Robert Divine (partner with Baker Donelson, Chattanooga, former Acting Director of USCIS, fellow member of the EB-5 Investors Committee of the American Immigration Lawyers Association, and a personal friend) asked me to prove what USCIS has said and done to show its hostility toward the EB-5 Program.
It was too easy. All of the following issues below come from my file of USCIS misinterpretations of the law or regulations, from official USCIS memos, official requests for additional evidence, or from USCIS stakeholder conference calls and USCIS reports on those calls.
Here's my baker's dirty dozen list.
1. The two-year rule on full investment and creation of jobs for purposes of removal of conditions, which USCIS snatched out of the marriage fraud amendments, without any apparent basis in reality. Why two years? Could have been four or five, if the goal is job creation. Done.
2. First USCIS said constructions jobs did count (2007) then said they didn't (2009), then said construction jobs must last two years (another two-year rule pulled out of the marriage fraud amendments, without any apparent basis in reality). Why not five years? Why not six months? Said.
3. First USCIS said we could have "rural areas" within MSAs, then it said we couldn't. Said.
4. Capital from sole proprietorships is not "personal assets" for purposes of investment. Said and Done.
5. First USCIS examined regional center applications based upon the business plan and the industries and geographic areas requested. Now it is "project-centric" and requires real or exemplar investment projects for each industry or economic sector and each geographic area (looks like county level, not sure). USCIS analyzes and "adjudicates" or "pre-approves" exemplar projects that do not exist and when they are not even asked to adjudicate them, which is very strange. In short, ACFI's application for designation as a regional center would not be approved today because the agency fails to apply its own laws, regulations and official guidance in a manner in keeping with the congressional intent of this job-creation program. Done.
6. USCIS is denying almost one-third of I-829s. As a prospective investor in the EB-5 Program, if I knew there was a one in three chance that I would not get my permanent green card, I would not invest. Done.
7. Given a choice of allowing an amended I-526 or a new I-526 upon the event of a "material change" in an EB-5 investment project, USCIS chose "new petition". Done.
8. The California Service Center (CSC) adjudicates I-526 petitions with the presumption that the applicant is either a terrorist or a drug dealer. CSC adjudicates I-829s without giving weight to or recognizing the "reasonable time" regulatory standard for job creation. Done.
9. First USCIS said we couldn't count indirect jobs outside the boundaries of the regional center. Then it said we could (Mayorkas letter to Sen. Leahy). Then it said we couldn't count indirect or induced jobs outside a TEA (targeted employment area). Then it said we could. Said and who knows?
10. First USCIS said we couldn't gerrymander TEAs, then it said we could, but most recently said we couldn't. Said.
11. CSC immigration service officers are over-relying on the four Administrative Appeals Office (AAO) "precedent decisions" and under-relying on the law and regulations. Requests for additional evidence coming out of the CSC strongly indicate that CSC officers are not using the preponderance of the evidence standard that statute law and case law require them to apply. Instead, CSC officers are imposing the beyond a reasonable doubt evidentiary standard.
12. USCIS's stated goal is 90 days processing time for an I-526 petition. Current processing time often exceeds nine months or more. While the I-526 petitions are pending, in most cases the investment capital sits in escrow. EB-5 investment project developers cannot wait on the capital that long. Many good job-creating investment projects are dying on the vine. Said and Done.
13. In a "troubled business" scenario, in which jobs are preserved rather than created, USCIS has stated that indirect jobs are not considered preserved, then they said they were. Said.
I could have added four or five more issues to this Baker's Dozen, proving that USCIS is confusing the hell out of foreign investors, their lawyers, investment project developers, and people who run regional centers. I hope it is not viewed as hyper-critical of USCIS, which it is not meant to be. I hope it is viewed for what it is: A list of evidence that the agency has mismanaged the EB-5 Program for a very long time to the everlasting detriment of the people the agency's employees are sworn to serve. In my view, the trend will continue.
I have lost hope that this trend will reverse itself.
