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Floyd Mitchell: [00:01:14] Hello EB-5 investors. This is Floyd Mitchell with eb5eb5.com. Welcome to Episode 5 of the EB-5 investor portal podcast recording on Friday December 1st 2017. Today’s episode is titled applying for an EB- 5 visa as an H1-B applicant or visa holder with special guest and immigration attorney Sam Newbold of Barst Mukamal & Kleiner. Sam heads of BMK’s EB-5 practice group representing individual investors regional centers and developers. Sam has counseled hundreds of individual EB-5 investors and their families through the entire EB-5 process and has one of the highest approval ratings in the industry. Mr. Newbold is a well-established speaker on immigration law topics in New York City and throughout the country. He often presents on topics involving complex immigration issues. Mr. Newbold also serves on the board of directors for the Safe Passage Project, a nonprofit that provides pro-bono legal aid to accompanied minors in the immigration process. He holds degrees from New York Law School and Elon University. He’s admitted to practice law in New York and New Jersey. He’s a member of the American Immigration Lawyers Association, American Bar Association and the New York State Bar Association. Mr. Newbold has been listed in the 2015, 2016 and 2017 Super Lawyers rising star publication which recognizes New York City’s top attorneys under the age of 40. Sam welcome to the show. Today’s topic is covering H1-B applicants and visa holders who may want to learn more about the EB-5 program.

Floyd Mitchell: [00:02:50] Sam can you tell us if individuals seeking a U.S. green card may file an EB-5 petition concurrently with a pending EB-2 or EB-3 application out to USCIS.

Sam Newbold: [00:03:01] Sure we have a number of Indian clients who are here in the United States on H1-B and their employers have filed employment based green cards on their behalf. We call these EB-2 or EB-5 category green cards in contrast EB-5 for example. Indians are subject to a backlog in EB-2 and EB-3 similar to how Chinese are subject to a backlog any EB-5. Basically we only give out a certain number of visas globally and we cap also the number of visas we give out to specific countries every year as well. So because of the interest we have in Indian nationals wanting to emigrate for employment it’s created a very long line in the EB-2 and EB-3 category for Indian nationals who are here in the United States on H1-B visas and they are here continuously on these H1-B visas employed with their employers while they’re waiting for their green cards to come through. Meaning that they’re waiting for their visa number to be current so that they can process and adjust their status from being an H1-B visa holder to a U.S. green card holder. So oftentimes what they do is, they’ll come to us because they’re hearing about EB-5 and there’s no backlog for Indian nationals in the EB-5 category and they’re looking to perhaps pursue you know an EB-5 investment as a way to get a green card because it would be faster than having to wait you know 10 to 15 years maybe for their visa number to become current and processed under EB-2 or EB-3. So one of the questions initially that they ask us is, “can I file an EB-5 petition if I have an EB-2 or EB-3 sort of green card case going with my employer. The answer to that is yes absolutely. These petitions operate totally independently of one another. For example, the investor files an EB-5 petition themselves and the employer is actually the entity that sponsors the immigrant for the green card and files all the paperwork. So they’re the actual person who filed that petition with immigration there. So you have an employment based green card case going and an investment based green card case going and they can totally operate concurrently. They don’t interfere with each other necessarily and they don’t even really have those cases never really crossed paths at all. So the question about whether or not that’s possible is yes it’s definitely possible and we have Indian national clients who have successfully done that. It’s becoming very popular.

Floyd Mitchell: [00:05:32] I would assume that in some cases Sam some of these employees that may be sponsored by their employer might be a little bit nervous about their employer finding out that they are filing in the EB-5 petition after the employer has invested money and time in helping them with their H1-B visa. Have you encountered this? Is this a reasonable concern?

