email@example.com (239) 465-4160 skype: usadvisors twitter @EB5info NEWSLETTER | MARCH-APRIL 2012 • EB-5 Visa Investor Lawsuit Alleges Fraud & Deceit in New Orleans Regional Center Investments • Ongoing Lawsuit Stalls Maryland EB-5 Visa Project, Promotion Persists • EB-5 Visa Agent / Broker Rapid Visas Denounces Jay Peak • What the Victorville AAO Decision Means for EB-5 Projects With Bridge Loan Arrangements • Experts Offer Analysis on EB-5 Regional Center AAO Denials • and lots more...
EB-5 Visa Investor Lawsuit Alleges Fraud & Deceit in New Orleans Regional Center Investments
Tim Milbrath (near poster on left) and William Hungerford (middle right) working it hard in the Big Easy USAdvisors.org!
A lawsuit alleging fraud and misconduct brought forth by 27 EB-5 visa immigrant investors against New Orleans Regional Center operators William Hungerford and Tim Milbrath is seeking an immediate accounting of the whereabouts of their investments as well as relief and answers to their questions concerning the status of their residency in the United States. As first reported by Greenberg Traurig attorney Kate Kalymkov, the suit alleges the following: • Plaintiffs bring this action on behalf of the Fund, a limited partnership, by way of derivative action for the benefit of the Fund against the defendants identified herein for gross mismanagement, breach of fiduciary duty, intentional interference with contract, conversion of Fund assets, and unjust enrichment. • Upon information and belief, Hungerford and Milbrath formed NobleReach-NOLA and the entities through which Hungerford and Milbrath own, operate, and control NobleReach-NOLA for the sole purpose of creating a vehicle through which to perpetrate fraudulent schemes to divert Fund assets and convert such assets for their own ultimate personal benefit. • Upon information and belief, NobleReach-NOLA has no legitimate and/or independent business activities outside of its involvement in the fraudulent schemes of Hungerford and Milbrath to divert Fund assets. • Upon information and belief, NobleOutReach Original Partners LLC is a sham company formed by Hungerford and Milbrath solely for the purpose of serving as a vehicle to convert money from the Fund and funnel it to Hungerford and Milbrath for their own ultimate personal benefit. • In addition to failing to provide accurate, non-misleading financial statements and other information that would have demonstrated that they were, in fact, converting the Fund’s money for their ultimate personal benefit, Hungerford and Milbrath otherwise intentionally misled Plaintiffs regarding the profitability and viability of the Fund’s projects.
Among a litany of misconduct, Noble-RealEstate-GP, through the actions of Hungerford and Milbrath, acting in concert and collusion with each other and entities that they control: • diverted at least $6 million of Fund monies to themselves for excessive and unwarranted “consulting services;” • diverted approximately $3 million of Fund monies that were specifically dedicated and reserved for investment in job-creating enterprises to pay excessive and unwarranted operating expenses of the New Orleans Regional Center’s operations, including financing the purchase of real estate in Maryland that benefitted Hungerford and Milbrath; • grossly mismanaged the construction of certain projects situated in New Orleans; • grossly mismanaged the Fund’s investments by causing the Fund to pay exorbitant fees for minority ownership interests in sham companies formed, owned and controlled by Hungerford and Milbrath that do not generate any revenues or provide any legitimate services; • breached fiduciary duties owed to the Fund; and • unjustly enriched Hungerford and Milbrath to the detriment of the Fund. Also: 1. The principals of Noble-RealEstate-GP are Hungerford and Milbrath, the same individuals who have conducted the bad acts alleged herein resulting in the depletion of the Fund’s assets. 2. The alleged transactions at issue were not products of any valid exercise of business judgment. 3. To the contrary, the alleged transactions were part of a scheme orchestrated by Hungerford and Milbrath to defraud the Fund by diverting its assets into sham companies and ultimately converting Fund monies for their own ultimate personal benefit. The investors are mostly from China (over half) but the rest do come from all over the world: UK, Jamaica, Iraq, Singapore, New Zealand, Iran, Turkey, Saudi Arabia & Korea. The defendants are homegrown and have long, distinguished bios:
The resumes of both Bart and Col. Tim must have been extremely impressive and may have been one of the factors in placing all of their faith into the Noble enterprises without conducting much, if any, due diligence on the actual operational activities of the investments. This promotional video produced by NobleOutReach emphasizes the Katrina disaster and the purpose of the funds to help rebuild New Orleans (hence the name Noble Outreach as was explained to me in 2007 by Tim and Bart in a meeting we had in Washington DC). "After Hurricane Katrina, the worst natural disaster in U.S. history, struck the region on Aug. 29, 2005—flooding 80 percent of the city, dispersing the city’s 450,000 inhabitants and causing more than a billion dollars in damages to residential property in Orleans Parish alone—the two men shifted their focus to New Orleans and the U.S. Gulf Coast." According to this news story, the objective of the Noble fund was “...unique in that they would come into a venture fund. It’s a typical mutual fund where investors pool their dollars. Normally, they’d invest directly in a project, and if it’s successful, that’s great. We’ve set up the venture fund to allow investment to be pooled with U.S. investment, and the businesses that are created from within that fund produce the jobs.” "'We’re giving these people an option,' explained Milbrath, a retired Air Force colonel who was chief of staff of the White House Military Office during three presidential administrations and worked in the United Arab Emirates before joining NobleOutReach. 'You can live in Moscow, for example, and still invest in the New Orleans recovery effort. The city was totally devastated, so this is a good time to get in there and share in the profits. This is not a charity. We’re going in with private equity.' “'Our objective is to market internationally and get the word out. Then, once those investors have been identified, we would bring them into an LLC' Hungerford told The Washington Diplomat in a lengthy interview last month. The advantage of being in a fundbased investment was explained: "The fund pools investment dollars and allows the USAdvisors.org!
partners to diversify their investment risk, collectively share financial rewards, and, where required for EB-5 immigrant investors, benefit from the job creation and economic benefits of the entire portfolio of investments.
Describing his relationship with the City of New Orleans and how they would be compensated, "Hungerford and Milbrath could also make a sizable amount of money for themselves, too." “When the immigrant makes his $500,000 investment, there’s a service fee of 12 percent, which we collect to cover our marketing and travel costs,” Milbrath explained. “We don’t pay New Orleans, and the city doesn’t pay us. We collect it directly from the investor, because the city cannot be in a conflict of interest with the investor. That’s why they need a private company like us.” And an interesting footnote: Added Milbrath: “The government takes great pains to make sure this program works. Each state has specific securities laws that have to be complied with.” USAdvisors.org!
