Header graphic for print

EB-5 Insights

Where Government Policies and Business Realities Converge

Posted in Department of Homeland Security, EB-5 Investment, Immigrant Investor, USCIS, Visa

On Aug. 26, 2016, U.S. Citizenship and Immigration Services (USCIS) announced a notice of proposed rulemaking for an International Entrepreneur Rule, and provided an advance version of the proposed rule for public review.

According to an announcement from USCIS, the proposed rule will allow the Department of Homeland Security (DHS) to exercise discretion, on a case-by-case basis, to provide parole for foreign entrepreneurs who are directing the development of a startup business entity in the United States and whose involvement in the startup would provide a significant public benefit.  USCIS proposes to amend its regulations in connection with Section 212(d)(5) of the INA to provide a “transparent framework” for the exercise of agency discretion and the case-by-case adjudication of parole requests for start-up entrepreneurs.

In order to be considered for parole under the proposed rule, an immigrant entrepreneur would be required to:

  • Own at least 15 percent of the startup and be actively involved in its operation
  • Have formed the business in the United States within the previous three years.

The entrepreneur must also demonstrate that his or her business the potential for job creation and growth by showing:

  • Investment of a minimum of $345,000 from qualified U.S. investors with success in prior investments
  • The receipt of grants or awards from federal, state, or local government entities.

The proposed rule also provides flexibility for an entrepreneur who may only partially satisfy one or both of the above criteria, by permitting the entrepreneur to provide evidence of the start-up’s potential for growth and job creation.

Under the proposed rule, a qualifying entrepreneur may receive parole for a two-year period, and may be eligible for renewal based upon the success of the start-up.

When finalized, the proposed rule may hold potential for immigrants who find themselves caught in current immigrant visa backlogs, as well as individuals who seek to emigrate from countries that do not have E-1 or E-2 visa status such as Mainland China and Vietnam.  Further analysis of the proposed rule may also illuminate potential opportunities for EB-5 investors who are awaiting the availability of a visa number.

Upon publication of the rule in the Federal Register, the public will have 45 days during which to provide comment on the rule.

As we review the text of the proposed rule thoroughly, we will provide additional insights and discussion about the potential opportunities it could present to immigrants in different contexts.

Posted in EB-5 Program, Immigrant Visa, Immigration, Targeted Employment Area

There are currently many different investment immigration programs offered by countries around the world, all of which offer their own unique benefits. Two popular programs are the EB-5 Visa Program in the United States and the Quebec Investment Immigration Program (QIIP) offered in Canada. The following comparison provides an in-depth look at the parameters of the two largest investor immigration programs in North America.

EB-5 insights chart

Minimum Investment Amount

For the U.S. EB-5 Program, the minimum capital investment amount is USD 500,000 for an investment into a Targeted Employment Area (TEA), which is a rural area or area of high unemployment. For all other investments, a minimum of USD 1,000,000 is required. However, it is anticipated that these minimum investment amounts may increase in the near future. Applicants to the QIIP must agree to invest CAD 800,000 risk free, which will be returned after 5 years. This investment is fully guaranteed by the Quebec government.

Minimum Net Worth

While there is no minimum net worth requirement for the EB-5 program, QIIP applicants must demonstrate net worth of at least CAD 1.6 million obtained through lawful means, either alone or together with their accompanying spouse/partner. Net worth includes assets such as property, bank accounts, stocks and bonds, investments, and pension funds, among others.

Type of Investment

EB-5 investors must make an at-risk investment into a new commercial enterprise, meaning any for-profit activity formed for the ongoing conduct of lawful business; this does not include non-commercial activity such as ownership of a private residence. On the contrary, investments under the QIIP are risk free and guaranteed by the Quebec government. The minimum investment amount will either be returned in full after 5 years or can be financed by a Canadian financial institution.

Job Creation Requirement

As mentioned above, there is no job creation requirement for the QIIP. However, each EB-5 investment must create at least 10 full-time jobs for qualifying U.S. workers within two years of the investor’s admission to the U.S. as a Conditional Permanent Resident. This can be either direct job creation for 10 identifiable W-2 employees at the commercial enterprise where the investor directly made his capital investment, or it can be indirect job creation, in which jobs are shown to be created collaterally or due to investor’s capital investment into a commercial enterprise affiliated with a regional center.

As one of the largest law firms with offices located around the globe, Greenberg Traurig is equipped with an extensive network of attorneys, uniquely positioning us to enable seamless investment immigration, regardless of which country’s program you ultimately choose.

