Eleven EB-5 investors are suing U.S. Immigration Fund and its top brass, alleging the sponsor steered them into a doomed Manhattan tower while collecting millions in fees.
The proposed class action, filed April 21, 2026, in the Southern District of New York, represents roughly 160 foreign investors who each allegedly put up $560,000 — a $500,000 capital contribution plus a $60,000 administrative fee — for a preferred equity stake in the stalled "29th & 5th" office tower in NoMad. The filing pegs aggregate losses at no less than $89.6 million.
Named as defendants are U.S. Immigration Fund – NY LLC, its affiliated manager 29th and 5th Funding 100 GP, LLC, founder Nicholas A. Mastroianni II, president Nicholas A. Mastroianni III, and Canadian senior lender Otera Capital Investments IX Inc. Investors claim the USIF defendants violated Section 10(b) of the Securities Exchange Act and Rule 10b-5, and bring additional state-law claims for fraud, fraudulent concealment, negligent misrepresentation, breach of fiduciary duty, and breach of contract, among others.
At the heart of the case is the October 18, 2018 Private Placement Memorandum. Plaintiffs say it touted developer HFZ Capital Group's "expertise in a broad range of real estate disciplines" while leaving out the inconvenient stuff. By then, according to the filing, HFZ had been named in more than 60 lawsuits, a number that eventually climbed past 140. The filing also says managing principal Nir Meir was running a multi-year scheme to siphon millions from the firm.
Investors allege that criminal diversion of trust funds from this very project began in 2018 — two years before Covid. The Manhattan District Attorney indicted HFZ in February 2024, and HFZ pleaded guilty in August 2024, which the filing cites to head off any pandemic-era excuse.
The financing math, investors say, didn't add up either. The filing states HFZ had locked in about $242.7 million of the $1.325 billion needed — roughly 18 percent — and the property appraised in July 2018 at just $180 million to $190 million. According to the filing, the sponsor itself acknowledged in the PPM that it had undertaken no independent investigation of the developer's financial information.
Against Otera, plaintiffs allege breach of a July 2019 Tri-Party Recognition Agreement, saying the senior lender failed to provide the notices, cure periods, and 90-day purchase option window that should have come before the April 23, 2021 UCC foreclosure sale. At that sale, according to the filing, the mezzanine lender's $84.8 million credit bid was the only one submitted — despite 90 potential bidders signing NDAs to peek at the data room.
For advisors and wealth managers who route clients into EB-5 and other private placements, the case (Xi et al. v. U.S. Immigration Fund – NY LLC, No. 1:26-cv-03298) reads like a checklist of everything that can go wrong: a developer with a long docket, fee-driven capital deployment, and an exculpation clause plaintiffs argue can't survive bad-faith allegations under Delaware law.
The allegations have not been tested in court, the defendants have not yet filed a response, and no court has ruled on the claims.
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