The U.S. Securities and Exchange Commission (SEC) recently announced that a Florida-based businessman has agreed to settle charges that he misused investor funds that were intended to create U.S. jobs through the EB-5 Immigrant Investor Program.
The agency alleged that Jason Adam Ogden, the CEO of a pair of smoothie and frozen yogurt franchises called Juiceblendz and Yoblendz, formed AJN Investments to conduct an investment offering in conjunction with the EB-5 program, which provides foreign investors a path to permanent residency when their investments create at least 10 jobs for American workers.
Investors allegedly were told that their money would help build and operate Juiceblendz and Yoblendz stores in strip malls and create a sufficient number of jobs for them to qualify for an EB-5 visa and ultimately a green card.
However, the SEC alleged that Ogden changed his business model midstream without updating the offering materials, focusing on developing kiosks in sports arenas and university campuses rather than following through with the construction of full-size stores. Not only did this result in smaller-than-promised returns for investors, but it also jeopardized their EB-5 program status because kiosks don’t stimulate the same job creation as full-size stores and construction projects.
Shamoil T. Shipchandler, director of the SEC’s Fort Worth Regional Office, commented:
As alleged in our complaint, jobs and green cards fell by the wayside as Ogden abruptly changed his business plan and diverted funds for his own benefit.
The SEC further alleged that Ogden improperly siphoned more than $1 million in investor funds for his personal use, making undisclosed cash transfers to his bank account. Ogden allegedly used investor funds to repay a personal loan and pay for meals and entertainment.