A web of deceit? Among other claims, the EB-5 visa investor lawsuit claims the following: • Hungerford and Milbrath carried out a scheme to defraud the Fund by diverting the monies invested with the Fund by these investors into separate corporate entities that Hungerford and Milbrath ultimately control. • Hungerford and Milbrath set-up a complex web of companies to aid and abet them in their scheme to defraud the Fund, including over thirty (30) separate corporate entities formed under the laws of Louisiana, Maryland, and Delaware. • The fraudulent scheme of Hungerford and Milbrath consisted of systematically misappropriating and/or converting Fund assets by diverting investment money in the Fund to themselves and/or entities that they control. • Hungerford and Milbrath, with the assistance of others, formed over thirty (30) limited liability companies organized under the laws of three different states, namely, Louisiana, Maryland, and Delaware, between 2008 through 2010. These limited liability companies are named Defendants in this action and the nature in which Hungerford and Milbrath used these entities to carry out their fraudulent scheme is described in detail herein below. • These are exhibits describing how the funds were moved from one entity to another in what the attorneys for the plaintiffs claim was an effort to cover-up the deceit and fraud • The web of companies created by Hungerford and Milbrath was devised such that the Fund (and ultimately, the Plaintiffs) contributed all or nearly all of the financing for various enterprises and projects that Defendants Hungerford and Milbrath received the majority of ownership interests with virtually no capital contributions to the new entities. A chart depicting the complex organizational structure of the Fund’s investments is attached hereto as Exhibit “E”. • Hungerford and Milbrath never disclosed to Plaintiffs that the Fund’s investments would be structured in such a complicated and non-transparent manner. • Hungerford and Milbrath who contributed little or no money for the capital needs of the foregoing entities or projects acquired majority ownership interests in the foregoing entities and projects through the web of companies that they formed. • Hungerford and Milbrath purposefully and knowingly concealed and suppressed the truth about their ultimate ownership interests in and control of the companies and projects to which they caused the Fund to direct Plaintiffs’ investments in order to mislead Plaintiffs as to the disposition of those funds and to conceal these Defendants’ scheme.
What happened? It remains to be seen what the truth is behind the alleged fraud, but it should provide a cautionary tale to not only investors who simply believe the claims being made by the promoters, but, more importantly, by those investors' attorneys and advisors.
NOBLE was a frequent fixture at EB-5 conferences handing out Mardi Gras beads and large checks. Their $40,000 - $60,000 finders fees paid to attorneys and others was at the time the highest in the program. Many immigration attorneys took Bart and Tim up on
their offer and now their clients are probably wondering who was keeping an eye out for their interests.
List of fees and expenses as outlined in the NOBLE PPM
In this quote from the Washington Post's piece Foreigners Invest Greenbacks in Return for Green Cards, Martin Scherer and Pamela Dance, Britons who live in Sarasota, FL, are in the process of investing in Noble Outreach's fund. For seven years, the couple, who own properties in Britain and Florida, had to leave the United States every three months to renew their temporary visitor visas. They hope their investment will allow them to travel between Britain and the United States more freely. But beyond the promise of a green card, they also see an upside in their investment. "We have the chance to invest in New Orleans on the ground floor," Scherer said. "It could be a chance of a lifetime." Now what? The Plaintiffs' Immigration Status The suit alleges that the first I-829 was filed around May 2010 on behalf of Terrence Sumpter and that USCIS responded with a Request for Evidence (RFE) on May 2011. The agency "requested additional information regarding the status of construction of the Fundâ€™s Value Place hotel project in order to verify that the job-creation requirement was met," to USAdvisors.org!
which Hungerford and Milbrath responded. No further notice on the response was reported by the plaintiffs. The suit brings up the following points: • The ability of all Plaintiffs to complete the foregoing process and receive permanent residency in the United States is now in serious jeopardy as a result of the gross mismanagement and conversion of Fund assets by defendants Hungerford and Milbrath. • Specifically, if an immigrant investor does not file his or her I-829 Petition before the 2year conditional residency period expires, the immigrant investor’s conditional residency is automatically terminated and the individual is barred from seeking permanent residency under the EB-5 Immigrant Investor Visa Program. • Seventeen (17) of the named Plaintiffs still need to file their I-829 Petitions. • For example, the following identified Plaintiffs, among others, must submit their I-829 Petitions on or before the corresponding date or they will face deportation proceedings: (1) Tianyi Liu – I-829 Petition due on or before June 17, 2012; (2) Shuangmei Ge – I-829 Petition due on or before August 5, 2012; (3) Wenjie Zhan – I-829 Petition due on or before September 29, 2012; and (4) Xiao Tong Zhang – I-829 Petition due on or before November 2012. • In order to complete and submit their I-829 Petitions in a timely fashion, Plaintiffs will require, among other things, access to information currently in the defendants’ possession. • Unless Plaintiffs are granted access to information in defendants’ possession and control, it is likely that Plaintiffs will not be able to complete their I-829 Petitions and/or USCIS will ultimately reject such petitions. • If USCIS denies any of Plaintiffs’ I-829 Petitions, such Plaintiffs will become deportable, and thus forced to return to their country of origin. • Alternatively, such Plaintiffs will have the option of investing an additional $500,000 or $1,000,000 (depending on area of investment enterprise) in a different investment enterprise and filing a new I-526 petition and re-immigrating. • Significantly, any children who turned 21 after their parents’ original I-526 Petition filings would not be able to avail themselves of the option of re-immigrating based on their parents’ new investment. This is only one side of the story and we have invited Tim and Bart to give us their account to present a balanced portrayal from their perspective. Sources and further reading: docs/New-Orleans-Complaint1.pdf docs/MOU NOLA Noble.pdf
docs/Noble LPA.pdf docs/dhs_approval_letter.pdf docs/nor_brochure(1).pdf docs/Web of Companies.pdf
Ongoing Lawsuit Stalls Maryland EB-5 Visa Project, Promotion Persists Lawsuits are time-consuming â€“ not to mention costly. And while an ongoing legal dispute in Maryland would not mark the first time a lawsuit delayed an EB-5 visa project, the case is significant because of the large scope of the offering and the fact that the project's promotion to EB-5 investors continues in spite of the litigation. In 2005, developers, the City of Baltimore, and the State of Maryland announced plans to redevelop a 28acre site, State Center, which is currently home to several state government office buildings and 3500 state employees.
A government office building at the site of Maryland's State Center project
But a little over a year ago, progress reached an impasse when nearby commercial property owners filed a lawsuit against the developer and two state agencies. According to the Daily Record in Baltimore, plaintiffs charge that the State of Maryland "failed to follow its own procurement rules in hiring a developer for the project by not opening the process to competitive bidding in 2005," which was when the state chose the developers. The suit also claims that "the proposed State Center project would prompt an exodus of state government jobs" which would "[render] the central business district with more
vacancies." As of December 2011, the number of vacancies in the district stood at 25%, a harrowing figure that reflects the current economic recession. Despite the lawsuit, EB-5 promoters are are still raising funds for the project, which they present as a public-private partnership with the full support of state and local government, including the current Governor of Maryland, Martin O'Malley. A lofty vision State Center is a big project – $1.5 billion all told. To finance the construction of two office towers that are part of the development, the project's officers will combine $30 million from the State of Maryland and $10 million from the developer with other private funds to raise a total of $230 million. We know that EB-5 investments will help finance at least this part of the construction and that the DC Regional Center is handling the EB-5 funding element.
Artist's rendering of the new State Center campus and surrounding development
According to a promotional video targeting prospective EB-5 investors, the two buildings will occupy 605,000 square feet of space with an underground parking garage beneath. The State of Maryland has already pre-leased 515,000 square feet for 20 years. The remaining space will accommodate street-level retail establishments, including a grocery store.