Posted in EB-5 Program, I-526, I-829, I-924, Regional Center, USCIS

At its July 28, 2016 stakeholder engagement, USCIS Immigrant Investor Program Office (IPO) Chief Nicholas Colucci focused his opening remarks on USCIS’s efforts to enhance the IPO’s adjudication capabilities, the office’s commitment to conducting program oversight and promoting program integrity, and the role of the designated regional center in maintaining program integrity. Before delving into a discussion of oversight-related issues, Mr. Colucci reported on the following:

Program Metrics

  • During the 18 months leading up to June 30, 2016, USCIS received more than 21,000 I-526 petitions, with approximately 11,900 approved. Mr. Colucci also reported that USCIS had approved approximately 2,300 I-829 petitions approved during that period.
  • With respect to IPO staffing, USCIS anticipated that it would achieve its staffing goal of 171 IPO staff by the end of calendar year 2016. Mr. Colucci noted that the agency has been hiring lawyers, economists, and individuals with expertise in the securities and banking industries to strengthen the IPO’s capabilities.
  • Mr. Colucci discussed a forthcoming report from the Department of Commerce that examines the economic impact of the EB-5 program. Mr. Colucci previewed the report by suggesting its estimates of positive economic impact could exceed estimates made by USCIS as well as other private-sector economic studies of the program.

Issues Concerning EB-5 Investment by a Minor

The issue of whether a minor child can be a principal EB-5 petitioner received considerable attention at the meeting and was addressed by USCIS in prepared remarks. In light of USCIS backlogs, and to avoid the possibility of a minor child aging out as a result of associated delays, potential investors have begun considering making a minor child the principal EB-5 investor. USCIS recognized at the outset that the issue will be case-specific and that there is no age limitation in the EB-5 regulations. But the agency also raised two general issues relevant to their analysis of the question. First, USCIS raised the question of whether a minor has the capacity to enter into a binding contract, and noted that minor petitioners would have the burden of demonstrating that the contract is binding on the minor. Second, the agency noted that if the minor petitioner is under 14, a parent or guardian would be required to sign the petition on the minor’s behalf, and further that in that case, proof of the legal guardian or parental relationship would need to accompany the petition.

Program Integrity and Oversight

The latter part of Mr. Colucci’s remarks focused on program oversight and integrity. He emphasized the IPO’s efforts to more broadly engage entities in the business and financial communities, in part, he reported, to expand the reporting of suspected EB-5-related misconduct to the Department of Treasury. Mr. Colucci noted that Fraud Detection and National Security Directorate (FDNS) staff would be conducting site visits to some job-creating entities (JCE) and that I-829 interviews would be taking place for some investors.  He stated that site visits would be ongoing around the country, primarily in an unannounced fashion. I-829 interviews will be conducted with some petitioners by adjudicators and via videoconference.

Mr. Colucci took the opportunity to emphasize the significant responsibilities that regional center operators have to oversee the activity occurring within the ambit of their designations, and the “central” role they play in ensuring the program’s integrity. He recognized that the “paradigm” of regional center relationships has expanded, and stressed that the due diligence, monitoring, and oversight of the capital investment into projects within the regional center are the responsibility of the regional center.  Along with a regional center designation, said Mr. Colucci, comes “great responsibility and trust.”

Regional Center Audits

These comments led into a discussion about the implementation of an audit process for regional centers.  The audits will be conducted on the regional center by IPO staff, which will provide notice of the audit. The audit will look at aspects of the regional center including the regional center’s compliance with applicable law and regulation, the nature of the oversight the regional center is conducting on the projects it is sponsoring, the path of funds from investor, to escrow, to the new commercial enterprise (NCE), to the JCE. Mr. Colucci sent a clear message reinforcing the seriousness with which USCIS views program oversight, as well as the responsibilities designated regional centers have as the federally designated entity to assist the agency in ensuring the program’s integrity.

Other Issues

Finally, IPO officials discussed EB-5 updates to the USCIS policy manual, which will be published for public comment, as well as forthcoming revisions to forms I-924, I-924A, and I-526.  An IPO official then discussed briefly the progress of forthcoming USCIS EB-5 regulations. As stakeholders are aware, the regulations will reportedly address issues including minimum investment amounts, targeted employment areas (TEA), regional center designation, and job creation methodology. IPO staff was constrained, however, from providing any detail on what the regulations may contain, but anticipated the regulations could be published in the near future (though not addressed during the stakeholder meeting, Secretary of Homeland Security Jeh Johnson testified before the Senate Judiciary Committee on June 30, 2016 that he expected USCIS to publish the EB-5 regulations at some point in November 2016).

