Friday, December 2, 2016

EB-5 Visas Expected to Reach New Heights Under Trump, As Immigration Rules Tighten

(Source: Santa Monica Observer) EB-5, Also known as the Immigrant Investor Program, grants visas to foreigners in exchange for investing a minimum of $500,000 into U.S. projects that promise to employ 10 or more workers. To read the story at http://www.smobserved.com/

USCIS Policy Manual EB-5 announcement

From: U.S. Citizenship and Immigration Services [mailto:uscis@public.govdelivery.com] Sent: Wednesday, November 30, 2016 9:29 AM Subject: USCIS Message: Policy Manual Available for Comment Employment-Based Fifth Preference Immigrants: Investors
Dear Stakeholder,
USCIS seeks your input on the USCIS Policy Manual item listed below which contains either new or revised policy guidance. Please note that this item is effective as of the date shown below.
Type of Document for Comment: USCIS Policy Manual Title of Document: Employment-Based Fifth Preference Immigrants: Investors Related Documents: Policy Alert Opening & Closing Dates for Comment: November 30, 2016 – December 14, 2016 Effective Date of Policy: November 30, 2016
Please send all comments to publicengagementfeedback@uscis.dhs.gov and be sure to include the following to make your comments clear:
State the title of the relevant volume and section in the subject line of your message;
Refer to a specific portion of the document;
Explain the reason for any recommended change; and
Include data, information, or authority that supports the recommendation.
If you are unable to access the document through the link provided above, please do the following:
  1. Go to www.uscis.gov/outreach
  2. Select “Feedback Opportunities” on the left side of the page
  3. Select “Policy Manual for Comment” on the left side of the page
Kind Regards,
USCIS Public Engagement Division

Thursday, December 1, 2016

New EB-5 Regional Centers approved

New EB-5 regional centers have been approved by USCIS.

  • EB-5 Fund CA, Inc. (California)
  • Home Paradise Texas Regional Center, LLC (Oklahoma, Texas)

5 Important Points from the New EB-5 Policy Manual

(Source: Wolfsdorf Rosenthal) Today, USCIS released an important draft version of the USCIS Policy Manual on the employment-based fifth preference immigrant visa category(EB-5). The guidance addresses all aspects of the program including the requirements for a regional center and for Form I-526, Immigrant Petition by Alien Entrepreneur adjudication. It also describes the different types of regional center projects, including hypothetical projects and actual projects. The guidance is effective as of November 30, 2016,. USCIS has combined previous adjudication memoranda and current adjudication policy in one source. Here are five important points from the new EB-5 Policy Manual:
  1. Investment of Capital. The Policy Manual includes clarifications over the type of “capital” which can be invested in a new commercial enterprise.  It states that an immigrant investor using loan proceeds as capital (most commonly, a home equity loan) to be, under the terms of the loan agreement, personally and primarily liable for the indebtedness secured by assets owned by the immigrant investor.  Additionally, a loan secured by an immigrant investor’s assets only qualifies as capital up to the fair market value of the pledged assets.  The Policy Manual also provides requirements for using a promissory note (a promise to pay) as capital, including a requirement for the promissory note debt to be secured by the investor’s assets and to have been properly perfected in accordance with local laws and fully amenable to seizure by a U.S. noteholder. 
  2. Return on Investment and Redemption Agreements. An immigrant investor may receive a return on his or her capital in the form of a distribution of profits from the new commercial enterprise, even during the conditional residency period and before creation of jobs, as long as the distribution is not a portion of the investor’s minimum qualifying investment or is guaranteed to the investor.  For immigrant investors who contributed capital in exchange for an equity interest, there can be no redemption agreement which authorizes the immigrant investor to demand a return of some portion of the investment funds, even after obtaining conditional permanent resident status.
  3. Targeted Employment Areas.  A geographic area that once qualified as a Targeted Employment Area (TEA) may no longer qualify, as employment rates or population can increase over time. An immigrant investor cannot rely on previous TEA determinations that were made based on facts that have subsequently changed.  The appropriate date for USCIS to determine whether an immigrant investor’s investment qualifies for the lower capital investment amount depends on the time of the investment:  If the investment of capital is made to the new commercial enterprise (or made available to job-creating entity in regional center context), the analysis focuses on whether the area qualifies as a TEA at time of the investment.  If the investment of capital has not been made at the time of I-526 filing, the analysis focuses on whether the area qualifies as a TEA at time of the I-526 filing.  Additionally, an immigrant investor is not required to demonstrate that the area in question remains a TEA at the time the Form I-829 removal of conditions application is filed.
  4. Material Change. The Policy Manual provides some clarification (though also raises more questions) about the difficult concept of “material change.”  It states that changes that occur after a Form I-526 filing but before an immigrant investor obtains conditional permanent resident status are considered material if they result in the investor’s ineligibility.  This appears too vague and could be interpreted to mean leniency for minor changes that occur after filing but before approval of the conditional green card. The May 30th 2013 guidance memo is rigid on changes occurring prior to issuance of conditional permanent residence, but somewhat more lenient on changes that occur after approval of conditional permanent residence. This is important especially for Chinese waiting in the quota line who can get approval of their petitions but must wait for their place in line before they can obtain conditional permanent residence.
  5.  I-829 Adjudications. USCIS is proposing that applications to remove the conditional permanent residents filed on Form I-829 include the comprehensive business plan and economic analysis previously submitted with the Form I-526.  USCIS clarifies that the jobs need not be in existence as of the time of I-829 adjudication to be credited, as long as they were created because of the immigrant’s investment and such jobs were considered permanent when created.