The video states that State Center Phase 1 will create 2428 new jobs – 1200 more than the minimum required by the project's EB-5 investment dollars. That suggests that roughly 123 EB-5 investors would need to prove creation of 1228 jobs to receive green cards. The project promoters' overarching message seems to be this: • State Center has government support.
â€˘ The project will create more than enough jobs necessary for its immigrant investors to receive green cards. â€˘ The government followed a sound process when choosing a developer and choosing a plan for the new State Center site. â€˘ Re-development of the State Center site is something the community wants. All of these points, of course, will help convince investors that the State Center project presents a great opportunity to obtain a U.S. green card. Hurdles and opposition But not everybody in the surrounding community wants the project to succeed. The DC Regional Center's promotional video appeared online last July, the same month a Baltimore circuit court denied the state's motion to dismiss the suit against State Center. "The entire project is a house of cards built upon enormous public subsidies" an attorney for the plaintiffs told local press. "With over 2.2 million square feet of vacant office space in downtown Baltimore, it makes no sense to build another 1.5 million square feet less than a mile away from the downtown district subsidized by the taxpayers." Following the circuit court's denial to dismiss, the State of Maryland filed a countersuit against the plaintiffs. That suit, which seeks $100 million in damages, states that the plaintiffs' claims are wholly without merit and exist for no other reason than to delay the project. Despite complaints that the government failed to adhere to a truly competitive bidding process, the state notes that the plaintiffs are not developers themselves and would not be eligible to compete for the State Center contracts. Although two of the four plaintiffs, including the lead plaintiff, settled with the state last month, the project remains in litigation.
Around the same time the state filed its countersuit, the city's comptroller, Peter Franchot, withdrew his support for the project. He now claims that financing State Center risks "[plunging] Maryland taxpayers into deeper debt and threaten[s] the state's fiscal health."
"I must respectfully inform you that I cannot and will not support further efforts to complete this project as currently proposed," Franchot wrote last week to the secretaries of the Maryland Department of General Services and the state Department of Transportation. "It is difficult, for example, to justify the willingness of state agencies to rent space at above-market rates at a time when Maryland's structural budget deficit continues to exceed one billion dollars."
Previously, Franchot cast more than a dozen votes in favor of the project. It seems that spending taxpayer money on an enormous development no longer appears as feasible as it did in 2006 â€“ back when the economy was booming and new development seemed like a far better bet. Local news sources frequently refer to the project as "controversial" and lament its having "flown mostly under the public's radar." Promotion continues despite litigation Although legal wrangling persists and it remains to be seen whether the project will proceed as intended, foreign promoters continue to recruit investors. On September 16, 2011, the Artisan Business Group announced its selection by investment immigration agency MICON International to be the Asian market entry USAdvisors.org!
consultant for the State Center project. The announcement is significant because it suggests that MICON is promoting the project despite the ongoing litigation â€“ something a quick visit to the company's Website confirms.
The above screenshot was captured on February 22, 2012. Since MICON International is not a registered broker-dealer in the United States, it also seems curious that the company would promote the State Center project on its U.S. Website. Of course, none of the marketing by MICON or the DC Regional Center mentions the lawsuits, the alleged lack of public dialogue about the project, or the withdrawal of support from at least one key public official. Presumably, the marketing that occurs in China and elsewhere is also omitting these significant and possibly game-changing facts. USAdvisors.org!
None of this means there isn't a lot to like about the project. It has won accolades and at least one high-profile award for its innovative, "smart growth" approach. Furthermore, there is a push in Maryland to prevent similar lawsuits from stalling statesupported development projects. Sources tell us that Governor O'Malley, a Democrat, recently introduced a bill in the state's Democrat-controlled legislature that would reduce so-called "nuisance lawsuits" from stalling P3 projects like State Center. Such lawsuits can bring progress to a standstill. What's more, public-private partnerships don't always work out in the best interest of communities or immigrant investors just because they're public-private partnerships. Until the courts render a decision that is favorable to State Center, no developer will break any ground and no EB-5 investment dollars will create any jobs. Image Credit: Baltimore Blog & Mithun
New Legislation Could End Maryland EB-5 Visa Project Litigation Over in Maryland, the State Center controversy continues. What's more, some new legal developments may have created even more problems for the project's government supporters. When we reported on the Maryland State Center litigation a little over a month ago, it came to our attention that some legislators were trying to pass a bill that would prevent so-called "nuisance" lawsuits from stalling state-supported development projects. That legislation is now making its way through the state's House and Senate, but not without a few raised eyebrows. That's because part of the bill â€“ a particular amendment â€“ appears to have been added for the sole purpose of ending the lawsuit against State Center. In a suit that project USAdvisors.org!
supporters call groundless, a small cadre of commercial property owners allege that the state of Maryland awarded a contract to a developer without a competitive bidding process. If passed with its controversial amendment, many believe there is a good chance that the pending legislation would end the State Center litigation as we know it. Ongoing promotion despite litigation Before we look at the recent bill, let's consider why the State Center project was problematic from an EB-5 perspective. On February 22, we took a screenshot from the MICON International Website which suggested that State Center was an open project. MICON International is the foreign agent promoting the State Center project to prospective EB-5 investors. This observation was significant since State Center was in the midst of a lawsuit and being promoted at the same time. There was also a video promoting the project (still live as of today) that went online back in July of last year, well after the project was already in litigation. However, neither the MICON listing nor the promotional video disclosed that State Center was involved in an ongoing lawsuit that had put the project on an indefinite hold. We, on the other hand, feel that the litigation is a significant fact that should be brought to the attention of both the public and EB-5 investors. We even reached out to immigration attorneys specializing in EB-5 visa law to check on the promotion-related implications for EB-5 projects in litigation. According to attorney Jor Law of Homeier & Law, P.C., it's perfectly fine to promote a project in litigation as long as that fact is disclosed somewhere in the offering documents or in some manner to the investor. After all, he notes, there are plenty of good companies out there that have, at some point or another, been involved in litigation.
However, Law adds, if the litigation concerns â€œthe very essence of the project or offering itself,â€? it may not be wise to continue promoting the project. Does that mean that the State Center project should be going out of its way to disclose the litigation? Not necessarily. Does it mean that they must in some way disclose it to each investor who signs on? Yes. As long as investors are informed that the project can't create any jobs while it's in the midst of a lawsuit, there's no problem â€“ at least from a legal perspective. Presumably, the State Center promoters were disclosing this fact to investors. According to MICON's Website, the State Center project is still "current" but, at least for the moment, "closed." The bill and its accompanying amendment But with a new bill making its way though Maryland state government, State Center could be back on track sooner than expected. As long as public opposition doesn't stop the bill and all of its amendments from reaching the governor's desk, that is.
To be sure, the general spirit of the legislation is not controversial. Backed by Governor Martin O'Malley and his administration, the bill seeks to create a better process for the state and private developers to work together on public-private partnerships. Nothing too outlandish about that, right? But it's a particular amendment to the bill that has many observers concerned. Under the proposed amendment, which was a part of the bill when the House approved it, the losers in public-private partnership lawsuits would be USAdvisors.org!
able to appeal directly to the Maryland Court of Special Appeals, the state's secondhighest court. According to the Baltimore Sun:
At issue is a provision that allows a party in such a suit to appeal a circuit court judge's denial of a motion to dismiss before the two sides are forced to exchange documents through the discovery process, and before they are allowed to present evidence at trial.