Posted in Department of State, Immigrant Visa, USCIS, Visa, Visa Bulletin

This week, the Department of State released the Visa Bulletin for September 2016. Given that visa numbers are issued based on the government fiscal year, we expect to see significant movement again in October 2016; for September 2016, the last month of FY2016, there were only minor changes with regard to movement of final action dates in most of the employment-based categories from the August 2016 Visa Bulletin.

Continue Reading.

Posted in Department of Homeland Security, EB-5 Investment, EB-5 Program, Immigration, USCIS

Due to the complex intersection of real estate, corporate, securities and immigration law (among others), an investment in a company under the EB-5 Program can be a complicated affair. One of the reasons an EB-5 investment is complicated has to do with U.S. governmental regulatory bodies with potential oversight over an EB-5 investment. The following is a non-exhaustive list of regulatory bodies in the U.S. which have oversight of an EB-5 investment.

For starters, U.S. immigration is largely regulated by the U.S. Department of Homeland Security through its sub-agency the U.S. Citizenship & Immigration Services (USCIS). When seeking benefits under the EB-5 Program, an investor will file a Form I-526, Immigrant Petition by Alien Entrepreneur (I-526), with USCIS.  USCIS has a fraud detection and national security unit which can conduct site visits on an EB-5 investment and also has auditors on staff to conduct audits of an EB-5 investment or a regional center. Thus, USCIS is often the first agency to recognize issues with an EB-5 investment.

USCIS also has a memorandum of understanding with the Securities and Exchange Commission in the event USCIS suspects fraud, misrepresentation or other issues with an EB-5 investment, a principal of a regional center, or an EB-5 investor. Additionally, USCIS has a memorandum of understanding with the Financial Crimes Enforcement Network (FINCEN) in order to investigate and flag illicit use of the financial system, which can include instances of money laundering. For instance, misuse of an EB-5 investor’s funds, such as diversion through various U.S. banking institutions can raise issues that FINCEN investigates. In addition, USCIS has stated publicly that they discuss EB-5 investments with the Federal Bureau of Investigation, Immigration and Customs Enforcement and the Securities and Exchange Commission. While no system is perfect, this does help ensure EB-5 Program integrity by providing layers of security for an EB-5 investor.

It is worth mentioning that in the broader context, the U.S. Department of Homeland Security’s duty is to secure the U.S. from external threats, including antiterrorism, border security, immigration and customs, cyber security and disaster prevention and management, and it has over 240,000 employees. Thus, one of the largest U.S. government agencies has strong resources to help ensure EB-5 Program integrity and EB-5 investor security.

In addition to the U.S. governmental agencies which regulate immigration, an EB-5 investment is a “security” for the purposes of the Securities Act of 1933. This, among other factors, puts an EB-5 investment squarely under the review of the Securities and Exchange Commission (SEC). The SEC’s mission is to protect investors, including EB-5 investors no matter what country they originate from, maintain fair, orderly and efficient markets (such as the marketplace for EB-5 investments), and facilitate capital formation. The SEC oversees securities markets, brokers and dealers, investment advisers, and investment companies. A large part of this is protecting against fraud in the marketplace. As noted above, the SEC and the USCIS have a memorandum of understanding between the agencies in order to ensure integrity in the EB-5 marketplace and transparency in the EB-5 Program. Additionally, when issues with an EB-5 investment rise to the level of criminal conduct, they can be investigated by the Federal Bureau of Investigation and referred, by any of the agencies discussed herein, to the Department of Justice for prosecution.

Furthermore, when an EB-5 investment involves a U.S. licensed broker-dealer, as many do, the conduct of that broker-dealer and certain aspects of the EB-5 investment will fall under the ambit of the Financial Industry Regulatory Authority (FINRA). FINRA is an independent, not-for-profit organization authorized by the U.S. Congress to protect investor’s by ensuring the securities industry (which includes EB-5 investment) operates fairly and honestly. To that end, FINRA can, and does, investigate and ensure an EB-5 investment complies with U.S. laws.

It is clear that the EB-5 Program has regulatory oversight by multiple U.S. government agencies which are committed to ensuring integrity, transparency and a fair EB-5 marketplace.