Monday, November 28, 2016

EB-5 Visas Expected to Reach New Heights Under Trump, As Immigration Rules Tighten

(Source: Santa Monica Observer) EB-5, Also known as the Immigrant Investor Program, grants visas to foreigners in exchange for investing a minimum of $500,000 into U.S. projects that promise to employ 10 or more workers. In the past few months, there has been a lot of talk on what will become of the EB-5 visa program, which was set to expire on September 30, 2016. To no surprise, Congress passed a Continuing Resolution just two days before the set expiration date which will allow the EB-5 program to continue until December 2016. Congress will now either need to agree on a reform for the program or let it expire. Experts on the topic believe that the EB-5 immigrant visa program will continue to thrive under the Trump Administration. Though changes are expected to take place to the EB-5 Immigrant Visa Program, experts everywhere are predicting that the program will thrive when Trump takes Office.

Former New York Governor George Pataki commented on the topic, "His strong stance is against illegal immigration. EB-5 is a legal immigration program. He [President Elect Donald Trump] understands the need for capital, the need for investment."
Trump himself is no stranger to the Immigrant Investor Program. His own company brand has been licensed to Trump Bay Street, a large Eb-5 funded project developed by Kushner Cos. and KABR Group. Kushner Cos. is led by Jared Kushner, Tump's son-in-law. Trump Bay Street is a 50-story luxury apartment tower in Jersey City, N.J. Though Trump himself is not taking any part in the financing of Trump Bay Street, he has displayed that he is eager to license his name out to an EB-5 funded project. This information alone suggests that he has underlying support and understanding for the EB-5 program.

While Trump was campaigning to be President, The Trump Organization continued to find branding opportunities that license out the Trump name to real-estate projects to expand the Trump brand without taking on financial responsibility for the projects. As reported in the Wall Street Journal at the end of October, The Trump Organization is partnering with Global Management Resources on a $170 million 33-Story luxury hotel and condo development in downtown Austin, TX. The Trump-branded hotel, is seeking $40 million from 80 EB-5 investors, making it the second Trump-branded building that has applied for EB-5 funding. Much like Trump Bay Street in NJ, The President Elect is only lending his brand to the project while its partner, Global Management Resources will be in charge.

Trump is a developer himself, and he seems to understand the importance of a program like this. The fate of the EB-5 Visa Immigrant Investor Program is still undecided, but EB-5 experts across the U.S. are remaining optimistic. Some experts are even speculating that the EB-5 program will expand to reach new heights once it is controlled by a government made up of Republicans.

