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Los Angeles County Attorney

EB-5 Visa

Employment Based visa category 5 allows foreign national investors and their families to live and work in the United States.

If you and your family are interested to obtain US permanent residency status and you have the money to invest $500,000 in one of US immigration approved EB5 regional centers projects, you may come and live and work legally in America. You do not need a work sponsor and you can choose to live anywhere in US. You, your spouse, and your under 21 children all get the green card and within five years of acquiring your legal residency you may be eligible to get your US passport. For those individuals that the U.S existing immigration laws do not provide a solution, for example, if you do not have eligible family members to get a green card through family based visa categories or you do not have an employer for work sponsorship to get a green card, EB5 could be the solution to US legal residency and a path to US citizenship.

Overview of the EB-5 Visa Program

This employment based visa preference also known as EB-5 Immigrant Investor is reserved for business investors who invest $1 million or $500,000, if the investment is made in what USCISS calls a "Targeted Employment Area" in a new commercial enterprise that employs at least 10 full-time U.S. workers. No Labor Certification Required is required for this work visa category.

USCIS administers the Immigrant Investor Program, also known as "EB-5," created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by USCIS based on proposals for promoting economic growth.

There are 10,000 visas available in the category each year, 3,000 of which are set aside for investment through designated regional centers regardless of TEA status. There are three basic requirements for an EB-5 visa:

  • the alien must establish a business or invest in an existing business that was created or restructured after November 19, 1990
  • the alien must have invested $1 million (only $500,000 when investing in a TEA through a USCIS designated regional center) in the business
  • the business must create full-time employment for at least 10 US workers per investor

All EB-5 investors must invest in a new commercial enterprise, which is a commercial enterprise:

Commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to:

· A sole proprietorship

· Partnership (whether limited or general)

· Holding company

· Joint venture

· Corporation

· Business trust or other entity, which may be publicly or privately owned

This definition includes a commercial enterprise consisting of a holding company and its wholly owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business.

Note: This definition does not include noncommercial activity such as owning and operating a personal residence.

Job Creation Requirements

· The commercial enterprise or the EB-5 Visa investment must create or preserve at least 10 full-time jobs for qualifying U.S. workers within two years (or under certain circumstances, within a reasonable time after the two-year period) of the immigrant investor's admission to the United States as a Conditional Permanent Resident.

· Create or preserve either direct or indirect jobs:

o Direct jobs are actual identifiable jobs for qualified employees located within the commercial enterprise into which the EB-5 investor has directly invested his or her capital.

o Indirect jobs are those jobs shown to have been created collaterally or as a result of capital invested in a commercial enterprise affiliated with a regional center by an EB-5 investor. A foreign investor may only use the indirect job calculation if affiliated with a regional center.

Note: Investors may only be credited with preserving jobs in a troubled business.

A troubled business is an enterprise that has been in existence for at least two years and has incurred a net loss during the 12- or 24-month period prior to the priority date on the immigrant investor's Form I-526. The loss for this period must be at least 20 percent of the troubled business' net worth prior to the loss. For purposes of determining whether the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.

A qualified employee is a U.S. citizen, permanent resident or other immigrant authorized to work in the United States. The individual may be a conditional resident, an asylee, a refugee, or a person residing in the United States under suspension of deportation. This definition does not include the immigrant investor; his or her spouse, sons, or daughters; or any foreign national in any nonimmigrant status (such as an H-1B visa holder) or who is not authorized to work in the United States.

Full-time employment means employment of a qualifying employee by the new commercial enterprise in a position that requires a minimum of 35 working hours per week. In the case of the Immigrant Investor Pilot Program, "full-time employment" also means employment of a qualifying employee in a position that has been created indirectly from investments associated with the Pilot Program.

A job-sharing arrangement whereby two or more qualifying employees share a full-time position will count as full-time employment provided the hourly requirement per week is met. This definition does not include combinations of part-time positions or full-time equivalents even if, when combined, the positions meet the hourly requirement per week. The position must be permanent, full-time and constant. The two qualified employees sharing the job must be permanent and share the associated benefits normally related to any permanent, full-time position, including payment of both workman's compensation and unemployment premiums for the position by the employer.

Capital Investment Requirements

Capital means cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness. All capital shall be valued at fair-market value in United States dollars. Assets acquired, directly or indirectly, by unlawful means (such as criminal activities) shall not be considered capital for the purposes of section 203(b)(5) of the Act.

Note: Investment capital cannot be borrowed.

Required minimum investments are:

· General. The minimum qualifying investment in the United States is $1 million.

