Category Archives: Articles and Blogs

May 22, 2018
New EB-5 Regulation Raising Investment Amount And Making TEA Changes Set For August 2018 In OMB Spring 2018 Unified Agenda

In January 2017, the Department of Homeland Security (DHS) proposed to amend its regulations governing the employment-based, fifth preference (EB-5) immigrant investor classification. In general, under the EB-5 program, individuals are eligible to apply for lawful permanent residence in the United States if they make the necessary investment in a commercial enterprise in the United States and create or, in certain circumstances, preserve 10 permanent full-time jobs for qualified U.S. workers. This rule sought public comment on a number of proposed changes to the EB-5 program regulations. Such proposed changes included: raising the minimum investment amount; allowing certain EB-5 petitioners to retain their original priority date; changing the designation process for targeted employment areas; and other miscellaneous changes to filing and interview processes.

Originally posted at ILW.COM

Mar 26, 2018
The EB-5 Bill Failed: So now What?

With President Trump’s signing of the Omnibus bill, the most current attempt at EB-5 reform officially goes into the dustbin of history. There is a saying that goes something like, ‘when god convened a committee to create a horse, they came up with the camel’ (no disrespect intended to camels, of course). And so it went with the now aborted EB-5 legislation. It went from bad to worse to a point where there was enough in it for absolutely everyone to hate it. It’s at times like these when it is worth to take a step back so maybe we can take step forward.

Firstly, where are we now? With the passage of the Omnibus spending bill, the Regional Center program has secured yet another short-term extension through September 30, 2018. That victory, if it can even be called one, may be extremely short lived. The entire push for the legislation was to thwart the DHS proposed rule on EB-5 from becoming final. In fact, the publication date had been accelerated from April to February, due to reported heavy lobbying by the large Regional Centers who urged delay precisely so the legislative process could have a chance. Now that the process has run its course, and failed (again), there may be nothing left to stop DHS from promulgating the final rule. When that happens, most notably, the minimum investment amount will likely increase to $1.3 million. There is a real possibility that the lack clear TEA rules and standards (as USCIS will administer instead of the states) will force all but the most risk-prone (or desperate investors) to invest at the higher, non-TEA, amount of $1.8 million.

For investors currently contemplating an EB-5 investment, you have just gotten a second chance at the $500,000 investment level, and that window of opportunity may not last for too long. As little as four or five days ago, most in the industry believed the legislation would pass and with it the increase to $925,000. What seems certain, is that at some point and perhaps soon, the $500,000 investment level will be gone forever.

Next, what should we be doing as an industry? It seems pretty clear that a repeat of this current legislative exercise is not going to be productive. More importantly, the outcome highlighted an important takeaway, namely, this bill, in any of its incarnations would not have been what the industry really needed. The policy premise of the EB-5 program is to create jobs, within that, the TEA policy is to direct some of the job creating dollars to areas that need it the most, namely distressed urban areas and rural areas.

For any EB-5 reform to be meaningful, it has to deal with the white elephant in the room, and that is the backlog and retrogression of mainland Chinese born investors (and perhaps soon Vietnamese and others). That backlog has already significantly reduced the capital flows coming from China from several billion dollars a year to a small fraction of it. As other countries enter a retrogression status, they too will see declines. Even if new rules or a new bill allows rural/distressed urban investors to claim priority visas, the EB-5 program as a whole will quickly top out at a billion per year or less in deployed capital. That simply isn’t big enough to warrant the attention of a critical mass of serious project sponsors or the amount of time and effort on the part of the government it takes to administrate the system.