Sam Newbold: [00:05:55] Yeah I mean for some people it might be a sensitive subject and we can totally understand why. The employer has invested in this employee that spent ten or fifteen thousand dollars or so on putting together this petition for them and they’re holding a job offer open to them while this is in process and the employee is waiting for their visa number to become current. There is this sort of level of concern by the employee that maybe if they go off on their own and try to find their own green card it might make them fall out of favor with their employers so to speak so we understand that. And that’s really a case by case thing. You know some employees have great relationships with their employers and their employers may think that’s a great idea. Other employers if they found out about that may not see it that way. So you have to be somewhat aware of the relationship that the employee has and that’s really their decision about whether to do that. An employee is going to know whether or not something like that is going to affect their employment with their employer. So you obviously don’t want to have them pursue something that they aren’t comfortable with, but it’s something to consider for sure. Oftentimes the investor (we’re really talking about Indian nationals here) will go online research about EB-5 and they’ll talk amongst themselves or maybe they have a colleague or a friend or they know somebody that has done this themselves. And they’ll have questions but they’re not quite sure who to contact about that and maybe it might be beneficial for them to contact their immigration counsel for their employer, but again that depends on their relationship with their employer and that may not be a good idea for some people if they feel like it will be a problem. They may want to go seek their own immigration counsel to pursue this. If they don’t necessarily want their employer to know. So, it’s definitely something to think about and we come across that set of circumstances frequently.

Floyd Mitchell: [00:07:45] When the employee files the EB-5 petition, is there some type of notification from USCIS that will go to that respective employees H.R. department? Will their boss find out that they’re filing a second petition concurrently with their H1- B? Is this something that they need to spend any time worrying about in terms of things being awkward at work or upsetting their boss, and things of that nature?

Sam Newbold: [00:08:14] Yeah I mean look, their employers are not really going to know. Let’s liken this to a similar situation, let’ssay that the employee gets married to a U.S. citizen and they file a green card petition that way and they get their green card through marriage. I mean look, life happens and things happen and people’s circumstances change. The employer is not going to know that that person unless they told him they got married for purposes of tax treatment you know HR and things like that. They might find out that way but they’re not going to find out from immigration necessarily that and I-130 petition has been filed by their new U.S. citizens spouse. Similarly, USCIS isn’t going to notify H.R. of their employer that the investor file an EB-5 petition. So no, there’s nothing really to be concerned about there necessarily. It’s quite often that clients of ours who do this concurrent process will go through and file their 526 and adjust their status and they go to work with a green card one day and they just let HR know that “here’s my green card” (laughter) and they find out that way. So you can’t expect to live your life in a vacuum, you know, life changes and circumstances change and this is just an option for people who are looking to pursue it.

Floyd Mitchell: [00:09:26] Can you tell us how an investor would fund their EB-5 investment and what the total amount is. Along with a little bit about the money aspects of this process.

Sam Newbold: [00:09:38] Sure. Well. Ideally if this person has been employed in the United States and they have a good income and they can leverage that income to serve as their investment in the the EB-5 program, that’s a very nice set of circumstances to have. That’s really kind of like the best circumstances where they really just have W-2 income and you’re filing their tax returns as proof of that and things of that nature. That’s a good way for them to document their source of funds. A common scenario that we have with our clients from India in this situation is, they have a house and perhaps they’ve paid off the mortgage on their house and they’ll get a new home equity line of credit for example against their house and use those proceeds to service as their investment principle in the EB-5 program. That’s very common as well and then other clients will combine domestic income that they’ve earned here through employment. Maybe, proceeds from a home mortgage that they’ve gotten in it and possibly a gift from a relative abroad that we can show source of funds from. And then they stitched together that way and all of those scenarios are perfectly fine and perfectly acceptable and provable. And that’s the general way that most nationals from India come up with the funds for the EB-5 program.

Floyd Mitchell: [00:10:58] Do the funds have to come from overseas or can they be funds that are in a U.S. bank account or here in America and can investors use funds from friends and family?

Sam Newbold: [00:11:11] The funds just have to be from a local source. There’s nothing in the regs (regulations) that say that the funds have to come from overseas, they just have to show that they were earned lawfully. So I guess people may think that you know if here in the United States unlawfully or something that you can’t use your income here which would be true because you didn’t really earn that income lawfully because you didn’t have work authorization, but if you’re hear on valid non-immigrant visa status and you’re an H1-B visa holder, you’ve been employed and, it’s all valid, you can you use all that income that was lawfully earned here in the United States, it doesn’t have to necessarily come from abroad. So that rumor is false. You can absolutely use income that’s earned here in the United States. Similarly you don’t even have to be here in the United States but you may own property or investments here in the United States and that income is here in the U.S. That’s certainly lawful as well. So yeah, it doesn’t have to entirely come from abroad or all from abroad. Domestic earnings here in the U.S. as long as they’re lawful can be use for EB-5.