· In Targeted Employment Area, where unemployment is above certain rate or rural area, the minimum qualifying investment is $500,000.

A targeted employment area is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate.

A rural area is any area outside a metropolitan statistical area (as designated by the Office of Management and Budget) or outside the boundary of any city or town having a population of 20,000 or more according to the decennial census.

Application Procedure

The following is a basic overview of the steps required. The alien investor must submit a completed Form I-526 (Immigrant Petition by Alien Entrepreneur) to U.S. Citizenship and Immigration Services ("USCIS") along with supporting documentation clearly demonstrating that the investment meets all EB-5 requirements.

To obtain immigrant visa:

After the Form I-526 is approved, if the foreign national investor is residing within the U.S., the alien investor must submit a completed Form I-485; Application to Register Permanent Residence or Adjust Status to USCIS. If residing outside the U.S., the alien investor must contact US Department of State and the National Visa Center and go through the consular application procedure and obtain the immigrant visa at a US Consulate abroad. The alien applicant, and his spouse and under 21 children, will be granted US conditional legal residency when I-485 is approved or the consulate office issues the immigrant visa and applicant arrives in US. If you are abroad you must enter the U.S. within six months of the date of the Embassy approval.

The alien investor must submit a completed Form I-829 (Petition by Entrepreneur to Remove Conditions) to USCIS, within 90 days before the second anniversary of admission to the U.S. as a conditional resident in order to acquire US legal permanent residency.

Processing Time

USCIS posts their processing times in their website and it vary by number of cases they review and process at the time. After an application has been processed and approved by USCIS, each investor must clear Form I-485 or the consular interview process after I-526 approval and before green card issuance.

Preliminary List of EB-5 Visa Application Required Documents

At Warner Law Center we assist you to prepare complete biographical information and the source of funds report.

Investor documents and requirements

The list of documents needed for an EB-5 investor application is extensive and will vary on a case-by-case basis. Generally, an investor and his/her family members will need the following:

Personal Documents

  • The investor must present full and complete personal biographical information for yourself, and any family members (spouse, children under 21)
  • Any and all IDs, including: passports, national IDs, U.S. driver's licenses and social security cards (if applicable), birth certificates;
  • Marriage certificates and/or divorce decrees (if applicable);
  • The USCIS will require information regarding the investor's education, employment history, and business experience, including but not limited to résumés, diplomas, and business registrations;
  • The USCIS will require court/prison records, military records;
  • The USCIS will require photographs: two color photographs in passport style. No head covering or dark glasses should be worn.

Government and Financial Documents

The USCIS requires financial statements:

The investor must prove that they have a level of income or have accumulated sufficient wealth that would enable the investor to invest.

The investor must prove the invested capital is from a "lawful" source. Regardless of who provides the capital the source of funds must be provable from a lawful source.

To prove the source of investment funds, USCIS requires five years of personal and business, if any, tax returns, proof of ownership in any businesses and business licenses. You must present a track record of an honest course of dealing.

If the source of funds came from a specific transaction, such as an inheritance or gift, you must prove the transaction occurred by providing an official document, such as a closing statement or contract.

Other evidence may include but need not be limited to bank statements, stock certificates, any loan or mortgage documents, promissory notes, security agreements or other evidence of borrowing which is secured by assets of the applicant, a gift statement, a loan statement, etc.

  • USCIS Form I-526
  • USCIS Form I-485 (If in the U.S.), OR Form DS-230 (If outside the U.S.)
  • USCIS Form I-829 (Petition to Remove Conditions on Residence)
  • Other Supporting Documents.
  • The filing fee for Form I-526 Petition is $1,500.

Preliminary List of Required Documentation:

The following is a generic list of items needed and not exhaustive and investors should consult with immigration counsel.

· Passport identification page (for you and the family members who will be immigrating with you)

· U.S. visa stamps and I-94 Departure Record (for you and the family members who are currently in the U.S)

· Birth certificates and marriage certificate

· Net worth statement/statement of investor's financial status

· Earnings and account statements, employer letters, closing documents, property deeds, and other documents regarding source of funds

· Bank account statements and wire transfer records regarding withdrawal and transfer of funds from your bank account to U.S. enterprise

· Business registration/incorporation documents of any businesses owned in U.S. and abroad

· Individual income tax returns for past 5 years in US and abroad as applicable

· Business income tax returns for past 5 years in US and abroad as applicable

· Principal investor's resume or work history statement

Sour of Funds:

The most common problem area in EB-5 cases has often been insufficient documentation of the source of investment funds. Many applicants are hesitant to disclose the required financial information and USCIS in turn sends a burdensome request for additional information and evidence. It is advisable to provide more documented information rather than too little information. Immigration case examiners are highly altered to these issues and require a well-documented source of funds. At Warner Law Center we assist you to analyze and detect potential issues and we help you to prepare a well-organized source of funds report in support of your petition for investor visa packet.