Posted in EB-5 Business Plan, EB-5 Investment

The EB-5 Program is a complicated decision that requires much thought, diligence, and preparation. In light of this, it is important for an investor to know their rights. With recent headlines highlighting the problems with some EB-5 projects, it is important for a potential investor to know that the EB-5 program does work and is a viable path to permanent residence.  Since 2008, the EB-5 program has represented over $14.6 billion in foreign direct investment in to the U.S. By virtue of making these investments, the EB-5 program has resulted in permanent residence for thousands of investors and their family members from all over the world.  These green cards enable applicants to live and work in the United States, to travel freely outside the country, and to enjoy all of the rights and benefits of being a green card holder in the United States.

However, making an investment is an important decision that the investor and their family members should make after careful consideration.  As part of making that decision, it is critical to conduct careful and extensive research into the project being considered for investment the Regional Center administering the EB-5 program, and the foreign agent, where applicable, for their track records of success, their experience in the industry, and their compliance with all legal requirements.

Specifically, as it relates to the project, the investor has the right to review all the documents in conducting due diligence. Accordingly, investors should review the business plan, economic report, construction timeline, and market study, to understand supply and demand figures, estimated job creation, anticipated exit strategies, and other basic principles of the investment.

Of particular importance is to review the private placement memorandum (the PPM). The PPM is a summary of the material aspects of the investment, including the operating and subscription agreements, among others, and is the only document which outlines all the risks of the investment. While the PPM may be legally dense and lengthy, sometimes close to 100 pages, it is the most important document investors will review in identifying the project for their EB-5 investment. Those interested in pursuing the path to permanent residence via EB-5 must understand that, as investors, they have the complete right to ask questions and conduct their own due diligence in deciding whether a specific project is suitable for investment.

In fact, in today’s market, thorough due diligence is perhaps the most critical element in preparation to pursue permanent residence through EB-5. Beyond the review of documents as described above,  an investor will want to be sure that the project has a management team and developer with a substantive track record of success as well as adequate capital to complete the project.  Additionally, it is important to make sure that the entire project professional team is intimately familiar with the EB-5 landscape, and exhibits the highest integrity. It is important to ensure that the written materials you receive are consistent with any verbal discussions potential investors may have had with principals of an investment or their agents.

In conducting the due diligence process, potential EB-5 investors can use the following questions:

  1. When was the Regional Center approved by USCIS, and has it gone through any amendments?
  2. Has the Regional Center received any Form I-924 denials?
  3. Has the Regional Center ever received a Notice of Intent to Terminate?  If yes, what is the current status of its designation?
  4. Has the Regional Center maintained its annual compliance filings with USCIS known as the I-924A?
  5. Has the Regional Center ever been the subject of an SEC investigation or review?
  6. IS the Regional Center a licensed broker/ dealer or working with one?
  7. What are the Regional Center’s or project principal’s successes with similar developments?
  8. What is the Regional Center’s success rate with Form I-526 and Form I-829s?
  9. What is the Project’s success rate with Form I-526s?
  10. Has the Project received an exemplar project pre-approval from the USCIS?
  11. Does the investment use an escrow account and if so, what are the release provisions?
  12. Is the full investment amount refunded if the Form I-526 is denied?
  13. Is the administrative fee or any other fees other than the investment amount refunded if the Form I-526 denied?
  14. Has an action for securities violations and/or fraud ever been filed against the Project, or any of the individual’s involvement in the management and operation of those entities?
  15. Have any of the Regional Center or Project principals ever been involved in a criminal proceeding?

Lastly, investors should feel free to consult with their own advisers as to the financial, tax, legal, accounting, regulatory, and any other matters, and understand the financial, tax, legal, accounting, regulatory, and related consequences of that investment. Having conducted proper due diligence, investors will likely be able to rest easier after making their investment decision.

Posted in EB-5 Investment, EB-5 Program, Immigration

In the United States, there are very strict laws in place to protect investors.  These laws are administered by a governmental agency known as the U.S. Securities and Exchange Commission (SEC).  The mission of this agency is to regulate the U.S. markets, protect investors from fraud, ensure fair, systematic, and efficient markets, and facilitate capital development.

The EB-5 program is a unique path towards a green card that allows an individual to self-sponsor them and their family members for a green card by investing $500,000 in a U.S. business that will create ten or more jobs in the U.S.  The advantages of the EB-5 are numerous:

  • It doesn’t require an employer or family sponsor
  • It allows investors to live anywhere in the United States (not necessarily by their EB-5 investment)
  • It allows them to travel freely in and out of the U.S. as a permanent resident
  • It allows them to have work authorization
  • It allows their children to attend university as a resident once they obtain a green card

Continue Reading

Posted in EB-5 Processing Times, USCIS

On July 14, 2016, USCIS released updated processing times for the Immigrant Investor Program Office (IPO).

