1. EB-5 101: Green Card Through Investment
Parisa Karaahmet, Fragomen, Del Rey, Bernsen, & Loewy
Alexander G. Rojas, Barst, Mukamal, & Kleiner LLP
Genevieve Roman, Extell New York Regional Center
Kristal Ozmun, Miller Mayer LLP
NY AILA 2015 EB-5 101

2. Agenda Overview of EB-5 criteria & requirements
Direct vs. regional center investments
Role of counsel in representing the investor
Ethical considerations
Panel’s top tips for new EB-5 practitioners
Q&A
NY AILA 2015 EB-5 101

3. Overview of the EB-5 criteria and requirements
Legal requirements
Source and path of funds
Filing process and RFE trends
Removal of conditions

4. Eb-5 Basics
EB-5 category created in 1990 for foreign nationals who invest in a new commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs.
Congress set aside 10,000 immigrant visas annually for investors and their immediate family members.
Immigrant Investor Pilot Program enacted in 1993, providing for regional centers – due to sunset on September 30, Job creation may be estimated using “reasonable methodologies.”
Foreign nationals can get a green card if:
Invest $500,000 or $1,000,000 (depending on geographical area); and
Investment creates full-time jobs for 10 U.S. workers
Green cards conditional for 2 years
Conditions removed if investment sustained and jobs created
NY AILA 2015 EB-5 101

5. I-526 Petition
General requirements – INA § 203(b)(5) and 8 CFR § 204.6
New commercial enterprise
$500,000 or $1 million from a lawful source
At-risk investment
Investment will create at least 10 full-time U.S. jobs
Investor must be engaged in the management of the enterprise
NY AILA 2015 EB-5 101

6. I-526 – Individual Investors
New Commercial Enterprise
Created after November 29, 1990
Matter of Soffici, 22 I & N Dec. 158, (1998), Matter of Hsiung, 22 I & N Dec. 201 (1998); OR
Substantial change from investment - 40% expansion of net worth or number of employees
NY AILA 2015 EB-5 101

7. I-526 – Individual Investors
Actively in the process of investing $1 million or $500,000 if the investment is in a targeted employment area
Targeted employment area (“TEA”)
A rural area of less than 20,000 in population; or
An area which as unemployment of at least 150% of the national average
Evidenced by submitting a letter from the state’s agency confirming that the area has high unemployment and defining the statistical area
USCIS may disagree with the state’s method of calculation, but generally will defer to the geographic area
NY AILA 2015 EB-5 101

8. I-526 – Individual Investors
Investment must be at risk
Matter of Soffici, Matter of Izummi, Matter of Hsiung, 22 I & N Dec. 201 (1998) , Matter of Ho 22 I & N Dec. 206 (1998)
Must be an equity investment
Debt instrument prohibited/no guaranteed repayment
Personal funds or loan secured by personal assets
NY AILA 2015 EB-5 101

9. I-526 – Individual Investors
Lawful source of Investment Funds
Matter of Soffici and Matter of Izummi
Examples
business earnings, salary, gifts, loan, etc.
Evidenced by personal tax returns, financial statements, etc.
NY AILA 2015 EB-5 101

10. I-526 – Individual Investors
Tracing
USCIS requires the petitioner to demonstrate that the personal funds derived from a lawful source and were ultimately invested in the EB-5 enterprise
Numerous transactions between investor and the EB-5 enterprise investment would require the investor to provide documentation from each transaction
EB-5 Enterprise
EB-5 Investor
$$$
$$$
$$$
NY AILA 2015 EB-5 101

11. I-526 – Individual Investors
Job creation
The investment must result in the enterprise creating or saving 10 full time jobs (35 hours per week) for US workers (USC citizen, LPR, work authorized immigrant)
Must be direct job creation, i.e. W-2 employees evidence by submitting I-9 forms of employees and for US workers (supporting docs copy of passport, I-551 card with the I-9 forms)
NY AILA 2015 EB-5 101

12. I-526 – Individual Investors
Job creation
Defined in terms of the position, not the person. The position must be created and filled by a US worker
Investor and family members do not count
When must position be filled? How long must it last?
NY AILA 2015 EB-5 101

13. Direct vs. Regional Center EB-5 Investment
What is a “regional center”?
Pros and cons of direct v. regional center EB- 5 investments
Differences in representation on direct v. RC- based EB-5 petitions

14. I-526 – Individual Investors
Engage in business on day to day basis or through policy formation
Title and description of job duties
Evidence of corporate officer or director position
Board position (policy formation)
Purely passive investor not permitted
NY AILA 2015 EB-5 101

15. Regional Center v. Individual Eb-5
Individual Eb-5 Petition
Investor buys business or starts new business
Must be 10 direct full-time, W-2 employees who are USCs or LPRs
Few applications
Regional Center Eb-5 Petition
Investment into a business associated with a USCIS Approved Regional Center
95% of all applications
Main advantage
Indirect employment counts through the use of an economist report to predict project job creation.
NY AILA 2015 EB-5 101

