On October 9, 2026, Justice Reed of the New York County Commercial Division issued a decision in Chen Dongwu v. New York City Regional Ctr. LLC, 2026 NY Slip Op. 51697(U), holding that the fact that EB-5 investors did not earn a return on their investment was an insufficient basis for a fraud claim, explaining:
Plaintiffs, moreover, fail to raise a triable issue of fact as to any harm they suffered as a result of defendants’ alleged misrepresentations, including statements or omissions regarding Developer’s purported funding contribution. The New York Court of Appeals has long observed that, to give rise, under any circumstances, to a cause of action, either in law or in equity, reliance on the false representation must result in injury. The principle, the Court of Appeals explained, is simply that, if the fraud causes no loss, then the plaintiff has suffered no damages. While plaintiffs allege that they did not receive returns of each of their $500,000 investments, plaintiffs do not dispute that each received a green card and obtained permanent residency status for themselves and/or their family members.
Plaintiffs offer deposition testimony, as well as a letter signed by defendants Olsen and Levinsohn addressed to New York’s City’s then-Deputy Mayor of Housing and Economic Development Alicia Glen, demonstrating that defendants acknowledged their fiduciary obligations to do everything the Fund can do to secure a replacement developer who will be in a position to repay the $77 million. However, such evidence does little to establish any harm suffered as a direct result of defendants’ purported misrepresentations. Plaintiffs are unable to point this court to any representation contained within the offering materials stating that NYCRC guaranteed a return of plaintiffs’ investments.
At the time plaintiffs signed their subscription agreements and applied for investor visas, the applicable regulations on qualifying investments required evidence that the petitioner has placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk. The structure of the EB-5 program is designed as an investment vehicle and is not principally an income-producing security. It is a mechanism by which an investor places capital at risk in order to obtain immigration benefits. That plaintiffs did not receive a return of their investments does not establish the requisite injury necessary to prove fraud.
Plaintiffs can only recover damages for fraud by proving actual pecuniary loss sustained as a direct result of misrepresentations. Damages are to be calculated to compensate plaintiffs for what they lost because of the fraud, not to compensate them for what they might have gained. Plaintiffs’ mention of defendants’ own expert, attesting that defendants’ had the authority not to proceed with the BMB Project and instead could have invested in an alternative project that yielded both green cards and the return of capital, is unavailing. Such hindsight attempts to hold defendants liable for their judgment and decisions, which would be more appropriately adjudicated under their remaining breach of fiduciary duty claims.
(Internal quotations and citations omitted).