Such a move could retroactively affect the State Center litigation, a reality that many say is why legislators added the amendment to the bill. Needless to say, it wasn't long after the House passed the bill with the accompanying amendment that scathing criticism erupted. With cries of "crony capitalism" and the suggestion by some lawmakers that the amendment creates "shadow government" and stinks of corruption, it suddenly looked like everyone was against the new legislation. The Senate approved a version that omitted the questionable amendment, but the administration apparently supports both the law itself and the amendment that has so many lawmakers up in arms. Observers expect the issue to be decided over the next 30 days during a special legislative session. Is the criticism fair? The Baltimore Sun's editorial staff sure doesn't think so:
There is no doubt that it is unusual, but it is neither unprecedented nor unconstitutional. In fact, relevant case law shows that such a procedural change by the legislature is presumed to affect current cases unless the General Assembly specifies otherwise. The bill does not, as has been widely and incorrectly reported, send cases like this one straight to the Court of Special Appeals. Circuit courts would still have original jurisdiction. Nor does it tilt the scales in favor of the State Center project. The legislature is not changing any of the standards by which the State Center lawsuit will be judged but is instead adding another step to the legal process. If the case that the state broke its procurement law in approving the State Center deal is as strong as the litigants say it is, then the only effect of the General Assembly's action will be to drag out the legal process even more, which only benefits the project's opponents.
That said, the same editorial goes on to affirm its general support for the State Center project. If anything is certain, it's that the state must not think the plaintiff's suit against the project holds merit. Observers have identified the remaining plaintiff in the suit as a "serial" plaintiff, so it may very well be that he or she is only pursuing the lawsuit to delay the development. But from the EB-5 investor's perspective... It seems to us that investors in this project should know that all of this is going on. USAdvisors.org!
From what we have seen, both the regional center and its foreign broker have promoted this project as nothing other than a sound, job-creating EB-5 investment. And were the project in a position to break ground, it may very well be a fantastic opportunity for immigrant investors seeking a US green card.
Maryland Governor Martin O’Malley Supports the controversial amendement
But for the time being, the State Center project can't get going because it's in the midst of a lawsuit – a lawsuit that seems now to have involved, at least in an indirect way, the Maryland state legislature.
If State Center's promoters are still selling the project to immigrant investors – and it could be that they have stopped – we feel it's imperative for all the information about these legal proceedings to be disclosed. And while the issues surrounding State Center are unique, they should serve as a cautionary tale for investors and their counsel investigating the panoply of EB-5 opportunities now on the market.
EB-5 Visa Agent / Broker Rapid Visas Denounces Jay Peak by Michael Gibson
Rapid USA Visas CEO Douglas Hulme and Jay Peak President Bill Stenger in happier times
The following email flooded the inboxes of over 100 immigration attorneys yesterday, apparently ending what may have been the longest and most successful agent/broker relationship in EB-5 visa history:
The alliance of Jay Peak and Rapid USA Visas was formed years ago, long before most people in the U.S. had ever heard of the EB-5 Visa Immigrant Investor program, and it was a union that appeared to benefit both parties substantially and resulted in an injection of over $200 Million from more than 400 investors into this little known corner of New England. Jay Peak co-owner and President Bill Stenger was not able to raise the capital he needed to develop Jay Peak into the vision that he had for a four season, full-service resort in an area that did not receive much traditional capital investment but had heard about the EB-5 visa program and saw that as a way to attract capital and create jobs in a depressed, remote area of Vermont. The big problem, however, was that he did not have the resources or overseas connections to attract foreign investors who could provide him with their capital in exchange for the green card. At the time, Douglas Hulme, a British citizen, was acting as a business broker in Florida selling small businesses to UK residents for purposes of qualifying them for the E-2 visa.
With the average sales price of only a few hundred thousand dollars and low commissions, he approached Bill with an idea to sell investments in Jay in return for a commission on each investor he brought in. They both agreed on a compensation arrangement that was very profitable for Hulme's firm, Rapid USA Visas, earning well over $25,000 per investor once the I-526 had been approved. Rapid USA Visas and Jay Peak had an additional clause in the subscription agreement that provided both parties with compensation of $10,000 even if the investor did not pursue the investment after the 30-day review period ended, making Jay Peak one of the few EB-5 regional centers that charged (and still charges) a document fee.
The process worked very well for both parties as they began to market the Jay Peak projects heavily in the United States, the United Kingdom where they established an office, and around the world. A frequent fixture at AILA and other U.S. and overseas EB-5 networking events, the Jay Peak/Rapid USA Visa booths were typically among the largest in the room. These marketing expenses were funded in part by a substantial number of immigration attorneys who recommended Jay Peak projects to their clients based on the claims made by the agent / promoter Rapid Visas and the State of Vermont and its officials. The immigration attorneys were also paid large finder's fees and commissions to promote and sell the Jay projects to their clients and could be seen toting bags of promotional material back to their offices to hand out to their clients, whom they assured that these were very good investments, or sometimes put another way, Jay Peak had a "great track record". The combination of marketing to immigration attorneys and substantial overseas promotion led to the funding of one of the largest EB-5 regional center projects in the program today. Statements made by Bill Stenger and James Candido with the Vermont Agency of Commerce and Community Development (VACCD) put the amount of investment in the state at over $200 million and 400 investors. Assuming that figure to be correct, the fees paid to agents and attorneys involved with the sale of these securities offerings (the subscription fee used to be $65,000 but is now $50,000) would be well over $20 million. Given that it was such a lucrative practice for all of the parties, this announcement comes as a huge surprise to everyone who received the notice. Why such a profitable arrangement was suddenly and without notice terminated by the broker/agent is not known at this time, but several analysts have speculated that it may be due to either the financial condition of the resort due to the large amounts of capital expenditures and low revenue from the warm winter and low bookings or doubts that the job creation projections may not be realized as outlined. Should Jay Peak fail to achieve the removal of conditions upon the filing of the I-829 petition (they are claiming a 100% approval rate right now) or fail to return a substantial portion of the principal, their investors may look to the agents, promoters, and attorneys who recommended this investment for relief.