16. What is a Regional Center?
A Regional Center (“RC”) is not merely a defined geographic area but rather it is a business entity that coordinates foreign investment within an approved geographic area in compliance with the EB-5 statutory, regulatory and precedent decision framework
Regional Centers do not hold sole jurisdiction over their geographic region – several RC’s may cover the same area(s) and/or have partially overlapping boundaries
Purpose of the RC: Promotes economic growth through increased export sales, improved regional productivity, increased domestic capital investment, and job creation
NY AILA 2015 EB-5 101

17. Regional Center v. Direct EB-5
Over 90% of I-526 petitions filed annually are Regional Center-affiliated.
Perceived benefits of RC Investment may include:
A particular RC-affiliated investment project may be pre-approved by USCIS;
Indirect employment counts through the use of an economic impact report to project job creation
less active role in the day-to-day policy formation and management of the business

18. RC Affiliated Projects may count both Direct and Indirect Jobs
Regional Center affiliated projects may count direct jobs of full time, W-2 employees, as well as indirect jobs in meeting the ten jobs per investor requirement:
“notwithstanding the requirements of 8 CFR 204.6, the Attorney General shall permit aliens admitted under the pilot program to establish reasonable methodologies for determining the number of jobs created by the pilot program, including such jobs which are estimated to have been created indirectly “ (Section 610, 1993 Act)
Indirect Jobs: Jobs shown to have been created collaterally or as the result of the economic stimulus of the EB-5 investment
Indirect Job Creation resulting from an EB-5 investor’s capital investment is based upon a business plan and detailed economic analysis demonstrating creation of indirect jobs through “reasonable methodologies” (economic forecasting tools):
multiplier tables
feasibility studies
market analyses
other economically or statistically valid forecasting devices
NY AILA 2015 EB-5 101

19. Who Creates a Regional Center? Relationship to the project?
Project developers may create their own regional center in order to raise capital for their own development projects
Project developers may have a project sponsored by a non-affiliated regional center (“Rent-a-Center”)
The Regional Center and the investment Project are separate entities, but are affiliated
Regional Center has oversight/compliance obligations independent of the Project
NY AILA 2015 EB-5 101

20. Regional Center Functions
Tracks infusion of capital into job-creating enterprise and monitors JCE’s compliance with Biz Plan and foundational facts in economic impact report, as well as other requirements of the immigration regulations
Ex: Maintain up-to-date “TEA” verifications; no “material change”
Other ongoing administration and compliance/reporting requirements, such as:
Track, monitor and report on Form I-924A
Offering and sale of investments conducted in accordance with securities regulations
IRS reporting requirements (maintain up-to-date IRS form W-8 or W-9’s, as applicable; distribution of K-1’s

21. Regional Center Functions, Cont.
May screen investors for securities and immigration issues
May coordination with immigration counsel and provide oversight of the immigration petitions/processes:
Provide I-526 templates to investors/counsel
May review investor source of funds
Allocates jobs among investors
Provide I-829 templates to investors/counsel
May provide investors with project updates
Evaluates and selects potential new projects for suitability within the EB-5 program’s framework
NY AILA 2015 EB-5 101

22. Regional Center Approvals
Approved for certain industries – NAICS codes
Approved for a certain geographic area
Approved for a certain economic methodology
What should an attorney look for in a RC designation when representing an investor?
All of the above PLUS:
Project Pre-Approval?
Job Allocation between investors?
NY AILA 2015 EB-5 101

23. Role of the Immigration Attorney in Representing the Investor
Attorney’s relationship with the client
explaining the limits of attorney representation
Understanding client’s goals and ensuring EB-5 is the appropriate option
Managing expectations
Immigration due diligence

24. Timeline for EB-5 Process
Individual EB-5 investors file I-526 petitions
Approx. 14* months; PLUS
approx months for Consular Processing / Adjustment of Status
Two-Year Conditional Lawful Permanent Residence Status
24 months
I-829 Petition to Remove Conditions
Filed during 90 day period before CLPR status expires
Approx. 12.3* months
*As of March 31st, 2015
NY AILA 2015 EB-5 101

25. Ethical considerations
Knowing when to co-counsel and when to use experts
Payment of finder fees to attorneys
Engagement letters

26. Panel’s top tips for newer EB-5 practitioners

27. QUESTIONS?

28. Disclaimer
This presentation outline and the presentation itself are for general educational purposes only and are not intended to provide specific guidance or legal advice about what to do or not to do in any particular case. You should not rely on this general information to make decisions about specific immigration matters. If you are not yourself a lawyer, you should seek the assistance of an immigration lawyer to help you resolve these issues. Thank you.
NY AILA 2015 EB-5 101