Tuesday, June 22, 2010

E-2 (nonimmigrant investor) conversions to EB-5

It came in the form of a direct question from an experienced immigration lawyer. May his client, who has an E-2 (treaty investor) nonimmigrant visa, take money invested in the United States and re-invest it in a regional center investment project?

The answer? Yes, indeed! There is nothing in federal law or regulations regarding the EB-5 Program to prohibit it.

As a matter of fact, I am discussing E-2 conversions to EB-5 with immigration lawyers representing several clients who came here from Iran and India. The investors still have to come up with the minimum investment amount of $500,000. And regional centers typically charge investors from $30,000 to $50,000 for five years of EB-5-related services to help the investors get the permanent green card.

Conversion also makes sense for investors in Canada's similar immigrant investor program who want to put a couple of hundred thousand dollars with their returns from the Canadian program and invest the money in the EB-5 Program in the United States.

These two sources of immigrant investors are generally untapped resources to help create badly needed jobs in the United States.

Having said the above, you should be mindful that this E-2 money is frozen out of the EB-5 Program if a direct investment of even E-2 revenues is used. So you must be very careful to develop new capital and have a good accountant at the ready.

In response to the question: May an E-2 investor grow his business and eventually qualify
as an EB-5, as the business increases in value enough to
meet the EB-5 Investment Threshold?

USCIS responded to the EB-5 stakeholder's question in this manner:

"8 CFR 204.6(e) defines 'capital'.

"Legislative History: S. Rep. 55, 101st Cong., 1st Sess. 5, 21 (1989) twice refers to EB-5 investments as “new capital” that will promote job growth.

"The reinvestment of a commercial enterprise’s revenues cannot be considered part of a qualifying investment. See generally De Jong v. INS, Case No. 6:94 CV 850 (E.D. Texas January 17, 1997); Kenkhuis v. INS, No. 3:Ol-CV-2224-N (N.D. Tex. Mar.

If USCIS could find more ways to strangle the EB-5 Program, it would. This federal agency demonstrates its hostility toward the EB-5 Program over and over again.