The question of whether federal and state regulators would consider Rapid USA Visas to be an unregistered broker whose activities included marketing, soliciting and facilitating the sale of a U.S. security in exchange for a commission (finder's fee) will be explored next, as well as the State of Vermont's role in supervising the activities of the projects that fall under their jurisdiction. Questions must be raised as to VACCD's role in supervising the marketing, promotion and solicitation of these projects involving possible unregistered brokers / agents and the payment of fees to unregistered persons (such as attorneys) which could be violations of federal (SEC) and state securities laws and regulations. We will also explore the role of immigration attorneys in the recommendation of securities to their clients, issues of ethics, dual compensation, due care, conflicts of interest, and their liability should the Reg. D exemption found to have been violated and the offer rescinded, as well as what potential liability they could face should there be a failure of the project to create sufficient jobs to remove conditions or fail to repay a significant portion of the capital invested. Further reading: Jay Peak/Rapid Visas Promotional Marketing PDF New York Times EB-5 Article featuring Jay Peak
What the Victorville AAO Decision Means for EB-5 Projects With Bridge Loan Arrangements In the fallout from the Victorville Regional Center's termination, the EB-5 stakeholder community learned much about how USCIS interprets the rules governing the EB-5 visa program. A December decision from the agency's Administrative Appeals Office (AAO) clearly spells out why the agency affirmed the California Service Center (CSC) director's
Construction at one of Victorville's EB-5 projects, 2009
decision to terminate Victorville's eligibility. The language in that decision also calls into question at least one additional issue – whether projects that rely on bridge financing risk the denial of investors' petitions in situations where the project created jobs before EB-5 capital entered the equation. The termination The Victorville Regional Center in Victorville, California received notice of its termination in October of 2010, but several things happened both before and after that event. Here's a quick refresher on the termination saga: • May 4, 2010: The CSC director issued a "Notice of Intent to Terminate" (NIT) the regional center's status. At that time, the agency's chief concern appeared to be problems with the regional center's job counting methodology. • August 10, 2010: After considering the regional center's response to the initial NIT, the director issued a second NIT. • October 20, 2010: The director considered Victorville's response to the second NIT and issued a notice of termination. • May 24, 2011: Affirming the October decision, the agency issued a final termination notice and ended the city's immigrant investor program. This was the first time USCIS terminated an EB-5 regional center. Since the Victorville termination, only one other regional center – also in Southern California, incidentally – has met a similar fate. After filing a Motion to Reconsider, which was dismissed by the CSC and certified to the AAO, the City of Victorville then filed a lawsuit against USCIS, the Department of Homeland Security, and some government officers. However, since the AAO's final decision on the regional center's motion was still pending at the time, USCIS agreed to a stay on the lawsuit until that decision became available.
The AAO decision In a decision dated December 21, 2011, the AAO issued an Affirmance of both the CSC's dismissal of Victorville's Motion to Reconsider and the termination, noting that the regional center failed to demonstrate that its project satisfied the EB-5 visa program's job creation requirements. In particular, the AAO found Victorville's plan "one of job preservation and not job creation." This distinction is significant because Victorville's investments do not fit into the program's "troubled business" category nor did the regional center ever claim it was investing in a troubled business. According to the AAO:
[The Victorville Regional Center] is seeking to Aerial view of Victorville's project invest capital only after the jobs have already been created. [Dr. Pepper Snapple Group] and Plastipak began hiring in December 2009. As of June 2010, the [city's proposed industrial wastewater treatment facility] was 90 percent complete. Regardless of the stage of financing the investors propose to provide, it remains that the jobs for which the applicant wishes to receive credit already exist.
Victorville's projects included financing for the soda bottling facility as well as a new wastewater treatment plant. It appears that the regional center decided to infuse EB-5 capital into these projects after new jobs had been created, an approach that the AAO found unacceptable:
Notably, the record does not show that the applicant made a commitment to provide later-stage financing at the outset of the project. Instead, the applicant appears to have decided to commit capital toward later-stage financing only after the initial stages of the project that created the jobs in question were already complete."
What does this language mean for other EB-5 investor projects that use bridge financing?
In a conversation with EB5info, Robert Divine, a noted immigration attorney and former Acting Director of USCIS, said the above statement actually "leaves hope" for business plans relying on EB-5 capital to replace a bridge loan. As long as those plans are explicit about their intention to use EB-5 capital â€“ presumably before the actual bridge loan is made â€“ Divine thinks USCIS will count the jobs. "It appears that USCIS may, in fact, be willing to honor specific Robert Divine plans to obtain interim financing that would be taken out by EB-5 capital," he said. "Although it remains less than clear under exactly what circumstances bridge financing can succeed." Divine also thinks investors relying on bridge loan agreements should "hope to distinguish" their projects from the Victorville decision. Other experts appear to share this view. Joseph Whalen, a former INS (and later USCIS) adjudicator who has published prolifically about the EB-5 program, writes the following about how regional centers can use EB-5 funds to pay off a loan:
One of the easiest way [sic] to make it possible is to use a mix of domestic and foreign investments and to make it even easier, structure the project in phases. Alien investors can enter and exit projects at different times so timing the infusion of certain alien investors' funds is a key component to success.
Now suppose that there have also been some domestic investors involved all along and/or bridge loans that have built up as well. As long as there are enough new direct or indirect jobs available to be allocated in sufficient numbers, then new EB-5 alien investors can buy into the project and displace or join with domestic investors or pay down some bridge loans. In this sense, the buy-in is generally in the form of joining the investor group that is supplying financing to the developer rather than direct ownership of the [new commercial enterprise] creating jobs but it has been made possible by the EB-5 investors. This is especially OK if the bridge loans from lenders or short-term domestic investors were obtained because of EB-5 money known to be in escrow or on the way due to aggressive Regional Center marketing efforts known to the domestic investors and/or bridge loan sources.
It would follow, then, that relying on EB-5 financing to replace a bridge loan should be acceptable to USCIS. Those submitting applications, however, would be wise to make any bridge financing arrangements only in anticipation of EB-5 capital infusion and to clearly state to the agency that it is their intention to do so.
In his additional writings on the Victorville debacle, Whalen opines that USCIS was simply "cutting off the ability for an applicant to lay out one course of action and then follow another." To clarify that assertion, he quotes the following section of the decision:
The applicant responded to concerns about timeliness by stating: 'project-finance projects, such as this one, typically require three or more stages of financing; the EB-5 funds are a critical part of this project's funding life-cycle, and each phase is critical to job creation. Indeed, job creation will not occur unless the entire project is funded throughout.' The applicant asserted that USCIS Joseph Whalen approved the concept of bridge loans when it approved the regional center application. The applicant continued that USCIS has no authority to link expenditure of alien investor funds to the construction phase only, but that the applicant could have done so had the director not terminated the regional center's status. The applicant claimed that it would have reached its $25 million goal but for the fact that the director terminated the regional center, and it would have focused funds differently if the focus had been a condition of the original approval. The applicant acknowledged that the IWWTF was 'constructed with non-EB-5 funds,' but asserts that existing job creation is in jeopardy if the applicant's ability to refinance is in question. While the regulations do allow alien investors to rely on job preservation, they may only do so if the investment is in a troubled business. 8 C.F.R. Â§ 204.6(j)(4)(ii). The applicant, however, has never asserted that the alien investors will be investing in a troubled business.
And as Whalen explains, Victorville's concession that it "would have focused funds differently if the focus had been a condition of original approval" reveals that it failed to plan ahead for that very contingency. "Failing to plan = planning to fail," he concludes. Although a regional center can lay out an initial series of contingencies for approval by USCIS, Victorville did not do so. "Transparent complexity," Whalen told EB5info, "is critical to the precise application of EB-5 funds." The denouement On February 6, 2012, the City of Victorville submitted a voluntarily dismissal of its complaint against USCIS and the Department of Homeland Security. Given the AAO's Affirmance of the director's decision to terminate, not to mention the potential expense of a lawsuit against the federal government, the city was hardly in a position to continue fighting. Though it recruited a total of 19 investors prior to its termination, none of them will receive green cards â€“ at least not through this EB-5 project.