DOCUMENTING LAWFUL SOURCE OF FUNDS

The EB-5 regulations require the investor to prove that the invested capital was "obtained through lawful means." Specifically, 8CFR§204.6(j)(3) requires either "foreign business registration records"; corporate, partnership and personal tax returns filed within 5 years; "evidence identifying any other source of capital"; or documentation of court judgments or pending court cases. However, in practice, this is one of many examples in EB-5 practice where USCIS ventures well beyond the regulatory requirements in insisting upon far more substantial documentation to prove lawful source of funds. Although the regulatory list of documents is in the disjunctive, in practice USCIS requests all of the listed categories of documents and, in most cases, significant additional documentation.

What follows is the outline of suggested types of documents to meet the lawful source of funds requirements. In reviewing this list, the client or attorney should be aware of the following practice pointers based upon the author's experience with these types of applications:

  • As indicated above, this is one area of the law where simply following the regulations will not be sufficient. The regulatory requirements (including especially the 5 years of tax returns) should be viewed as a starting point. In some cases (unfortunately not the norm), tax returns will show a sufficient enough income to preclude the necessity of any further documentation.
  • The requirement to document lawful source of funds is the same whether the investment is an individual investment or a regional center investment.
  • Documenting lawful source of funds requires extreme attention to detail and knowledge of business documentation and sometimes of finance and accounting. Many financial transactions require a multitude of documents to evidence, and USCIS will insist on all of the detailed documentary evidence.
  • It is only necessary to prove where and how the investor obtained the $500,000 or $1,000,000 required to be invested. It is not necessary to prove where the investor obtained every dollar that he or she now has or ever had.
  • The difficulty of documenting the lawful source of funds often varies greatly by country. It can be especially difficult in countries where no tax returns are required to be filed or where full disclosure of revenues and profits on tax returns is the exception rather than the rule. Where tax returns are not required to be filed, this should be documented. Where tax returns are required to be filed but the individual's tax returns show very little income, the documentation of the source of funds should provide overwhelming evidence to counter the negative implication that comes from a review of the tax returns.
  • Documenting lawful source of funds is a different requirement than the requirement to trace the funds from the individual investor to the investment enterprise. This also needs to be done in great detail. For countries with restrictions on the outflow of currency, this can be especially difficult, since the investor may engage in several layers of transactions between the money leaving the investor's account overseas and arriving in the US enterprise.
  • In documenting lawful source of funds, the ultimate focus is on the person who originally obtained the funds. If the investor obtained all of the funds on her own, this is not an issue. If the funds were the result of a gift, the lawful source of the giftor's funds must be documented. If the source of funds was a loan, the lawful source of the lender's funds must be documented, as well as the lawful source of any collateral put up by the investor for the loan. If the source of funds is an inheritance, the decedent's source of funds may be the issue.
  • Very often in documenting lawful source of funds, the attorney or client must make a judgment regarding how far back to go with the documentation. For example, if the source of funds is a real estate transaction that resulted in substantial proceeds from the sale of real estate, the documentation of the real estate sale is certainly required. If the real estate was purchased within the last several years, it is highly recommended to document how the investor obtained the money to purchase the real estate that has now been sold. If the real estate was purchased 30 years ago, it may be impossible to provide such documentation. There is no clear line regarding how far back one must go to obtain documentation, with "reasonableness" being the rule of thumb. The same concepts apply to, for example, securities transactions. For inherited money, if the decedent earned his or her money 50 years ago, USCIS may agree it is not possible to document the earning of those funds at the present time.
  • If the investor obtained the invested money through unlawful employment in the US, issues may be raised by USCIS.
  • Although primary documents should be obtained wherever possible, written statements, affidavits and resumes can help fill some of the holes in the primary documentation and can help to paint a picture that satisfies the USCIS examiner that the invested capital had a lawful source.
  • It is always a good idea to provide a narrative description of the investor and the invested funds, with citations to the documentary exhibits, rather than relying on the USCIS examiner to understand all of the documentation and to draw the conclusion that the investor wants drawn from the documentation.
  • In many EB-5 cases, documenting the lawful source of funds can be the most arduous and time consuming part of the process. The investor should be forewarned of the need for substantial documentation. Sometimes, the investor may have gone to great lengths to avoid having documentation of the very transactions that now have to be proved for purposes of the EB-5 petition. A good rule of thumb is that if the attorney can understand, through the documentation, where the money came from, the chances of being able to satisfy USCIS should be greatly enhanced.

