Kushner & Trump and the EB-5 Regional Center Extension

First things first, the EB-5 Regional Center program has been extended until September 30, 2017 as part of a larger federal budget extension.  And as we’ve pointed out previously (but bears repeating), the extension affects the Regional Center program.  The “regular” EB-5 program involving individuals who invest does _not_ need to be extended like the Regional Center program (which started as a “Pilot Program” and never escaped that designation).  However, portions of the regular/direct EB-5 program will be affected by provisions that overlap with the Regional Center program – see this (link to previous article about EB-5 changes that impending).

Secondly, the EB-5 program has gotten its biggest boost in publicity due to President Trump’s in-laws (the Kushners) being linked to an EB-5 Regional Center that was pitching mainland Chinese investors.  There has been a title wave of articles on this subject and the EB-5.  The previous stories of fraud and criminality in previous EB-5 Regional Center projects has not garnered this much publicity.  The tie in to Trump and his family is fueling this and rightfully so.

See the articles below.

Jared Kushner’s sister puts EB-5 visas back in the spotlight.

Kushner Family Stands to Gain From Visa Rules in Trump’s First Major Law

The biggest issue is that the promoters of the program essentially made a direct link between one of the Kushners to Donald Trump.  It was a blunt *wink**wink* to the potential customers that this project is guaranteed to do well – because it is expressly _forbidden_  to make guarantees of any sort on an EB-5 project.  The funds have to be “at risk” in the target business.

We are not big fans of the Regional Center program – while useful and a boost to the US economy when used correctly, the amassing of such capital can create numerous opportunities for abuse.  We prefer clients go the direct route of the EB-5 visa – where one invests into a business and oversees it to create the 10 direct jobs.  However, we understand that with certain investors, they would prefer a more hands off vehicle – which is where the Regional Centers are handy.

The entire affair will inject more urgency to the reform/abolish debate to the EB-5 program as it the sunset date for the temporary extension nears in September of this year.

However, portions of the regular/direct EB-5 program will be affected by provisions that overlap with the Regional Center program – see this

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EB-5 Fraud Case Continues To Reverberate

 

In the past few years there have been a quite a number of EB-5 Regional Center related cases.   They are pretty well documented in the press — just google “Eb-5 Fraud” and one can get a good sense of the range of scams and fraud causes that can erupt from EB-5 cases.  In our opinion, the best way to minimize the risks involved in an EB-5 investor case (in terms of fraud) is to manage one’s own business enterprise.

In most of the uncovered fraud cases, there has been major litigation and government prosecution involved.  In many cases the investors were able to recover the funds.

Well it looks as if there is a new area where the the litigation is going and it’s towards the banks that are holders of the escrow accounts.  These banks are supposed to hold the EB-5 investment funds in an escrow account until a few agreed upon actions happen, such as approval of the investor’s EB-5 investment petition.  It looks as if in the allegations here, that did not happen.

Click on the link below for the article.

http://www.latimes.com/business/la-fi-wilshire-eb5-fraud-20160725-snap-story.html

 

EB-5 Proposals and What They Could Mean

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It’s that time of the year, where the EB-5 Regional Center program is going to sunset and there is a scramble (as usual) to renew it.  And it should be pointed out that this has no effect on the “original” EB-5 program, were an individual invests capital and creates 10 jobs.  That will always be there.

But the Regional Center portion of the EB-5 program has always been given a life for limited periods of time, possibly because of some of the controversy and issues surrounding this program.

There are a number of competing bills summarized here:

http://eb5coalition.org/resources/bill-comparison-chart/

Mainland China and EB-5s: Rationales and Visa Usage

The plight of mainland Chinese who use the EB-5 investment immigrant visa have been in the news.

Of note are the rationales for those who leave (via the EB-5 or other means) in the Wall Street Journal (paywall):

http://online.wsj.com/articles/the-great-chinese-exodus-1408120906

The other being story is how the allotment of the EB-5 visa for mainland Chinese have been used up for this fiscal year. (The NEW fiscal year starts up on October 1). 

http://online.wsj.com/articles/investor-visas-soaked-up-by-chinese-1409095982

It should be noted that this doesn’t affect EB-5 users from other countries.

Visas as a Cold War Tool

 

The title of this Wall Street Journal Op-Ed piece says it all : “Weaken Putin With a Russian Brain Drain.”  (Paywall link).

The Op-Ed piece essentially proposes the use of certain visas as a means of taking away Russia’s best and brightest.  Specifically using a combination of O-1 (those with “extraordinary ability”) and the EB-5 investment visas.

The writer, Edward Luttwak, adds a few wrinkles to the two visas in this editorial piece (urging Obama to use his executive powers to modify both visas to make it easier and more attractive to Russian passport holders.).

The use of the two visas as an “anti-sanction” is an interesting thought experiment.  But it will probably stay that way, a thought experiment.

 

EB-5 Generally: Investor Visa

EB-5 Investor Visa

There’s been some discussion about the EB-5 Investor Visa on this blog, without any real discussion of what one should do to acquire an EB-5 visa.

Generally, the EB-5 Investor Visa requires two things (this is VERY general):

1)  An initial investment into a new business enterprise of $1,000,000 (one million US dollars) in the United States.

2)  And in the process of accomplishing the above, create 10 full time jobs for US citizens or US permanent residents.

One can reduce the required amount of $1,000,000 to just $500,000 (five hundred thousand dollars) in one of two ways:

a)  Invest in a rural area or an area where the employment is 150% of the national average; OR

b)  Go through an EB-5 Regional Center.

As noted in other posts, the future of the EB-5 Regional Center has not been decided by the new administration (currently it is set to sunset around March).

And the EB-5 should not be mixed up with the temporary visa E-2.  The EB-5 allows the foreign national to acquire permanent residence (along with the immediate family as well).

The grant of permanent residence, is conditional (almost like a marriage greencard).  One has to file another petition to make the green card permanent in two years time, where the USCIS will review the petition once more.

The problem for most people is the amount of capital required (different from the E-2 visa, which doesn’t have a set monetary amount).  And the fact that one has to be involved quite a bit in the day to day operations (please compare to the EB-5 Regional Center, which has different requirements).

USCIS Announces New Filing Location for all EB-5 Petitions

All EB-5 related filings is to be filed at CSC only.

Submit all new EB-5 petitions and regional center application materials to:

For Direct Mail (i.e. USPS):

USCIS California Service Center
ATTN: EB-5 Processing Unit
P.O. Box 10526
Laguna Niguel, CA 92607-0526

For private couriers (FedEx, etcetera):

USCIS California Service Center
ATTN: EB-5 Processing Unit
24000 Avila Road, Room, 2nd Floor.
Laguna Niguel, CA 92677