Boyd Campbell
Vice President and General Counsel
America's Center for Foreign Investment, LLC
www.acfi-usa.com
Wednesday, April 20, 2011
Sunday, February 20, 2011
U.S. government giving foreign investors the shaft
I've been doing a lot of thinking about EB-5 investors lately.
What happens when they get to the I-829 petition stage (removal of conditions) and there is insufficient information from the investment project that the investor's money was "fully invested" as required by federal regulations?
What happens to the investor if there is insufficient information from the investment project that it created at least 10 U.S. worker jobs as required by federal regulations?
What happens to the investor if the investment project fails? What happens to the investor if a regional center fails?
What happens if the investor is approved for removal of conditions but the investment project goes bankrupt?
Apparently neither Congress nor U.S. Citizenship and Immigration Services (USCIS) gave much thought to this because it wasn't happening when the law was passed and the regulations were written. It's happening now. As everyone knows, the worst recession in our lifetimes delivered a roundhouse punch to the U.S. economy, and the recovery -- which is occurring in some parts of the United States -- is extremely slow.
It is in this economic environment that EB-5 investment projects are not doing well or failing. Insufficient jobs are being created to cover EB-5 investment project investors (minimum of 10 U.S. worker jobs each). EB-5 investors' money is being lost. And the consequences for the foreign investors -- who, in good faith, put their hard-earned money down and in many cases sent their families to the United States and their children to enroll in school -- are brutal and patently unfair and unjust.
When the investors have insufficient information and documentation to deliver to USCIS along with their I-829 petitions, the petitions are denied and the investor and family members -- if in the United States -- are put in deportation (removal) proceedings.
One can argue about the unfairness and injustice of this for quite awhile, but what we (immigration lawyers, Congress, USCIS, regional centers) need to focus on is how to protect the investors. These problems are not their fault and they should not be denied immigration benefits if their money is lost and/or an insuffucient number of U.S. worker jobs is created through no fault of their own.
It is my understanding, although records are incomplete, that USCIS is denying about one-third of the I-829 petitions filed with the California Service Center. This situation is not sustainable if the EB-5 Program is to survive.
News travels fast, and bad news travels faster. If I have a one in three chance of not obtaining a permanent "green card" if I invest through the EB-5 Program, my money is staying home.
There is a precedent in U.S. visa programs for situations where there are failures of eligibility requirements. On October 28, 2009, Congress passed the Department of Homeland Security Appropriations Act for FY2010. Thanks to Brent Renison's organizational skills and relentless lobbying, it contained help for family immigration beneficiaries.
"The Act contains two measures to address survivors’ issues: (1) self-petitioning rights for all widow(er)s of American citizens and their children contained in section 568(c) of the Act; and (2) certain survivors’ rights for family based, employment based, and other immigrants contained in section 568(d)," Renison wrote.
"The 'widow penalty', whereby spouses of U.S. citizens and their children faced automatic denial of a visa petition if the death of the spouse occurred prior to adjudication and prior to two years of marriage, effectively ended upon the passage of § 568(c). That section removes the two-year marriage requirement from the current law that permits widows and widowers ('widow(er)s') of U.S. citizens to file a self-petition for themselves and their children.
"By removing the two-year precondition to a current statutory program, Congress retained the widow(er) self-petition procedure including the requirement to show a good faith marriage. The law does not alter the rights of widow(er)s who were married two years or more, who have been able to self-petition since 1990.
"The deletion of the two-year marriage requirement will allow a widow(er) who was married less than two years at the time of the citizen spouse’s death to file a Form I-360 self-petition within two years of the law’s passage, or within two years of the spouse’s death, whichever is later."
Do you see any parallels by applying the above to the troubled EB-5 Program? First, when it was writing regulations for the EB-5 Program, USCIS plucked the "two-year rule" from the marriage fraud amendments without any consideration of its impact in the business world. That is the two-year conditional period during which the EB-5
investor must "fully invest" his or her money and create 10 U.S. worker jobs.
I am, of course, using the analogy of a deceased U.S. citizen spouse for my proposition that failed EB-5 investment projects or regional centers are akin to the death of a petitioning spouse.