Floyd Mitchell: [00:12:06] Thank you for clarifying that Sam. Can EB-5 investors use gifts from friends or family to make their investment?

Sam Newbold: [00:12:16] Yeah, Absolutely. As long as it’s a true gift. And you know, it’s money that can be sourced and there’s a clear path of funds and there’s clear paper trail and documentation about where the person giving that money got that money from the beginning. Same set of circumstances and burden of proof are required from that person giving the money that the investor would have to show. So you have to provide that documentation as well, so as long as that documentation exists and the source of those funds being gifted can be obtained then absolutely money can be gifted.

Floyd Mitchell: [00:12:50] You mentioned earlier that the EB-5 visa has grown in popularity amongst immigrants from India. Can you compare the EB-5 visa to the H1-B and discuss some of the similarities there or the key differentiators.

Sam Newbold: [00:13:10] Sure. The H1-B program is problematic in some ways. It’s the most common employment based work visa that we have in the U.S. that we offer to people. It’s a visa that requires a specialty occupation, meaning that the job has to be one that requires at least a bachelor’s degree in specific fields that the employer has to have that relevant bachelor’s degree or equivalent work experience to be qualified for that position. So it’s really common for people who are coming out of school. They’re here as a student and want to transition into the workforce here to apply for an H1-B. The issue for H1-B is that they’re subject to an annual quota. So there’s only a certain amount of H1-Bs that the government allots for people every fiscal year and those are used up usually within the first week that you can apply for H1-B which is the first week of April. So the government’s response to that issue is to create a lottery system or as basically if you want to be eligible for an H1-B visa with the start date of October 1st in the year, you have to submit your application within the first five days of April to be considered in the lottery and they’ll randomly select 85,000 or so applicants just truly randomly. With the way that the numbers work, last year we had about 200,000 applicants for roughly around 85,000 visas 65,000 roughly for people with bachelor’s degrees in another, carve out 20,000 for for people with U.S. master’s degrees. So do the math. The odds of being selected could be somewhere around 30 maybe 40 percent for people with master’s degrees. That leaves a lot of people out to dry. In terms of being selected, so then what do they do. Right? And then they’re left scrambling. They either have to leave go back to school or find another visa category, so on and so forth. If you are selected in the H1-B lottery, you have the H1-B for up to six years. If you’re from India and you’re looking to transition into a green card, the employer will normally start that process in your fourth or fifth year in the H1-B status and depending on whether or not you’re in the EB-1 or EB-2 category, you might be waiting for another eight, ten or twelve years before you can actually get the green card. So if you add all that stuff together, you know 18 years, maybe 15 years, 12 years depending on the backlog when you combine the time and H1-B status, the wait time and the EB-2 or EB-3 category, just to get a green card. That’s the reason why people from India who are here on H1-Bs and they’re looking for green card options or you know looking looking hard at the EB-5 option because if you’re on an H1-B and you submit a 526 application, that 526 application is taking about 18 to 22 months to adjudicate. Once that’s approved as long as you’ve been maintaining your H1-B status, you can file an adjustment of status which takes about four to six months to adjudicate and you’ve got your green card in hand at that point. So you’re looking at somewhere around 24 to 28 months as opposed to 15 years. There are things to consider as well. The green card that you get with the EB-2 or EB-3 petitions, it doesn’t have any conditions. For example you do have to follow through with the offer of employment and continue to work for that point for a period of time before you could say switch jobs for example. The EB-5 green card that you get is conditioned for two years. So there is a conditional period with the green card and at the end of that two year period you have a 90 day window to submit an 829 application to remove the conditions so that you can get your unconditional regular green card. To fulfill those requirements you have to demonstrate that the jobs that you serve were going to be created have been created, the investment remains at risk and deployed to the project and once you demonstrate that, your regular green card will be issued. So I mean look there are some differences between the benefits that you get. I mean if you pick a good project, the project’s on point, it’s really just a matter of filing it and just making sure that you file it on time and you’ll get your regular green card. But, you know, these the exact conversations that we have our clients. We weigh the pros and cons. We talk about their individual circumstances because everything is case by case. And some people have different concerns than others. But in terms of time that’s kind of what you’re looking at and the reason why EB-5 has become very popular with H1-B visa holders from India.

