Category Archives: Press realese

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 (https://www.dhs.gov/immigration-statistics/yearbook/2015/table6), 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: https://judiciary.house.gov/hearing/is-the-investor-visa-program-an-underperforming-asset/. 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.

Set 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 https://www.reginfo.gov/public/do/eA…&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

Fev 16, 2016
E3iG’s CEO Testifies in Before the United States House of Representative Judiciary Committee Hearing entitled, “Is the Investor Visa Program an Underperforming Asset”

NEW YORK, Feb. 16, 2016 /PRNewswire/ — E3 Investment Group is proud to announce that Chief Executive Officer Matt Gordon appeared before the United States House of Representatives Judiciary Committee as an expert witness at the committee’s February 11, 2016 hearing on the EB-5 program. The hearing examined the issues and causes that have prevented the EB-5 program from maximizing its creation of social value for America. According to Mr. Gordon, “It was a great honor to be called by Chairman Goodlatte before the committee and have the opportunity to help shape the policy debate.” Mr. Gordon’s appearance before the committee continues his involvement in the public policy arena having made in presentation in front of senior legislative staff of the Senate Immigration Sub-Committee this past November.

Mr. Gordon continued, “It is very clear that the EB-5 program has not lived up to its potential. The poor regulation of targeted employment areas, in particular the accepted rampant practice of gerrymandering, has deprived truly distressed economic and rural areas from receiving their fair share of EB-5 investment capital.” The full webcast of the hearing can be seen at this link:

http://judiciary.house.gov/index.cfm/2016/2/is-the-investor-visa-program-an-underperforming-asset

Mr. Gordon’s written testimony can be found at this link:

http://judiciary.house.gov/index.cfm/hearings?Id=22D22033-1110-4DAD-BE27-7F65CC159384&Statement_id=59DCD1F6-0B63-48D8-8559-F0C5D7E23571

The other witnesses appearing with Mr. Gordon at the hearing were: Mr. Nicholas Colucci, Chief, Immigration Investor Program U.S. Citizenship and Immigration Services; Ms. Rebecca Gambler, Director, Homeland Security and Justice Issues; and Ms. Jeanne Calderon, Clinical Associate Professor, Stern School of Business, New York University.

In his testimony, Mr. Gordon cited the Initiative for a Competitive Inner City’s (ICIC.org) work on how EB-5 capital can be used in distressed urban areas. According to Kim Zeuli, Ph.D., Senior Vice President and Director of Research at ICIC, “Mr. Gordon presented important testimony on how those in the EB-5 community and investors can be better motivated to apply EB-5 capital to distressed communities in America. There are a great many American cities that would benefit greatly from foreign direct investment into their communities.”

Mr. Gordon also testified about his involvement with the More American Jobs Alliance, or MAJA. According to MAJA founding member Shae Armstrong of CP Homes in Dallas, Texas, “We created MAJA to help refocus the EB-5 program on the creation of actual jobs in rural and distressed areas. E3 Investment Group, through its E3 Cargo trucking company, is leading by example. E3 Cargo is headquartered in Indianapolis, Indiana, and is now in Southaven, Mississippi. All E3 Cargo locations are in single census tract targeted employment areas, helping bring investment capital to these areas in need and fulfilling the true policy intent behind the EB-5 program. We are proud of Mr. Gordon’s important testimony and proud to have him as a founding member of MAJA.”

According to Mr. Gordon, “MAJA has been singularly instrumental in helping set the policy agenda with respect to desperately needed reforms to the EB-5 program. MAJA represents all those in the EB-5 community, including regional centers, direct sponsors, investors and the communities into which they invest, who believe in the policy ideals of the program. I look forward our efforts in the coming months to help enact EB-5 reform legislation.”

Jul 27, 2015
E3iG’s Scalable-Direct® EB-5 Gets First Green Card Approval

NEW YORK, July 27, 2015 /PRNewswire/ — E3 Investment Group is pleased to announce that the first I-526 green card petition based on its Scalable-Direct® business model has been approved by United States Citizenship and Immigration Services. “In many ways, this is the final milestone in our Scalable-Direct business model,” noted E3 Investment Group CEO Matthew Gordon. “This approval is related to our E3 Cargo trucking subsidiary. To date, we have deployed capital, run the company successfully and created more than the needed jobs to support an eventual I-829 petition (removal of green card conditions) approval. We did all this in a matter of months where most other sponsors take years, if ever. The only thing left was for USCIS to grant our investor the initial green card approval. This has now happened and we now focus our attention to further scaling the leading direct business model in the EB-5 program.”

