New York immigration attorney Mona Shah and her firm, Mona Shah & Partners, have asked a federal judge to sanction the U.S. Securities and Exchange Commission (SEC) for filing a lawsuit they say lacks evidentiary support. The motion, filed on September 16 2024 in the U.S. District Court for the Southern District of New York, invokes Rule 11 of the Federal Rules of Civil Procedure, which requires that factual allegations in signed pleadings be backed by evidence.
Basis of the motion
- The motion seeks dismissal of the SEC’s claim and at least $900,000 in fees and costs for Shah’s firm.
- It argues that the SEC sued Shah and her firm in 2023 without first requesting the investor files that Shah had identified under oath.
- Rule 11 is cited to contend that a federal agency cannot “accuse someone first and look for the evidence afterward.”
SEC’s original complaint
- In November 2023 the SEC sued eight defendants, including New York businessman Nadim Ahmed and his companies NuRide Transportation Group and NYC Green Transportation Group.
- The defendants had raised more than $66 million from over 100 investors through the EB‑5 immigrant investor program.
- The SEC’s allegations against Ahmed, NuRide, and NYC Green focus on fraud.
- Against Shah and her former firm Mona Shah & Associates, the SEC alleges a single violation of Section 5 of the Securities Act of 1933 – selling unregistered securities – a claim that does not require proof of intent.
Accredited‑investor requirement
- The SEC’s complaint relies on a Regulation D exemption that mandates every purchaser be an accredited investor:
- Net worth > $1 million (excluding primary residence), or
- Annual income > $200 000 (or $300 000 with a spouse).
- The definition also covers investors the issuer “reasonably believes” meet those thresholds.
- The SEC asserts that at least one investor’s eligibility form for a NuRide EB‑5 offering indicated the investor was not accredited.
Testimony and document dispute
- Four months before the lawsuit, Shah testified under oath that her firm retained comprehensive investor files (tax returns, bank statements, source‑of‑funds memoranda, subscription agreements) and disclosed their location to the SEC.
- A subsequent SEC subpoena requested internal policies and a checklist but did not ask for the investor files themselves.
- In December 2025 the SEC answered Shah’s requests for admission, stating that the accreditation status of investors “remains the subject of discovery” and that it had “not received sufficient supporting documents.”
- In January 2026 Shah’s side produced over 72,000 pages of investor records—documents the SEC had not requested.
- On September 10 2024 the SEC filed amended responses converting earlier answers into denials, which Shah’s attorneys say confirms the agency lacked evidence for its original claims.
Co‑counsel and Rule 11 argument
- The Investor Choice Advocates Network (ICAN Law), a nonprofit litigation group, joined McGuireWoods as co‑counsel.
- ICAN Law founder Nicolas Morgan, a former SEC trial counsel, emphasizes that Rule 11 applies to the government and that the SEC was told under oath where the records were but proceeded with the lawsuit without requesting them.
Impact on investors and EB‑5 program
- Shah contends the SEC action has been “devastating” to her firm and to the hundreds of investors who relied on the EB‑5 program.
- Prior to the complaint, approvals were granted in more than 74 NuRide cases; every subsequent denial cited the SEC case.
- The complaint notes that U.S. Citizenship and Immigration Services (USCIS) had issued multiple “notice of intent to deny” letters to NYC Green investors before the SEC suit, affecting petitions for unconditional permanent residency.
Comparison with European visa programs
- Shah argues that, unlike the U.S., European jurisdictions (e.g., Portugal, Italy) lack an SEC‑type regulator overseeing securities‑linked residence‑by‑investment schemes.
- Portugal’s securities regulator, the Comissão do Mercado de Valores Mobiliários (CMVM), supervises funds used for its golden‑visa program, but there is no equivalent to the SEC’s oversight of EB‑5 offerings.
Procedural history
| Date | Event |
|---|---|
| Jan 2024 | Both plaintiff and defendant groups moved to dismiss the SEC complaint; briefing closed Apr 2024. |
| Mar 2025 | Judge Vernon S. Broderick allowed federal prosecutors to intervene and paused discovery for three months pending a parallel criminal case against Ahmed. |
| Jan 14 2026 | Magistrate Judge Sarah L. Cave dismissed the criminal complaint against Ahmed without prejudice; a hearing on Ahmed’s deferred‑prosecution agreement was scheduled the same day. |
| Sep 16 2024 | Shah’s Rule 11 motion filed, seeking sanctions and dismissal of the SEC claim. |
Policy context
- Shah’s team notes that the SEC’s 2026 regulatory agenda, released in July under Chair Paul Atkins, signals possible changes to the accredited‑investor definition, though the agenda is not a formal rule proposal.
- The SEC filed the EB‑5‑related lawsuit in November 2023 when Gary Gensler was chair, and Shah argues the agency’s current push for “accredited‑investor reform” is inconsistent with prosecuting cases like hers.
The motion remains pending, and Shah’s attorneys have requested oral argument on the Rule 11 sanctions request. The outcome could affect how the SEC pursues enforcement actions against immigration‑related investment schemes.
Source article: www.imidaily.com
