There are four steps in the EB-5 petitioning process that an immigrant investor should be prepared to complete to become a U.S. permanent resident, along with their spouse and unmarried children under the age of 21.
There are four steps in the EB-5 petitioning process that an immigrant investor should be prepared to complete to become a U.S. permanent resident, along with their spouse and unmarried children under the age of 21.
A primary EB-5 requirement is an initial investment in a new commercial enterprise. That investment must be $800,000 (USD) in a Targeted Employment Area or $1,050,000 in a non-TEA area. As per United States Citizenship and Immigration Services (USCIS) regulations, investors must provide appropriate documentation in their I-526 petition to show the capital for their EB-5 investment has been obtained or earned through lawful means.
Making an investment of $800,000 - $1,050,000 in one of the EB-5 projects that ultimately fails, jeopardizes both the investor’s funds and the U.S. residency of the investor’s family, therefore every investor would be wise to know as much as possible about the investments they’re considering.
What is EB-5 due diligence?
Due diligence is an investigation of an investment prior to signing a contract. Due diligence contributes significantly to informed decision making by enhancing the amount and quality of information available to the investor allowing him or her to better understand the benefits and risks.
What is included in an EB-5 Immigrant Visa due diligence review?
Due diligence begins with a thorough analysis of the investment documents including the capital structure, project viability, exit strategy and job creation potential as it relates to the the EB-5 green card program.
The due diligence review should also identify risk mitigation strategies that have been implemented by the Manager or General Partner to protect investors. These include use of a fund administrator to oversee all transfers of investor funds, and construction monitoring to ensure transfers to the Developer are in-line with construction progress.
John Tishler: SEC Rule 10b-5 is what I’d call the primary rule of liability we’re concerned about in EB5 offerings or EB5 projects. It applies to any offering of securities that has any jurisdictional nexus to the United States. Jurisdictional nexus simply means that some mode of interstate commerce was used: the telephone, an email, postal delivery. I think it is impossible to imagine an EB5 transaction taking place that did not somehow avail itself of the means of interstate commerce in the United States. 10b-5 is going to apply.
And what it says is that it’s unlawful for any person in connection with the offer or sale of securities to omit or misstate a material fact or to state a fact that, in the context in which it is stated, is misleading. And that’s considered to be a fraud. When people talk about securities fraud, Rule 10b-5 is what they’re referring to.
Comparing the commonly used word “fraud” and the common sense understanding of it, the standard for securities fraud is quite a bit lower than the common sense understanding of that term 'fraud'.
Fraud includes an intent to omit a fact or to state a fact that wasn’t complete in its context. Rule 10b-5 has what’s called a scienter requirement in relation to the omission of facts meaning there has to have been intent.
