EB-5 Regional Center Mamtek International Defaults

Categories: Immigration Lawyer Blog San Diego

Mamtek International, a company that produces “Sweet-O”, a zero-calorie sweetner in Moberly, MO solicited 15 EB-5 investors from China to put up $500,000 each in 2010. On August 1st, 2011 Mamtek defaulted on its first bond payment, and laid off workers on September 2nd. Now the factory site is idle and there are no jobs. For the investors to receive green cards under the EB-5 program, Mamtek must higher at least 10 U.S. workers per investor, or use an economic study showing a sufficient number of indirect or induced jobs will be created. If workers are being laid off, and Mamtek is defaulting, it is not a good sign for these investors, both from a financial perspective and from an immigration perspective.

State and local government officials promoted this venture, but apparently with little review. Former Missouri Governor Bob Holden’s firm Midwest Us-China Association was one touter of the project. Holden now states “the association did not check to see whether the company was legitimate or had the funds necessary to sustain a major project.” “I don’t have the staff to go in and do all the due diligence.” as “That would take a considerable amount of money with not a good rate of return.”

Governor Jay Nixon, told reporters that the state of Missouri had allocated $17.6 million in direct assistance for the project, and the city of Moberly issued a $39 million industrial bond. A preliminary investigation uncovered that only one patent was obtained “to purify the final product” even though Mamtek claims it devoted extraordinary resources to obtaining patents to protect its process which produces sucralose “far more efficiently than previously possible” using “proprietary and innovative technology”. The Missouri Attorney General plans to further investigate Mamtek International for civil and criminal liability.

This only scratches the surface of the problems. It appears the investors, the attorneys, the governor, city officials, and state officials all failed to perform sufficient due diligence. An investigative report by Janet Morales of the Moberly Mirror could not even find proof of the existence of the company’s Chinese factory. “The address for the China headquarters of Mamtek International is listed as 183 Queen’s Road, Hong Kong. The Mirror could not find an address for the plant in Fujian. The Mirror contacted several entities, both in the U.S. and in China in regards to the plant in China, its location, trade status, etc. with little success.”

More information about this project is sure to come out as the Missouri officials conduct their investigations. This project serves as a reminder to EB-5 investors to choose their investment carefully. Very little is known about the 189 approved Regional Centers. Mamtek still remains on USCIS’ list of approved regional centers. While we suspect few of the USCIS approved Regional Centers are purely fraudulent, it does not mean that legitimate business models might not withstand the economic realities of our current economies. Many businesses just see the program as a cheap way to get capital, and may not be prepared to meet all of the program’s requirements. We encourage investors to choose a Regional Center with a proven track record and to perform their own due diligence before investing in the EB-5 project.