Kurt Reuss: John, as a broker dealer in EB5, what about the argument that you probably don’t have the ability to raise money for an offering right now.
John Leo: I would agree. Last year, we probably brought 30 investors into deals but to get these deals done you really have to go through China. That’s simply how this business is currently designed.
Kurt Reuss: What is the role of a broker dealer and how do they provide compliance? And where in the process does that compliance sometimes fall apart? Are there situations where an issuer doesn’t get the compliance or coverage that they thought they were going to get and that they’re paying for?
John Leo: Certainly, I guess there are a number of ways to frame it. If you hire an immigration attorney, they’ll do their job as an immigration attorney. If you hire a securities attorney, they’ll draft the documents. The fact is we reject more than half the deals we see. Probably 9 out of 10 of the deals we see in this space, we reject. If you can recall the recent issue of fraud in Seattle, we would not have done that deal.
One person controlling every aspect of a deal, that’s a pass, a complete pass. The fact that a deal’s getting done, that it has a securities attorney and an immigration attorney doesn’t necessarily mean it’s a good deal or a bad deal. It might mean that no one has really dug into the transaction from the investor’s perspective. Ultimately, that’s the job of a broker dealer. As a service provider, you never want to be associated with a fraud or a failure in any business and EB5 is a small business so certainly, you wouldn’t want to be associated with that.