For more visit:
http://www.prnewswire.com/news-releases/e3-investment-groups-scalable-direct-business-model-receives-first-green-card-approval-300118672.html

Abr 20, 2015
E3iG’s Scalable-Direct® E3 Cargo Featured by JP Morgan

E3 Investment Group’s EB-5 funded transportation subsidiary E3 Cargo featured in a report issued by JP Morgan Chase and the Initiative for a Competitive Inner City

New York, NY, April 20, 2015 (Newswire) – E3 Investment Group (E3iG), headquartered in New York, announced today that E3 Cargo, E3 Investment Group’s EB-5 funded subsidiary, has been featured in an investment report issued by JP Morgan Chase and Initiative for a Competitive Inner City (ICIC.org).

For more visit.
http://www.newswire.com/press-release/e3-investment-groups-e3-cargo-featured-in-jp-morgan-chase-report

Abr 14, 2015
E3iG CEO Matt Gordon Publishes Newest Edition of ‘The EB-5 Book’ Legal Treatise

E3 Investment Group CEO Matt Gordon publishes latest edition of The EB-5 Book, the leading legal treatise on the EB-5 immigrant investor program.

New York, NY, April 14, 2015 (Newswire) – E3 Investment Group (E3iG), headquartered in New York, announced today that Chief Executive Officer Matt Gordon has published the latest edition of the EB-5 Book with Co-Editors Angelo A. Paparelli and L. Batya Schwartz Ehrens.

For more visit:
http://www.newswire.com/press-release/e3-investment-group-ceo-matt-gordon-publishes-newest-edition-of

Jan 6, 2015
E3iG’s E3 Cargo Scalable-Direct® Launches Operations

INDIANAPOLIS, Jan. 6, 2015 /PRNewswire/ — E3 Investment Group (E3iG), headquartered in New York, announced today they launched the first ever EB-5 venture in Indianapolis, Indiana. E3 Investment Group is deploying the capital in its trucking business, E3 Cargo Trucking.

According to Matt Gordon, Chief Executive Officer of E3iG, “We have successfully achieved among the most important of all milestones. We have secured our operational funding and are now in the process of hiring our first employees and deploying the investment capital of our immigrant investor who is using this investment as the basis of her petition to become a lawful permanent resident of the United States. Within the month, we hope to have our first trucks carrying freight on the road to build Indianapolis’, Indiana’s and America’s next great trucking company.”

For more visit:
http://www.prnewswire.com/news-releases/e3-investment-group-launches-eb-5-venture-in-indianapolis-300016619.html

Jun 30, 2014
E3iG CEO Authors Chinese Direct Investment Publication

NEW YORK, N.Y., June 30, 2014 (GLOBE NEWSWIRE) — via PRWEB – E3 Investment Group, headquartered in New York, announced today that that Chief Executive Officer Matt Gordon has been selected to author a chapter in a forthcoming investment book for the Chinese and international markets, which will focus on explaining direct EB-5 investments.

The book will be entitled Invest in the USA—Guidebook for High Net Worth Individuals to Invest in the USA, Chief Editor: Zhihui Guo. This book is a guide book for Chinese high net worth individuals regarding how they invest in the USA, including EB-5 Investment, Real Estate Investment, Investment and Wealth Management, and Oversea Study for their children. The book is expected to be published in September, 2014 by one of the top Chinese publishers, the Huazhang Publishing Company (Jixie Gongye Publishing House). The book will be published in both paper and electronic versions in Chinese for the market in China and in English for the US and Global markets.

For more visit:
http://www.reuters.com/article/2014/06/30/idUSnGNX3YKn5t+1d8+GNW20140630

Mai 1, 2014
E3iG CEO Featured Speaker at Harvard’s Kennedy School

E3 Investment Group announces today Chief Executive Officer Matt Gordon will be a featured speaker at Impact Investing in Inner Cities: Putting Foreign Capital to Work Through EB-5. The Initiative for a Competitive Inner City organized this important policy conference, which will be held on July 1st, 2014 at the Harvard Kennedy School of Government.

For more visit:
http://www.prweb.com/releases/ICIC/Conference/prweb11817208.htm

Nov 26, 2013
E3iG Announces Asian Road Show and Second Scalable-Direct® Investor

E3 Investment Group will be conducting its first Asian roadshow in early December, visiting Vietnam, Korea and China and will be joined by Expert Admissions, a leading education consultancy. E3 Investment Group has also secured their second investor in their Scalable-Direct business model.

For more visit:
http://www.prweb.com/releases/EB-5-Roadshow/Investor/prweb11369073.htm