Immigrant Investor Regional Centers - What Prospective EB-5 Petitioners Should Know Before Investing
By Janelle M. Lewis, Principal Attorney, The Law Office of Janelle M. Lewis
EB-5 petitioners who are seeking this visa classification have two options for investing in the U.S. - direct investment, where their qualified investment results in the direct creation or preservation of at least 10 permanent full time jobs for U.S. workers; or indirect investment through regional centers.
What are Regional Centers?
Immigrant Investor Regional Centers, also known as Regional Centers are, “any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, and increased capital investment. This can include entities ranging from a state government agency to a consortium of exporters, specifically an entity benefiting a particular geographic region of the United States.”
Regional centers pool investments from various investors. The investments are then used in a specific geographical area with the U.S. in order to create “New Commercial Enterprises” (NCE) that are ultimately meant to generate economic growth for the specified area that the regional center is located. Differing from direct or standalone investments by foreign investors, use of regional centers allow for job creation to be measured using “reasonable economic or statistical methodologies to demonstrate indirect job creation.” In this case, indirect job creation means that the jobs are are not within the enterprise which the foreign investor invested, but are indirectly created by “Job-Creating Entities” (JCE).
Regional centers must be approved by the United States Citizenship and Immigration Services (USCIS). Although all regional centers must be approved by USCIS, an approval does not signify that 1) USCIS endorses the activities of the regional center; 2) the regional center is in compliance with U.S. securities laws; and 3) that the risk to the foreign investor has been minimized or eliminated.
Responsibility of Foreign investors EB-5 petitioners who invest via Regional Centers
- Demonstrate that they are or actively in the process of investing capital, which has been lawfully obtained, into a New Commercial Enterprise located in the regional center’s designated area;
- Demonstrate that their investment will directly or indirectly create at least 10 full-time jobs for qualified U.S. workers; and
- Provide a copy of the regional center’s most recently USCIS issued approval letter, which must be submitted with their I-526 petition;
What Foreign Investors Should Keep in Mind Regarding Regional Centers and EB-5 Petitions
- First and foremost - MAKING AN INVESTMENT DOES NOT GUARANTEE A GREEN CARD OR LEGAL PERMANENT RESIDENCY. The EB-5 visa allows foreign investors who make or are in the process of making a qualified investment that results in job creation or preservation in the U.S. to become eligible to apply for a two-year conditional lawful permanent residency. Legal Permanent Residency can only be obtained toward the end of the two year period, once it has been determined that the investment led to the creation or preservation of at least 10 full-time jobs for lawful U.S. workers. It is at this point that the foreign investor can apply to have the conditions removed and, if approved, can receive a Green Card or Legal Permanent Residency status. This means any promise of a Green Card or Legal Permanent Residency status upon making the investment to a regional center should be highly scrutinized and ultimately understood that making an investment does not guarantee neither a Green Card or Legal Permanent Residency.
- A USCIS designated regional center does not signify that USCIS, the Security & Exchanges Commission (SEC) or any U.S. government agency has: 1) approved the investments offered by the regional center; or 2) expressed any view concerning the quality of the investment (including but not limited to return on investment (ROI) or other claims made by the regional center).
- Accordingly, SEC has issued the following recommendations to foreign investors who are making the decision to invest in a regional center in exchange for a EB-5 visa classification:
- Confirm that the regional center has been designated by USCIS
- Obtain copies of documents provided to USCIS
- Request investment information in writing
- Ask if promoters are being paid
- Seek independent verification
- Examine structural risk
- Consider the developer's incentives
- Look for warning signs of fraud, including, but not limited to:
- Promises of a visa or becoming a lawful permanent resident
- Guaranteed investment returns or no investment risk
- Overly consistent high investment returns
- Unregistered investments
- Unlicensed sellers
- Layers of companies run by the same individuals
For more information on the above recommendations issued by SEC, please go to the following link. Also note that the information is available in Chinese (Traditional), Korean, and Spanish.
This article is for educational purposes only. The views expressed in this article do not constitute legal advice and legal information provided in this post should not be relied upon as legal advice. Please contact an Attorney for advice on your specific matter.