EB-5 Capital-Loss and Green-Card-Loss Risk: Analysis and Mitigation

Analysing the risk of losing capital and losing the green card under EB-5 is a core step every Vietnamese investor needs to take before committing US$800,000 or more to the Visa EB-5. Unlike the “safe” image many brokers promote, EB-5 is in fact an investment carrying real risk — USCIS requires the capital to be “at risk” as a condition of visa issuance, meaning the investor could lose part or all of the capital.

The two greatest risks are the risk of capital loss and the risk of losing the United States permanent resident card immigration status (immigration risk). In many worst-case scenarios, the two risks occur together — the investor loses both the money and the chance to settle. The history of the EB-5 programme has recorded numerous large Regional Center fraud cases prosecuted by the Securities and Exchange Commission (SEC), causing hundreds of millions of US dollars in losses to thousands of international investors.

The EB-5 Reform and Integrity Act of 2022 (RIA) introduced new legal protections for good-faith investors, in particular INA Section 203(b)(5)(M) — which allows eligibility to be retained even if the Regional Center is terminated. However, these protections do not replace thorough due diligence on the investor’s part. This article analyses in detail the five groups of EB-5 capital-loss and green-card-loss risk and practical mitigation strategies for Vietnamese investors.

Risk Group 1 — Capital Loss Risk

EB-5 capital-loss risk arises from three main sources: project failure, fraud and market volatility.

Project Failure — Business Project Failure

Under EB-5’s legal requirements, the investment capital must remain “at risk” — capable of being lost through business failure. This is not merely a formal requirement but a real risk:

• Construction falls behind schedule and over budget
• Revenue falls short of the projections in the PPM
• Strong competitors emerge in the area
• Operating costs exceed forecast
• Poor operational management

For EB-5 projects in real estate (which make up the majority of projects), construction risk and market absorption risk are the most common. A hotel project may open late, a residential project may fail to sell all its units, and a mixed-use project may fail to attract retail tenants as expected.

Misappropriation — Fraudulent Use of Capital

This is the most serious risk and typically causes the greatest financial loss to investors. The SEC has prosecuted dozens of Regional Center fraud cases throughout the history of the EB-5 programme, including several notable examples:

• A cancer treatment centre project in Southern California: US$27 million was raised from 50 Chinese investors; after 18 months with no construction activity, US$11 million was transferred to three other companies in China, and US$7 million was transferred to the personal accounts of the managing couple.

• A Chicago Convention Center project: US$145 million raised from more than 250 investors, with US$11 million in administrative fees misappropriated.

• The Vermont ski resort and biomedical research case: more than US$200 million misused between 2008 and 2016 — the largest EB-5 fraud case in history, prosecuted jointly by the State of Vermont and the SEC.

Common fraud patterns include: transferring funds to the principals’ personal accounts, using new investors’ money to pay earlier investors (Ponzi-like), inflating property values in offering documents, and false statements about job creation.

Market Risk — Market Volatility

Even when a project involves no fraud and is well managed, market factors can affect the ability to recover capital:

• Rising interest rates (as in 2022-2024) increase the developer’s refinancing costs
• A real estate downturn affects the exit strategy
• Inflation pushes construction costs over budget
• Changes to state property tax policy

Risk Group 2 — Green Card Loss Risk

This is the immigration risk group, which can occur independently or alongside the risk of capital loss.

Risk at I-526E

The I-526E petition (or I-526 for direct EB-5) can be denied for the reasons analysed in the article EB-5 petitions rejected with an RFE or NOID:
– Insufficient source of funds documentation
– At-risk capital cannot be demonstrated
– Project deficiencies (job creation methodology, business plan)
– Investor eligibility issues

At this stage, the investor can lose the money already transferred into escrow if the Regional Center does not refund it under the terms of the contract. Some projects include a refund clause if the I-526E is denied; others do not.

Risk at I-829

The I-829 petition — the step to remove conditions on the green card after two years — is the second risk point and is usually more serious:

• Job creation falls short of 10 jobs per investor
• Capital is not maintained at-risk through to the I-829 stage
• Source of funds is challenged again with new evidence
• Material change to the project after I-526E
• The Regional Center is terminated before I-829

If the I-829 is denied, the conditional green card expires and the investor is placed into removal proceedings. This is the worst-case scenario — having lived in the United States for two years with the family, with children already in school, and then having to leave.

Regional Center Termination Risk

USCIS has the authority to terminate a Regional Center in a number of circumstances set out in USCIS’s EB-5 programme:
– Breach of RIA compliance requirements
– Failure to file annual statements
– Fraud detected within the project
– Material deviation from the approved business plan
– Background checks on the principals uncover problems

Before the 2022 RIA, Regional Center termination often had devastating consequences for investors. After the RIA, INA Section 203(b)(5)(M) provides a protection mechanism — analysed in detail below.

CSPA Risk — Children Ageing Out

Children accompanying EB-5 parents can “age out” on turning 21 before the immigrant visa is issued. The Child Status Protection Act (CSPA) has an age-calculation formula that adjusts for processing time, but if the calculation is not sufficient, the child loses the right to accompany the parents and must apply for a separate visa independently.

