Parisa Karaahmet, Fragomen, Del Rey, Bernsen, & LoewyAlexander G. Rojas, Barst, Mukamal, & Kleiner LLP Genevieve Roman, Extell New York Regional CenterKristal Ozmun, Miller Mayer LLP

NY AILA 2015 EB-5 101

Overview of EB-5 criteria & requirements

Direct vs. regional center investments Role of counsel in representing the

investor Ethical considerations Panel’s top tips for new EB-5

practitioners Q&A

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Legal requirements Source and path of funds Filing process and RFE trends Removal of conditions

• EB-5 category created in 1990 for foreign nationals who invest in a new commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs.

• Congress set aside 10,000 immigrant visas annually for investors and their immediate family members.

• Immigrant Investor Pilot Program enacted in 1993, providing for regional centers – due to sunset on September 30, 2015. Job creation may be estimated using “reasonable methodologies.”

Foreign nationals can get a green card if: Invest $500,000 or $1,000,000 (depending on geographical

area); and Investment creates full-time jobs for 10 U.S. workers

Green cards conditional for 2 yearsConditions removed if investment sustained and jobs created

NY AILA 2015 EB-5 101

General requirements – INA § 203(b)(5) and 8 CFR § 204.6◦New commercial enterprise ◦$500,000 or $1 million from a lawful

source◦At-risk investment◦Investment will create at least 10 full-

time U.S. jobs◦Investor must be engaged in the

management of the enterprise

NY AILA 2015 EB-5 101

New Commercial Enterprise◦Created after November 29, 1990 Matter of Soffici, 22 I & N Dec. 158,

165-166 (1998), Matter of Hsiung, 22 I & N Dec. 201 (1998);

◦OR◦Substantial change from investment -

40% expansion of net worth or number of employees

NY AILA 2015 EB-5 101

Actively in the process of investing $1 million or $500,000 if the investment is in a targeted employment area

Targeted employment area (“TEA”)◦ A rural area of less than 20,000 in population; or◦ An area which as unemployment of at least 150% of

the national average◦ Evidenced by submitting a letter from the state’s

agency confirming that the area has high unemployment and defining the statistical area USCIS may disagree with the state’s method of calculation,

but generally will defer to the geographic area

NY AILA 2015 EB-5 101

Investment must be at risk ◦Matter of Soffici, Matter of Izummi,

Matter of Hsiung, 22 I & N Dec. 201 (1998) , Matter of Ho 22 I & N Dec. 206 (1998)

Must be an equity investment◦Debt instrument prohibited/no

guaranteed repayment◦Personal funds or loan secured by

personal assets

NY AILA 2015 EB-5 101

Lawful source of Investment Funds◦Matter of Soffici and Matter of Izummi

◦Examples business earnings, salary, gifts, loan, etc.

◦Evidenced by personal tax returns, financial statements, etc.

NY AILA 2015 EB-5 101

Tracing◦ USCIS requires the petitioner to demonstrate

that the personal funds derived from a lawful source and were ultimately invested in the EB-5 enterprise

◦ Numerous transactions between investor and the EB-5 enterprise investment would require the investor to provide documentation from each transaction

EB-5 Investor$$$ $$$$$$

EB-5 Enterprise

NY AILA 2015 EB-5 101

Job creation◦ The investment must result in the enterprise

creating or saving 10 full time jobs (35 hours per week) for US workers (USC citizen, LPR, work authorized immigrant)

◦ Must be direct job creation, i.e. W-2 employees evidence by submitting I-9 forms of employees and for US workers (supporting docs copy of passport, I-551 card with the I-9 forms)

NY AILA 2015 EB-5 101

Job creation◦ Defined in terms of the position, not the person.

The position must be created and filled by a US worker

◦ Investor and family members do not count◦ When must position be filled? How long must it

last?

NY AILA 2015 EB-5 101

What is a “regional center”? Pros and cons of direct v. regional center

EB-5 investments Differences in representation on direct v.