The first fix of any meaningful reform will be to ‘go big’ (or go home). In 2015, according to DHS’s yearbook of immigration statistics (, there were 1,051,031 green cards issued. EB-5 is capped at 10,000; that’s 0.951%. So as a policy, we’re allocating less than 1% of all green cards to people who are generally highly educated, have significant wealth and are investing in businesses and projects that directly support the US economy and American jobs. The simple fix is to allocate another 30,000 or 40,000 visas to the program. The difference is pretty much rounding error and an extra several billion dollars a year of job creating capital is meaningful and important. The US currently has negative population growth rate without immigration. So without an influx of immigrants, our nation will shirk. Regardless of where a person falls on the highly charged questions of US immigration policy, the question cannot be whether or not we need immigrants, but which are the best for America. Without getting into the entire debate here, it’s pretty safe to say, allocating 3-4% of the pool to educated, wealthy, job/investment oriented people should be at the top of everyone’s list.

With this, other fixes to the program would make a lot of sense. Foremost is the TEA regime. It’s a boldfaced lie to claim that the TEA policy works as intended. The vast majority of all capital flows into projects that qualify in TEAs irrespective of where they are located. You can see my testimony on this point in front of the House of Representatives Judiciary Committee here: We should all ask ourselves a question: At this point do we even care about TEAs? Some money does flow to non-rich urban areas currently, so maybe we should just get rid of TEAs and stop pretending like we’re meeting the lofty policy goal of helping distressed areas. If we really do want to help them, then we need the policy implementation to be meaningful. Firstly, the investment amount between TEA and non-TEA areas must be enough to change some investors’ project selection from non-TEA projects to TEA based projects. In the final bill, the difference was $100,000. So the discount to motivate people for an important policy objective was a grand total of 9.7%, down from what is now 50%. That was laughable. If that will be the difference, then the policy will fail. Based on my personal experience, I would say that the difference would need to be at least $250,000.
Another area for improvement would be to give TEA-based petitions an adjudication preference. The current two-year processing time is virtually at a point of killing the EB-5 market generally. For TEA based investors, guarantee six-month processing. On the same topic, there should be a premium processing option for all investors. It’s a fee funded program. Investors would easily pay an extra $5,000, $10,000 or more to get their petitions processed in months instead of years. USCIS cannot claim it’s a resource issue as the funds would come from the investors. There is no reason why this can’t be done (unless USCIS has its own agenda).

There are many other needed changes with respect to ensuring investor protection and true national security interests. Many were in the bill and most were not contentious. The point of this article was not to create an all encompassing checklist but rather to focus the big picture topics that were absent from the recent process and can hopefully become a part of the solution in the near future. Otherwise, none of it will matter if and when reform finally does happen.

Sep 11, 2017
A New Status Quo in the EB-5 Program By Matt Gordon

DHS has published a date of final action of April 2018 on its proposed amendments to existing EB-5 rules (see…&RIN=1615-AC07 ). The most notable change is increasing minimum investment amounts to $1.3 million for TEA based projects and $1.8 million for non-TEA based projects. The second significant change would be removing the power from the states to determine the contours of a TEA, which would presumably limit the gerrymandering that has plagued the program to date.

This may be just another line in the sand, but it may be one that sticks. The Regional Center program authorization is due to expire on September 30 th. President Trump seems to have crafted a cross-party deal to extend the budget (which includes the Regional Center Program) until December 8th. From November 1st until December 7 th there is a real window of opportunity to get EB-5 reform done. Most of the industry seems in agreement that minimum investment amounts will go up to around $800,000 for TEA based investments and $950,000 to $1 million for non-TEA investments. There is also agreement on having allocations of visas for certain types of investments, such as infrastructure, rural and distressed urban (true TEA). The last sticking point may be how much wiggle room to allow in the number of census tracts allowed to create a TEA.

What’s different this time about the pending negotiations is the shifted status quo. For the last few years, the predominant industry players have had no incentive to compromise as the never ending short-term extensions were simply a perpetuation of the status quo of existing rules that favored them greatly. With the new rules coming, and nothing they can do to stop it, the entire negotiating posture must change. If not, most large Regional Center based project will find that new investors are all but priced out of the market, with more than a 300% increase in cost. That, plus the retrogression issues in China, will surely take away the life’s blood of investor volumes feeding these projects. So maybe, this time, common sense will replace the brinksmanship and the long needed reform measures will pass.