For Vietnamese cases facing a priority date backlog, the risk of CSPA ageing out is real — particularly where a child is already 18-19 years old at the time the I-526E is filed.

Risk Group 3 — Legal and Regulatory Risk

EB-5 is a programme created by the United States Congress and can change over time.

RIA Changes and Programme Lapses

EB-5 has a history of “lapses” — short periods when the programme expires because Congress has not yet renewed it in time. The 2022 RIA reauthorised the programme through 30 September 2027 and created a grandfathering provision for petitions filed before 30 September 2026.

Investors filing after 30 September 2026 face legislative risk — if Congress does not renew the programme or changes the law in future, their petitions could be affected.

Competition from the Trump Gold Card

The Trump Gold Card, established by President Donald Trump in September 2025 and launched in December 2025 at the US$1 million level, has created direct competition for EB-5. Although the Gold Card is facing a federal lawsuit over its constitutionality, the emergence of this programme could affect EB-5 policy in future. A detailed comparison of the two programmes is available in PLI’s dedicated feature article.

Visa Bulletin retrogression

The EB-5 programme has a per-country quota — no more than 7% of total visas for any one country. When many investors from one country file petitions, the priority date can “retrogress” — move backwards — leaving petitions that were otherwise ready waiting longer.

Vietnamese cases have not yet experienced retrogression as China and India have, but demand for EB-5 from Vietnam is rising rapidly — the risk of future retrogression cannot be ruled out.

SEC enforcement

The SEC continuously monitors and prosecutes Regional Centers showing signs of violating US securities law. the SEC’s official Investor Alert on EB-5 lists typical fraud patterns. When an SEC enforcement action occurs, USCIS typically terminates the Regional Center automatically, causing a knock-on effect for investors.

Risk Group 4 — Risks Specific to Vietnamese Investors

Alongside the general risks, Vietnamese investors face a number of specific risks.

Visa agents fraud

A serious warning noted by many EB-5 immigration lawyers during 2026: a number of “visa agents” in Vietnam are promoting all-inclusive EB-5 packages that include fabricating source of funds documents. USCIS is familiar with the pattern and can spot these fabricated documents, and typically issues a NOID or an outright denial.

Serious consequences:
– The EB-5 petition is denied, with the fees and preparation time lost
– Being placed on record for “fraud” — INA § 212(a)(6)(C)
– A permanent bar on re-entering the United States
– Possible criminal prosecution in both the United States and Vietnam

Currency control risks

Vietnam has regulations on personal outward remittances, managed by the State Bank of Vietnam. Transferring EB-5 investment funds without a valid permit breaches Vietnamese law and can trigger an RFE from USCIS.

No DTA in Place

Vietnam and the United States do not yet have a formal double taxation agreement. As a result, Vietnamese investors face a higher risk of double taxation than investors from countries with a DTA — particularly after becoming a US Tax Resident and having to declare tax on worldwide income.

Language and Cultural Barriers

USCIS requires every foreign-language document to have a certified English translation. Errors in translation, or incomplete translation, are a common cause of RFEs for Vietnamese investors.

Risk Group 5 — Operational and Tax Risk

After receiving the green card, investors face a range of complex compliance obligations:

US tax compliance: Form 1040, Form 8938 (FATCA), FinCEN Form 114 (FBAR), Form 5471 (foreign corporation) and Form 3520 (foreign trust). Failing to meet these requirements can lead to heavy penalties and affect Good Moral Character for the N-400. Analysed in detail in the article EB-5 tax obligations after the green card.

Continuous residence requirements: a permanent resident who is absent for too long can be regarded by USCIS as having abandoned residence. Managing residence and travel is an ongoing concern throughout the entire period of holding the green card.

Material change to the project: after the I-526E is approved, if the project changes significantly, the I-829 petition can be put at risk.

New Legal Protection — INA Section 203(b)(5)(M)

The EB-5 Reform and Integrity Act of 2022 added Section 203(b)(5)(M) to the Immigration and Nationality Act, providing an important protection mechanism for good-faith investors.

Scope of Protection

Under INA 203(b)(5)(M), an investor can retain eligibility even where:
– The Regional Center is terminated
– The New Commercial Enterprise (NCE) is debarred
– The Job-Creating Entity (JCE) is debarred

USCIS has confirmed that Section 203(b)(5)(M) applies to both pre-RIA and post-RIA investors — offering equal protection to every good-faith investor.

Eligibility

To qualify for protection, an investor must:
– Be a good-faith investor — not involved in any fraudulent conduct
– Not be a “knowing participant” in the matter that led to the termination or debarment
– Notify USCIS of continuing to meet eligibility requirements, or
– Amend the petition to demonstrate that the new requirements are met

Limitations

Section 203(b)(5)(M) does NOT protect:
– An investor who knew about the fraud and did not report it
– An investor directly involved in the conduct that caused the termination
– A case where the project closes due to purely commercial failure (not fraud) — to be assessed case by case

This mechanism is important because it allows good-faith investors to keep their priority date and continue on the path to a green card even if their Regional Center is terminated.

