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Common EB-5 visa Investor Questions

Posted by Kurt Reuss on January 09, 2017

EB 5 Visa requirement common questions:


Q:  "I haven't paid taxes, individual or business, because my country of residence doesn't require it or it isn't customary. Is this a problem?"

A: Catharine: We normally tell clients if they can provide income tax returns, it’s great to do so. If they can't, it's not going to make or break their petition. 

We let them know that if USCIS EB5 sends a request for evidence (RFE) for copies of their income tax returns, they will need to either produce them or get a letter from an attorney in their country of residence stating the legal reason behind why they can't provide those tax returns.

I always request tax returns but I’ll still file a petition if I don't have them. 

 

Q: "When will I get my EB5 money back?"

A: Rupy: Often times an investor's understanding may be that their funds are being loaned to a project for five years so they can expect a return of their capital in five years.

Investors should understand that they are making an equity investment in the new commercial enterprise (NCE), and the NCE is making the loan.  So the return of capital is dependent on two outcomes, first the repayment of the loan by the JCE and second the liquidation of the NCE by the Manager.

What are the EB 5 visa requirements for getting EB5 immigrant visa

Posted by Kurt Reuss on December 21, 2016

EB 5 visa requirements checklist with Due Diligence.

Making an investment of $500,000 - $1,000,000 in an EB-5 project 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 EB5 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 US EB-5 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.

EB-5 Source of Funds for EB5 investment visa

Posted by Kurt Reuss on May 07, 2016

EB 5 source of funds scenarios

If you are applying for an EB-5 visa, providing evidence of income and a lawful path of EB5 funding will be the key to your successful transaction. Since there are a myriad of ways to collect the money you need for your investment, having an expert eb-5 investment attorney to guide you successfully through the documentation process is a key element.

Here are a few common EB-5 source of funds scenarios and how to document them.

What is an NCE?

Posted by Kurt Reuss on April 01, 2016

Full meaning of NCE ‘New Commercial Enterprise’

A requirement of the US EB 5 program is for the foreign investor to invest and engage in a ‘New Commercial Enterprise’.

EB-5 regional center offerings involve a new commercial enterprise (“NCE”) and an independent job creating enterprise (“JCE”), NCE invests or loans the EB-5 investors funds into the JCE.

There are no restrictions on the type of business as long as it is a new business enterprise or the investment is made to into a failing business to save jobs, but in both cases the investment must create or save at least ten (10) jobs.

Consequences of Not Registering as an RIA

Posted by Kurt Reuss on March 17, 2016

Registered Investment Advisor

Kurt: Chris, you mentioned to me that fines for not registering as a registered investment advisor can come in varying tiers, depending on the way you're perceived to have gone about not registering or the circumstances around it.

Fines can range from a lower level when the SEC recognizes that you're doing what you thought you should be doing, but you just didn't do it properly and fines will usually escalate for egregious and repetitive wrongdoings. Any thoughts on how the SEC perceives the issue of fines?

Chris: I think they're going to look at the activities you're actually conducting. In this case, with eb 5 visa requirements being a relatively new area, it's hard to say how they're going to go. I know the state of California structures their fines on a tier system.

Based on first offenses or minor offenses, it's almost a slap on the wrist, if you will. But I've also seen massive disgorgement of profits where some investment advisors have been operating two or three years without registering and they’re continually trying to skirt the rules.

In some cases they do this through the creation of additional companies in an effort to keep their amount under management spread out among multiple entities, but the SEC determines that those entities were integrated. I think it depends on the actual conduct that determines the severity of the fine.

SEC Rule 10b-5 and the scienter requirement

Posted by Kurt Reuss on October 31, 2015

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 Investment 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.

In any event, 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. 

In terms of the commonly used word “fraud” and the common sense understanding of it, lets discuss what it means to commit fraud. The standard for securities fraud is quite a bit lower than the common sense understanding of fraud. 

Fraud also 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 from which means there has to have been intent. 

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. Understanding the Issuer Exemption plays critical role in EB 5 Visa documentation.

What is an EB5 Inter-Creditor Agreement?

Posted by Kurt Reuss on June 05, 2015

Inter-Creditor Agreement in concern with EB5 Projects

(Michael Gibson): Generally an intercreditor agreement just defines the terms of the relationship between a senior and a subordinate lender in a transaction. Sometimes if there are multiple lenders in the senior pool you'll see agreements between those lenders as well. With respect to EB5 intercreditor agreements, the EB5 capital is going to be in a subordinate position. 

The first question to ask yourself is whether you need an intercreditor agreement. Intercreditor agreements are often not very favorable to a subordinate lender. The terms may stipulate that if there is a default under the senior loan, the subordinate lender will be asked to do things like forego rights to collect interest or principal payments, to standstill on exercising remedies, or to give up certain rights in a bankruptcy action including rights to object that a subordinate lender would otherwise have including rights to approve certain aspects of a bankruptcy plan. In general, in a subordinate position, the first thing you want to ask yourself is, do I really want an intercreditor agreement?

EB5 Process - Step by Step

Posted by Kurt Reuss on January 01, 2014

In general, there are four steps in the EB5 process that an immigrant investor must complete in order to become a U.S. permanent resident through the USCIS EB 5 visa program (though we suggest you start by interviewing and retaining an experienced EB-5 immigration attorney).
Once these four steps have been completed, the EB5 investor, his or her spouse, and their unmarried children under the age of 21 will be eligible to become permanent residents of the United States.