Tuesday, November 22, 2016

EB-5 will thrive under Trump, experts say

(Source: The Real Deal) The legislative fate of EB-5 may still be up in the air, but champions of the controversial visa program are not worried — they say they have a powerful friend on their side. EB-5 will likely to continue to thrive under President-elect Donald Trump, EB-5 experts said at a panel hosted by The Real Deal in Shanghai Friday, despite his adversarial rhetoric toward immigrants. “His strong stance [is] against illegal immigration,” former New York Gov. George Pataki said. “And EB-5 is a legal immigration program. He understands the need for capital, the need for investment.” Charles Gargano, the executive director of the U.S. Immigration Fund and a former U.S. ambassador, is also optimistic. “Under President-elect Trump, a developer himself, he will magnify the need for a program like this,” he said.

Trump certainly isn’t a stranger to the program. His son-in-law Jared Kushner’s Trump-branded rental tower in Jersey City took in $50 million in EB-5 funds. U.S. Immigration Fund, in fact, was tapped for the 50-story, 447-unit project. Last month, Congress granted a temporary extension ensuring that EB-5 would operate until at least early December. Meanwhile, lawmakers are mulling over a proposal to reform the program. They’re considering changes that include a raise in the minimum investment amount from $500,000 to $800,000 and tougher qualifications for project sites. “It shouldn’t be an issue, but it is going to change,” U.S. Immigration Fund CEO Nicholas Mastroianni said. “I don’t see [the increased minimum amount] as a deterrent.” Critics of the program lament the fact that it commodifies American citizenship, provides opportunities for fraud and disproportionately benefits wealthy areas. Proponents, however, argue that such setbacks are far outweighed by its benefits. “People can say it’s a backdoor ploy for citizenship,” Pataki said. “There’s always going to be criticism but the need for this is only going to be greater because banks [today] are taking a step back.”

 From the New York website: For Chinese investors themselves, EB-5 will remain a popular immigration option. It could very well grow to new heights under a government that’s fully controlled by Republicans, panelists said. Trump may not be against legal immigration, but work visa programs like EB-2 and EB-3 are getting tougher and and tougher to attain, according to Yuan Shaozhong of QWOS, a Shanghai-based immigration agent. “EB-5 is the only feasible option for a lot of Chinese immigrants right now,” she said.

Judge Raps Quiros In EB-5 Case

A federal judge has issued a scathing ruling against Jay Peak developer Ariel Quiros, agreeing preliminarily with federal regulators that the Miami businessman was the mastermind behind the largest EB-5 fraud case in the country that played out in the mountains of northern Vermont. Judge Darrin P. Gayles, in a ruling handed down on Monday in federal court in Miami, froze the assets Quiros, the owner of Jay Peak, had accumulated through funds raised from EB-5 investors meant to pay for developments in northern Vermont. The judge also barred Quiros, a Miami businessman, from raising funds from the program.

Gayles agreed to the request for the injunction against Quiros from the U.S. Securities and Exchange Commission, and in a 44-page ruling, said the SEC wove “a compelling and well-documented account of one man’s use of his control over multiple entities to squander investor funds, enrich himself, and, ultimately, commit securities fraud.” “The record supports a preliminary finding that Quiros was the architect of a fraudulent scheme to use the investor fund to enrich himself,” Gayles wrote. See story here at Valley News.

Saturday, November 12, 2016

New group of EB-5 investors sues Quiros and Raymond James

(Source: VTDigger.org) A group of Chinese investors have filed a federal lawsuit against Ariel Quiros, his former broker, and his one-time brokerage firm. See report at https://vtdigger.org/

Friday, November 11, 2016

Deadwood Mountain Grand investors sue former EB-5 director

(Source: Rapid City Journal)  A group of investors that includes a country music star is the latest to sue Joop Bollen, the embattled former director of South Dakota’s EB-5 immigrant investor program. The lawsuit was filed Tuesday in federal court by a group of eight individual and six corporate plaintiffs who invested in the Deadwood Mountain Grand hotel/casino complex in Deadwood. The group includes W. Kenneth Alphin, better known as “Big Kenny,” who is one-half of the country music duo Big & Rich. See report at http://rapidcityjournal.com/news

Tuesday, November 1, 2016

What’s In Store for EB-5?