Q&A on EB5 Visa

What is the Source of Law?

You can find out information on EB-5 Green Card Law on the USCIS EB-5 Immigrant Investor website.

EB-5: was created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by USCIS based on proposals for promoting economic growth.

EB-5 Regional Center - The Immigrant Investor Pilot Program ("Pilot Program") was created by Section 610 of Public Law 102-395 (Oct. 6, 1992), and has been extended through Sept. 30, 2012. EB-5 requirements for an investor under the Pilot Program are essentially the same as in the standard EB-5 investor program, except the Pilot Program provides for investments that are affiliated with an economic unit known as a "Regional Center." Investments made through regional centers can take advantage of a more expansive concept of job creation including both "indirect" and "direct" jobs.

What is a Regional Center?

A Regional Center is defined as any economic entity, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment. The organizers of a regional center seeking the "Regional Center" designation from USCIS must submit a proposal, supported by economically or statistically valid forecasting tools, showing:

· How the regional center plans to focus on a geographical region within the United States. The proposal must explain how the regional center will promote economic growth in that region.

· How, in verifiable detail (using economic models in some instances), jobs will be created directly or indirectly through capital investments made in accordance with the regional center's business plan.

· The amount and source of capital committed to the regional center and the promotional efforts made and planned for the business project.

· How the regional center will have a positive impact on the regional or national economy.

Do Spouses and Children Get a Green Card?

Your spouse and unmarried children under the age of 21 may be admitted to the U.S. with you on a two-year conditional period. If your I-829 petition to remove conditions is approved, the conditions will be removed from your spouse and children's Green Card status. As lawful permanent residents your spouse and children will be authorized to work or attend school in the U.S.

Are There Advantages to Investors who Immigrate with Family?

Children of families who immigrate under EB-5 are permitted to attend public schools, elementary through high schools without paying tuition. Children who attend college or university in the United States will not be required to pay the international student tuition rate, which is substantially higher. Permanent legal residents may apply for admission to American universities in the same manner and pay the same tuition as US citizens.

Do Eb5 Investors Must Remain in US at all times?

When the consulate office approves the investor's immigrant visa applications they must enter US within 180 days of visa issuance. The investor must then establish residency in the United States. Evidence of intent to reside includes opening bank accounts, obtaining a driver's license or social security number, paying state and federal income taxes, leasing or purchasing a home. Generally, permanent residents must not stay out of US for longer than 180 days every time they travel out of states. A green card holder who remains outside the United States for more than one year without obtaining a returning resident visa may be found to have abandoned his/ her legal permanent residency status. However, in determining whether your status has been abandoned, any length of absence from the U.S. may be considered, even if it is less than one year.

What is the most common structure for the pool of investment funds?

The general/limited partnership model is the most common structure for the pool of investment funds that make up a commercial enterprise. An investor purchases an interest in the limited partnership. The limited partnership is the business entity responsible for creating and operating the new commercial enterprise used to satisfy the requirements of EB-5. The immigrant investor becomes a limited partner in the partnership and the percentage of shares conveyed to the EB-5 investor depends on the percentage the investment bears to the value of the project. The prospectus for each project will describe the valuation methodology.

What are the risks to the immigrant investor?

Just like any real estate investment, there is risk of loss for the Eb5 investor. At Warner Law Center we provide investors with projects that are compliant with the EB-5 program and analyze each project in and from the view point and objects of individual of investor. Not two investment opportunities may be alike in terms of business activities, investment returns, the scope of project and length of time it takes to complete the project.

The investment, in order to qualify for the EB-5 program, has to be "at risk". Our goal is to meet the "at risk" criteria, while at the same time minimizing the risk of loss for all investors. At Warner Law Center we strive to identify and present to potential investor, projects that achieve this. Ultimately, an investor needs to put a level of trust in their broker, our team, and our proven track record. We also urge all investors to independently verify information contained in a project's business plan and thoroughly review the Offering Package. Our goal is to build a network of global investors that will continue to invest in our projects. Success is the best way for all of us to ensure that this goal is realized.

What are the Requirements for Source of Investment Funds?

The investment funds must come from a lawful source. Lawful sources may include: personal earnings, for example, wages, salaries, rent income, profits from the sales of a property, stocks or bonds, profits from business, a loan secured by personal assets of the immigrant investor, business transactions, gifts, and inheritances.

How to Prove Investment Funds are Lawful?