Until then, it may be a very good time for investors sitting on the sidelines to pick their projects and get their source of funds documents ready for filing by the first week of December as this time, change may finally be coming.

Originally posted at ILW.COM

Jul 21, 2017
2017 EB-5 Regulatory Update: Timing is Everything by Matt Gordon

The forces for change seem to finally be coming together to provoke real change in EB-5. After several short-term extensions to the Regional Center program, there is now the firm chance that key elements of the EB-5 program will be reformed in this current legislative cycle that ends on September 30, 2017. While the need for a renewal only applies to the Regional Center program, legislators have often said that the changes to the minimum investment amount and which projects can qualify for it should be undertaken at the same time as a full Regional Center program extension. Even without legislative action, the US Department of Homeland Security, of which United States Citizenship and Immigration Services (USCIS) is a part, has the power to effect these same changes. The real question is not if these changes will be made, but rather by whom (Congress of USCIS) and the exact amount.

It is important to note that USCIS has proposed a change in the current EB-5 rules, which would increase the minimum investment amount to $1.3 million for projects that qualify/are located in targeted employment areas (TEAs) an $1.8 million that are not. The proposed rules would also limit what can be counted as a TEA.

A key factor that increases the likelihood for change in the last several months is the support of Senator Cornyn of Texas. Senator Cornyn is the second ranking Republican in the Senate. The Senate Majority Leader, Senator McConnell, generally defers to Senator Cornyn on matters related to EB-5 policy. In previous attempts to reform the program, it was Senator Cornyn who prevented the legislation from advancing. Today, that is no longer an impediment.

Another important factor is that the Congress, for the first time this year, is not in the midst of other significant legislative action. During the last widow for EB-5 reform, the Congress was all consumed with the appointment of a new Supreme Court Justice and reforming the American health care system.

To the prospective EB-5 investor, it is critical that he or she understand what this timing means. If the rules or law changes, what would have been $500,000 may cost $800,000 or even $1.8 million. Also keep in mind that the US EB-5 rules require that investors document that their investment capital comes from only legal sources. It often takes investors several weeks to compile all the needed documentation. Accordingly, anyone who wants to ensure the lowest cost related to getting a US Green Card through the EB-5 program, should begin the process immediately.

May 10, 2017
New Spending Bill Impacts Mexican Wall, Sanctuary Cities And EB-5 Investor Immigration

Congress just reached an agreement to keep the federal government open for the remainder of the year in the form of the “Consolidated Appropriations Act, 2017. From an immigration point of view, three aspects of this bill are noteworthy.

Firstly, while the bill beefed up enforcement, it did not provide funding for construction of the border wall with Mexico, as President Trump had asked. It seems clear that even though Trump wants the wall to be built, he does not have the support of the Democrats and not even the full support of his party on it. It seems doubtful that he will be able to corral enough of his Republican compatriots to back him in this effort. There’s a lot of skepticism about the wall in Congress, even if it is very popular for the rank and file in Trump’s mid-America country. How he proposes to get Mexico to ultimately pay for it is even less clear. What is more, arrests of would be immigrants along the Mexican border have declined sharply over the last six months which makes building the wall even less of an apparent priority.


The Congressional bill also did not include a “sanctuary cities” rider that the Administration had proposed. The rider would have permitted the Administration to withhold federal funding from jurisdictions that do not honor Immigration and Customs Enforcement (ICE) detainers to hold jailed inmates for review by ICE officials or otherwise fail to cooperate in the area of immigration enforcement. To better understand the significance of this development, a little background on the sanctuary jurisdictions issue is in order.

In January President Trump signed an executive order (EO 13768) that in part tried to restrict funding to so-called sanctuary jurisdictions.  Though the concept of sanctuary cities has been around for a while, there is no real legal definition of this term, nor an official explanation provided by the U.S. Citizenship and Immigration Service. “Sanctuary” has become a label, seen as an honor by some and as an insult by others. The absence of a clear definition was part of the problem with the President’s executive order.