Floyd Mitchell: [00:17:49] I understand that in some cases both spouses husband and wife are here on work authorization under the H1-B. When it comes to EB-5, does all it takes is just one of the two spouses to be approved under the EB-5 petition and that gets American citizenship for the wife or the husband, the person not applying for the EB-5 because my understanding is, once one Petitioner is approved, so is their spouse and all children under the age of 21. Is that correct?

Sam Newbold: [00:18:29] Yes that’s correct. First off, because they’re here in the U.S. and are U.S. persons, the EB-5 investor has to be accredited. Right. So they have to make sure that their income requirement or their net worth are of a level that allows them to invest as an accredited investor here in the U.S. So those are things that take into account and when we’re talking with clients sometimes it just goes back to the point of maybe they want to do this subtly and sort of under the radar or something. They’ll say “well the person who is the primary beneficiary on the H1-B visa holders may say you know “look, I think it might be hard for me to kind of keep this under wraps and I’m not sure how my employer would think about this. Can my spouse who is here on H4 visa be the primary investment?” The answer to that question is yes. Almost always income is you know joint income as long as that joint income can be sourced. The spouses on the H4 visa can be the primary applicant for the EB-5. And that would include the spouses here on H1-B and also children under 21. And everybody is included in the application and everybody gets green cards. So again another conversation of case by case but it’s a question that comes up quite a bit in that regard because it makes it a little bit easier to have to contain the EB-5 process and keep that sort of like a personal thing within the family that doesn’t really interfere with necessarily the H1-B employment if somebody is trying to be cautious about.

Floyd Mitchell: [00:20:04] The EB-5 industry tends to be very focused on real estate in terms of opportunities for the petitioner to invest. It’s not always real estate, there are other options but can you share with our audience how they may go about finding an EB-5 opportunity to invest in?

Sam Newbold: [00:20:23] Yes sure. That’s, the million dollar or the five hundred thousand dollar question that we always get with with clients is you know, “How do I find a good project?” “Where do I invest?”. “How do I get that information?”, so on and so forth. As immigration attorneys you know we’re not financial advisers we’re not licensed to recommend particular investments, but we do have a duty of service and loyalty to our clients to try and point them in the best direction possible so that they can make the best decisions that they can in ways that they can find out projects are for example working with a broker dealer here in the United States. There are broker dealers out there who have projects that they’ve vetted themselves to provide licensed recommendations and information specifically about that project and talk to the investor about the pros and cons of a particular project and meet their risk tolerances and so on and so forth. There’s new things popping up that are really cool such as the EB-5 investor portal for example where investors can go online and look at projects that are on the portal and learn about those, speak to a broker dealer and find out information about those and then investors can ask their attorneys that they’re working with to perhaps make an introduction to someone at the project. For example if they want to look at a specific project they just make a general introduction to the person at that projects and then let the investor and their financial advisors work with the contact at the project about finding out information and then the immigration attorney is really lying in the wait, they’re there to answer questions related to the project that might be immigration related and to help that part of the process as well so, we’re really good facilitators in that regard. The investor sort of comes to us to give them a general you know road map as to what do they go to next to find that project. And we sort of just hand them off and make key introductions to people and professionals that are able to provide that advice.

Floyd Mitchell: [00:22:25] There are over 1 million foreign students here in the United States. How does EB-5 stack up in comparison to H1-B for foreign students?

