Parties involved in creating an EB-5 investment offering

Preparing a project for raising EB-5 capital is daunting. This should be no surprise, as successfully navigating the nuances of complex EB-5 laws is imperative. Inaccurate or messy paperwork , poorly structured deals, and improper promotion of projects can create unnecessary delays at best, and lead to project denials, hefty fines, and/or litigation at worst. For any venture seeking EB-5 capital, assembling a team with a deep understanding of EB-5 and a strong track record of experience in EB-5 is paramount.

Ensure all parties involved have gotten ample approvals from United States Citizenship and Immigration Services (USCIS) in the past and that they are known for their reliability within the industry. Using professionals who are experts in their fields and knowledgeable about the current EB-5 program will be the key to proving compliance with government regulation. Additionally, project sponsors should be in contact with these professionals early on into preparing an offering. While top EB-5 industry professionals can often charge relatively high rates, the indirect costs incurred down the line by sloppy work and bad business reputation may end up costing more than the professional’s rate. 

AIIA can help recommend expert EB-5 professionals – including immigration and securities attorneys, tax professionals, business plan writers, etc – to help developers bring their EB-5 offering to life.

Many professions have a niche field of practice for EB-5, including immigration and securities attorneys, investment professionals, business plan writers, economists etc. The developer of a project should be in contact with these professionals early on into preparing a project for EB-5. Below are some of the necessary professionals you will have to encounter when setting up your EB-5 offering.

Immigration Attorneys

Immigration attorneys should be involved in almost all aspects of the preparation of any EB-5 package. Immigration attorneys will file investors petitions, therefore they are useful for judging viability of a project in the context of USCIS requirements, and even when filing a regional center’s I-956, “Application for Regional Center Designation” or an individual project’s I-956F, “Application for Approval of an Investment in a Commercial Enterprise”.

Ideally, this attorney should not be the attorney who files the RC investor’s immigration petitions. It is usually best practice to maintain a degree of separation and encourage investors to seek their own immigration attorneys. 

Attorneys are NOT authorized to market or sell securities on behalf of the regional center (RC). This is a conflict of interest and illegal. Although attorneys can potentially receive gratuitous payoffs from doing this, it is extremely untrustworthy and could incriminate your RC if the attorney is caught. The Reform and Integrity Act of 2022 placed stricter compliance checks on RCs, and your project could be terminated and prosecuted for securities law violations for association with a “bad actor”.

AIIA has an established list of vetted EB-5 immigration attorneys for developers as well as for investors to use.

Economists

Economists are necessary for compiling an economic impact report to calculate potential job creation from the EB-5 project. Economists can help maximize the amount of indirect and induced jobs which are created, thereby simultaneously maximizing the EB-5 investment ceiling the project can withstand. If your project requires a TEA designation, economists are necessary for completing TEA analysis each year. 

Economists can also help maximize the amount of indirect and induced jobs which are created, thereby maximizing the EB-5 investment ceiling the project can withstand.The job creation requirement is one of the most important factors in an investor’s immigration process. Their petition will be denied if insufficient jobs are created. Having a high-quality economic report to persuade potential investors may save your project time, money, and attract more investors when marketing the project. Additionally, a quality report will ensure compliance with job creation requirements later down the road

Business Plan Writer

The business plan writer develops a comprehensive, EB-5-compliant business plan for the job creating entity. This document is not like other commonplace business plans, but requires EB-5 and RC-specific calculations to show USCIS the financial structure of the project, past expenses to start development, and expected job creation. 

It goes without saying that your business plan writer should have ample experience with EB-5. The business plan must fulfill certain requirements that will satisfy both the Securities and Exchange Commission (SEC) and USCIS through a legal precedent known as “Matter of Ho”. A Matter of Ho business plan must include credible, reliable, and traceable information about the business of the RC, New Commercial Enterprise (NCE), and Job Creating Entity (JCE); therefore, working with a business plan writer who knows how to fulfill these requirements is of the utmost importance.

It is worth noting that the project business plan is different from the EB-5 operations plan, which is a separate document required when filing a regional center application.

Securities Attorney

Securities attorneys are responsible for verifying legal compliance with securities law. Securities attorneys are the experts who draft important financial documents, such as the investor’s Private Placement Memorandum (PPM) and other offering documents. Securities lawyers also advise issuers on the best project structure and solicitation methods for raising capital.

Fund Administrators

The EB-5 Reform and Integrity Act (RIA) requires third-party fund administrators to oversee pooled investments in a regional center. The NCE must have a separate escrow account to hold EB-5 investments before deploying them to the JCE. This individual cannot be directly employed or associated with the NCE, JCE, RC or any associated third parties. These individuals can be bank officers, attorneys, CPAs, broker dealers, or a USCIS-authorized signatory. 

These individuals are responsible for monitoring funds entering into and leaving the account, preparing reports for the RC and each investor, and assisting the RC with filing tax returns for example. These officers also monitor liability and compliance with regulations set by both USCIS and the SEC, and will serve as a liaison in the case of an audit.

Full Service NCE Managers

If the work involved in filing for a regional center, raising EB-5 money, and remaining compliant seems daunting, it will come as no surprise that some service providers have positioned themselves as an all-in-one team to help get the job done more efficiently. An all-in-one service provider offers comprehensive solutions for developers and project sponsors that want to benefit from EB-5 financing, but want experts to manage the entire process–including the investor’s funds–for them. 

An NCE management firm works independently from the project sponsor, assembles the RC team, and manages the regional center’s application development and submission procedure. They will work with the RC team from the beginning through to a project’s approval from USCIS. They will then administer the fundraising, marketing, development of agent networks, and signing of investor paperwork. While such providers represent a greater tier of expense, their experience and network can make up for this expense through time saved and costly mistakes avoided. Such providers typically manage the fund where the EB-5 investors and act as a fiduciary on behalf of the investors.

Additionally, some NCE managers already have access to a regional center license (or several licenses), covering different regions of the country which can greatly simplify the process of getting a project underway.