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EB-5 Law & Related U.S. Law


FAQs on EB-5 law and related immigration law

[Q] I invested $1 MM in direct, individual EB-5 case, and now I think my I-829 will be denied soon. What do I do?

[Q] Several years ago, I invested $1 MM in direct, individual EB-5 case. I filed I-829 and I believe it will be denied for fialure to create 10 full-time jobs because I only created 3 or 4 jobs. What can I do at this point?

Our advice is that you immediately sit down with your current EB-5 attorney or with another EB-5 attorney and figure out what are your options. Do not wait until you get a I-829 denial to do this because it may be too late by then: You will be deemed to be "out of status" upon your receiving a I-829 denial notice from USCIS, and this will prohibit you from applying for adjustment or change of status in the United States.

[Q] What are the basic requirements of EB-5 law that I should know?

Go to www.eb-5center.com/eb-5_requirements to read an overview of the essential requirements of EB-5 case. Many articles helpful to your understanding of the EB-5 law are posted at "Easy as EB-5" section above.

[Q] What restrictions are imposed by the U.S. Securities Act or the state Securities Acts in marketing RC EB-5 Projects in U.S.?

[Q] Regional Center EB-5 has many Units for multiple investors. What are the restrictions imposed on the marketing of these Units (spots) to potential EB-5 investors. both within and outside the United States?

I am no expert on the U.S. Securities law, but the below is my understanding. Most, if not all, Regional Center EB-5 projects are offered or marketed to potential EB-5 investors without SEC and/or state registration requirements under either Regulation D or Regulation S exemptions, because such registration requirements are onerous. This means they can be (according to my understanding) offered to potential EB-5 investors as follows:

Within the United States: In reliance upon Rule 506 promulgated by the SEC, to only those persons who are deemed to be "Accredited Investors" within the meaning of Rule 501 promulgated by the SEC. Accredited Investor is defined as any person whom the issuer reasonably believes at the time of subscription to be:

[Q] Can I purchase an existing business by buying interests from a shareholder or owner?

[Q] Can I purchase an existing business by paying purchase price of $1 MM to owner or shareholder of the business, and then counting this $1 MM to meet the requisite investment amount, assuming of course, that I will create 10 new jobs?

I-526 can be filed based on the investment made in the past and requisite jobs created in the past, but those jobs must be maintained during CPR period. In some sense, with the jobs already created, USCIS might be more inclined to approve I-526 without any hassle.

[Q] What is an EB-5 project involving a "troubled business", and advantages and disadvantages?

Under the relevant regulation, EB-5 project (whether RC project or non-RC project) can involve a "troubled business".

Troubled business

[Q] I lawfully earned $500,000 + in US which is sitting in US bank, and I brought additional money from abroad. Is this OK?

[Q] I lawfully earned over $500,000 USD in the US, and that money is in my US bank acct. I also brought additional money from abroad. Do I have to show that these money brought from abroad was also lawfully earned?

The answer is No. If you had to show lawful source for all 100% of your entire assets, even Bill Gates would not be able to do that. Usually, the only thing that is required is for you to show that you lawfully earned the requisite investment amount for EB-5. Having said this, however, in limited cases, USCIS might ask for additional docs and proof; therefore, a careful planning might be required; and you should discuss in detail with your U.S. immigration attorney.

[Q] What is "job-sharing" arrangement under which two part-time positions can combine to count as one full-time position?

Pursuant to EB-5 law, an EB-5 investor must create 10 full-time positions. The regulations allow two part-time positions which qualify as "job-sharing" positions to combine and count as one full-time position. What is meant by such "job-sharing" arrangement?

"Job sharing" is defined as a form of part-time employment in which the schedules of two part-time employees are arranged to cover the duties of a single full-time position. For example, each job sharer may work a portion of the day or week.

Only in a limited circumstances can two part-time waiter/waitress positions be argued to fall under a "job-sharing" arrangement, but I guess one can try to make that argument.

[Q] What is the establishment provision that has been deleted that helped revive RC Program in 2002?

[Q] I understand that there was in the past a requirement that an EB-5 investor "establish" the New Commercial Enterprise, and that this requirement was done away with around 2002 that helped "revive" the EB-5 Program in general. Can you explain what this is all about?

Let's examine how this "establishment" requirement used to adversely affect both the regular, direct, individual EB-5 project and Regional Center EB-5 project.

In context of regular EB-5 project, the "establishment" clause meant that the investor could not just purchase an existing business even though the business was "new" -- that is, it was created after November 1990. This meant if the investor decided to acquire an existing business, he had to "materially" alter the business, so he could argue that he "established" a new business (or new commercial enterprise). This was the kind of requirement that prohibited bona-fide EB-5 projects to take place, because there is really no reason why you should discourage foreign EB-5 investors to invest in existing U.S. businesses.