If an EB-5 investment project fails and I, as a foreign investor, have fully invested my money in good faith, should I be able to self-petition for removal of conditions at the I-829 petition phase? I think it's only fair that I be allowed to do so.
What do you think? Should the federal government give these foreign investors the shaft when they cannot (through no fault of their own) meet all of the requirements for removal of conditions (to the permanent "green card"), or should there be a means to self-petition if an EB-5 investment project or regional center fails?
What happens when they get to the I-829 petition stage (removal of conditions) and there is insufficient information from the investment project that the investor's money was "fully invested" as required by federal regulations?
What happens to the investor if there is insufficient information from the investment project that it created at least 10 U.S. worker jobs as required by federal regulations?
What happens to the investor if the investment project fails? What happens to the investor if a regional center fails?
What happens if the investor is approved for removal of conditions but the investment project goes bankrupt?
Apparently neither Congress nor U.S. Citizenship and Immigration Services (USCIS) gave much thought to this because it wasn't happening when the law was passed and the regulations were written. It's happening now. As everyone knows, the worst recession in our lifetimes delivered a roundhouse punch to the U.S. economy, and the recovery -- which is occurring in some parts of the United States -- is extremely slow.
It is in this economic environment that EB-5 investment projects are not doing well or failing. Insufficient jobs are being created to cover EB-5 investment project investors (minimum of 10 U.S. worker jobs each). EB-5 investors' money is being lost. And the consequences for the foreign investors -- who, in good faith, put their hard-earned money down and in many cases sent their families to the United States and their children to enroll in school -- are brutal and patently unfair and unjust.
When the investors have insufficient information and documentation to deliver to USCIS along with their I-829 petitions, the petitions are denied and the investor and family members -- if in the United States -- are put in deportation (removal) proceedings.
One can argue about the unfairness and injustice of this for quite awhile, but what we (immigration lawyers, Congress, USCIS, regional centers) need to focus on is how to protect the investors. These problems are not their fault and they should not be denied immigration benefits if their money is lost and/or an insuffucient number of U.S. worker jobs is created through no fault of their own.
It is my understanding, although records are incomplete, that USCIS is denying about one-third of the I-829 petitions filed with the California Service Center. This situation is not sustainable if the EB-5 Program is to survive.
News travels fast, and bad news travels faster. If I have a one in three chance of not obtaining a permanent "green card" if I invest through the EB-5 Program, my money is staying home.
There is a precedent in U.S. visa programs for situations where there are failures of eligibility requirements. On October 28, 2009, Congress passed the Department of Homeland Security Appropriations Act for FY2010. Thanks to Brent Renison's organizational skills and relentless lobbying, it contained help for family immigration beneficiaries.
"The Act contains two measures to address survivors’ issues: (1) self-petitioning rights for all widow(er)s of American citizens and their children contained in section 568(c) of the Act; and (2) certain survivors’ rights for family based, employment based, and other immigrants contained in section 568(d)," Renison wrote.
"The 'widow penalty', whereby spouses of U.S. citizens and their children faced automatic denial of a visa petition if the death of the spouse occurred prior to adjudication and prior to two years of marriage, effectively ended upon the passage of § 568(c). That section removes the two-year marriage requirement from the current law that permits widows and widowers ('widow(er)s') of U.S. citizens to file a self-petition for themselves and their children.
"By removing the two-year precondition to a current statutory program, Congress retained the widow(er) self-petition procedure including the requirement to show a good faith marriage. The law does not alter the rights of widow(er)s who were married two years or more, who have been able to self-petition since 1990.
"The deletion of the two-year marriage requirement will allow a widow(er) who was married less than two years at the time of the citizen spouse’s death to file a Form I-360 self-petition within two years of the law’s passage, or within two years of the spouse’s death, whichever is later."
Do you see any parallels by applying the above to the troubled EB-5 Program? First, when it was writing regulations for the EB-5 Program, USCIS plucked the "two-year rule" from the marriage fraud amendments without any consideration of its impact in the business world. That is the two-year conditional period during which the EB-5
investor must "fully invest" his or her money and create 10 U.S. worker jobs.
