Mobile Store Investor Sues Over 'Fake' EB-5 Scheme

A truck accessory store and van investor has sued the people behind an allegedly fraudulent investment opportunity, accusing them of marketing the "fake investment" to people in Mexico, Taiwan, and Vietnam looking to gain visas by investing in the United States.

Plaintiff Cesar Bustos, a citizen, and resident of Mexico told a Texas federal judge on Wednesday that the mobile franchises purported to provide a valid way for foreign investors to gain citizenship through an E2 or EB5 visa but that they were also touted as a general investment scheme for investors like himself who were not necessarily looking to immigrate to the U.S.

But Texas residents Juan Carlos Martinez Cecias Rodriguez and Karina Hernandez — both of whom Bustos said are under indictment in the Western District of Texas — lied when they told investors the franchise would yield a guaranteed annual return of 11%, he said.

"The representations were material. The representations were also false," Bustos said in his complaint, filed Wednesday. "Defendants made the representations intending that the Plaintiffs would act on the representation by buying a RhinoPro Mobile franchise. Plaintiffs did in fact act upon those false representations and, as a result, caused Plaintiffs' damages in an amount of at least $175,000."

Bustos said Martinez and Hernandez pitched the scheme, which allegedly involved a truck accessory store and a van selling spray-on truck bed liners, to potential foreign investors not only in Mexico but in Taiwan, Vietnam, and other countries over a period of several years.

Bustos said they used the postal service to submit fraudulent visa applications, and email, phone, and banking wire services to transfer money from investors to companies also named as defendants.

He said Martinez, Hernandez, and the companies persuaded him to form Advance Investment Latam LLC and to buy and invest in a fully equipped mobile van and licensing rights for roughly $175,000.

He said Hernandez represented to him that he would receive the 11% annual return, but that that was "belied by the management contract" that he said limited his maximum return to less than 11%.

Bustos said that Martinez also did not disclose to investors that after signing the contracts, they would be unable to manage the businesses themselves. He said Advance Investment Latam was thus required to use a different company to manage their businesses.

Because the business model prevented investors from running their own businesses, Bustos said the companies lacked the capacity to generate enough income to provide even a minimal living for the investors and their families.

He said that franchises were "rarely, if ever" profitable. If payments were ever made to investors, he said, they often came from new investment fees — "a classic pyramid scheme."

In lodging, his suit, which alleged a violation of the Racketeer Influenced and Corrupt Organizations Act, Bustos asked the court to award him and his company damages, including treble damages, which is typical for RICO judgments.

Counsel for Bustos did not immediately respond to requests for comment on Thursday.

Bustos and Advance Investment Latam are represented by Charles M.R. Vethan, Daniel E. Serna, Joseph L. Lanza, and Jens K. Sandberg of the Vethan Law Firm.

Counsel information for the defendants was unavailable Thursday.

The case is Bustos et al. v. Invierte En Texas, LLC et al., case number 4:22-cv-02690, in the United States District Court Southern District of Texas.
 

https://www.law360.com/articles/1520195/mobile-store-investor-sues-over-fake-eb-5-scheme