Sam Newbold: [00:22:36] It’s definitely an option. I look at it this way. EB-5 isn’t for everyone obviously you know it’s a lot of money. There’s a level of sophistication that’s required in the process. There’s a lot a of documents that are important to read and review and you know for the right student it might be the right opportunity for them. I think if a person is over here from a different country and they’re studying here in the United States and they’re looking to stay and work here beyond being a student, find a job and things like that. The first place that they start is the H1-B. But like I said before, the H1-B is not a guarantee and the odds of being selected in the lottery system that we have right now are not favorable and oftentimes students are left scrambling and families back home are very frustrated with the lack of employment options in the United States especially for citizens of China and India where they don’t have other valuable options for entrepreneurs like E visas and things like that. It could be very difficult to figure out a path upon graduation as to how to get a job, stay here and actually make that educational investment pay off. For example if most foreign students are paying tuition in cash and that cash typically comes from their parents or someone from back home, and let’s say that they’re going to a school, you know that’s going to cost them two hundred thousand dollars over the course of four years in terms of tuition and board anything else that’s being paid out there. When they spend that two hundred thousand dollars on their education, you know their child comes out at 21, 22 years old or whatever and they can’t get a job because they’ve used their OPT, their one year of work authorization that they get as a result of being a student here or they used their OPT extension if they have a STEM degree but at some point they’re going to have to find a long term solution if they want to work in the United States and live in the United States. And it’s H1-B right? Sometimes you have to try over and over and over again, if you’re able to do that. You might not be able to get that and it’s very frustrating. So there’s a lot of uncertainty with that. One potential cure that EB-5 can provide, if you know early on that it could be difficult to get a work visa upon graduation, you might be able to bypass that by participating in the EB-5 program. You know if you’ve spent 200 or 300 thousand dollars in cash on your child’s education, maybe there’s a way for the student to make an investment under the EB-5 program to make sure that they have a green card when they graduate and get to get a job and work wherever they want. Part of the limitations with the H1-B is that it’s employer specific, you can only work for that employer and if you want to switch jobs that new employer has to file a change of employer petition and absorb those costs and it’s just sort of cumbersome some and it’s very fluid. With the green card you can work wherever you want, live wherever you want, on a company if you want. Can’t really start your own company under an H1-B visa so it’s pretty hard to be entrepreneurial and it’s a great way to sort of get the flexibility of the American dream. Be able to do whatever you want upon graduation, you know we would advise students who might be looking to do that. Obviously they have to make sure that they’re accredited and they qualify for the program. But if they do, you know try to do something in their sophomore year for example that way that gives them enough time to process their paperwork. Their petitions get their green card application filed. So that while they’re in OPT upon graduation they might be able to adjust their status and get a green card. Then that solves the whole H1-B problem and they can work wherever they want. Again, obviously it’s not for everyone, as we’re talking about a large investment and things like that but the right applicant EB-5 is a great option for those people that can meet the qualifications.

Floyd Mitchell: [00:26:36] Here at the EB-5 investor portal, our goal is to simplify the process as much as we can. We work with immigration attorneys like yourself, we work with a firm called Proxy Capital Partners. We work with a broker dealer who is an investment banker that does the you know the basically describes the project and goes through the selling of the security with the petitioner. Can you talk a little bit about the various professionals that will be helping the investor on this journey? It can be pretty daunting and seem like a very complicated process. And here at the EB-5 investor portal, we like to do a lot of hand holding, really make sure that the investor understands all of these very key professionals essentially that are going to be surrounding them and working with them through this process. Can you talk a little bit about that Sam and specifically Proxy Capital Partners and why that firm working in tandem with the EB-5 investor portal and an immigration attorney like yourself could be of value and very helpful to the investor?