In order to prove a lawful source of investment fund, the USCIS generally asks for five years of tax returns, five years of bank records, proof of ownership in any businesses, financial statements for each business, and business licenses. The idea is to present a track record of an honest course of dealing. If your capital came from a specific transaction, such as sale of a house, inheritance or gift, you must prove the transaction occurred by providing an official document, such as a closing statement or contract, or other official documents. In certain countries that do not have income tax return filings, as in US, this may be a challenging task.

What kind of return can I expect from the investment?

The level of return an investor can expect depends on the business opportunity and the particular business or regional center. into which they invest. Therefore, the expected returns are presented on a case-by-case basis. Generally, a higher risk investment will bear a higher return. Likewise, the lower the risk, the smaller the return an investor can expect. Most importantly, the receipt of an EB-5 Green Card does not depend on the return on investment; only that the investment creates the number of required jobs. Your Eb5 counsel cannot guarantee investments, but does work diligently to maintain the security of the investment at all times, comply with EB-5 guidelines throughout the entire project cycle, as well as maximize the potential return on investment.

Where to Start?

EB-5 investment opportunities are available on a first-come, first-serve basis. Investors who need additional time to gather or coordinate their capital investment may make a non-refundable deposit of $50,000 for a 90-day period to raise the required amount. The deposit and/or the full amount of the capital investment shall be wire transferred to a bank escrow account to secure your investment opportunity. At Warner Center we begin counseling you on the necessary documentation that needs to be organized for your initial visa application.

Who Should Consider an Eb5 Regional Center to Get Green Card?

There are many potential foreign individuals who are interested to come and work and live in US and seeking permanent residence in the U.S for existing immigration laws do not provide a solution that addresses their needs. For many of these individuals, the lack of options is nothing new; for a significant amount of others, paths that previously existed have now been blocked.

Although certainly not for everyone, one visa category that provides an optimal solution for many of these potential clients is the EB-5 regional center investment option. The EB-5 regional center allows a foreign national and his or her spouse and children to obtain employment authorization relatively promptly; allows the foreign national to work wherever he or she pleases (or not work if he or she pleases); and allows his or her children to go to school in the U.S. and to pay in-state tuition. Given the unprecedented favorable exchange rate for most foreign currencies against the U.S. dollar, the required investment amount - - usually $500,000 - - is not an insurmountable obstacle to many foreign national clients.

Regional Center Potential Investor Applicant List:

The following are examples of foreign nationals for whom investment in an approved regional center may be the best immigration option:

  • Retirees - these potential clients are often devoid of immigration options if they do not have a close family member or employer to sponsor them.
  • Potential H-1B shut out by quota - - This group is growing larger every year. As the H-1B category deteriorates into a lottery, new options - - even if not the most preferable options - - must be explored.
  • H-1B nearing six year limit - - Some of these individuals did not initiate the permanent residence process early enough; others have no permanent residence options available. Unless something can be done very quickly, these individuals will be out of options.
  • Investors from non-treaty countries - - For some foreign nationals, an E-2 nonimmigrant treaty investor visa may be completely sufficient but for the fact that they are not nationals of a country that has an E-2 treaty with the U.S.
  • Individual owner of a business outside of the U.S. who wants to set up a business in the U.S. - - Some of these individuals will not qualify for L-1 status because the overseas company will close upon transfer of the owner/manager to the U.S.
  • Entrepreneurs who want to set up a new business in the U.S. - - Some of these individuals will not qualify for L-1 because there is no related company overseas or because the individual does not have the one year of qualifying experience. Others may not qualify for E-2, L-1 or individual EB-5 because the U.S. company will not create any jobs or sufficient jobs in the near future. Still others may not want to wait to apply for permanent residence until the U.S. company has engaged in active business for one year.
  • Potential L-1 applicants who are nationals of a country (such as China or Russia) for which USCIS views startup L-1s with great suspicion.
  • F-1 student who wants to start a business - - Since on-campus employment for a business unrelated to the needs of the student body, and any off-campus employment, may be unavailable to the F-1, wealthy parents may provide an answer.
  • Spouse of permanent resident - - With long quota wait and no derivative status available, visa options are extremely limited.
  • Doctor who has not passed USMLE 1, 2 and 3 – Unless the doctor has a level of national prominence, H-1B is not an option.
  • Foreign nationals in a multiple-year immigrant quota waiting list - - As quotas in virtually all family and employment-based categories get longer, and with the prospects worsening, a permanent residence category with no quota wait becomes even more alluring.
  • CEO/manager of a company who is not a transferee - - With H-1B numbers unavailable, and with labor certification a particularly inappropriate option, another solution becomes necessary.
  • Parent who does not want to be involved in active management of, or employment in, a business but wants the children to be able to go to school in the U.S. - - F-1 may not be an option either because the children are pre-college or because INA §214(b) may be an obstacle. A relatively prompt route to permanent residence without a commitment that the parent work in the U.S. is an ideal option. The possibility of qualifying for in-state tuition on a relatively expedited basis is a special bonus.
  • Foreign national affected by Department of Labor regulations requiring employers to pay labor certification fees and costs - - Many employers cannot or will not pay legal fees and advertising costs for a labor certification application on behalf of a foreign national employee. This group of foreign nationals who could previously obtain permanent residence based upon employer sponsorship now needs another option.
  • Any foreign national with an urgent need or desire to become a permanent resident of the U.S.

