The only game in town? Offering Memorandum for immigrant investors in "Atlantic Yards II" claimed middleman USIF was "the holder" of EB-5 rights in NYC

I've written before on the dubious marketing (link) of the EB-5 loans currently under foreclosure, as well as dubious contract language (link) that, at least initially, seemed to leave the middleman company--the U.S. Immigration Fund (USIF), a "regional center" that recruited investors--in control. 

Now another company, Fortress Investment Group, may have control. It's all pretty murky.

I also reported on allegations, never adjudicated, that a Chinese investor in "Atlantic Yards II"--the first of two loans organized by the USIF--never saw the actual documents, just the signature pages. That meant the investor didn't see the disclosure of significant red flags. 

Each investor put up $500,000, with a total of $249 million raised. In the second loan, "Atlantic Yards III," a total of $100 million was raised.

The only game in town?

I took another look at the 2014 Offering Memorandum and saw another glaring red flag, on p. 4:

U.S. Immigration Fund - NY LLC, a New York limited liability company and affiliate of the Manager under the ultimate control of the Offering Principal ("USIF" or the "Regional Center") is the holder of the regional rights to undertake an EB-5 program in the New York City, New York area...

(Emphases added)

Why does this matter? Because a prospective investor reading this literally, and without much independent information (given distance and language), could conclude that only the USIF could offer an EB-5 investment in New York.

That suggests that there were no other alternatives. And if the USIF could market the investment by deploying quotes--even if not quite on point--from elected officials, that would reassure Chinese investors, who appreciate evidence of government involvement.

A contradiction

Interestingly enough, another disclosure in the document package avoids such language:

USIF has been approved by USCIS [United States Citizenship and Immigration Services] to be a designated regional center pursuant to the Pilot Program within the Territory based on a specified job creation economic model and industry categories.

This leaves the impression that there could be multiple regional centers. However, this disclosure appears on p. 52.

What about Atlantic Yards III?

The Atlantic Yards III Offering Memorandum, issued later in 2014, was more circumspect, stating:

The USIF New York Regional Center has been approved by the USCIS as a regional center under the EB-5 Program to undertake EB-5 capital investment projects in the New York City area.

Notices regarding English translation

"Prospective investor hereby agrees that it is the sole responsibility of prospective investor to ensure proper translation of this agreement into their native language if necessary," a disclaimer states in the Atlantic Yards II document. "In the event of any inconsistencies between this Offering Memorandum as set forth in English and any language translation, this Offering Memorandum as set forth in English shall govern."

(There's similar language in the second document.)

The bottom line

So, should any investor have relied on the misleading claim that "USIF is the holder of the regional rights to undertake an EB-5 program in the New York City, New York area"?

Or, more pointedly, how careful should New York State be in doing business with the USIF, which is assembling a joint venture to redevelop the six railyard development sites, collateral for the unpaid EB-5 loans?