5 Things to Look For to Ensure Fund Security and Immigration Success

In today’s EB-5 landscape, there is no shortage of attractive regional centers and projects competing for your investor dollars. On the one hand, this is a good thing: it’s a buyer’s market. However, it doesn’t make the choice any easier. Not all projects are created equal, and careful due diligence is as crucial as ever.

There are two primary concerns when it comes to the security of an EB-5 investment: 1) fund management controls and 2) immigration compliance. It’s important that the project you decide to invest in takes these two risk areas as seriously as you do. To this end, here are five safeguards to look for when choosing an EB-5 project:

1. Investment transparency

To be sure funds are managed correctly, look for an EB-5 solution that provides real-time account information directly to investors. Projects which offer investors the ability to track and report on the flow of funds from escrow into job creation, and ultimately back after the I-829 is adjudicated, provide an additional level of confidence in the project’s commitment to best practices.

2. Immigration status tracking and reporting

The EB-5 process includes many immigration milestones at which key information is to be reported to the US Citizenship and Immigration Service (USCIS). Look for a project that has systems in place to manage this process and provide real-time status to investors via an online portal — this will greatly reduce the chance that any crucial deadlines are missed.

3. Third-party fund administration

Fraud cases, such as the Jay Peak scandal in Vermont, serve as a reminder to look for projects that have implemented third-party administration solutions to keep investors’ funds safe throughout the entire EB-5 process. Independent third-party administration provides the necessary oversight that helps prevent funds from being mismanaged or misused.

NES Financial is the leading provider of third-party administration services to the EB-5 industry. The company has developed an entire suite of solutions, purpose-built for the EB-5 process, that cover the entire investment life cycle.

4. Immigration compliance

In maximizing your chance of immigration success, a little research goes a long way. To achieve immigration success, the project must be compliant with USCIS requirements and ultimately create the required number of jobs. Consider whether the project has an exemplar approval. Consider the histories of the regional centers and project developers you’re considering partnering with. Do they have a good track record of project completion, job creation, and I-829 approvals? Make sure that the project has engaged with experienced EB-5 professionals for all the key elements, including business plan writing, economic analysis, corporate and securities law, immigration law and, of course, fund administration. If possible, you and your immigration attorney should meet the key people responsible for compliance on the project side, ask them questions, and make sure your interests are aligned.

5. Investor repayment and exit strategy

The advent of retrogression and lengthening petition processing times for EB-5 investors born in mainland China have created significant risk with respect to when capital can be repaid to investors. On the one hand, if issuers do not manage this correctly, investors’ immigration result could be at risk. On the other hand, if the original investment capital is redeployed without due consideration (to meet the at-risk requirements), it could put the investment capital at increased risk of loss. When considering an EB-5 project for investment, it is critical that you understand the plan for the redeployment of capital, should it be necessary. Make sure that the issuer you choose has a plan to keep invested funds in compliance with EB-5 requirements until green card conditions are removed for investors on longer timelines (i.e., a redeployment strategy) while maintaining the flexibility and liquidity to pay out others who may have earlier exit dates. And note, this secondary investment requires the same due diligence as the first.

The NES Financial Medallion Program

One simple way to verify a project’s embrace of best practices, at a glance, is to look for an NES Financial Medallion.

Issuers involved in the Medallion Program demonstrate their commitment to upholding recognized best practices in project security, transparency, and compliance — thereby offering their investors the highest chance of immigration success. Projects are awarded an NES Financial Medallion level based on the number of NES Financial Intelligent EB-5 Solution Suites in use: Silver for one, Gold for two, and Platinum if they employ all three. Investors who want to benefit from the full range of EB-5 best practices, from start to finish, should subscribe in an NES Financial Platinum Medallion project.

Immigration to the US under EB-5 is a great opportunity, but it isn’t something to be rushed into — the consequences of a hasty decision are too high. Some projects may entice you through brand recognition, attractive project structures, or the promise of a better return, but none of that will matter if your investment is lost or your visa application denied. It’s important that you and your immigration attorney take the time to verify that your project’s issuer will prioritize your immigration success throughout the entire process — and that means investing in a project with the proper controls in place.