I am, of course, using the analogy of a deceased U.S. citizen spouse for my proposition that failed EB-5 investment projects or regional centers are akin to the death of a petitioning spouse.
If an EB-5 investment project fails and I, as a foreign investor, have fully invested my money in good faith, should I be able to self-petition for removal of conditions at the I-829 petition phase? I think it's only fair that I be allowed to do so.
What do you think? Should the federal government give these foreign investors the shaft when they cannot (through no fault of their own) meet all of the requirements for removal of conditions (to the permanent "green card"), or should there be a means to self-petition if an EB-5 investment project or regional center fails?
Wednesday, January 26, 2011
Dogged reporters cover Atlantic Yards
One of the largest development projects in the United States trying to take advantage of the EB-5 Program and foreign investment is Brooklyn Navy Yard in the Atlantic Yards development, a multi-phase project of the New York City Regional Center.
Controversy has dogged the development since its announcement.
Barclays Center is to be the new home of the New Jersey Nets, which would be renamed the Brooklyn Nets.
Two of the most dogged reporters covering the project are Matt Chaban of the New York Observer, and Norman Oder, a blogger who announced last September that he was quitting his day job to write a book about Atlantic Yards.
See: http://www.observer.com/site-search?keys=Atlantic+Yards&sa.x=6&sa.y=15
and
http://www.huffingtonpost.com/norman-oder/reuters-nails-lies-by-pro_b_801070.html
Controversy has dogged the development since its announcement.
Barclays Center is to be the new home of the New Jersey Nets, which would be renamed the Brooklyn Nets.
Two of the most dogged reporters covering the project are Matt Chaban of the New York Observer, and Norman Oder, a blogger who announced last September that he was quitting his day job to write a book about Atlantic Yards.
See: http://www.observer.com/site-search?keys=Atlantic+Yards&sa.x=6&sa.y=15
and
http://www.huffingtonpost.com/norman-oder/reuters-nails-lies-by-pro_b_801070.html
Sunday, December 5, 2010
Engagement or Dis-Engagement?
U.S. Citizenship and Immigration Services (USCIS) has an Office of Public Engagement. According to USCIS, "[t]he Office of Public Engagement (OPE) coordinates and directs agency-wide dialogue with external stakeholders. OPE actively collaborates with, and seeks feedback from, stakeholders to inform USCIS policies, priorities, and organizational performance reviews. OPE facilitates open and transparent communication between the Agency, external stakeholders, and the customers they represent by sharing feedback, working with Agency leadership, coordinating follow-up, and reporting back to stakeholders. The Office also works closely with other USCIS offices to support the implementation of highly visible outreach programs and public education initiatives."
OPE has three divisions: the Community Relations and Engagement Division, the Intergovernmental Affairs Division, and the Protocol Division. The first and third divisions are those with which I have had the most "engagement". I must say that Community Relations and Engagement is trying. I have been to a couple of community relations events and it appears USCIS district offices are reaching out to the general public to offer better information about what it does.
What is not working are the stakeholders' "engagements" conducted by the Protocol Division, specifically with reference to a little-known job-creation program that could provide badly needed jobs to out-of-work Americans. As I write this, the national unemployment rate has jumped to 9.8 percent!
Each time USCIS has had an opportunity to choose a way to change the EB-5 Program (as this foreign investor immigrant visa program is called), either via memo or via request for evidence, it has always selected the most restrictive change, thus strangling to death the only immigration-related visa program Congress seems to like and support.
Today, for example, USCIS is misapplying its own regulations and guidance and is denying about one-third of the Form I-829 investor petitions to remove conditions on residence (for the permanent green card). This is not sustainable and will be the death of the EB-5 Program.
I have a recommendation. Toss the word "engagement" and use the word "conversation". "Engagement" has a very military meaning to me as someone with 12 years of prior service in the Army. I prefer the word "conversation." Then let's have a few before this important (and unique) job-creating investor visa program goes down the tubes.
