In the last article, you mentioned that there were some serious risks to the EB-5 investor visa. Do you have examples? 

Some developers and lawyers lure potential applicants into investing in projects that have yet to be approved as regional centers with promises that government approval is just months away. Be cautious about promises. Potential applicants should research the project, the developer and the lawyers carefully. Some EB-5 projects try to lure investors by giving them some sort of guarantee on their investment. This is not permitted because it means the investment is not “at-risk” as required by the law. Or, developers may try to take advantage of investors desperate for the green card and who are willing to lose their investment and more in order to obtain permanent residency. In such cases, developers charge outrageous “management” fees for managing the projects, knowing that the applicant won’t complain for fear of jeopardizing his visa application. Some developers may also try to use the invested funds while the initial visa application is still pending. If the application is denied, those funds might be lost forever. The investment should be placed into an escrow account until the application is approved.

What do you suggest a potential EB-5 applicant do to avoid being taken advantage of?

Research, research, research and more research; look into the backgrounds of everyone concerned with the EB-5 regional center project. Ask a lot of questions and demand information up front. If not satisfied with the responses, look elsewhere. Beware of promises. Very few things in life are guaranteed, so be cautious when a lawyer promises you a green card or when a developer promises a certain return on an investment. Read all documents carefully. If English is a struggle, then don’t be ashamed to hire an interpreter to help. A lot of money is involved – spending a few hundred dollars on an interpreter could be the best investment of all. After reading the complicated documents, there should be lots of questions. Don’t be afraid to ask them – you’ll regret it later if you don’t.

Do you have any other advice to minimize the risks? 

Demand to visit the project. Sometimes, a person can get a lot of information from inspecting and examining the project. Consider the location of the project, the business plan, and the surrounding area. Does the project seem like a good idea in light of all of the circumstances? Remember, there has to be a showing that you investment created 10 US jobs. If the project is a failure within 2 years of your application, this will be a huge problem. If you are discouraged from visiting the project, this should be a warning sign. Be wary of the fees charged for legal services and/or services related to the management of the project. If the fees seem very high or unreasonable, demand an explanation in writing. The bottom line: use common sense and trust instinct. If there is an uneasy feeling or there seem to be more questions than answers, walk away! There are and will be other legitimate EB-5 projects.

 

—Disclaimer—
This article is made available by Lee & Lee, PS for educational purposes only. The intent is to give the reader general information and a general understanding of the law. The article does not provide specific legal advice. Readers of this article should understand that there is no attorney client relationship between you and the writers. Furthermore, the article is not a substitute for competent legal advice from a licensed professional attorney in your jurisdiction.