The EB-5 issuer is required to make reports to investors, to retain appropriate personnel to handle the bona fides of not only evaluating the investment, but to evaluate the internal controls of the manager.
Most of the time in a private placement memorandum (PPM) or in the operating agreement, an EB-5 fund will require some basis of an annual report to be provided to investors, either in the form of financials or in the form of a written report. But there's no state corporate laws requiring the issuance of annual reports, nor is there a requirement for audits.
When you review EB-5 offering documents you ought to concern yourself with:
- Are you being provided annual reports?
- Is there an audit?
- If there is an audit, who’s actually doing the audit. You clearly want people who are experienced in the fund business.