What are the Differences between Regional Center and Individual EB-5

The profiles of the individual EB-5 investor and the regional center EB-5 investor are generally rather different. The individual EB-5 investor generally has the following characteristics:

  • He or she actually wants to start and/or manage a business.
  • His or her business will be creating employment up front.
  • The investment is the driving force behind his or her wanting to come to the US.
  • He or she wants to have control over his or her investment.
  • He or she wants to maximize profits from his or her investment.

On the other hand, the regional center often meets the needs of investors with a different set of characteristics:

  • He or she is not interested in starting a business.
  • He or she may be a retiree.
  • Although he or she may want to start a business, it will not create sufficient employment for an individual EB-5.
  • He or she wants to be geographically mobile.
  • He or she wants to spend a significant amount of his or her time outside of the US.
  • Immigration - - rather than US business - - is the driving force behind his or her investment.

Partly because regional center investments address the needs of the foreign nationals described above, and partly because the standards for individual EB-5 petitions are so restrictive, the number of EB-5 regional center petitions has increased substantially in recent years and now exceeds 90% of the total number of EB-5 petitions filed.

Before discussing the details of EB-5 regional center petition filings, some background is in order. Established in 1992, the U.S. Immigrant Investor Pilot Program has had a troubled past. The program was suspended in 1997 because of two major problems:

a. Failure by investors to complete their total investments; and

b. Failure of the investment projects to create jobs.

Under the new guidelines of the program, issued in 2002, regional center investors are now required to invest the full $500,000 before submitting the I-526 petition, thereby resolving the first problem. As will be discussed in more detail below, the second problem has been resolved to a greater extent by some regional centers and to a lesser extent by others. For this reason, choosing the optimal regional center is a critical decision.

The Immigrant Investor Pilot Program remains a "pilot program" with continuing extensions through the present date. The latest extension expires September 30, 2012. Because of the success of the program both in terms of attracting investors and in terms of providing capital for economic development and job creation, as of the date of this article there is an expectation that the pilot program will be extended --perhaps permanently--by Congress.

Comparing Regional Center and Individual EB-5

The major advantage of the regional center as compared with an individual EB-5 investment is that indirect employment creation is allowable. In many cases, the sole remaining issues are tracing the funds from the investor to the regional center and proving the lawful source of the investor's funds. This eliminates the need to deal with the many complicated issues involved in an individual EB-5 petition for which the investment enterprise has not been pre-approved, such as whether the investment entity qualifies as a "new commercial enterprise;" whether the investment is in a "troubled business;" and whether the requisite "direct employment creation" has taken place.

In addition, the regional center option is advantageous because:

  • The foreign national can live anywhere he or she wishes in the U.S.;
  • The foreign national can work anywhere he or she wants; or not work, as he or she pleases;
  • The foreign national's children may stay in the U.S. and study in the U.S.; and
  • The foreign national can travel in and out of the U.S. as frequently as he or she desires.

The following analysis illustrates the similarities and differences between the individual EB-5 investment and the regional center investment with reference to some of the major elements involved in EB-5 adjudications:

Amount of Investment:

Most of the approved regional centers have been approved as "targeted employment area" investments, thus qualifying for the reduced $500,000 investment requirement. 8 C.F.R. § 204.6 (e). Individual EB-5 investments are either $500,000 or $1,000,000 depending upon whether the investor can prove that the investment is in a "rural area" or in an area which has experienced unemployment of at least 150% of the national average rate. Otherwise, if the investor does not meet her burden of proof on these points, the required amount of investment is $1,000,000.

Job Creation:

An individual EB-5 petition requires proof of "full-time employment" as direct employees (not independent contractors) of ten U.S. workers. 8 C.F.R. § 204.6 (j)(4). Although technically the requisite employment does not have to have been created at the time of approval of the I-526 petition, adjudication history reveals great difficulty in getting individual EB-5 petitions approved based upon business plans showing that the requisite employment will be created within the two year period before the necessity of filing a condition removal petition.