Sam Newbold: [00:27:50] Yeah sure. The EB-5 process can be overwhelming and trying to understand all the moving parts. You’re dealing with immigration law, securities law, corporate law, finance, investments, things of that nature that can be quite confusing and convoluted and really at the end of the day if you’re contemplating an EB-5 investment, you’re looking to make sure that you can get your principal back at some point and that you can get the green card and you might be happy with that. If you can make a little bit of money along the way, fantastic. You know, but we understand that an at risk investment is just that there’s always a chance that a project could fail. You may not get your money back, you may be able to keep your green card or get a green card at all initially. You need to pick a project but you may not necessarily know how to look for the right things. What we do as immigration attorneys, is we boil a project down to its immigration components and then your financial advisers and a financial team such as a broker dealer can can boil the projects down to their financial characteristics and then just essentially telling you what’s going on in the project from an immigration perspective from a financial perspective, so that you feel like you’re making the best decision possible under the circumstances that will help you achieve your immigration and financial goals. Companies like proxy for example are third party monitors and managers of EB-5 projects and what they provide the investor in the EB-5 ecosystem is an independent obligation so to speak to make sure that the funds that are being placed into these projects by the investors are being used exactly how they’re supposed to be used. That the money’s being tracked. That job creation is being tracked. That expenditures are being tracked and providing access via a portal for the investor to be able to get real time information as to how their money is being used in a project that they can actually have some peace of mind as to what’s going on. I think what’s happened frequently in the past with the EB-5 program and the EB-5 industry is that money is collected by investors and there’s very little contact or relationship moving forward between the project and the investor. Companies like Proxy Capital Partners try to create a better more seamless ongoing relationship with the project, the professionals involved and the investors can make sure that they understand what’s going on. They’re getting updates, they’re getting the appropriate documents that they need, whether it’s tax documents or disclosure documents, in real time, as they’re going through the lifecycle of their investment which could be easily five years or more. Those types of service providers are out there and they’re involved in projects they help give investors and other stakeholders in the EB-5 space, comfort that there is a proper third party administration going on in projects to make sure that the goals that everybody is trying to achieve are actually achieved. So that’s kind of what is going on right now. I think everybody in the industry that really involved in EB-5 support integrity measures with the program nationally. I know that in Washington with proposed legislation this is something that’s at the forefront of everyone’s minds. I think everybody supports that and the EB-5 ecosystem is responding to that. Finding more ways to be accountable with the program, finding ways to make it more organized, more efficient. Now companies like Proxy Capital Partners are providing those services. Immigration attorneys and firms such as BMK have always been conservative in making sure that we’re making the best decisions possible for our clients and you’re finding that regional centers and developers are also being much more involved and organized on how they assemble their teams of who’s involved with the projects. So I think that the EB-5 industry is improving and you know we make sure that our clients know what’s going on and that we’re here to help them along the way.

Floyd Mitchell: [00:32:08] So from my understanding and what you’ve you’ve said proxy Capital Partners has essentially put together some some extra protection tools for the EB-5 investor. I mean I subscribe to EB-5 and I get an update every so often, every couple months or so that says that a project failed or somebody didn’t do the right thing with the money, or you know the industry has has gotten a few black eyes in that regard and so Proxy Capital Partners is basically here to be on the investor side from what from what I’m hearing is that correct?

Sam Newbold: [00:32:54] I think protection tools is a good way to describe it, how you said it. What made a lot of these EB-5 fraud stories possible is that a lot of deals in the past were assembled such that there was a lot of conflicts of interest in the deals meaning that the regional center was the same person or group of people that was the developer and the issuer was the same person as a regional center and the developer and they were all the same people and it was like left hand giving money to right. And I think for these unscrupulous actors who are looking to take advantage of that, it just made it very, very easy to defraud investors or to misappropriate funds inappropriately and Proxy comes in to help eliminate that and also in conjunction with that the advent of more broker dealers coming into the space and encouraging the EB-5 actors such as regional centers, developers to eliminate some of these conflicts of interest have really helped improve the investment environment within the EB-5 program and what proxy’s main purpose is, is to come in and to be an independent third party service provider that has the authority to monitor and help manage the EB-5 capital flow process from intake to deployment and back. These are the types of companies that are able to provide an immediate value-add to an offering because the issuer of these securities able to say “look we have a third party that we don’t control, who has the authority to oversee how this money is going to be used. They’re going to update you on how this money is going to be used. We get in trouble if we don’t use it correctly and they’re able to build a catalog of statistics and data and documents that we can use to make ourselves more compliant with USCIS, to respond to potentially USCIS audits to a SEC or FINRA audits and that we can use to give you continuous updates as to the performance of your investment the use of your funds and how you’re moving along through the process of making an investment and trying to make a return.” So I think that’s what the space is moving towards. So companies like Proxy are specializing in those types of projects that we feel like are the most valuable in the market here at BMK.

Floyd Mitchell: [00:35:36] Per the EB-5 program and the main purpose of your client’s investment in this program is to create 10 jobs, 10 new jobs. And if those jobs aren’t being tracked properly, if you’re not showing proof that those jobs, (not you as the attorney but) the regional center is not showing that those jobs were created properly and are not being tracked properly, that could cause a problem that could prevent the petition from being approved. And so firms like proxy Capital Partners help essentially track how the funds are being dispersed as you mentioned and they make sure that the developer or the regional center that that money is being used properly essentially to create those jobs. Can you talk a little bit about how all of these professionals working together can help track the jobs and help make sure that these really critical aspects of the petition are being handled properly and when all is done right should result in the investor getting a green card when done wrong they will almost always result in a denial?