On April 25th, 2017 that executive order came under scrutiny by a San Francisco-based federal judge who ruled that it was unconstitutional thus blocking it from being enforced. The judge’s ruling was in line with the contents of an earlier letter written by some 300 constitutional, immigration, administrative law, and international law professors and scholars addressed to President Trump that concluded,  Based on our legal analysis of EO 13768, 8 U.S.C. § 1373, the U.S. Constitution, and relevant Supreme Court precedent, we conclude that terminating federal funding from these jurisdictions in order to coerce them to rescind their “sanctuary” policies violates the Tenth Amendment, exceeds the federal government’s powers under the Spending Clause, and exceeds the president’s powers under Article II.

With the refusal of Congress to fund this initiative, the world appears to be unfolding as it should.

The area I wanted to pay a little more attention to was the EB5 investor immigration area.

The Congressional bill simply reauthorized the EB5 program through the end of fiscal year 2017. That is a relief to many foreign investors and EB5 immigration attorneys, but not completely.

The EB5 program is in desperate need of revision. In The EB-5 Book published by’s Immigration Law Library, editors Matt Gordon and Sarah A. Schroeder provide an excellent historical review of the EB-5 program, but in particular, a good write up about what is missing in terms of integrity measures to improve it.  Much of the discussion centers on so-called Targeted Employment Areas (TEAs) and the problem of gerrymandering to include projects in TEAs that otherwise would be located outside and therefore would be ineligible for EB-5 investment purposes and the immigration benefits to foreign investors that accrue from such investments. Other issues such as the stature of sponsors as for example people with criminal records, social injustice in for example how the program impacts ethnic minorities unfairly, the lack of geographic diversity in terms of failing to sufficiently include rural areas of the country and the tendency of exaggerating the economic benefits and job creation aspects of projects are all discussed. The views of some of the leading political figures in the EB-5 field are summarized. In short, the whole EB-5 field is examined. What comes out loud and clear from reading the book is that the EB-5 program is very much a work in progress.

Despite all these deficiencies in the program as at the moment, it is still better to have the program with all its shortcomings than not to have one at all. As the EB-5 program stands at the moment, an investor with $ 500,000 can get conditional permanent resident status by investing in a project undertaken by one of some 800 regional centers. See here for a complete listing of them. Within two years of investing, the investor can apply to renew his or her green card and provided the money is still invested and it has created at least 10 jobs, the green card will become permanent. There is talk about raising the required investment substantially, for example to $ 1.3 million, but so far that has not happened. That is good news for anyone looking to the program to still find a reasonable way to gain permanent residence in the United States. It could be that this threshold could be raised as early as this summer so as the saying goes, make hay while the sun shines.

To sum up, this bill was a disappointment for President Trump when it came to building a wall on the Mexico border and in refusing to sanction cutting back funding to sanctuary cities. However, even though the bill did not improve upon the integrity measures that are needed, the bill renewed the EB-5 program and is therefore a welcome development for foreign investors, U.S. immigration attorneys and investor immigration to the United States. All these matters are in a state of flux however and could change at any moment.

Andy J. Semotiuk is a U.S. and Canadian immigration lawyer, published author and former UN Correspondent with offices in New York and Toronto. Sign up for his newsletter at My Work Visa.

Originally posted at Forbes DOWNLOAD PDF

Oct 5, 2016
A Five Year Old’s Lesson on US Immigration

Mark Twain once said upon reading his own obituary, “The report of my death was an exaggeration”. In the last week there have been numerous reports, even from USCIS itself, that the EB-5 Regional Center Pilot Program was given a new (albeit very short) lease on life by being included in the Continuing Resolution. Note, the EB-5 program generally is a part of the Immigration and Nationality Act of 1990 and not in need of regular reauthorization. So it seems that the Regional Center Program continues to exist until mid-December of this year. Or does it?

At first blush, the continuing resolution provides funding for program that exist. It doesn’t directly extend the programs itself, unless there is specific language to that extent. With respect to the Regional Center Pilot Program, and a couple of other important immigration programs, Congress did not put in the added language. It is important to note, Congress did so in the case of the eVerify program.