Local press in Victorville reports that the city's decision to drop the lawsuit demonstrates "some fiscal restraint in the wake of financial uncertainty." And despite the dissolution of its regional center status, it looks like Victorville was able to hang on to jobs in 2011. The Dr. Pepper-Snapple bottling plant was supposed to create 200 jobs back in 2008. It now employs 269, according to the report. Image credits: Victorville Daily Press & Design Build Institute of America
Experts Offer Analysis on EB-5 Regional Center AAO Denials With so many new EB-5 regional centers coming onboard, it's easy to forget that USCIS actually denies a number of proposals for regional center designation. And while a couple of recently released AAO decisions on applicants' appeals of their denial are clearly just two of many such decisions, they reveal much about the kinds of applications USCIS now receives and how the agency deals with them. Both decisions are almost a year old but were just released in recent months. Although USCIS redacted most proper nouns from each decision's text, certain details from the first one indicate that the application came from Washington state â€“ in particular from a proposed seaside resort project near the City of Brinnon. The second, it seems, also came from the Pacific Northwest and included proposed projects in the Spokane, Yakima, and Portland-Vancouver-Beaverton MSAs among other areas. Merely a "marketing strategy" The first decision bears an April 26, 2011 date stamp. According to the AAO, the applicant failed to "[demonstrate] how the purchase of vacation suites in a resort community under USAdvisors.org!
construction could be considered an investment in the construction of that community." Furthermore, it appears that the applicant was unable to "[demonstrate] the economic impact of the community."
The Statesman Group's Website
Submitted by the Statesman Group, a Canadian developer, the application sought regional center status for an area that would include the Pleasant Harbor Marina and Golf Resort, a proposed waterfront development. Though the Statesman Group claims that Pleasant Harbor "would create 2000 jobs during the construction and afterward" according to local press, the AAO saw the proposal as little more than a "marketing strategy" to attract homebuyers.
Under the proposed plan, foreign nationals would purchase a vacation suite to serve as a primary residence, a vacation or "second" home, or investment property. The AAO found this plan little more than an attempt "to attract buyers for vacation suites rather than investors of capital in a new commercial enterprise," an understanding that ultimately inspired the denial. A number of attorneys and EB-5 experts published their own opinions following the decision's release. According to Suzanne Lazicki, who writes business plans for EB-5 regional centers, the AAO's decision was "interesting, if unsurprising."
One of Miller Mayer's recent newsletters contained an analysis of the Statesman Group's AAO denial.
At least two noted immigration law firms also referenced the AAO's decision in recent newsletters. According to a recent newsletters from the Miller Mayer and Serotte Reich Wilson firms, the conclusion to the AAO's decision sums things up nicely:
[T]he applicant has proposed an investment plan whereby alien investors would make independent, passive, personal real estate investments that garner them no equity ownership in a new commercial enterprise. Instead of presenting a plan for a pooled equity investment of capital into a new commercial enterprise, the applicant has merely put forth a marketing strategy to attract sufficient buyers to fund later phases of development. This plan does not meet the letter or spirit of [the law and regulations] designed to encourage pooled investments in a new commercial enterprise benefitting a geographic region.
And since, as the AAO also notes, "[every] retail establishment uses at least some of its sales proceeds to purchase additional inventory," every customer who enters its doors does not automatically become an investor in the business. Here, the comparison to the Statesman Group's application seems extremely appropriate â€“ not to mention telling. The same newspaper article detailing the number of jobs this project seeks to create also states that Garth Mann, President of the Statesman Group, is now working closely with his attorney and a professional writer. With better assistance, perhaps his next attempt at USCIS approval will pan out. This will be his fourth try. According to one observer and former USCIS officer we interviewed, this application failed to pass the "laugh test." It simply could not be understood as a serious approach to meeting core elements of the regional center approval process. Had the applicant shown how the purpose, scope, focus, and operation of the proposed regional center would actually benefit the economy and create new jobs, its chances for approval may have been greater. An "overly broad" proposal Dated May 2, 2011, the second decision tells us much about what USCIS looks for in the economic impact report and in TEA data. First of all, the applicant's proposal offered five different scenarios:
• Conversion of an abandoned warehouse into commercial space • Conversion of an abandoned office building into a hotel • Development of a new, mixed-use building that would house, among other things, a bank • Investment in a computer game development company • Investment in a farm that will become a vineyard & winery According to the AAO, the applicant sought approval for all of these potential investments, and its submission also stated that projects within its proposed geographical area would be of no fewer than seven different types. Among them were commercial/industrial developments like "hospitality, retail, industrial, flex, office, and transportation facilities," public-private partnerships that would develop "civic/public facilities and infrastructure," investments in lending institutions, establishment of agricultural endeavors, and renovation of "functionally-obsolete buildings." Unfortunately for the applicant, the AAO found its proposal severely lacking in credible economic analysis. Although the submission "presumes a bank will rent space in mixed use development the regional center constructs," says the AAO, the applicant "does not contemplate that the new commercial enterprise would establish or invest in the bank, a project the applicant specifically requests approval to pursue." Furthermore, the applicant apparently conceded that its input-output model could not "include a government sector" and even went so far as to state that "[a] more complete explanation of methodology for such a project will be developed in the future should such a project The first page of the AAO's decision, proper nouns redacted
actually be proposed." Unsurprisingly, the AAO responded that USCIS "will not approve a regional center covering potential investments in projects for which the applicant has submitted no economic analysis whatsoever." It also seems that the proposal included an exemplar economic analysis for a hotel, which would fit into the "hospitality" category, but failed to offer similar exemplars for proposed investments in a transportation facility. Even ignoring the applicant's lack of analysis and exemplars for certain proposed projects, this omission alone would make the proposal much too vague to garner USCIS approval.
The AAO is currently composed of nine branches. It's the fifth branch that is responsible for appeals of Regional Center application denials. (source)
"[T]he proposal is overly broad," writes the AAO, "covering several potential projects, some of which are not even identified, for which the applicant has provided no economic analysis at all." The applicant also failed to provide sufficient input data to support economic models used in the proposal. For the abandoned office building conversion, the proposal specified neither the size of the building nor of the hotel that would replace it. The applicant did, however, state that local hotel operators "inform the developer that for every $1 million in hotel revenue, the developer can assume that hotel guests will spend another $1 million at nearby businesses" and mentions surveys that provide a "statistically valid basis" for such estimates. But since the applicant failed to cite any sources, studies, or reasonable methodologies to support such a claim, USCIS considered the assertion less than convincing. The agency simply could not objectively evaluate whether such a notion was reasonable or credible. It looks like the proposal lacked evidence that apartment rental income (presumably from the mixed-use development) would necessarily benefit the geographic territory of the USAdvisors.org!
regional center. And that hypothetical computer game development company? It apparently projects revenues of $15 million per year, but the applicant never showed any data to support that assertion. In a thorough (and sometimes humorous) analysis of the decision, former INS adjudicator Joseph Whalen suggests that the economist performing the analysis never received the necessary guidance from his or her regional center sponsor:
As mean as it may seem, I don't think Dr. [REDACTED] will be getting too many Regional Center gigs after this. To be fair, I don't think that Dr. [REDACTED] was ever informed what his WORK PRODUCT needed to accomplish or what specific items needed to be addressed.