RC-based EB-5 petitions

Engage in business on day to day basis or through policy formation◦Title and description of job duties◦Evidence of corporate officer or director

position◦Board position (policy formation)◦Purely passive investor not permitted

NY AILA 2015 EB-5 101

Individual Eb-5 Petition◦ Investor buys business or starts new business◦ Must be 10 direct full-time, W-2 employees who are

USCs or LPRs◦ Few applications

Regional Center Eb-5 Petition◦ Investment into a business associated with a USCIS

Approved Regional Center◦ 95% of all applications◦ Main advantage

Indirect employment counts through the use of an economist report to predict project job creation.

NY AILA 2015 EB-5 101

A Regional Center (“RC”) is not merely a defined geographic area but rather it is a business entity that coordinates foreign investment within an approved geographic area in compliance with the EB-5 statutory, regulatory and precedent decision framework

Regional Centers do not hold sole jurisdiction over their geographic region – several RC’s may cover the same area(s) and/or have partially overlapping boundaries

Purpose of the RC: Promotes economic growth through increased export sales, improved regional productivity, increased domestic capital investment, and job creation

NY AILA 2015 EB-5 101

Over 90% of I-526 petitions filed annually are Regional Center-affiliated.

Perceived benefits of RC Investment may include: A particular RC-affiliated investment project may

be pre-approved by USCIS;◦ Indirect employment counts through the use of

an economic impact report to project job creation

less active role in the day-to-day policy formation and management of the business

Regional Center affiliated projects may count direct jobs of full time, W-2 employees, as well as indirect jobs in meeting the ten jobs per investor requirement: “notwithstanding the requirements of 8 CFR 204.6, the

Attorney General shall permit aliens admitted under the pilot program . . . to establish reasonable methodologies for determining the number of jobs created by the pilot program, including such jobs which are estimated to have been created indirectly “ (Section 610, 1993 Act)

NY AILA 2015 EB-5 101

Project developers may create their own regional center in order to raise capital for their own development projects

Project developers may have a project sponsored by a non-affiliated regional center (“Rent-a-Center”)

The Regional Center and the investment Project are separate entities, but are affiliated

Regional Center has oversight/compliance obligations independent of the Project

NY AILA 2015 EB-5 101

Tracks infusion of capital into job-creating enterprise and monitors JCE’s compliance with Biz Plan and foundational facts in economic impact report, as well as other requirements of the immigration regulations Ex: Maintain up-to-date “TEA” verifications; no “material change”

Other ongoing administration and compliance/reporting requirements, such as:Track, monitor and report on Form I-924AOffering and sale of investments conducted in

accordance with securities regulationsIRS reporting requirements (maintain up-to-date IRS form

W-8 or W-9’s, as applicable; distribution of K-1’s

May screen investors for securities and immigration issues

May coordination with immigration counsel and provide oversight of the immigration petitions/processes:Provide I-526 templates to investors/counselMay review investor source of fundsAllocates jobs among investorsProvide I-829 templates to investors/counsel

May provide investors with project updates

Evaluates and selects potential new projects for suitability within the EB-5 program’s framework

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Approved for certain industries – NAICS codes

Approved for a certain geographic area Approved for a certain economic

methodology What should an attorney look for in a RC

designation when representing an investor?◦ All of the above PLUS:

Project Pre-Approval? Job Allocation between investors?

NY AILA 2015 EB-5 101

Attorney’s relationship with the client◦ explaining the limits of attorney representation

Understanding client’s goals and ensuring EB-5 is the appropriate option

Managing expectations Immigration due diligence

Individual EB-5 investors file I-526 petitions◦ Approx. 14* months; PLUS◦ approx. 4-9+ months for Consular Processing / Adjustment of Status

Two-Year Conditional Lawful Permanent Residence Status◦ 24 months

I-829 Petition to Remove Conditions◦ Filed during 90 day period before CLPR status expires◦ Approx. 12.3* months

*As of March 31st, 2015

NY AILA 2015 EB-5 101

Knowing when to co-counsel and when to use experts

Payment of finder fees to attorneys Engagement letters

This presentation outline and the presentation itself are for general educational purposes only and are not intended to provide specific guidance or legal advice about what to do or not to do in any particular case. You should not rely on this general information to make decisions about specific immigration matters. If you are not yourself a lawyer, you should seek the assistance of an immigration lawyer to help you resolve these issues. Thank you.

NY AILA 2015 EB-5 101