McALLEN, Texas (AP) — The Securities and Exchange Commission has accused a South Texas company that recruits foreigners seeking U.S. visas in exchange for $500,000 investments of fraudulently selling at least $5 million in securities, according to court documents.
U.S. District Judge Randy Crane froze the assets of USA Now Regional Center and appointed a receiver Monday at the request of the SEC. A lawyer representing the company did not immediately return a call Wednesday. The SEC complaint, filed Monday, was first reported Wednesday by The McAllen Monitor.
Search warrants made public in July indicated the FBI had been investigating the company as a possible Ponzi scheme since at least early 2012 on suspicion of wire fraud and money laundering. The SEC complaint said the company "fraudulently offered and sold at least $5 million in securities to at least 10 investors."
USA Now is among hundreds of private businesses designated by U.S. Citizenship and Immigration Services to recruit foreign investors to the "EB-5" visa program. But three years into the company's recruitment, the complaint said, "none of the investors identified by the Commission to date have received even conditional visas, let alone green cards."
The visa program, known as EB-5, was created to attract foreign investment and create jobs. The investors' primary goal is usually to obtain visas for themselves and their families, but the investments must create at least 10 full-time jobs.
Under a long-running pilot program, private companies — called regional centers — can be certified by the government to recruit the investors to a variety of job-creating development projects. The number of these companies in the program exploded during the economic crisis as developers saw them as new source of capital.
USA Now was supposed to be taking the investors' money and holding it in escrow, but the funds were instead transferred to other accounts for other business or personal use, according to the SEC. At least once, incoming money was used to make a payment to an existing investor.
The company, located just miles from the Texas-Mexico border, had initially focused on attracting Mexican investors, but the SEC complaint said the company recently began targeting investors in Egypt and Nigeria.
Named in the complaint are Marco Ramirez, USA Now's director of operations, and Bebe Ramirez, the company's director and managing member. Marco Ramirez and others traveled to Cairo, Egypt, in September and November 2012 to recruit investors; he was in Nigeria doing the same last month.
At the same time that the two were starting USA Now, they opened a Cajun-themed restaurant in McAllen called The Bayou Grill. More than $1 million in investor funds that were supposed to be in escrow were diverted into the new restaurant, according to the SEC. They also took investors' money for an energy business that was not one of the potential investments approved by the government, the complaint said.
In some cases, investors' money was removed from escrow and diverted the same day it was received. In one instance, $485,000 was used to settle an unrelated civil lawsuit. Money also was used to buy vehicles and to pay off an early investor.
When the search warrants went public in July, Tony Canales, an attorney representing the company, said the FBI didn't understand the business.