So did the Regional Center Program expire? This question is of profound importance, not only to the EB-5 Regional Center community, but also to the Conrad 30 Waiver Program, and the non-minister special immigrant religious worker program. These questions are not just theoretical in nature. So concerned was the Senate Judiciary Committee, that they requested a memo on these points from the Congressional Research Service. A copy of that memo, dated October 3, 2016, is included with this article.

The memo is an excellent review of the statutory and case law affecting the answer of whether these immigration programs actually now exist. The conclusion is that there is a basis to question whether they do. See page 8, “As an initial matter, the FY2017 CR does not have any provisions that would expressly address or extend the four immigration provisions, either by directly amending the relevant statutes or by directing that such statutes “be applied” using a different date.”

The memo then analyzes the present programs and CR against the precedent cases and fact patterns, “The Consortium Venture Corp. case discussed above held that a CR did not automatically extend provisions found in an authorizing statute “in the absence of express language reestablishing or continuing that authority.’” See page 9.

“While the FY2017 CR explicitly extends appropriations, and the authority and conditions imposed on those appropriations, contained within the FY2016 DHS Appropriations Act, the Act is otherwise silent with regard to the extension of authorizations in the FY2016 DHS Appropriations Act that are not tied to funds provided therein.” [Emphasis added, see page 9.] “Insofar as no funds were provided in the FY2016 DHS Appropriations Act specifically for the other three provisions, and given that FY2017 CR did not otherwise extend the sunset date authorizing those three programs, it does not appear that this reading of Section 101 would require the conclusion that the “authority and conditions” regarding those three provisions [non-eVerify programs referenced above], such as the date extension, would be continued by the FY2017 CR.” Page 9. Emphasis added.

For the moment, USCIS believes that the Regional Center program is alive (and maybe even well). Or maybe it shouldn’t and it should take the position that it has in fact expired, thus forcing the issue for direly needed reforms to the Pilot Program. This may also create the impetus for one or a group of EB-5 investors who invested in a non-regional center based ‘direct’ project to sue USCIS to force them to stop all petitions related to Regional Center sponsored projects, as such adjudications are causing massive delays to the direct-based petitioners’ adjudications, who are thus harmed.

One way or the other Congress should act to fix the situation. Ambiguity is bad for any system of law or marketplace (and EB-5 is a bit of both). Hopefully, they will take the opportunity to really pass needed reforms to the Regional Center pilot program and stop kicking the legislative can down the road.

Reprinted with permission.
Originally posted at: ILW.COM EB-5 Blog

Jul 1, 2016
Vermont is Becoming the Activist Regulator in EB-5.

Last week Vermont Public Radio reported on its website that the Vermont Department of Financial Regulation suspended the Okemo Resort development project of its authority to solicit new investors.

The full text of the article can be found here:
The article reports that regulators are seeking changes to the project PPM as well as the escrow release terms of the project. The heighten scrutiny and active intervention of the State agency is a reaction to the threat and scandal of the Jay Peak project.

Following the changes, already invested investors will be notified and have the right to opt out. While the investors would have no claim for harm under a securities law perspective, having to pull their I-526 petitions and refile, given the increasing adjudication times would clearly come at a personal cost. If any families had a child in an age out situation (a child who has turned 21 since the filing), then there would be a monetary cost as well (although probably not easily actionable).

It is good to see the Department acting like a real regulator. Similar to what the SEC does with registered offerings on the Federal level, the Vermont Department is focused on the quality of the disclosure to investors. What is surprising is that they took things a step further in going after substantive changes around the escrow structure. This is very aggressive given that escrow is not legally required in EB-5 offerings at all.

Vermont clearly has a lot to lose if the EB-5 market loses faith in Vermont. The ski industry is of critical importance to the State and EB-5 has become a key financing vehicle for that industry. It will be interesting if other state regulators pick up on Vermont’s lead to more actively regulate Regional Center activity within their borders. It will also be interesting to see if and how this may affect the forthcoming rules recently announced by DHS. While a uniform national approach to EB-5 regulation makes a lot of sense, it is particularly frightening to thing about USCIS having to get involved with offerings at this level, both from a potential for delay and expertise standpoint. Worse perhaps is the continued vacuum on the Federal level that led Vermont and perhaps soon others to take a more affiliative role.