Sam Newbold: [00:36:57] Absolutely. There is an ongoing requirement that the regional center file annual reports to update immigration as to how the regional center is promoting economic activity to the benefit of the U.S. and they hope to make those filings every year on those forms. They have to report how many jobs have been created in the fiscal year. And on top of that they have to also report to potential USCIS audits so to speak that might be coming up down the road, and site visits and be able to report that information to USCIS firsthand and then as well the investor has to demonstrate that their money is being put to work to employ U.S. workers and when they file their 829 petitions they have to show that their investment has resulted in the creation of at least ten full time jobs for qualified U.S. workers. In order for them to keep their green card. So what happens if the investor can’t prove that? Or the project is so unorganized that they can’t really demonstrate that those jobs have been created or documented correctly or presented correctly etc. Well that investor has their 920 denied and they’re going to receive a notice to appear in immigration court to face deportation. So it’s a huge deal all because of unorganization or mismanagement of information and you have an investor there who might be deported because of that so what broker dealers, third party fund administrators like Proxy Capital Parnets and a good team of professional immigration attorneys financial advisers so on and so forth they help streamline and organize the process, not only for the investor but for regional centers and issuers and developers to make sure that things are running smoothly. It’s not a conflict, everybody wants the same goal. You know, the investor wants the project to move forward and do what it’s supposed to do so that they can get their green card and make a return on their investment and continue to live in the United States. You know, the developer wants to build the projects so that they can profit off of their project and they want to be able to repay their debts and the EB-5 loans are part of those debts. The Regional Center wants to make sure that you know that flow is being done correctly and that they’re able to you know oversee and administer the specific project for investors and everybody is moving towards the same goal, they all want success. But there’s better ways to do it than other ways and having a team of people together that can monitor and track how things are going and be able to generate reports in real time to whoever needs them adds more accountability to everybody involved, adds more peace of mind that everything is moving correctly and that it makes it more likely that the project is going to be successful in the end.

Floyd Mitchell: [00:40:04] And for anyone in our audience that may be looking to apply for an EB-5 visa, can they call you? Are you accepting new clients? Can you help them in this process?

Sam Newbold: [00:40:18] Yeah absolutely. We give free consultations. 15 or 20 minutes by phone by Skype. In person. Let us know. We’re here to answer people’s questions that they may have not only about EB-5 but just immigration in general at BMK, We’re the oldest immigration firm in the country. We do every kind of immigration you can imagine and we’ve always done that since the beginning of our firm. So we had all types of EB-5 cases. Allwhole host of cases all types of immigration cases in general. We’re really good at the interplay between all the immigration categories and what’s going on, so we can give you comprehensive advice with respect to your immigration situation and you know we’re happy to answer questions at any time.

Floyd Mitchell: [00:41:04] I’d like to thank you again Sam, for all of this wonderful information for our audience, for anyone who may be here in the United States on an H1-B and may be considering the EB-5 program, you’ve just given us some really great information and so thank you again. We look forward to having you on the show again real soon.

Sam Newbold: [00:41:26] Absolutely. I really appreciate being on the podcast and thank you.

Floyd Mitchell: Hello EB-55 investors this is Floyd Mitchell with EB5EB5.com. Welcome to Episode 4 of the EB-5 investor portal podcast recording on Thursday July 27th 2017. Today’s episode is titled The EB-5 Visa in Silicon Valley with special guest and immigration attorney Sophie Alcorn. Sophie’s firm Alcorn Immigration Law helps corporations, start-ups and small businesses in Silicon Valley sponsor the biggest talent in technical fields for U.S. Immigration. Alcorn Immigration Law has a 95% success rate in defending immigration and innovation with visas, green cards and citizenship. We are really excited to have Sophie on the show today and she’ll be sharing more information about her firm and the EB-5 program. Sophie Welcome to the show.

Sophie Alcorn: Thank you Floyd, I really appreciate it.

Floyd Mitchell: We appreciate your time today and for sharing more information about your firm’s approach to immigration especially the EB-5 program. What is the most common question you get from your immigration clients.