Are you asking yourself: "What is his WORK PRODUCT?"
Well, presumably, he is an economist and he was asked to create an Economic Analysis, right? What specifications was he given? Was he given any at all? Did the client ever even hand him a copy of the pertinent statutes and regulations or precedents? I would guess not.
Additionally, the "Business Plan(s)" handed to the Economist (if there were any) probably lacked sufficient detail. (I know I may be stating the obvious BUT as this very case shows us, it obviously is not obvious to everyone attempting to jump on board). Did the Business Plan writer (the idea person/true entrepreneur) ever even talk with the Economist? Again, I think not.
Therefore, I blame the Regional Center Sponsor/Applicant and his/her/their EB-5 attorneys, consultants, and/or advisors.
Proving that its investments would occur in a TEA also caused problems for the applicant. While the proposed geographical limits for the regional center included counties in the Spokane, Yakima, Portland-Vancouver-Beaverton, Longview, Lewiston, and Wenatchee MSAs, the applicant accounted for population data in only eight counties out of a 26county total. Those eight counties are located in MSAs, which means they can't be considered rural for TEA purposes. And since only four counties in the proposed geographical area had an unemployment rate that was 150% of the national rate in 2007 and the applicant conceded in its response to an RFE that none of the counties in question had an unemployment rate in excess of 150% in 2009, there was no way USCIS could approve the regional center for the $500,000 investment threshold. As Whalen explains it, the applicant "submitted information addressing projects in TEAs however, the entire geographic area selected contained ZERO known TEAs and they could not even show any probability of finding one TEA in there at all!" USAdvisors.org!
He concludes that the applicant's submission was "substandard" and contained "immaterial supporting documentation." Clearly, USCIS found these regional center applications deficient in basic tests of whether they were "reasonable" and "credible." Future EB-5 regional center applicants should take heed and consider themselves forewarned. For anyone wondering whether USCIS plans to release more decisions like these, the odds are good that it will. After all, the agency denied 44% of all regional center applications in the first quarter of this fiscal year.
Are Internal Issues Delaying EB-5 Regional Center Approvals? RFEs, I-924s, CSC... The jargon and acronyms of EB-5 may seem confusing for new regional center applicants â€“ especially when those applicants end up waiting longer than they ever anticipated to receive their approvals. And with reports of a number of applicants facing long hold times after responding to an RFE, there has been speculation that internal conflicts at USCIS are partly to blame. After the agency's publication of a letter addressing tenant occupancy in regional center economic analyses, many EB-5 stakeholders are wondering whether the delays are connected to tenant-related job counting. At least one pending regional center applicant believes that they are and offers evidence to support that contention. Removing tenant occupancy projects For clarification on the issue, we interviewed a principal at an EB-5 regional center whose approval is still pending after he responded to an RFE last fall. The applicant requested
that we use neither his name nor the name of his regional center prior to his receiving an official approval. This applicant watched others who filed around the same time he did receive their approvals and sent an inquiry to USCIS to see why his application remained in pending status. The agency issued a vague "excuse," he told EB5info. It seems that an issue pending at headquarters was the source of his application's delay. The applicant's RFE sought information about tenant occupancy. His strategy now, he says, is to remove any project that includes tenant occupancy and seek approval that way. Otherwise, he worries that his application will be subject to even more delays – possibly even a denial. "Any new job is a good thing for this country," he argues. It doesn't matter whether they're indirect, induced, or "due to tenant occupancy." New jobs have a positive impact on the U.S. economy, says the applicant, and the apparent opposition by USCIS to some tenant occupancy arrangements only hinders job creation via foreign direct investment. The result of poor regional center proposals? In response to USCIS' letter about tenant occupancy, former agency adjudicator-turned EB-5 consultant Joseph Whalen, who is showing up more and more often on this blog due to the sheer volume of EB-5 related commentary he publishes, posted an article calling the message "strange." "[I] wonder why it was sent," says Whalen. He speculates that "a huge number of pisspoor Regional Center Proposals were filed in a mad rush in an attempt to beat the I-924 Fee." Whether that is the case or not, the possibility warrants consideration. After all, the agency's tenant-occupancy letter noted the following: • Several I-924 applications used a tenant-occupancy methodology, which seeks credit for jobs created by tenant businesses leasing space in developments funded with EB-5 capital. • USCIS uses a "fact-specific" analysis to determine whether it is "economically reasonable" to count tenant-related jobs for a given project. • A case-by-case adjudication process governs all decisions, including decisions made for projects that utilize tenant-occupancy methodologies.
If the agency really did receive a number of applications it considers subpar, could it have issued the letter as a word of caution to future regional center applicants? What's more, is this the reason so many applications relying on tenant job creation have been on hold? There's no way to be sure, but the evidence at hand suggests that it is. According to EB-5 visa attorney Boyd Campbell, the USCIS letter is "troubling." Boyd Campbell "USCIS never consulted outside economists or EB-5 lawyers before releasing this memo," he opines. "The RFEs followed rapidly, and predictably show a shocking lack of knowledge about state and federal securities laws."
Whether USCIS is able to resolve this issue remains to be seen. In the meantime, it continues to be a source of immense frustration for regional center applicants and their attorneys.
USCIS Seeking Securities Attorneys to Help With EB-5 Issues Good news: USCIS is looking to hire experienced attorneys with knowledge of corporate, finance and securities law to work on the securities and investment related issues related to the EB-5 visa and practices within the industry. If the Regional Centers and EB-5 agents & service providers were hoping that financial and securities practices in the industry would continue to be ignored by USCIS it looks like that may not be true for much longer. At least they will hopefully have the resources and manpower to investigate financial and securities related problems within the industry. Note: "ALD attorneys also provide litigation support to the Department of Justice in federal lawsuits involving USCIS regulations, adjudications, practices, and/ policies." Here is the job description:
Job Title: Experienced Attorney Department: Department Of Homeland Security Agency:Citizenship and Immigration Services Job Announcement Number:CIS-626255-COU Open Period: Tuesday, April 10, 2012 to Tuesday, April 24, 2012 The Office of the Chief Counsel (OCC), U.S. Citizenship and Immigration Services (USCIS), Department of Homeland Security, is seeking to fill multiple positions with experienced attorneys possessing at least three years of demonstrated experience in corporate, financial and/or securities law to focus on investment-based immigration issues for the Adjudications Law Division (ALD) in Laguna Niguel, CA or Washington, DC. DUTIES: The attorneys will serve as advisors to the Chief of the ALD, the Chief Counsel, and to USCIS and other Departmental components on issues relating to the adjudication of EB-5 petitions. ALD attorneys provide advice to the Director and USCIS Operations on the legal consequences of laws, policies and initiatives that affect immigration benefit processing and adjudications. ALD attorneys review regulations, policy memoranda, and field guidance for legal sufficiency. ALD attorneys also provide litigation support to the Department of Justice in federal lawsuits involving USCIS regulations, adjudications, practices, and/policies. Salary Information: (HQ) Washington, DC (GS-13) $89,033 to (GS-15) $155,500 (CSC) Laguna Niguel, CA (GS-13) 91,141 to (GS-15) $155,500 QUALIFICATIONS REQUIRED: Applicants must possess a J.D. degree from an accredited law school, be an active member of the bar (any jurisdiction), and have at least three years (3) years of post-J.D. experience in corporate, financial and/or securities law with demonstrated ability in evaluating business plans and formation, as well as investment agreements, financial data and reports, and accounting principles. Applicant should possess a strong working knowledge concerning the formation and operation of limited partnerships, limited liability corporations, and related business structuring mechanisms. Applicants should possess a strong working knowledge of securities rules and regulations relating to public and private securities, shareholder agreements, profit sharing agreements, and all applicable licensing requirements. A Master's in Business Administration and/or substantive experience in employment-based immigration law is a plus. Here's the link on USAJobs.com.