OPE has three divisions: the Community Relations and Engagement Division, the Intergovernmental Affairs Division, and the Protocol Division. The first and third divisions are those with which I have had the most "engagement". I must say that Community Relations and Engagement is trying. I have been to a couple of community relations events and it appears USCIS district offices are reaching out to the general public to offer better information about what it does.
What is not working are the stakeholders' "engagements" conducted by the Protocol Division, specifically with reference to a little-known job-creation program that could provide badly needed jobs to out-of-work Americans. As I write this, the national unemployment rate has jumped to 9.8 percent!
Each time USCIS has had an opportunity to choose a way to change the EB-5 Program (as this foreign investor immigrant visa program is called), either via memo or via request for evidence, it has always selected the most restrictive change, thus strangling to death the only immigration-related visa program Congress seems to like and support.
Today, for example, USCIS is misapplying its own regulations and guidance and is denying about one-third of the Form I-829 investor petitions to remove conditions on residence (for the permanent green card). This is not sustainable and will be the death of the EB-5 Program.
I have a recommendation. Toss the word "engagement" and use the word "conversation". "Engagement" has a very military meaning to me as someone with 12 years of prior service in the Army. I prefer the word "conversation." Then let's have a few before this important (and unique) job-creating investor visa program goes down the tubes.
Thursday, October 28, 2010
First time USCIS has halted an EB-5 regional center
By Brooke Edwards of the Victor Valley Daily Press
VICTORVILLE, Calif. • The federal government has terminated Victorville’s foreign investor program, ending the city’s hopes to raise tens of millions of dollars for projects at Southern California Logistics Airport.
It’s the first time U.S. Citizenship and Immigration Services has ever terminated an EB-5 program, agency spokeswoman Mariana Gitmore said by phone Tuesday. She said Victorville hadn’t been able to demonstrate that it meets the criteria to raise funds through the federal program, despite repeated requests for more information.
USCIS approved Victorville’s application as an EB-5 Regional Center in June 2009, allowing the city to solicit $500,000 loans from foreign citizens so long as that money helps create 10 local jobs. In exchange, the foreign lenders are put on the fast track to getting U.S. visas.
USCIS sent the city a rare notice of intent to terminate its EB-5 program in May, raising questions about whether Victorville had misrepresented itself in marketing the program and if projects such as the stalled Victorville 2 power plant are still viable.
The Daily Press has regularly been asking for updates on the status of the program. Most recently, the Daily Press sent an e-mail Monday morning asking whether Victorville had heard back from USCIS. City spokeswoman Yvonne Hester deferred to City Attorney Andre de Bortnowsky, who still hadn’t responded to requests for comment as of Tuesday afternoon.
USCIS sent its final termination notice Oct. 20.
The website www.vveb5.com remained active Tuesday afternoon, still touting Victorville’s EB-5 program even though USCIS ordered any advertisement to stop with its first notice back in May.
VICTORVILLE, Calif. • The federal government has terminated Victorville’s foreign investor program, ending the city’s hopes to raise tens of millions of dollars for projects at Southern California Logistics Airport.
It’s the first time U.S. Citizenship and Immigration Services has ever terminated an EB-5 program, agency spokeswoman Mariana Gitmore said by phone Tuesday. She said Victorville hadn’t been able to demonstrate that it meets the criteria to raise funds through the federal program, despite repeated requests for more information.
USCIS approved Victorville’s application as an EB-5 Regional Center in June 2009, allowing the city to solicit $500,000 loans from foreign citizens so long as that money helps create 10 local jobs. In exchange, the foreign lenders are put on the fast track to getting U.S. visas.
USCIS sent the city a rare notice of intent to terminate its EB-5 program in May, raising questions about whether Victorville had misrepresented itself in marketing the program and if projects such as the stalled Victorville 2 power plant are still viable.
The Daily Press has regularly been asking for updates on the status of the program. Most recently, the Daily Press sent an e-mail Monday morning asking whether Victorville had heard back from USCIS. City spokeswoman Yvonne Hester deferred to City Attorney Andre de Bortnowsky, who still hadn’t responded to requests for comment as of Tuesday afternoon.