(Source: NREI) The short-term extension that Congress granted for the EB-5 investment program is due to end on December 9. In the interim, Congress has some work to do, focusing on program reforms that would address issues ranging from allegations of funds misuse to calls for higher investment minimums to better oversight of regional centers that deploy EB-5 funds. Against that backdrop, what can the real estate industry expect to see happen come December 9?  “Everybody on the American side knows EB-5 has been effective in getting capital to stimulate job creation at no cost to government. A political divide has arisen because developers in a relatively small number of big money centers have used an increasingly higher percentage of EB-5 investment, without much participation by developers in other areas,” says Robert Divine, head attorney in the global immigration group of Memphis, Tenn.-based law firm Baker Donelson. Divine served as chief counsel of United States Citizenship and Immigration Services (USCIS) from 2004 to 2006.

That facet of contention has been thoroughly covered in the media over the past two years. Related Co. and Extell Development Co. are among the big name developers to look to EB-5 funding for their projects. Related used it for Hudson Yards and Extell is seeking EB-5 investors to pump $200 million into its Central Park Tower project. About 85 percent of EB-5 investors come from China, and because of the program’s popularity, people born in mainland China who invest now are on a wait list of approximately seven to eight years for visas, Divine says. “China, which drives the bulk of EB-5 investment, doesn’t see EB-5 as an investment program, they see it as an immigration vehicle,” says Wei Xie, a research manager for real estate services firm CBRE who tracks EB-5 investment. EB-5’s current framework says investment money can only be used in Target Employment Areas (TEAs) facing high unemployment and needing economic stimulus. But loopholes exist for savvy developers. For instance, Hudson Yards qualified to use the funding by being in the same district as Manhattanville’s public housing communities. As a result, one change to the program that legislators are looking into is refinancing the definition of a target employment area, Xie notes. “For example, some projects are in Manhattan and downtown D.C. It’s hard to say these are economically distressed. We need to make sure capital is going in where it is needed most,” she says.

For their part, foreign investors want continuity, predictability and no retroactive changes to the program, according to Divine. Meanwhile, representatives from rural areas in the U.S. want more money flowing to them, and some do want retroactive reforms. Retroactive changes could mean that if investment minimums rise to $800,000—an increase sources say is currently being discussed—they could affect deals dating back to June 2015, when the program technically ended, says Edward Beshara, founding attorney at Beshara Professional Association, which specializes in representing investors and developers in EB-5 legal matters. Beshara adds, however, that he doesn’t think retroactivity will be applied. Congress is also struggling over how to classify the TEAs geographic areas for minimum investment requirements, Beshara adds. He is a member of the Best Practies Committee of IIUSA, the organization representing the EB-5 industry, which has drafted best practices suggestions regarding both investors and the regional centers that handle their money. His recommendations include mandatory third-party fund administration to ensure EB-5 regional center developers is using the funds correctly and as planned. Another recommendation is to give foreign investors a real exit strategy. There’s precedence for that to happen as EB-5 is governed by both immigration rules and the SEC, which considers EB-5 regional center requests a public offering. “A true exit strategy should be real, which would allow investors to obtain money back. One thing we learned from bad EB-5 projects is that principals fraudulently used the investors’ money.”

According to Xie, one of the main issues facing EB-5 right now is lack of sufficient oversight for these complex transations that include long-distance investors. Sometimes the EB-5 fund money is managed well; sometimes it isn’t, she notes. For the most part, sources say Congress will enact a short-term extension of the program on December 9. But what about something more permanent? “The possibility of a long-term extension depends on representatives’ ability to compromise,” Divine says. He lists three possible scenarios for December. The first and most likely is a short-term extension with no change. The next most likely is an extension with changes that would constitute “integrity measures that would not affect investors, but prevent mishandling of funds.” And the third most likely outcome is an impasse. “It seems unlikely that a comprehensive negotiated arrangement and long-term extension could be done by December 9, but we can hope so and work toward it,” Divine says.

