EB-5 Foreign investor visa program
What is a Regional Center?
- In the mid 1990’s a pilot program which created the Regional Center was passed into law.
- The Regional Center program allows U.S sponsors to create investment opportunities in which a foreign investor could invest their funds and obtain U.S residency.
- Through the creation of jobs and foreign capital investments the Sponsor promotes economic growth.
Development of Regional Center
- Regional Centers are developed by U.S Sponsors
- This usually requires a $1 million investment per investor unless situated in a Targeted Employment Area (TEA)
- If TEA $500,000
- Job Creation Requirement (10 Full Time Workers) Direct or Indirect
- TEA Designation:
- Rural area with a population of 20,000 or less; or
- An area where the unemployment rate is no less than 150 percent of the U.S. national average.
- Towns or areas with where unemployment rates are high.
Examples of Regional Center Projects
- Mixed Hotels (Condo Hotels), Office, Retail or Residential Space
- Higher Education
- Health Services (Hospitals, Research Facilities)
- Ski Resorts
- Commercial Office Space
Benefit to Foreign Investors
- Job creation requirement becomes the responsibility of the Regional Center Sponsor not the investor.
- Investor not in charge of the day to day management of Regional Center
- If project is an established, reputable Regional Center it is easier for investors to get their residency status.
“New” Commercial Enterprise
Investment Alternatives for Investors
- A foreign investor may also qualify for residency by investing in a “new” Commercial Enterprise as opposed to investing in a Regional Center by:
- Creating a new business
- Expand an existing business
- Purchase an already existing business; or
- Save a failing business
Development Requirements for CE
- Job Creation (10 Full Time U.S Employees).
- Jobs must be created within a 2 year period of CE.
- Investor must actively manage the investment.
- Capital Investment
Benefits to Investors
- Flexibility – investor can to in what industry to invest and choose the location of the business
- Control and involvement in the day to day management and operation of the business
- Ability to choose their team (Management, Attorney, etc.)
Risks: RC vs. CE
What are the Risks with Regional Center’s?
- Escrow is not required, hence your funds can generally be used immediately by the project developers and your right to a refund will be limited
- If a Regional Center project fails within the first two years after a green card is issued, an investor will be unable to remove the conditions, and subsequently lose the green card
- There’s always the possibility that USCIS might revoke the certification of a Regional Center, when this occurs an investor is left no recourse
- Law not clear on Regional Center Fiduciary Duty
What are the risks with Commercial Enterprises?
- A business plan is required with application of CE and must be approved
- Only Direct jobs satisfy job creation requirement
- Approval Process takes longer than Regional Centers
- Investor must live near business
Successful vs. Failed Projects
Successful EB-5 Projects
- Lake Buena Vista Resort Condo – Hotel
- Managed by experienced industry professionals
- Investors go through an eligibility process
- Initial Conditions have to be met
- Funds are places in Escrow
- Company will return funds if conditions not met investor (subscriber)
- Jay Peak Development (Ski Resort)
- Federal Officials, along with Vermont Officials, allege that Miami businessmen, Ariel Quiros and his partner, resort CEO Bill Stenger, orchestrated a “Ponzi” like scheme of Fraud.
- Quiros used over $50 million for personal use
- Largest Fraud in Vermont History
- $200 Million raised from investor misappropriated
- No overwatch by state agencies
- Criminal Probe Ongoing
- What happens to the foreign investors residency process when an EB-5 Project fails as in the Jay Peak development in Vermont?
- Investors ONLY recourse is to sue for compensatory and punitive damages
- If any of the investors who had received conditional residency, unable to remove conditions, will lose their Green Cards
- The future of the EB-5 program is very promising as an increasing number of people are becoming aware of its existence and benefits
- The EB-5 program is a win/win platform for our economy, U.S sponsors and foreign investors
- Regional Center developer sponsors need to create a team of experienced industry professionals to minimize risks for investors and build a reputable RC
- Real Estate Attorney
- SEC Attorney
- Immigration Attorney
- Experienced Management
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