USCIS sent its final termination notice Oct. 20.
The website www.vveb5.com remained active Tuesday afternoon, still touting Victorville’s EB-5 program even though USCIS ordered any advertisement to stop with its first notice back in May.
Wednesday, September 1, 2010
Please come to Boston
The second EB-5 conference presented by the American Immigration Lawyers Association was another huge success. More than 425 people attended the August 27 conference, which is a 30 percent increase over the first conference in San Francisco last October 19.
The panel discussions were very good. It became apparent that the problems the EB-5 Program faces are in some part being created by the federal agency charged with overseeing it, USCIS, and in part by regional centers not playing by the rules.
In large measure, however, it is USCIS that is openly hostile to the EB-5 Program and is not interested in Congress's intent that the EB-5 Program become a job-creating engine. It still sputters, and for reasons that only USCIS knows.
Boston was a great setting for the conference and the Seaport Hotel was a fine facility for this size conference.
The panel discussions were very good. It became apparent that the problems the EB-5 Program faces are in some part being created by the federal agency charged with overseeing it, USCIS, and in part by regional centers not playing by the rules.
In large measure, however, it is USCIS that is openly hostile to the EB-5 Program and is not interested in Congress's intent that the EB-5 Program become a job-creating engine. It still sputters, and for reasons that only USCIS knows.
Boston was a great setting for the conference and the Seaport Hotel was a fine facility for this size conference.
Thursday, August 12, 2010
EB-5 investors' FAQ
Q. When was the regional center approved by USCIS, and has it been audited by USCIS?
A. Regional centers that have more recently been approved may have little or no track record of successful immigrant petitions or of job creation. Some regional centers have become inactive, and some have not been audited. Some regional centers that have been audited have seen their approval revoked.
Q. Is the regional center affiliated with any government entity?
A. It can be, but you should look carefully. Does the government entity that has this affiliation have any track record in job creation or economic development? The government entity may have some or no experience in this regard.
Q. How many years of experience do the general partner or principal in the investment project have in working with immigrant investor programs?
A. Although some project developers may have experience with the EB-5 Program, most will not. Do not conflate the regional center with the investment project, if the two are separate and distinct. Such investors invest "through" the regional center and into the job-creating entity (the investment project). Some of the general partners or regional center creators have little or no experience with the EB-5 Program. Others have extensive experience both in the United States and with investor immigrant programs in other countries.
Q. Should I ask how many years of experience the principals involved in the regional center have in job creation?
A. Very good question, and you should ask it. The EB-5 Program is very young, but some of the regional center principals have been involved in job creation and economic development for a long time. Regional center principals who have such experience should be considered in your plan to invest.
Q. Does the regional center investment include direct job creation, indirect job creation, or both?
A. Most regional centers include direct and indirect and induced job creation. A safer alternative is an investment project that relies upon direct job creation only, with a plan to produce an economic impact study showing indirect and induced job creation if needed at the I-829 (removal of conditions) stage.
Q. Can I ask about the regional center's track record -- how many I-526 petitions approved/denied, how many I-829 petitions approved/denied?
A. You would be foolish not to ask these important questions. If the regional center will not provide this information, do not pursue an investment through that regional center. The safest regional centers at this point in time are those that have I-829 approvals, but there are very few of these.
Q. Do I have to deposit or pay a fee to get a copy of the securities offering?
A. Some regional centers charge a deposi, which is applied to the regional center's administrative services fee if you invest. Some regional centers charge a flat fee to receive a copy of the securities offering. Other regional centers charge no fee for the privilege.
Q. What amount do I have to pay to invest?
A. In most regional centers, the investment amount is $500,000. Regional centers generally charge an administrative services fee of from $25,000 to $60,000. America's Center for Foreign Investment typically charges the investor $30,000 for five years of EB-5 compliance services.
Q. Do I make a payment into an escrow account? Is the investment amount refunded if the I-526 is not approved?
A. Most regional centers use escrow accounts to deposit the investor's $500,000 and the regional center's administrative services fee. The provision of an escrow account with the money remaining in escrow until the I-526 petition is approved is a critical security feature for the investor.
