TIPS FOR EB-5 INVESTMENT

EB-5 is considered as the fastest and safest way to settle down in the U.S. However, investors always deal with certain risks. The following tips of EB-5 Investment will help investors find the most feasible project with higher ability to receive a permanent resident card.

Risks in EB-5 investment

In last June, the U.S authorities announced about an investigation into the Vermont – Regional Center – and Jay Peak project. It is showed that the project owner misused more than $200 million and another $50 million from investors for his own personal use. This caused many investors of the project to worry about losing their money, including Vietnamese investors. Of course, the dream of settling down in the U.S via investment hardly becomes true.
(Thanh Nien News)

EB-5 investment is often considered as a risky investment. Actually, there is no guarantee that EB-5 investment will succeed or fail. And there is no evidence that investment (not) located within a regional center is safer than others. Investors always deal with certain risks. The result of your investment depends on a wide range of issues such as projects, investment experiences, business operations, management strategies, etc.

No guarantee of return

EB-5 investors are required to suffer risks. Thus, if any projects commit 100% to return investment capital in the contract, the visa application will be denied by USCIS. USCIS considers whether the investment of investors create 10 full-time employment for qualifying employees or not. The assessment of potential development, business ability and ability to return the capital depends on the project model, the experience of the investor and the contract signed between the investor and the project owner.

Infeasible Projects

Normally, when taking their participation in new projects at the beginning stage, investors are likely to bear more risks such as no capital return and no receive of permanent green cards. In addition, projects in which the capital contribution of project owners is much lower than that of investors or which have waited for new investors often have many potential risks. and is not safe. Well-known and large-scale EB5 projects supported by the U.S government do not mean that they are safe.

Safer EB-5 investment and less risks

As with any investment, it is important to research thoroughly any offering that purports to be affiliated with EB-5.

  1. Confirm that the regional center has been designated by USCIS

If you intend to invest through a regional center, check the list of current regional centers on USCIS’s website at www.uscis.gov. If the regional center is not on the list, exercise extreme caution. Even if it is on the list, understand that USCIS has not:

– Endorsed the regional center or any of the investments it offers.

– Ensure the compliance with US securities law; or

– Minimize or eliminate risks for investors.

     2. Obtain copies of documents provided to USCIS

Regional centers must file an initial application (Form I-924) to obtain USCIS approval and designation, and must submit an information collection supplement (Form I-924A) at the end of every calendar year. Ask the regional center for copies of these forms and supporting documentation provided to USCIS.

     3. Request investment information in writing

Ask for a copy of the investment offering memorandum or private placement memorandum from the issuer. Examine it carefully and research similar projects in evaluating the proposal. Follow up with any questions you may have. If you do not understand the information in the document or the issuer is unwilling or unable to answer your questions to your satisfaction, do not invest.

  1. Seek independent verification

Confirm whether claims made about the investment are true. For example, if the investment involves construction of commercial real estate, check county records to see if the issuer has obtained the proper permits and whether state and local property tax assessments correspond with the values the regional center attributes to the property. If other companies have purportedly signed onto the project, go directly to those companies for confirmation.

        5. Examine structural risk

Understand that you may be investing in a new commercial enterprise that has no assets and has been established to loan funds to a company that will use the funds to develop projects. Carefully examine loan documents and offering statements to determine if the loan is secured by any collateral pledged to investors.

6. Look for warning signs of fraud

Beware if you spot any of these hallmarks of fraud:

– Promises of a visa or becoming a lawful permanent resident. Investing through EB-5 makes you eligible to apply for a conditional visa, but there is no guarantee that USCIS will grant you a conditional visa or subsequently remove the conditions on your lawful permanent residency.

– Guaranteed investment returns or no investment risk. Money invested through EB-5 must be at risk for the purpose of generating a return. If you are guaranteed investment returns or told you will get back a portion of the money you invested, be suspicious.

– Overly consistent high investment returns: Investments tend to go up and down over time. Be suspicious of an investment that claims to provide, or continues to generate, high rates of return regardless of overall market conditions.

– Unregistered investments. Even though a regional center may be designated as a regional center by USCIS, most new commercial enterprise investment opportunities offered through regional centers are not registered with the SEC or any state regulator. When an offering is unregistered, the issuer may not provide investors with access to key information about the company’s management, products, services, and finances that registration requires. In such circumstances, investors should obtain additional information about the company to help ensure that the investment opportunity is bona fide.

Even though EB-5 brings a lot of benefits to investors, risks are still there. Hope that information about risk minimization in EB-5 will be helpful to EB-5 investors.

(Source: USCIS)

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