Wall Street Journal Profiles Young EB-5 Investors, Wealthy Chinese Better education for their children, cleaner air, safer food. According to a recent Wall Street Journal article, these are just some of the things bringing wealthy Chinese immigrants to the United States. As the EB-5 stakeholder community knows well, many people who have made their fortunes in China are looking for ways to emigrate. And a large number of them, it seems, are young. Indeed, the individual the Journal profiles for this article, Shi Kang, is only 43 years old.
Millionaire writer Shi Kang plans to leave China for the United States.
Shi is one of many Chinese citizens seeking opportunities in the United States despite finding so much success in his own country. And he is typical of many wealthy Chinese residents arranging their immigration by investing hard-earned money into any of several EB-5 visa projects. What’s driving this exodus? According to the Journal, “a survey published in November found that 60% of about 960,000 Chinese people with assets over 10 million Yuan ($1.6 million) were either thinking about emigrating or taking steps to do so.” This matches a study conducted previously by Bain Capital and the state-run China Merchants Bank, according to the report. 60% is a lot, and the numbers may be shocking to many – especially since many Americans think of immigrants coming here to earn money, not invest it. However, these Chinese residents are looking for more than increasing their wealth. They are looking for a new way to live and for the opportunity to enjoy many things US citizens take for granted – things like financial security, clean drinking water, and outdoor scenery. A friendlier business environment than that offered in China is another frequently cited reason for increased emigration. Officials taking notice
Chinese officials are not unaware of the increasing number of applications for American, Canadian, and European visas. To combat the emigration, they have promised reforms such as improved public services and plans to combat environmental problems, but few changes will go into effect until 2015. Many of China's young, upwardly mobile individuals are not waiting. Instead, they are searching for investment opportunities outside of China â€“ opportunities that let them use their wealth to secure a better future for themselves and their families. China's population, by many standards, is actually quite wealthy. Some estimates now show China being home to as many as 150 to 300 billionaires and as many as 1 million millionaires. With numbers like these and with so many wealthy Chinese citizens eager to leave, the prospect of continued growth in the EB-5 visa program looks good. Image Credit: Mask 9
Technology Accelerator Just One of Several New EB-5 Visa Projects Amid news of various lawsuits, seemingly arcane decisions by USCIS, and alleged broker-related shenanigans, it's important to remember that most news from the EB-5 arena is good news. Indeed, EB-5 investment projects around the United States are constantly recruiting investors and creating new jobs for US citizens. This is why Congress created the EB-5
Corryville, a neighborhood in Cincinnati, is home to a new EB-5 visa project that seeks to drive technological innovation in the region
visa category, and it's why public officials from both major parties continue to support the program. Here are a few projects that made the news recently: New Potential for Cincinnati This one garnered substantial attention in the Cincinnati area. It's what the press calls the University of Cincinnati accelerator, and its purpose is moving technologies developed at the university out into society so that they can drive business and innovation. This from the Cincinnati Business Courier:
The accelerator will identify promising UC technologies through a competitive application process. It will award gap funding or pre-seed funding so that investigators can conduct the work needed to attract outside investment to reach the next stage.
And it's with help from the Midwest EB-5 Regional Center that this project came into fruition. While the regional center contributed just $500,000 to the technology accelerator â€“ that's one EB-5 investor's dollars â€“ its investment in this project is part of a $20 million revitalization project on the street where the accelerator is located. According to Terry Chan, who operates the regional center, the project should create 400 new jobs in the area. New companies are already setting up shop in the area, and efforts to rennovate aging buildings into new office space is something local officials hope will change public perception of the neighborhood. At present, Corryville is largely considered an "unsafe, unsavory area." The regional center's scope also includes a restaurant accelerator, which will operate in the same manner. These projects are very different from the hotels, sportsplexes, and ski resorts we're so used to seeing from EB-5 regional centers. Let's hope they really do spur growth and innovation in the Cincinnati area â€“ and create new jobs along the way. Using all that extra space Here's another project that piqued our interest, although, to be fair, it's not exactly an EB-5 project yet. But like the Cincinnati effort, it's definitely a "different" kind of EB-5 project. In Merced County, California, the county government along with a local group, the Sierra Academy of Aeronautics, want more foreign business for their airport, which is located in a Foreign Trade Zone.
"LAX, San Francisco, and Oakland airports are running out of space," one official told local press, adding that the Merced County location had "a lot of space available." The EB-5 element would fit in when Sierra constructed a cargo and logistics center at the local airport. Due to previous relationships with people and entities abroad, the group has already seen some interest from Chinese investors. It would first need to gain regional center approval, of course. A Green Opportunity? A new foreign investment effort in Texas is on the verge of becoming the nation's eighth EB-5 regional center focused on renewable energy. Austin Mayor Lee Leffingwell just announced a Control tower at Castle Airport, Merced proposal to create a center that will specifically County, California address "clean energy development" and "green" job creation. They'll be doing it through investments in what Inside Climate News calls "advanced battery and green construction companies." Nobody is saying how big the project will be â€“ at least not yet. But the mayor is already promoting it as the premier green energy investment among America's ever-diversifying EB-5 opportunities. While there isn't any data available with regard to how many green jobs the EB-5 program has created thus far, the Austin center certainly wouldn't be the first to offer foreign investors a chance to invest in America's clean economy. The Arizona Alternative Energy Center solicits investments in solar power as does the Inland Empire Renewable Energy Regional Center, which is also seeking EB-5 funds to build a renewable energy "superstore."
Will these projects succeed? Will the newest among them garner USCIS approval? At this point, there's no way to know. At the same time, it's refreshing to see EB-5 regional centers trying something new. Image credit: Building Cincinnati, Castle Airport, CleanTechnica Solar panels in Webberville, Texas. The Webberville facility is the largest of its kind in the state.
Are you an EB-5 practitioner who would like to contribute an article? Email Adam Green, Editor: firstname.lastname@example.org or contribute directly at EB5info.com EB5info.com Michael Gibson email@example.com 239.465.4160 @EB5info
News, information, and events in the EB-5 visa immigrant investor green card program during March and April 2012
Published on Apr 18, 2012
News, information, and events in the EB-5 visa immigrant investor green card program during March and April 2012