Q. Can I redeem my investment following conditions removal?
A. We certainly hope so. With some regional centers, this is fairly certain; with others it is not. Although third-party indemnity insurance contracts are permitted by USCIS, there is that nagging doubt that such contracts may not meet the regulatory “at risk” requirement.
Q. What provisions are made regarding the security of the investment?
A. The federal law governing the EB-5 Program states that your investment is "at risk". You should perform due diligence regarding the likely security of your investment. Professional financial advisors can help you.
Q. What use is made of the investor’s funds? What is the type or types of projects?
A. Regional center investments may involve commercial building projects, condominiums, hotels, film studios, heavy and light manufacturers, warehouses, real estate, and other types of projects.
Q. What form of investment should I invest in? Are there different business models out there?
A. Yes. The most common investment vehicle is a limited partnership that loans money to a job-creating entity. Other forms of investment structure include limited liability companies that may be a partnership, equity investments, venture capital funds, and real estate investment trusts (REITs). These types of projects vary from regional center to regional center.
Q. What has been the rate of return to investors historically?
A. It varies. Usually 2 to 5 percent. Regional centers promising outrageously high returns -- such as 15 to 30 percent -- are probably investments that are too good to be true. Then again, an investment project offering a 2 percent return might be a much safer and more secure investment. Investors may need to balance the importance of immigration track record, security of the investment and rate of return on the investment project's structure For example, a project may have more than a few ways to take you out (i.e., return your $500,000), thus increasing the likelihood that you will get your money back.
Q. Does the regional center provide regular reporting of the status of the investment to the investors, and at what intervals?
A. Yes, the best ones do. You should expect regular reports with an update on the investment project, job creation and new investment opportunities, at least quarterly.
Q. Once I have invested my money, how do I monitor job creation? What steps are taken if the requisite job creation has not occurred?
A. The investor should look for an investment project with detailed job reporting on a regular basis and with a provision that failure to create the required jobs establishes a basis for reinvestment of the proceeds in another project, so as to keep the investor’s immigration and investment process on schedule.
Q. Do you have a lawyer I have to use?
A. Some regional centers require the investor to use the regional center’s lawyer to file the investor petition, and others do not. The regional center’s immigration attorney may provide review and counseling to an investor’s lawyer. A general counsel of a regional center, such as myself, will work closely with the investor's lawyer to insure EB-5 compliance. A few regional centers do this.
Q. Does the regional center’s attorney contact the foreign national directly, or can the referring attorney maintain all contact with the foreign national?
A. With some regional centers, the lawyer deals directly with the investors. With others, even if the regional center’s lawyer handles the investor petition, the lawyer may deal only with the referring lawyer at the referring lawyer's request.
A. Regional centers that have more recently been approved may have little or no track record of successful immigrant petitions or of job creation. Some regional centers have become inactive, and some have not been audited. Some regional centers that have been audited have seen their approval revoked.
Q. Is the regional center affiliated with any government entity?
A. It can be, but you should look carefully. Does the government entity that has this affiliation have any track record in job creation or economic development? The government entity may have some or no experience in this regard.
Q. How many years of experience do the general partner or principal in the investment project have in working with immigrant investor programs?
A. Although some project developers may have experience with the EB-5 Program, most will not. Do not conflate the regional center with the investment project, if the two are separate and distinct. Such investors invest "through" the regional center and into the job-creating entity (the investment project). Some of the general partners or regional center creators have little or no experience with the EB-5 Program. Others have extensive experience both in the United States and with investor immigrant programs in other countries.
Q. Should I ask how many years of experience the principals involved in the regional center have in job creation?
A. Very good question, and you should ask it. The EB-5 Program is very young, but some of the regional center principals have been involved in job creation and economic development for a long time. Regional center principals who have such experience should be considered in your plan to invest.
