• Know the Immigration History. It is important to know the immigration history of the Regional Center project and whether any EB-5 visas, conditional green cards, full validity green cards and/or loan repayments have been successfully issued to investors for the same project or similar past projects. • Research All Major Players. Investigate all the major stakeholders involved in the EB-5 Regional Center project for their reputation in the industry. The EB-5 Regional Center’s offering documents should list the names of the economists, escrow banks, developers, and other major players who are involved in the project. • Ask Questions about the Project. It is important to closely scrutinize and analyze the offering documents provided by the
Regional Center (e.g., business plan, economic report, escrow and LLC agreements, etc.) and ask questions if greater clarification is needed or to address any ambiguities. Another critical question is to ask what percentage the EB-5 funding is in relation to the project’s overall capital stack. In the event that things do not go as planned, it is essential to know ahead of time if the project has a repayment plan. To help potential EB-5 investors navigate through the EB-5 project selection, the SEC and the USCIS have also put together their own list of steps and potential warning signs any seasoned EB-5 immigration counsel should review with clients as a best practice including the following: • Confirm that the Regional Center has been designated by USCIS • Obtain copies of project documents provided to USCIS • Request investment information in writing • Ask if promoters are being paid • Seek independent verification
• Examine structural risk • Consider the developer’s incentives • Look for warning signs of fraud: 1. Promises of a visa or becoming a lawful permanent resident 2. Guaranteed investment returns or no investment risk 3. Overly consistent high investment return 4. Unregistered investments 5. Unlicensed sellers 6. Layers of companies run by the same individuals For a more comprehensive description of the steps and warning signs above you can review the SEC’s and the USCIS’ joint EB-5 investor alert checklist at: www.sec.gov/ investor/alerts/ia_immigrant.htm While risk is inherent in every EB-5 investment by regulation, there is no need for an immigrant investor to expose himself or herself to any undue risk due to fraud and bad actors.
EB-5 Regional Center Insurance Solutions
David Souders 440.461.1101
VOL. 5, ISSUE #1, MARCH 2017
IIUSA.ORG | 51
International Perspectives
and potential investment risks. By regulation, the EB-5 project must be an “at risk” investment to qualify for visa issuance. Immigrant investors need to proceed with caution if anyone promises a guaranteed return of their investment or states that their investment will not be at risk.