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There is not a mechanism to restrict the eb-5 principal to operate eb-5 projects on behalf of their investors who only passively
There is not a mechanism to restrict the eb-5 principal to operate eb-5 projects on behalf of their investors who only passively involve in management. Is this fair? Actually it is always a confliction between the best interest of an eb-5 project principal who wants to make more money and 10-job-creation requirement that is needed to remove condition in the I-829 phase.
I agree and disagree, but you do raise a core issue that will become more relevant.
1. Where multiple investors are involved in a single EB-5 project, it is very, very difficult to get limited partners to agree on anything: even conducting voting is extremely difficult. I am not saying it cannot be done, but the very number of investors may not give an individual investor with any real control anyway.
2. A lot of difficulty lies with the way EB-5 law is being administered by USCIS, and I am sure regional centers are all for any changes to the EB-5 law which would make it easier for EB-5 investors to obtain permanent green cards and would ultimately benefit alien EB-5 investors. But they are not in position to change the EB-5 law, and many regional centers want to change the EB-5 law. And often, there is no one at the USCIS hierarchy level whom regional centers can talk to. A lot of EB-5 policies are set up by USCIS officials in Washington, D.C., and there is a disconnection between what regional centers need and what USCIS is willing to do, and in my opinion, this disconnect is growing. I personally find this ironical, because it was USCIS itself which, starting in 2002, "promoted" the EB-5 Program. Before then, the EB-5 Program was pretty much dead and no one cared too much until USCIS started promoting the EB-5 Program. What I can tell you is that most regional centers do try to run an honest operation, but sometimes, all the rumors and inaccurate information creates a lot of confusion. For example, I read some people say the denial rate for I-829 is over 40%: this is patently untrue. According to USCIS' own statistics, the denial rate for I-829s is around 15% on the average.
3. As long as there are different parties, there will probably be some level of conflicts as you pointed out. One way to eliminate this conflict is to make the EB-5 Program more similar to the Canadian Investor Program, with no (or reduced) job creation requirement and the government guaranteeing the return of the principal.
The bottom line is that I sort of agree with you, but I want to point out if an EB-5 investor wants the real control, he or she should pursue a direct investment EB-5 case, not a RC based EB-5 case. There is that option, but I am aware that this option is not that easy in practice. No one is putting a gun to the EB-5 investors' heads and forcing them to do RC based EB-5 cases. But again, I am sympathetic to your feeling, but there is also some level of conflict even when you hire a broker to invest money for you: whether you like it or not, there is some level of conflict there, no matter what the investment broker says.
Dear eb5attorney,
I really appreciate your thoughtful input and your opinion. If the U.S. eb-5 can involve into sort of Canadian Investor Program, then the U.S. can attract at least 3,000 ~ 4,000 families who emigrate to Canadian every year from Mainland China. Every family went to Canada through Canadian Investor Program qualifies for $500,000 investment of the U.S. program.
I am actually from a licensed China EB-5 broker, I know my client, and most of them are very conservative for the eb-5 is new for them, for they don't have control over how an eb-5 project is operated.
Hope the U.S. legislation body eventually wake up and pass a pro investor eb-5 law, then there will be lots more jobs created since whom coming to the U.S. are people with capital.
Be very honest with you, I did see some very greedy eb-5 programs coming to China, those are scams.
BTW, dear eb5attorney, I'd like to share with you the China eb-5 market experience.
Thank you for your comments. Although there are pros and cons with the Canadian Investor Program, I believe the U.S. EB-5 Program must change to be more friendly to foreign EB-5 investors.
From my perspective, everyone is "greedy", because that's in some sense what capitalism is based on, but I do agree with you that the U.S. EB-5 Program has to change to provide clear information to foreign EB-5 investors. For example, I urge USCIS to provide up-to-date information on the exact numbers of approvals and denials for I-526s and I-829s for each USCIS designated regional centers. That way, at least the public will have accurate information on the track record of each regional center. However, it may surprise you to know that USCIS does not have the necessary staff and means to accomplish this. This is partly because a lot of filing fees collected from EB-5 cases are not spent towards making the EB-5 Program better.
In my personal opinion, a lot of problems can be avoided if USCIS is willing to avoid narrow and impractical interpretations of the EB-5 law. Many EB-5 investors do not understand how much discretion USCIS has in de facto creating new EB-5 law.
"...For example, I urge USCIS to provide up-to-date information on the exact numbers of approvals and denials for I-526s and I-829s for each USCIS designated regional centers. That way, at least the public will have accurate information on the track record of each regional center."
>>> Thumb up!
it may surprise you to know that USCIS does not have the necessary staff and means to accomplish this
>>> Glad to know this info. I also relize that USCIS is very weak on investment and financial knowledge. I can understand that they are not required either by the law nor by their positions. But we, the Chinese eb-5 brokers, do wish that RCs can come up solid business so innocent capital investors can get green cards after they fulfill their obligation - investing $500,000 in the U.S.
This way, our job will be easier. And we can find more investors, there are 3000 investors moving to Canada every year because of the safe and simple design of that program
You have to realize that there are some things beyond regional center operator's control no matter how solid their initial business plans are. Let's take one example. Let's say ethanol was in a big demand when the gas price was very high, so the operator of a regional center came up with a VERY SOLID plan to build an *** plant in Illinois. They received investments from several sources, including alien EB-5 investors, but as soon as they were about to start the construction, the world economy went down, thereby almost eliminating the once large demand for ***. Should the regional center operator proceed with the construction of an *** plant, knowing that the *** plant was likely to fail, or should they be able to amend the initial business plan and go for another project?
I am not defending anyone, but you have to realize that a solid business plan can and do sometimes fail, without the fault of anyone. The more important question, to me, is how flexible and practical is USCIS willing to be to accommodate the "good faith" scenarios as the one I described.
Right now, the average denial rate of I-829s is 15%, according to the recently-released statistics by USCIS. Should the denial rate be lower? Everyone wants it to be higher, no question about that, especially regional centers. The fact of the matter is there is no way to eliminate the risk, but USCIS does have the power to be fair, flexible and practical, to promote the primary purpose of the EB-5 Program which is to create the jobs -- but in my opinion, this primary purpose appears to be getting lost. Or USCIS simply does not have the resources or knowledge to build a successful EB-5 Program; and if that's the case, I sincerely believe the EB-5 Program should be eliminated quickly altogether. And believe me, I do not say this lightly.
I also believe that USCIS has to be cognizant of the fact that without the Chinese EB-5 investors, the EB-5 Program will be very inactive. Therefore, people like yourself do have big responsibility and opportunity to inform the potential Chinese EB-5 investors of the true nature and state of the EB-5 Program. I realize that this is not easy. Anyway, so far, I have not met a single regional center operator who does not want all the EB-5 investors to obtain permanent green cards through I-829 approvals.
Why not look for direct EB-5 investment opportunities for your clients? There is very low expectation of profit from investment in a Regional Center. Individual business investments can be studied carefully and evaluated for their ability to create a solid imcome for the Immigrant Investor. They can invest in their own business and have pride in their own accomplishments.
Oops... sorry ... I need to be on the other forum. M
We do not encourage any investor to choose a RC-based investment over a direct, individual EB-5 case. They can choose whichever route that best fits their situations. However, the USCIS statistics show that around 90% of all filed EB-5 cases are regional center-based. The market forces and individual circumstances will influence the choices made.