Q. Does the regional center investment include direct job creation, indirect job creation, or both?
A. Most regional centers include direct and indirect and induced job creation. A safer alternative is an investment project that relies upon direct job creation only, with a plan to produce an economic impact study showing indirect and induced job creation if needed at the I-829 (removal of conditions) stage.
Q. Can I ask about the regional center's track record -- how many I-526 petitions approved/denied, how many I-829 petitions approved/denied?
A. You would be foolish not to ask these important questions. If the regional center will not provide this information, do not pursue an investment through that regional center. The safest regional centers at this point in time are those that have I-829 approvals, but there are very few of these.
Q. Do I have to deposit or pay a fee to get a copy of the securities offering?
A. Some regional centers charge a deposi, which is applied to the regional center's administrative services fee if you invest. Some regional centers charge a flat fee to receive a copy of the securities offering. Other regional centers charge no fee for the privilege.
Q. What amount do I have to pay to invest?
A. In most regional centers, the investment amount is $500,000. Regional centers generally charge an administrative services fee of from $25,000 to $60,000. America's Center for Foreign Investment typically charges the investor $30,000 for five years of EB-5 compliance services.
Q. Do I make a payment into an escrow account? Is the investment amount refunded if the I-526 is not approved?
A. Most regional centers use escrow accounts to deposit the investor's $500,000 and the regional center's administrative services fee. The provision of an escrow account with the money remaining in escrow until the I-526 petition is approved is a critical security feature for the investor.
Q. Can I redeem my investment following conditions removal?
A. We certainly hope so. With some regional centers, this is fairly certain; with others it is not. Although third-party indemnity insurance contracts are permitted by USCIS, there is that nagging doubt that such contracts may not meet the regulatory “at risk” requirement.
Q. What provisions are made regarding the security of the investment?
A. The federal law governing the EB-5 Program states that your investment is "at risk". You should perform due diligence regarding the likely security of your investment. Professional financial advisors can help you.
Q. What use is made of the investor’s funds? What is the type or types of projects?
A. Regional center investments may involve commercial building projects, condominiums, hotels, film studios, heavy and light manufacturers, warehouses, real estate, and other types of projects.
Q. What form of investment should I invest in? Are there different business models out there?
A. Yes. The most common investment vehicle is a limited partnership that loans money to a job-creating entity. Other forms of investment structure include limited liability companies that may be a partnership, equity investments, venture capital funds, and real estate investment trusts (REITs). These types of projects vary from regional center to regional center.
Q. What has been the rate of return to investors historically?
A. It varies. Usually 2 to 5 percent. Regional centers promising outrageously high returns -- such as 15 to 30 percent -- are probably investments that are too good to be true. Then again, an investment project offering a 2 percent return might be a much safer and more secure investment. Investors may need to balance the importance of immigration track record, security of the investment and rate of return on the investment project's structure For example, a project may have more than a few ways to take you out (i.e., return your $500,000), thus increasing the likelihood that you will get your money back.
Q. Does the regional center provide regular reporting of the status of the investment to the investors, and at what intervals?
A. Yes, the best ones do. You should expect regular reports with an update on the investment project, job creation and new investment opportunities, at least quarterly.
Q. Once I have invested my money, how do I monitor job creation? What steps are taken if the requisite job creation has not occurred?
A. The investor should look for an investment project with detailed job reporting on a regular basis and with a provision that failure to create the required jobs establishes a basis for reinvestment of the proceeds in another project, so as to keep the investor’s immigration and investment process on schedule.
Q. Do you have a lawyer I have to use?
A. Some regional centers require the investor to use the regional center’s lawyer to file the investor petition, and others do not. The regional center’s immigration attorney may provide review and counseling to an investor’s lawyer. A general counsel of a regional center, such as myself, will work closely with the investor's lawyer to insure EB-5 compliance. A few regional centers do this.
Q. Does the regional center’s attorney contact the foreign national directly, or can the referring attorney maintain all contact with the foreign national?
A. With some regional centers, the lawyer deals directly with the investors. With others, even if the regional center’s lawyer handles the investor petition, the lawyer may deal only with the referring lawyer at the referring lawyer's request.
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