The updated processing times are as follow:

  • Form I-526 Immigrant Petition by Alien Entrepreneur:  16.6 months
  • Form I-829 Petition by Entrepreneur to Remove Conditions:  20.1 months
  • Form I-924 Application for Regional Center:  9.9 months
  • Processing times for I-829 petitions have increased due to more petitions being submitted as a result of investors reaching the end of their two year conditional permanent residency status.  We also note that while the IPO states the processing times for Form I-924s are 9.9 months, practitioners are reporting that it is taking longer than that timeframe.

Applicants with pending I-526 petitions can check the status of the case online; applicants can also email USCIS.ImmigrantInvestorProgram@uscis.dhs.gov for updates on cases pending beyond the above-mentioned processing times.

We note that the processing times may vary from case to case, and are dependent upon workload and number of petitions pending with the IPO.  GT will continue to closely monitor these times.

Posted in Department of State, Visa Bulletin

This week the Department of State released the August Visa Bulletin, which contains some significant movement in certain employment-based categories.

  • In its July Visa Bulletin, which we wrote about here, the Department advised that it would impose cutoff dates for India and China in the EB-1 category.  In the August Bulletin, the Department has imposed a cutoff date of January 1, 2010 for both countries.  The Worldwide EB-1 category remains current.  Individuals born in India or China should consider initiating EB-1 cases now for filing on before July 31, 2016, as retrogression will be in place on August 1, 2016.
  • The July Bulletin predicted a cutoff date for Worldwide chargeability in the EB-2 category, and in the August Bulletin, that date has been set at February 1, 2014, with a predicted return to current in October, 2016.  The cutoff date for India in the EB-2 category advanced by two weeks from November 1, 2004 to November 15, 2004.  The Department explained in item F that “high demand for numbers for USCIS adjustment of status applicants has required the establishment of a date for August. This action has been required to hold number use within the Worldwide E2 annual limit.”
  • In the EB-3 category, worldwide chargeability, along with El Salvador, Guatemala, Honduras, and Mexico, advanced two weeks from March 1, 2016 to March 15, 2016.  The cutoff date for India advanced from October 22, 2004 to November 8, 2004, while the cutoff date for the Philippines advanced by three months from February 15, 2009 to May 15, 2009.
  • In the EB-4 category, the Department imposed a cutoff date for India of January 1, 2010, consistent with U.S. Citizenship and Immigration Services announcement that India had reached the EB-4 visa limit for fiscal year 2016.  The Department notes that the EB-4 category for India will become current in October, 2016.  The Department commented as follows:

As readers were advised in the May Visa Bulletin number 92, there has been extremely high demand in the E4 and SR categories, primarily for Juvenile Court Dependent cases filed with U.S. Citizenship and Immigration Services for adjustment of status. Pursuant to the Immigration and Nationality Act, this has now required the implementation of E4 and SR Application Final Action Dates for India, which has reached its per-country limit. This action will allow the Department to hold worldwide number use within the maximum allowed under the FY-2016 annual limits.

In the EB-5 category, the cutoff date for Mainland China remained unchanged at February 15, 2014.  The EB-5 category is otherwise current.

For those seeking to adjust status, The United States Citizenship and Immigration Service (USCIS) website indicates that the Application Final Action Dates chart must be used for filing Form I-485.

The Department’s Application Final Action Dates for the Employment-Based categories follow:

August Visa Bulletin Chart 2

Posted in Department of Homeland Security, I-526

On July 11, the Department of Homeland Security (“DHS”) issued a notice of proposed revision of a currently approved collection of information as it relates to Form I-526.  Comments will be accepted for 60 days, until September 9, 2016.  In particular, written comments and suggestions should address the following points:

  1. Evaluate whether the information collected is necessary for the agency to perform its duties, and whether the information will be useful;
  2. Evaluate whether the agency’s estimation of the burden to collect information is accurate, taking into consideration the methodologies and assumptions utilized;
  3. Enhance the quality, utility, and clarity of the information to be collected; and
  4. Minimize the burden on the agency and personnel in responding to the information request, including method of search, response, and collection.

This notice and the written and comments described above are in particular reference to Form I-526 and information collection.  Specifically, the current findings in relation to information collecting for Form I-526 are the following:

  1. The estimated number of respondents for the information collection of Form I-526 is 11,939, and it takes an estimated 1 hour and 50 minutes for each response.
  2. The annual hours of information collection is 21,848 hours.

Comments may be submitted via email, mail, and an online portal.  GT will continue to monitor this process and provide updates.