How to Mitigate EB-5 Capital-Loss and Green-Card-Loss Risk — a Seven-Step Strategy

For investors considering EB-5, here are some practical steps to mitigate the risk of losing capital and losing the green card:

Step 1 — Due Diligence on the Regional Center

Before committing to any project, an investor should carry out thorough due diligence:

• Track record: How many projects has the Regional Center completed? What is its I-526E approval rate? Its I-829 approval rate? Its record of returning capital to investors in previous projects?
• SEC enforcement history: search the SEC EDGAR database and enforcement action archives. Any enforcement action in its history is a warning sign.
• Litigation history: search federal and state court records. Pay particular attention to lawsuits filed by investors against the Regional Center.
• Background check principals: do the Regional Center’s key figures have a clean business history?

Step 2 — Review the Private Placement Memorandum (PPM)

The PPM is the official disclosure document for an EB-5 offering. Investors should engage an independent immigration lawyer (not affiliated with the Regional Center) and a financial advisor to review:

• Does the investment structure meet the at-risk requirement?
• Is the job-creation methodology sound?
• Are the sources and uses of capital clearly set out?
• Are the risk factors fully disclosed?
• Are conflicts of interest disclosed?

Step 3 — Verify the Fund Administrator

The 2022 RIA requires every Regional Center to have a qualified fund administrator to oversee the investment fund. Investors should confirm:
– The fund administrator is an independent entity, not an affiliate of the Regional Center
– The fund administrator properly carries out its oversight role
– Periodic reports from the fund administrator are available to investors

Step 4 — Assess the Market and Project Type

The project type and market location have a significant effect on risk:

• Rural project: usually less competition but lower demand
• Urban TEA project: high competition, heavily dependent on the absorption rate
• Hospitality (hotels): dependent on tourism and the economic cycle
• Healthcare/senior living: less cyclical but more complex from a regulatory standpoint
• Multifamily residential: stable but requires attention to the rental market

Step 5 — Make Use of an Escrow Account

Many Regional Centers offer an escrow account — the investor’s capital is held with a third-party escrow agent until the I-526E is approved. This structure reduces the risk of capital loss if the I-526E is denied:

• Escrow with full release at I-526E approval: the safest option
• Escrow with partial release: shares the risk
• No escrow: the highest risk — should be avoided

Step 6 — Have a Clear Exit Strategy

Before committing, investors need to fully understand the project’s exit strategy:
– When can the investor get the capital back?
– What is the redemption mechanism?
– Is there a liquidity option before I-829?
– What happens if the project fails?

The PPM must clearly disclose the exit scenarios.

Step 7 — Consult Independent Experts

Investors should have at least three independent advisors:
– An immigration lawyer licensed to practise in the United States — one not referred by the Regional Center
– A CPA or tax attorney specialising in cross-border tax — for tax planning before becoming a Tax Resident
– A financial advisor to assess the deal structure

The fees for these three groups of experts are typically US$30,000-$80,000 — a worthwhile cost against the risk of losing US$800,000.

Comparing the Risk with Alternative Programmes

To put EB-5 risk into balanced perspective, it can be compared with several alternative programmes for Vietnamese investors:

Combo CBI Grenada → E-2 USA: lower capital risk (the CBI donation is only $235K, entirely non-refundable) but the outcome is time-limited residence, not a green card.

Turkish CBI → US E-2 Combo: $400K in property capital that can potentially be recovered after three years — lower capital-loss risk than EB-5, but still only time-limited residence.

EB-3 Skilled Workers: low cost ($40-70K) but very high dependency risk on the employer and a long backlog.

Trump Gold Card: a non-refundable $1M donation — 100% capital-loss risk, plus legal risk as the programme is currently facing litigation.

Compared with these options, EB-5 is still regarded as offering a good balance of risk and benefit — particularly with the INA 203(b)(5)(M) protection mechanism and the potential to recover capital once the project completes its cycle.

Summary

The risk of losing capital and losing the green card under EB-5 is a real factor that cannot be ignored when committing US$800,000 or more. The five main risk groups — capital risk, immigration risk, regulatory risk, Vietnam-specific risk, and operational/tax risk — can all be managed if the investor carries out thorough due diligence from the outset.

The EB-5 Reform and Integrity Act of 2022 introduced several new legal protections, in particular INA Section 203(b)(5)(M) for good-faith investors when a Regional Center is terminated. However, these protections do not replace the investor’s own responsibility to choose a quality project and Regional Center.

PLI’s team of immigration specialists recommends that EB-5 investors devote adequate resources to due diligence — including an independent immigration lawyer, a CPA specialising in cross-border tax, and a financial advisor to review the PPM. Investors should absolutely avoid non-transparent “all-inclusive” intermediaries, especially “visa agents” in Vietnam showing signs of fabricating documents. Investing in a professional advisory process from the outset is the most effective way to mitigate the risk of losing capital and losing the green card under EB-5, and to protect the whole family’s dream of settling in the United States.

Related articles in the EB-5 series

• What an EB-5 Regional Center is and 6 criteria for choosing a reputable regional centre
• Comparing EB-5 direct investment with the Regional Center route
• EB-5 for children under 21: age protection under CSPA regulations