With EB-5 Program Regulatory Reform on Horizon Selecting a Reputable EB-5 Regional Center Now Matters More Than Ever

The United States Office of Management and Budget (OMB) has completed its review of the EB-5 Immigrant Investor Program Modernization final regulation which had been proposed by USCIS. Such a review is typically the last step of the rulemaking process prior to publication of the final rule in the Federal Register. After the publication, the usual time for a legislative change to take effect is 30-60 days. While the text of the final regulation has not yet been publicly released, it is expected that the minimum investment amount may more than double for TEA ($1.35 million) EB-5 investments and increase nearly as much for non-TEA ($1.8 million) EB-5 investments. Although the EB-5 community pushed back for lower investment amounts during the comment period, it is unknown what changes were made, if any, and a revised draft of the regulation has not been circulated.

For prospective EB-5 investors who now feel urged to invest on short notice in order to still qualify under the current $500,000 TEA investment threshold, CanAm cautions that while it is certainly beneficial to many investors to take advantage of the lower investment amount, it should not happen at the cost of neglecting proper due diligence on both the investment and immigration side of the EB-5 program.

“This is now a critical time to select the right EB-5 regional center with a strong track record, as taking chances with an inexperienced EB-5 regional center may prove costly in the future,” commented Christine Chen, Chief Operating Officer at CanAm Enterprises.

“Given the uncertain times in the EB-5 industry, many investors may feel they have to act quickly. However, extensive due diligence on EB-5 regional centers should still be conducted to ensure immigration goals are achieved and capital is preserved,” said Peter Calabrese, Chief Compliance Officer at CanAm Investor Services.

Prospective investors evaluating regional center-sponsored EB-5 investments should perform extensive due diligence on both the regional center sponsor and the EB-5 project. In this regard, the parties should always carefully review the full offering package provided by the regional center – following up with any questions – as well as consult with experienced financial and tax professionals and immigration counsel in order to understand the nature of the investment, the extent to which it complies with EB-5 program requirements, and the potential consequences and risks in the event the investment is compromised for any reason.

The key facts that need to be known before investing with any regional center are as follows:

Fundamentals
It is absolutely essential to know the fundamentals of the EB-5 visa to adequately assess whether an investment opportunity will satisfy the EB-5 program requirements. Prospective investors should familiarize themselves with the role of an EB-5 regional center, immigration attorney, and the job creation requirement as well as the investment-at-risk requirement, including the overall investment and immigration timeframe. Investors should understand the role of regional centers and how the EB-5 funds will be released to projects. In case the EB-5 application is denied, investors should be aware of how the funds will be returned.

“Immigration through the EB-5 program requires job creation, and investors should keep that in mind at all times,” said Tom Rosenfeld, President and CEO of CanAm Enterprises. “At CanAm, we’ve helped more than 5,600 investors and their families to receive green cards through the EB-5 program. We seek to provide conservatively-structured EB-5 investment projects that align with our core goals: help investors achieve their immigration benefits and preserve the invested capital. Having repaid more than $1.25 billion in capital to our EB-5 investors, I think our track record attests to our success.”

Regional Centers
The investors must determine whether the regional center is authorized by USCIS and active at the time of making investment. The track record of the regional center must be reviewed and compared against other centers. The years of experience and the number of successful projects sponsored are good measures to analyze the performance of the regional center. A successful project would most likely be defined by its ability to achieve full immigration status and full repayment of funds to investors.

“The track record can be a good indicator when assessing the experience of EB-5 regional centers. At CanAm, we’ve structured over 55 EB-5 projects, had more than 13,000 green card approvals, and repaid over $1.25 billion to our investors to date. CanAm’s track record has also been verified by an independent auditor,” commented Walter S. Gindin, Director, In-house Immigration Counsel at CanAm Enterprises.

Projects
Cross-checking the reputation, track record, and experience of the project developer is also a very important part of the process. When identifying projects that meet the EB-5 program requirements, regional centers should work only with reputable sponsors who have proven track records. The project itself should be fully capitalized and entitled to ensure it will be completed. Projects must be economically viable to ensure that once capitalized, EB-5 investors can be repaid on time.

“At CanAm Enterprises, we operate 7 USCIS-approved regional centers and all of them have delivered high-quality EB-5 projects with sufficient job creation for all of our investors. To this day, we have raised over $2.8 billion in EB-5 capital. CanAm only works with reputable, experienced developers and partners, and structures investments in a manner that provides maximum security to the investors,” commented John Reid, Director of Project Development at CanAm Enterprises.