Senate panel seeking information about regional center projects

Sen. Tom A. Coburn (R-OK), ranking member on the Senate Committee on Homeland Security and Governmental Affairs, has sent letters to approved regional centers asking for a lot of information that goes far beyond the scope of the annual audit (Form I-924A).
For example, the letter seeks information about any fees charged to EB-5 investor visa applicants and received by the regional center, including amount and description, a list of any current and former corporate officers of the regional center, including title, position and dates of employment, and the name and address of any individual or entity -- either foreign or domestic -- that the regional center has an agreement with to provide legal, accounting, recruiting or consulting services, as well as a description of the service provided.
I'm not sure why Sen. Coburn wants all of this information or what he and his committee would do if or when they got it.  Most members of Congress see the EB-5 Program as a benefit for their constituents in states that have regional centers.  True, there have been some problems.  EB-5 attracts crooks and scam artists -- and EB-5 lawyer and consultant wannabes -- because there is a lot of money involved.  But EB-5 is no more full of fraud and abuse than any other visa program run by USCIS.
In fact, a lot of projects -- some completed, some ongoing -- are creating thousands of jobs in the United States for hard-working Americans.  When I find out what's going on, I'll let you know.

Revocation

Last year I predicted that a growth industry in my law practice would be USCIS notices of intent to revoke regional center designations.  A huge number of regional centers are inactive, failed or failing.  The annual audit, even if complied with by the regional center, will show no activity.  Regional centers that do not submit the annual audit to USCIS in late December risk receiving one of these notices to revoke.
These notices are going to come out of the EB-5 Unit in droves because so many regional centers are doing nothing.
Tyically there are three sound ways to counter one of these notices to revoke.  You can gin up an EB-5 project quickly and find the investors for it, which is very problematic and not likely.  You can affiliate with a successful regional center and glom on to another regional center's project -- not likely, but possible.  Finally, you can hire a manager who has successfully run another regional center or other regional centers.  There is ample precedent for this.
This is all very tricky business and not for the feint of heart. These approaches are by no means all-inclusive of what can be done in a notice-of-revocation situation, but they are the three main approaches I use.
Typically, regional center principals are real estate developers and spent lots of time and money to set up their regional centers -- often by EB-5 "consultants" who promised them the moon. It is always a shame when things don't work out, but the real estate economy is coming back very slowly, with commercial real estate and apartments leading the way.  Residential housing is still moribund.
Be very cautious when you receive one of these notices of intent to revoke and seek out an experienced EB-5 lawyer to help you respond. There is a lot on the line.

Ask and ye shall receive, but you will go horribly wrong

Many EB-5 project developers call us and want to obtain from us all of the information we know about the EB-5 Program.  Then they go away and try to do it on their own with often horrible results for themselves and their foreign investors.

EB-5 investors warned about scams

U.S. Citizenship and Immigration Services (USCIS) has issued a warning to EB-5 investors about scams.  One of the scams mentioned was the Chicago convention center.  Read the investor alert here:

http://tinyurl.com/l25b5zq

The Chicago convention center was a $156 million fraud investigated jointly by USCIS and the Securities and Exchange Commission (SEC).  The SEC has become increasingly involved in the EB-5 arena.

FINRA publishes guidance for broker-dealers concerning EB-5 securities offerings

FINRA (Financial Industry Regulatory Authority, Inc.), the largest independent regulator for all securities firms doing business in the United States, has published guidance for broker-dealers in performing due diligence on EB-5 securities offerings or "private placements."  Read a summary by clicking on the URL below:

http://tinyurl.com/pappqva

10 requirements for an EB-5 compliant business plan

Great article written by some friends of mine.  Highly recommended.

http://tinyurl.com/nzpdnlt

Stuck in the mud and spinning away

"The '64 Skylark had a regular differential, which, anyone who's been stuck in the mud in Alabama knows, you step on the gas, one tire spins, the other tire does nothing." - Lisa Vito, as played by Oscar-winning actress Marisa Tomei in the 1992 movie "My Cousin Vinny"

     The tire that's stuck in the mud is U.S. Citizenship and Immigration Services (USCIS) and the tire that's spinning is the Administrative Appeals Office (AAO).  How so?
     The AAO issued two regional center decisions overturning the California Service Center's denial of an application  to amend a regional center's geographic area and approved industries and an application for regional center designation by applying the May 30, 2013, EB-5 adjudications policy memo issued by -- who else? -- USCIS.
     In the first case (decision dated June 12, 2013), the AAO wrote that because the May 30 memo no longer requires regional centers to file amendments to "amend" their geographic areas and approved industries, that application for five states in the Midwest and 12 more industries, was due to be approved.
     In the second case (dated July 19, 2013), the AAO wrote that "verifiable detail" is not required because the May 30 memo now requires only "general predictions" with respect to job creation, capital investment, and timeframe for an EB-5 investment project. Federal law says that regional center applicants must submit a "general proposal".
     True to form, USCIS is not following the law, its own regulations or policy guidance.  So it's stuck in the mud.