaw received a fee between $5,000 and $50,000 for each successful investment.
At least 30 foreigners invested in the program. It is alleged that Edwin Shaw improperly used roughly $400,000 of the investor fees on its own expenses and personal expenses of the company’s principal. Edwin Shaw has agreed to a cease-and-desist order without admitting or denying the allegations. It has also agreed to pay disgorgement of $400,000 and prejudgment interest of $54,209.20 It will also pay a penalty of $90,535.
Additional details have been made available here.