Friday, October 28, 2016

USCIS drastically increases its' EB-5 related fees

USCIS has announced it will increase all EB-5 fees effective December 23, 2016. The most newsworthy increase is a 186% fee increase for Regional Center Designation up to $17,795. We expect to see very few new regional centers and more termination of regional centers as a result of the fee increase.

Reminder: Regional Centers must file their annual I-924A by December 29, 2016. 

Sunday, October 23, 2016

VTDigger sues state over EB-5 records

VTDigger is suing the state of Vermont in order to obtain records associated with oversight of the state’s EB-5 immigrant investment program. See report at https://vtdigger.org/

Saturday, October 22, 2016

Last Chance to Register for Chinese PE and EB-5 Finance Forum

Chinese Private Equity and EB-5 Investment Forum is taking place on October 26, 2016 in New York City area.  The much-anticipated private equity and EB-5 investment conference will bring together the most senior-level executives and professionals from the industry's most active market participants for a day of high level discussion, peer to peer exchanges and one on one networking sessions.  The event will have limited seats for senior-level executives from both the US and China and will feature honest and in-depth dialogues with the leading experts on how to effectively attract private equity and EB-5 investments from China.  In addition, the Forum offers unique networking sessions that will enable participants to establish useful and productive contacts and generate fresh deal flow or potential investment opportunities as well as possible funding leads from equity partners in China. 

Sign up here to join us in NYC at the Chinese Real Estate Private Equity and EB-5 Investment Forum!

Speakers & Agenda:

9:00- 9:15 am
Introduction and Welcome






Brian Su, Artisan Business Group














9:15- 10:30 am
Chinese PE: Partnering PE & EB-5 Financing from Asia


Scott Fuller, Capital United






Brian Su, Artisan Business Group






Bruce Rosetto, Greenberg Traurig






Hong Yu, Independent Consultant






Reid Thomas, NES Financial














11:00- 12:00 pm EB-5 Update-How Will the New Legislation 
impact the Chinese Investor?



Joseph Barnett, Wolfsdorf Rosenthal






Matthew Beatus, Wolfsdorf Rosenthal













12:00- 1:15 pm
Luncheon & Networking














1:15- 2:00 pm
Hot Topics on EB-5 Immigration and Securities





Ali Brodie, Fox Rothschild






Roy Carrasquillo, Fox Rothschild














2:15- 3:00 pm
Top RFEs in EB-5 Econometrics






Jeff Carr, Economic & Policy Resources













3:15- 4:15 pm
Minimizing Investment Risks for Overseas Investors




Michael Gibson, US Advisors





Trump's Name Invoked in Effort to Draw Chinese Investors

(Source: The New York Times) The investment pitch for a new Texas hotel uses Donald Trump’s name and has professional-sounding bona fides. Focusing on the well-heeled Chinese, the deal promotes the “excellent location” of the $130 million Austin Mirabeau Trump Hotel and “the world’s leading developer,” the Trump Organization. The project offers another enticement: a path to a green card in the United States. Chinese investors who put at least $500,000 into the hotel could get a visa as part of a government program intended to tap overseas money and create jobs in economically troubled American neighborhoods. 

On its surface, the pitch, detailed in a 16-page document distributed to Chinese investors in recent weeks, appears to be another example of Mr. Trump’s conflicting views on China and trade. Mr. Trump, the Republican presidential candidate, has accused the country of stealing American jobs even though he has used its manufacturers for his line of clothing.
But a closer look exposes the potential troubles with the controversial American visa initiative, called the EB-5 program, which has been marred by cases of fraud and doubts that it produces the desired economic results. The Austin project hasn’t been officially greenlighted, and there is little sign that either Mr. Trump or his organization is deeply involved.

The company named as the Trump Organization’s partner has zero value, according to the personal bankruptcy filing of its chief executive. And property records show a project with a different name, Waterloo Park Tower, is in the works for the site in Austin, which at the moment is home to a brick-oven pizzeria. A Trump-linked project has tapped EB-5 money from China in the past, according to a Bloomberg article published in March that looked at a tower in Jersey City, N.J. While a spokeswoman for Trump Hotels didn’t outright deny any Trump involvement in the Austin project, she played down the organization’s connection. “Our growth strategy is to expand the Trump Hotels portfolio by strategically developing and opening properties in both key U.S. and international locations,” said the spokeswoman, Jennifer Rodstrom. “While we do not have a definite project in Austin at this time, we remain interested in key U.S. cities and will continue to explore such opportunities accordingly.” Read complete article here:

Join us in NYC on October 26 at the Chinese Real Estate Private Equity and EB-5 Finance Forum to discuss updates on foreign Chinese investment into US Real estate projects.