[Q] Can EB-5 investment fund come from a joint account owned by EB-5 investor and his spouse?

There is INS memo by Weinig, Acting Asst. Comm. Adjudications (Aug 5, 1992), reprinted in 11 AILA Monthly Mailing 776 (Oct. 1992) that says this is allowed. In practice, this should be no problem.

[Q] Can all jobs created from a particular EB-5 project (with some USC investors) be allocated to just foreign EB-5 investors?

[Q] Let's say in a $100 Million USD project, $30 Million USD comes from foreign EB-5 investors seeking green cards, where as the remaining $70 Million comes from USC or green card holders or corporations. Let's assume 700 jobs are created in total (directly and indirectly). Can all 700 new jobs be allocated to the 60 foreign EB-5 investors only?

Yes, the regs specifically allow this. Here is the regulation on point.

Employment creation allocation. The total number of full-time positions created for qualifying employees shall be allocated solely to those alien entrepreneurs who have used the establishment of the new commercial enterprise as the basis of a petition on Form I-526. No allocation need be made among persons not seeking classification under section 203(b)(5) of the Act or among non-natural persons, either foreign or domestic. The Service shall recognize any reasonable agreement made among the alien entrepreneurs in regard to the identification and allocation of such qualifying positions.

[Q] After our family members obtained CPR status, my wife (investor) and I got divorced. How does this affect future I-829?

[Q] My wife was the principal investor, and based on her I-526 petition approval, my wife, our children and I obtained CPR status. The time to file I-829 to remove conditional status is fast approaching. Can I still get permanent resident green card even though I am now divorced from my wife?

You should not lose your immigration status if you become divorced after having obtained CPR status, and the viability of I-829 does not depend on your divorce. In fact, the immigration regulations specifically state that "the former spouse of an entrepreneur, who was divorced from the entrepreneur during the period of conditional residence, may be included in the alien entrepreneur's petition [to remove conditions - Form I-829] or may file a separate petition."

[HOT] [Q] Can I purchase an existing restaurant that was set up in 1999 and hire enough new employees and go for EB-5 case?

[Q] My friend in Los Angeles owns a successful Chinese restaurant that was set up in 1999 with about 10 full-time and 5 part-time employees. He wants me to invest $1 Million USD to expand his restaurant, create new positions and split the profit. I saw the restaurant, and it seemed to be doing well. My question is: Can I go for $1 Million direct, individual EB-5 case based on the facts?

Yes, this issue was answered recently by USCIS in a liaison meeting minutes. See below copied content from this liaison meeting minutes on point. Basically, as long as you create 10 new, full-time positions (in addition and separate from the existing full-time positions), you can go for an EB-5 case. However, creating 10 new, full-time positions for an existing restaurant is easier said than done. And no, you cannot fire all the existing restaurant employees and then hire new employees to replace the existing employees who were let go. That comes close to a fraud. Of course, if there is a bona-fide business reason why the business being purchased did not have any existing full-time positions, then it would be permissible not to have any full-time employees at the time of purchase.

[Q] How long must I remain in the United States each year after obtaining CPR or LPR status?

The first requirement of any investor after they receive the visa at the United States overseas consulate office is to enter into the United States within 180 days of visa issuance from the consulate. The investor must then establish residency in the United States. Evidence of intent to reside includes opening bank accounts, obtaining a driver's license or social security number, paying state and federal income taxes, renting or buying a home. The United States resident may work overseas if required based upon the nature of the business or profession. For those permanent residents living outside the U.S., we suggest the investor and family re-enter the U.S. no less than once every six months.

Do I need to be an "accredited investor" to participate in EB-5 project? What is it anyway?

An accredited investor is a term defined by various security laws that describes investors permitted to invest in certain types of higher risk investments, limited partnerships, hedge funds and angel investor networks. In the U.S. an individual is considered to be an accredited investor if they have a net worth of at least $1 million US dollars or have made at least $200,000 US dollars each year for the last two years ($300,000 with spouse if married) and have the expectation to make the same amount in the current year.

See below for recent change:

Dodd-Frank Act makes immediate changes to accredited investor standard in private placements

[Q] What are the risks for any investor in EB-5 project?

There are specific risk factors for each limited partnership, which are included in the offering materials for the limited partnership. Risk factors differ for each partnership but general risks include economic conditions, failure to meet job requirements and denied immigration status under the USCIS EB-5 Immigrant Visa Program.

The above risks are set forth in standard language, similar to the risk disclosure whenever you purchase mutual fund, etc.