This problem is solved with the regional center petition if the employment creation has been pre-approved for a particular project. In any event, pursuant to 8 CFR §204.6 (e), the regional center can qualify based upon indirect employment creation generated in the community through the regional center investment.

Although an investment in the regional center does not raise the issue of direct employment creation for purposes of the I-526 approval, the choice of regional center in which the investment is made is critical. In order for the investor to have conditions removed after the end of the two year conditional period, USCIS will have to be satisfied that the direct or indirect employment creation has actually taken place or will occur in a "reasonable time". 8 C.F.R. § 204.6 (a)(4). Choosing a regional center with a track record of employment creation thus enhances the likelihood that the investor will, in fact, be able to remove conditions, and become a non-conditional permanent resident. The investor should scrutinize how job creation is documented and calculated and the economic models of job creation methodologies utilized for determining indirect job creation.

Management:

As part of the pre-approval process, the regional center had to satisfy USCIS that the investors would be engaged in the "management" of the enterprise as opposed to maintaining a "purely passive role." 8 C.F.R. § 204.6 (j)(5). This must be proven on a case-by-case basis by the individual EB-5 petitioner.

Most of the regional centers are limited partnerships. Pursuant to 8 CFR §204.6 (j)(5)(iii), if the petitioner is a limited partner and the limited partnership agreement provides the petitioner with the rights, powers and duties normally granted to limited partners under the Uniform Limited Partnership Act, the investor will be considered sufficiently engaged in the management of the enterprise. As a practical and legal matter, this requirement can be met by a limited partner without the necessity of the investor committing to any specific amount of time or engaging in any day-to-day management, since such activities are performed by the general partner.

Source of Funds:

The requirements for the investor to prove the lawful source of his or her investment funds is the same for individual and regional center EB-5 petitions. 8 C.F.R. § 204.6 (j)(3). In both cases, the documentation requirements are extensive.

Timing:

Most I-526 petitions are approved within three to six months of filing. Since the quota is current for this category of immigrants, within three to six months of filing of the I-526, the investor and his or her family who are in the U.S. are able to file applications for permanent residence, employment authorization and advance parole travel documents. For investors and families outside of the U.S., the procedure for issuance of immigrant visas generally averages 5 to 9 months.

How to Choose A Regional Center and An EB 5 :

A Must Do List:

As of November 1, 2013, USCIS had approved approximately 400 regional centers. USIS has a list that includes 439 entries. Because regional centers can operate in multiple states, those entries DO NOT represent distinct regional centers.

Some of the approved regional centers have long and well-established track records; others are newly established and relatively untested. Because of the importance of the regional center's continued existence throughout the condition removal process, and the importance of the predicted job creation - - direct or indirect - - actually occurring in order to accomplish condition removal, the choice of regional center is an especially important one.

In addition to choosing a regional center, an investor must choose a specific investment project. Many regional centers have multiple projects. The fact that one project has been successful is no assurance that the next one will be. For this reason, we have compiled a list of questions that may be relevant in enabling an investor to choose the optimal regional center and project both for immigration purposes and for purposes of addressing his or her investment needs and desires. In reviewing this list with their clients, most attorneys will want to draw a clear line between providing immigration advice and providing business/tax/investment advice. Presumably, it is the immigration attorney's role to provide some guidance on the immigration ramifications of a decision to invest in any particular project. Equally clearly, the immigration attorney will likely want to steer clear of providing any non-immigration advice.

The following is a suggested must "do and find out" list:

  • How many I-526 petitions have been filed by investors in the regional center? How many have been approved? How many have been denied?

    The regional center's track record is of critical importance. A record of a substantial number of approvals and no denials is optimal.
  • How many I-829 condition removal approvals have the regional center investors received? How many denials?

    This is ultimately one of the most important questions. Approval of the I-526 petition is not the ultimate goal; approval of the I-829 condition removal petition is the goal. Only a small number of regional centers have been in business long enough to have a track record of condition removal approvals.
  • Has the regional center's project been reviewed and approved by USCIS?

    USCIS has an optional process whereby regional center projects can be "pre-approved". This pre-approval does provide an added level of security, although it is not binding on USCIS. Also determine if other investors have received I-526 approvals for this project. Although USCIS can reach a different result on a future investor's petition, this is a very good sign. Stay away from a project with I-526 denials.
  • When was the regional center approved by USCIS?

