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The Dual Purposes of an EB-5 Business Plan

Posted by Kurt Reuss on March 08, 2016

Kurt: The EB5 business plan has two purposes. First, you want to make sure your business plan is written to be I-526 compliant and ultimately approved by USCIS. Second, your plan needs to position your EB5 offering for marketing.

My belief is that everything you do in your business affects your brand and certainly this includes in a significant way, your business plan, which is given to investors as part of the offering. The plan is going to make an impression on investors and influence their decision of whether to participate. Obviously your business plan needs to recognize that reality while still being accurate.

Let's begin by discussing the I-526 approval aspects.

Martin, would you mind starting us off by talking a bit about ‘Matter of Ho’ issues?

The Issuer Exemption as it relates to EB-5

Posted by Kurt Reuss on August 11, 2015

An exemption from registration as a broker dealer under Section 15(a) of the Securities Exchange Act of 1934 is available for persons associated with an issuer and involved in the sale of the issuer’s securities.

How to Handle Early Repayment of EB5 Funds

Posted by Kurt Reuss on April 22, 2015

Let's assume that the borrower has an opportunity to repay the EB5 loan to the NCE; that the job creation requirements have been met; but not all the I-829s have yet been adjudicated.

What are the Manager's options? 

Carolyn Lee: The starting point is to determine what ‘investment’ means from USCIS statute, regulations, and precedent decision standpoint. The essential transaction that's regulated by immigration statute, regulations and precedent decisions is the transaction that is between the EB5 investor and the new commercial enterprise (NCE). That is the sole transaction and relationship that the term 'investment' refers to.

The problem is that USCIS in adjudication has tended to apply the standard

Provisions for Sustainment of Investment in Offering Documents

Posted by Kurt Reuss on April 17, 2015

Robert Divine: Ronnie's point is to have the offering documents basically say, "We can pay off every investor as they hit their I-829”, but I've actually tried that with a client who insisted on doing it this way and it didn't go well. USCIS said that that violated another part of 'Matter of Izummi' of making an arrangement that is tantamount to a loan.

Now, I've heard other cases where similar language with similar effect was approved and I'm confident that Ronnie has seen language of the type that he mentioned in deals that have been approved.

Ronald Fieldstone: I've never seen that language get an RFE.

Robert Divine: I hear you. We have different experiences from different cases but I'm worried about what can happen. The bad stuff doesn't happen every time.

The EB-5 Manager's Role and Responsibilities

Posted by Kurt Reuss on February 12, 2015

Michael Homeier: Balancing the EB-5 project Manager’s role and responsibilities and specifically the extent to which the Manager is obviously looking out for his own interests, but must also be aware of and must honor his legal obligations to look out for the interests of his investors at the same time. 

It’s typical of EB-5 investments that the principals run the show and are the Manager of both the project company and the funding company, whether it be a direct investment with investors coming in as minority owners of the business, or as an indirect investment with investors investing into a funding company that intends to deploy the EB-5 funds to a separate project company.

Investors naturally have a concern that the Manager will be looking out for the Manager’s own interests, sometimes at the expense of the investors’ interests, and by making a passive EB-5 investment the investor is to a considerable degree at the mercy of management. 

Removal of EB-5 Manager and a Succession Plan

Posted by Kurt Reuss on February 10, 2015

Darren Ofsink: In EB-5 it's likely that when investing in a limited partnership or a limited liability company, there isn't much in the way of statutory law that describes what the investor's rights are. 

There are basic fiduciary obligations of the company as well as management of the limited partners interest, but it's the limited partnership agreement and the operating agreement that are going to be the source of the primary rights of the investors. And so, it's important to understand that what is within the four corners of those documents is really going to be the sum total of the rights that you have.

I-526 Petition Requirements

Posted by Kurt Reuss on January 01, 2015

For an immigrant investor hoping to obtain his or her green card though the EB5 visa program, they must first choose an EB5 project and then make the required capital investment. That path to a green card and potentially to US citizenship, begins with the filing of Form I-526, the Immigration Petition for Alien Entrepreneur. That petition must be submitted with accompanying evidence in support of the USCIS EB5 program’s requirements. Upon receipt, the USCIS will evaluate and adjudicate the I-526 petition based upon the following:

Permanent Residency

Posted by Kurt Reuss on July 01, 2014

What is U.S. Permanent Residency (also known as a Green Card)?

U.S. permanent residency is an immigration status that gives immigrants the right to permanently live and work in the United States. Foreign immigrants who have obtained lawful permanent residency are given a permanent resident card, colloquially known as a Green Card.

What is an EB-5 Visa?

Posted by Kurt Reuss on February 01, 2014

Simply put, the EB-5 immigrant investor visa program is the fastest way to get your green card and gain permanent residency in the United States. The program is predicated on foreigners making an investment in a U.S. business, specifically one that would create 10 or more jobs for Americans.

Direct Investment or Regional Center Investment

Posted by Kurt Reuss on February 01, 2014

Each EB-5 visa applicant has two investment options, namely a direct investment or an investment through an EB-5 Regional Center.

Direct investment means that the EB-5 visa applicant must find his own investment project and must take a direct managerial role in the project’s oversight. While the ultimate goal of an EB-5 investor is to obtain a green card, direct investment tends to be better suited for those who want more hands-on control of their investment and for those who want to earn a higher rate of return on their investment. 

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