Reprinted with permission.
Originally posted at: ILW.COM EB-5 Blog

Jun 17, 2016
EB-5 Spring Cleaning Continues.

The SEC has continued its flurry of EB-5 activity with its announcement today of fines and a cease and desist order against American Life and its President, Henry Liebman. At the heart of the SEC’s order against American Life and Liebman, “certain EB-5 Agents were paid transaction-based compensation for the activities which effectuated the investor’s transactions in EB-5 securities…. As a result of the conduct described above, certain EB-5 Agents violated Section 15(a)(1) of the Exchange Act.” You can find the full order at this link on the site:…tion-Attorneys

It is interesting to note, that the premise of American Life and Libman’s culpability was derivate in this case. It is the EB-5 Agents who were the primary violators of the Exchange Act, “Respondents paid transaction-based compensation to unregistered broker-dealers,
causing the broker-dealers to violate Section 15(a)(1) of the Exchange Act.” [emphasis added].

This case is in contrast to the recent cases Ponzi scheme/fraud cases brought by the SEC against Jay Peak principals (see…rthern+kingdom) or the California Cancer Center case (see In the current case, there is no allegation of fraud, simply the violation of the Exchange Act caused by the use of unregistered broker dealers.

The SEC had already marked unregistered broker-dealers as targets worthy of their crosshairs, even where there was no allegation of fraud or harm to investors in the transactions. For some recent cases see:…Matthew-Gordon,…By-Matt-Gordon.

The SEC noted specifically that the agents were ‘mostly immigration attorneys’. Lawyers breaking the law, or at least the SEC’s interpretation of what constitutes action requiring broker dealer registration, is something that is high on the priority list of the SEC. In December, the SEC announced settlements with many immigration attorneys and charges against one firm who did not settle. See,…Matthew-Gordon.

The key lessons to be learned is that the SEC continues to apply its transaction based (success fee) compensation test to determine broker dealer registration requirements despite district court decisions to the contrary. (See SEC v. Kramer, 778 F. Supp. 2d 1320, 1336 (M.D. Fla. 2011). Secondly, immigration attorney should not be taking fees for referrals from sponsors, especially in the context where the lawyers were acting as counsel to the very investors they were referring.

It will be particularly interesting to see if and how DHS implements new rules related to regional centers in light of the SEC’s activity. On June 10th, DHS announced that it was (finally) engaging in rulemaking with respect to long needed updates to EB-5 regulations. See:

All that we know for now are the general topics: “Unique EB-5 program issues which will be addressed in the updated regulation are: the designation of Targeted Employment Areas; indirect job creation; the required investment amount; material changes effect on conditional residency; the regional center designation process; and monitoring for regional center compliance.” Hopefully while compliance was mentioned last, it will not be least.

Reprinted with permission.
Originally posted at: ILW.COM EB-5 Blog

Mar 31, 2016
Much Sound and Fury that Signifies Nothing

Without much fanfare by the SEC, this past Good Friday (March 25th), an administrative law judge ordered Boca Raton-based Ireeco LLC and Hong Kong-based Ireeco Ltd. to pay $3,179,633 in disgorgement, which is the amount in fees the companies collected with respect to arranging for the investments of 150 EB-5 investors. The action was based on the companies’ failure to have registered as Broker-Dealers. The SEC Press Release from June 23, 2015, can be found at this link:

You can also find my original article on this case entitled Miami Vice at:…Matthew-Gordon

There were several notable aspects of this action. Firstly, it was truly a ‘victimless’ crime (if a crime were even committed) as there was no allegation of fraud by any party or any other misdeed apart from failing to register. The judge in the case refused to grant the SEC’s request for further penalties beyond disgorgement noting that “there was no fraud or mismanagement on the part of Ireeco or its owners and that the companies could not have foreseen that the SEC, which had never taken this kind of action before, would come after them for this activity.” See the article appearing on…-unlawful-fees by Carolina Bolado for a full summary of the order.

