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SEC Charges Company, CEO for Selling Unregistered Securities Through EB-5 Immigrant Investor Program

On September 21st, 2018, the Securities and Exchange Commission (SEC) announced an $11.5 million settlement with an Illinois-based company, CMB Export LLC, its Chief Executive Officer Patrick Hogan, and 37 related limited partnerships. This settlement was reached in order to resolve charges related to unregistered securities that were improperly sold to foreign investors who were participating in the EB-5 Immigrant Investor Program.

According to the SEC order, one of these entities, CMB Florida Infrastructure Investment Group 26, targeted investors with ties to the Florida market. In this article, our top-rated Miami investment fraud attorneys provide an overview of the SEC’s settlement with CMB Export LLC and its CEO Patrick Hogan.

SEC Charges: Unregistered Securities  

Background 

The EB-5 Immigrant Investor Program was created by the United States government in order to promote economic development in disadvantaged communities. Through the program, foreign investors have an opportunity to obtain a green card in exchange for making a qualifying capital investment that supports U.S. jobs. At current law, the minimum investment is $500,000.

Violative Conduct 

According to the SEC, CMB Export targeted its business at prospective EB-5 investors. The alleged

misconduct in this case occurred between 2011 and 2015. During that time, CMB Export, under guidance and instructions from lead operator Patrick Hogan, entered into financial agreements with ‘referrers’.

These ‘referrers’ were not registered brokers. However, they were tasked with marketing, advertising, and offering investment opportunities in the dozens of limited partnerships that were owned and operated by the company. The marketing was aimed at investors living outside the United States.

In exchange, the referrers received compensation for their services. This is a direct violation of securities industry rules. As the ‘referrers’ that were used by CMB Export were not registered with the SEC or with any other state securities regulator, they should not have been offering the financial products to investors. In addition, many of the limited investment partnerships owned by the company were also not registered. In neither case did CMB Export demonstrate a valid exemption from securities registration requirements. 

Regulatory Sanctions 

Unregistered securities put investors at avoidable risk. Companies must avoid offering unregistered securities to investors unless they have a valid registration exemption. Without admitting or denying any improper conduct in this case, CMB Export and Mr. Hogan consented to the agency’s findings. Among other things, the SEC required CMB Export and all of its related investment partnerships to:

  • Cease and desist all further violations of basic registration requirements under U.S. securities law; and
  • Pay more than $11.58 million in financial penalties.

Get Help From a Miami Investment Fraud Lawyer Today

At Carlson & Associates, P.A., we are proud to fight tirelessly to protect the rights and interests of investors. If you lost money investing in unregistered securities, you may be eligible to recover financial compensation for your damages. To set up a fully private, no obligation review of your case, please do not hesitate to contact our Miami law office today.

Resources:

sec.gov/news/press-release/2018-208

sec.gov/litigation/admin/2018/33-10559.pdf

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