Friday, October 21, 2016

Most EB-5 funds go to gerrymandered districts: fed gov’t study

(Source: The Real Deal) The overwhelming majority of EB-5 funding goes into gerrymandered districts where affluent neighborhoods are combined with high-unemployment areas that qualify for the program, a new study shows. The study, released Wednesday by the U.S. Government Accountability Office, is the first attempt by the federal government to quantify claims of abuse critics have lobbed at the visas-for-dollars program, which is set to expire in December as lawmakers debate its future.

Conducted over a three-month period last year, the study found that 90 percent of EB-5 funds went to gerrymandered districts made up of two census tracts stitched together, and in some cases more than 100, the Wall Street Journal reported. EB-5, a low-cost source of financing for developers, allows projects to stitch together areas of low unemployment with affluent neighborhoods, one of the main points of criticism in the debate. The program allows investors to get a green card in exchange for investing at least $500,000 in U.S. businesses that create jobs. Looking at 200 investor applications received between July and September 2015, the study found that 36 percent of applications were for projects in census tracts with an unemployment rate of 4 percent or lower.

EB-5 requires projects to be in an area with unemployment at 150 percent of the national unemployment rate, which would have been at least 7.6 percent at the time of the study, which found that just 12 percent of applications were for projects in areas with unemployment of at least 8 percent. With 14,000 investor applications to look at, the report is only a small snapshot of the program and has a high margin of error, the Journal reported. The program is set to expire in December, and lawmakers have agreed to proposed changes of the unemployment issue. The program may have already lapsed due to a technical oversight by lawmakers, as The Real Deal previously reported. [WSJ] – Rich Bockmann

Wednesday, October 19, 2016

Artisan attends Yingke Global Partners Conference in Beijing

Brian Su and Artisan Business team recently attended the Yingke Global Partners Conference in Beijing. Yingke is the largest law firm in Asia Pacific and has over 31 international offices outside of mainland China. Brian Su is managing partner of Yingke Chicago China Center.

For updates on Overseas Investment Trends, join us in NYC on October 26.


 

Tuesday, October 18, 2016

Oct. 26 NYC PE & EB-5 Agenda Announced!


8:30- 9:00 am Check in and Registration










9:00- 9:15 am Introduction and Welcome



Brian Su, Artisan Business Group












9:15- 10:30 am Chinese Private Equity: Partnering Private Equity and EB-5 Financing from Asia



Scott Fuller, Capital United





Brian Su, Artisan Business Group





Bruce Rosetto, Greenberg Traurig





Hong Yu, Independent Consultant





















11:00- 12:00 pm EB-5 Update-How Will the New Legislation impact the Chinese Investor?



Joseph Barnett, Wolfsdorf Rosenthal





Matthew Beatus, Wolfsdorf Rosenthal











12:00- 1:15 pm Luncheon & Networking










1:15- 2:00 pm Hot Topics on EB-5 Immigration and Securities



Ali Brodie, Fox Rothschild





Roy Carrasquillo, Fox Rothschild












2:15- 3:00 pm Top RFEs in EB-5 Econometrics



Jeff Carr, Economic & Policy Resources











3:15- 4:15 pm Minimizing Investment Risks for Overseas Investors



Michael Gibson, US Advisors

























Join us at the Chinese Real Estate Private Equity and EB-5 Investment Forum nearby Newark Airport on October 26.

Thursday, October 13, 2016

Artisan team visits emigration consultants in Guangzhou

Brian Su, CEO of Artisan Business Group is leading the Artisan team throughout China meeting with emigration professionals. The team met with consultants in Guangzhou to discuss trends and updates in EB-5 marketing.