Even the SEC did not take a particularly aggressive stance in this case is it did not seek to get the owner of the two companies named, but only the companies themselves, which had long since transferred the fees. It is important to note that the owners are not personally liable for the disgorgement order against the companies. The SEC essentially gets a free pass uncontested win, by allowing the purported miscreant to keep the fruits of his alleged crimes.

It is possible that the SEC did not want to pick a real fight with someone with sufficient resources to give them a fight. It is notable, that the defendants’ counsel was Joseph Sacher of Gordon Rees, who was the very same securities litigator who handed the SEC a stinging defeat on the very same point of broker-dealer registration in the now famed, SEC v. Kramer case (778 F.Supp.2d 1320 (2011)).

The conclusion of this case (or really the fact that it was pursued at all) is a wholly unsatisfying result. Here, no one was hurt and no one was punished, so why all the bother. As most in the EB-5 community know, there are real transgressions occurring every day that injure investors and the confidence in the overall market. One would hope that the SEC would focus its limited investigative and prosecutorial resources on the cases that matter, instead of racking up meaningless notches on its belt on the ones like this, that don’t.

Reprinted with permission.
Originally posted at: ILW.COM EB-5 Blog

Dec 9, 2015
A Higher Bar for all EB-5

Yesterday, December 7, 2015, the SEC announced settlements and the filing of one law suit against US immigration attorneys for allegedly acting as unregistered brokers in violations of the Federal securities laws. The timing could not have been more poignant. Both behind the scenes and occasionally in public articles and letters, there is a pitched battle being fought for the future of the EB-5 program. One on side are those who support the immediate and meaningful reform of the EB-5 program currently contemplated for inclusion in the Omnibus spending bill. On the other are generally larger real estate based Regional centers who want nothing more than to continue the business as usual of enhancing their wealth with sometimes blatant disregard of the rule of law and the societal purpose to create jobs for Americans who need them the most.

This action by the SEC is the case in point showing that reform is needed and it is needed now. Beyond the enhanced securities laws provisions contained in the reform bill, reform would send the clear and convincing message that those who participate in the EB-5 program must do so in a more compliant, more policy consistent manner than before. For the last ten years or more, the largest EB-5 sponsors have benefitted from the use of billions of dollars of essentially subsidized capital by virtue of the EB-5 program. It is time at long last, to reform the EB-5 program, so that those who cannot or will not play by the rule, so that those who do not deliver their fair share to America, simply get out of the EB-5 program.

If Regional Centers want to pay lawyers or Chinese agents as brokers, that is fine, so long as they comply with Federal Securities Laws. As the Regional Center is the sponsoring organization that allows the New Commercial Enterprise to gain the benefits of the EB-5 program, it should be responsible for the conduct of those it allows to operate under its wing. By the same logic, the Regional Centers should be responsible for making sure the NCEs have policies and procedures that help ensure the NCEs are fulfilling their obligations under Labor Laws (a point which many of the objectors pushed back on as an excuse for delaying the current reform efforts). A fair counterbalance to receiving the benefits is to be obligated by the burdens.

The EB-5 program was created ONLY to benefit American workers. Not lawyers, not sponsors/developers, not even the immigrant investors. The entire policy from giving the investors Green Cards, to effectively encouraging them to invest capital for the use by developers at discounted rates of return with long hold periods, was all wisely designed to result in true job creation and structural economic improvement for America. In the last several years, during the rapid growth of the program, greed has pushed many to break the law or pursue projects that did not really provide the benefits they were supposed to. It is time we raised the bar by embracing the reforms. They are not perfect, as no law ever is, but it is a vast improvement over the current regime and will clearly signal to all in the EB-5 community that the game is changed. It is time to do better. Please support the reforms so that time can be now.

Reprinted with permission.
Originally posted at: ILW.COM EB-5 Blog