    Regional centers that have more recently been approved may have very little or no track record of successful EB-5 petitions or of job creation. This is not a reason to avoid such regional centers, but may be a reason to exercise even greater due diligence.
  • Is the regional center affiliated with any government entity?

    If so, an added level of credibility exists; and the government entity may have experience in job creation.
  • How many years of experience does the general partner or principal in the investment project have in working with immigrant investor programs?

    Some of the general partners or regional center creators have little or no experience with immigrant investor programs. Others have extensive experience both in the United States and with investor immigrant programs in other countries.
  • How many years of experience do the principals involved in the regional center have in developing projects that create jobs?

    In order for the condition removal to be successful, jobs will have to be created. Principals who have extensive experience in projects that have created jobs should be a consideration.
  • Does the investor have to make a deposit or pay any fee for the offering materials?

    If so, the investor needs to evaluate the benefits of investing in a regional center that has such requirement versus one that does not.
  • What is the amount required to be paid by the investor?

    In virtually all regional centers, the investment amount is $500,000. Regional centers generally have additional costs and fees of $35,000 to $70,000. Some regional centers include the investor's legal fees in this amount.
  • 10. Is payment made into an escrow account? Is the investment amount refunded if the I-526 is not approved?

    The provision of an escrow account with the money remaining in escrow until the I-526 petition is approved is a security feature for the investor. This is perfectly appropriate on EB-5 cases.
  • When will the investor be able to redeem his or her investment following condition removal and with what rate of return?

    A financial professional should be able to advise the investor regarding security of the investment, when the investor may be able to recover his investment and likelihood and amount of return on the investment. The investor should be aware that the investment is a risky venture and that there can be no guarantee that the investor's funds will ever be returned, or that the conditions on residence will be removed. The investment must be at "risk" in order to qualify for residence under this program. However, some investments have a Clearer exit strategy than others.
  • What has been the rate of return to investors historically?

    As with other investments, investors may need to balance the importance of immigration track record, security of the investment and rate of return on the investment.
  • What type of investment is being made with the investor's funds?

    Investments may be made in a wide variety of projects. Certain investments may be better able to withstand economic downturns.
  • Does the regional center provide regular reporting of the status of the investment to the investors, and at what intervals?

    Optimally, the investor should receive a regular report with an update on the investment project, job creation and new investment opportunities.
  • What is the regional center's plan for demonstrating direct or indirect job creation, and is this plan realistic?

    Various economic models exist for demonstrating indirect job creation. Models based on direct job creation may be less flexible. Reviewing the economic report will help to determine how realistic and conservative are the projections on which the indirect job projections are based.
  • What precautions are taken to monitor job creation? What steps are taken if the requisite job creation has not occurred?

    The investor should look for a project with detailed job monitoring and reporting on a regular basis.
  • Is the job projection sufficiently greater than the required number so as to have a "margin for error"?

    In order for all investors in a project to be able to remove conditions, there must be 10 direct or indirect jobs created per investor. The greater the job projection over and above this amount, the more assurance the investor has that conditions will be removed even if there are fewer jobs than projected.
  • What percentage of the total capital is EB-5 money?

    Investors may prefer an investment where there is significant investment from the project developer and/or from traditional financing sources.
  • Will the investor be one of the last investors in a project?
  • If job creation falls short, the last investors may lose out.
  • Is the success of the regional center project dependent on bank financing, or the ability of the center to raise certain capital or have a minimum number of EB-5 investors?

    If so, the project may never get off the ground. For this reason, an investor may want to make certain that there will be sufficient investors and sufficient capital to complete the project. It is best if the developer has articulated fall back options for other capital infusion sources if insufficient EB-5 investors materialize.
  • Is the business plan credible?

    If the business plan and the assumptions made in the business plan do not appear to be credible to the investor, they may not be credible to USCIS; and the business plan may not be successfully executed.
  • What are the contingency plans for the project if the project is off track?

    If the jobs are too few, different than projected or will take too long to create, condition removal is in jeopardy. A regional center may have contingency plans if any of these conditions occur that would enable the investor to file a new or amended petition as necessary.
  • What is the reputation of the developer of the project?

    Ultimately the investor's fate is in the developer's hands. The investor should research the history of the developer and his team.
  • Will the job creation occur before the EB-5 investor invests?

    If the project will be proceeding based on interim or bridge financing, the investor should review with his attorney whether the financing is structured in such a way as to meet USCIS requirements.
  • Who represents investors in the regional center?

    Some regional centers mandate the use of their attorney exclusively. Others permit the investor to have his or her own private counsel, sometimes partnering with the regional center's counsel or with review by the regional center's counsel.

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