Sophie Alcorn: Yeah the most common question is..”How can I stay in the United States or how can I get the United States”. Even though there are so many options and so many laws that allow for legal immigration to the United States it’s so confusing to try to decipher them and navigate them. Immigration law is one, if not the most, complicated types of law in the United States. Many judges have complained that it’s even more complicated than our crazy tax law system. And if you couple that with the fact that most people who need to navigate U.S. immigration law are from countries where English is not the first language that they learn and if they speak English they speak it as a second language. It’s just so unfair and so difficult for them to try to decipher what immigration laws mean. As a non-native English speaker especially so what I see my job as and our team what we do at Alcorn Immigration is really, we come in to help understand…What is your specific situation? Where are you at? Where do you want to be in your life? How do you want to get there? Who do you need to help like your family, your company, your employees, and what? And then we we brainstorm. We use all of the tools of immigration law, visas, parole, green cards, citizenship and so we come up with a lot of creative legal options to help figure it out and then we turn it over to our clients because what it’s really about is our clients figuring out what are their priorities. So you know given where they are and where they want to go would they rather pick option A which has these pros and cons, option B which has the pros and cons, option C, and to really give a lot of thought to, “How do I want my life to work?” How long can I wait for this visa? Do I want to try to get it inside the U.S. or outside of the United States? How much do I care about when I’ll be able to work in the United States? Do I just want to be here physically? Do my children need to go to school? Which type of school do they want to go to? Do I need to travel a lot back and forth for business meetings or board meetings? Or do I need to just plant myself in the United States and not travel because my kids are really young? So you know everybody’s situation is different but everybody has questions. And so people are just delighted to have the opportunity to make an intelligent decision about about their future and to feel like they have some control in choosing one of these strategies that we offer.

Floyd Mitchell:  I understand that your firm’s primary focus in terms of clientele is the Silicon Valley area, the individuals who have immigration needs and the companies that also have immigration needs. Can you tell us what’s unique about serving these clients?

Sophie Alcorn: Yeah, we get to help people who are coming to Silicon Valley coming to the United States who are focused on innovating and changing the world. They’re not just starting software companies but also biotech, neuroscience, artificial intelligence, 3-D printing, robotics and the fact that we get to be a part of this process and helping so many brilliant and skilled people come here is really what gets me up every morning and gets me excited to come to the office. There are amazing people and I love helping and hearing everybody’s stories and their plans for what they want to do in the United States. You know and a lot of our clients just want to come to make a better life for themselves and their families and that’s pretty inspiring too.

Floyd Mitchell: The type of work you do is deeply human. Isn’t it? Your clients are really relying on you and trusting you to guide them and help them navigate a really complex system.

Sophie Alcorn: It is… Absolutely it’s so much about trust and relationship building and clients come to me scared. We get hundreds of calls every month from people who are scared. They’re confused. They’re lost. They know what they want but they’re not quite sure how to get it. Or maybe they’re not even sure what they want because they’ve they’ve even given up hope because it seems too complicated. And yeah I mean the easy scenario in which it makes sense then it’s completely obvious to say that immigration law is deeply human where it could be an asylum case for example. But even when I am representing the director of a huge museum or somebody running a publicly traded huge Chinese company it is still deeply human deeply personal work because it’s their lives it’s their futures and everybody cares about what their life is going to look like. And especially when kids come into the picture what opportunities their children will have growing up in a certain way of life or culture and having opportunities resources freedom good education systems opportunity to go to college in the United States. Those are things that are really really important to our clients.

Floyd Mitchell: That is a really unique perspective. Would you say that the children of your clients are a major motivator in the EB-5 program?

Sophie Alcorn: Oh…. It’s the primary driving factor for many people who are getting EB-5 green cards. Sometimes even families who are living abroad they have teenage children or children in college in the United States as foreign students on F-1 visas. Often the parents are still busy working and they need to stay in their home countries such as China but they will even give their child their 20 year old the five hundred thousand dollars for am EB-5 regional center investment so that their child will have the ability to live in the United States after college without needing to go through the crazy random H-1B lottery for professional visas. There’s no guarantee that your your adult child will be able to stay and actually pursue a professional path in the United States. So yeah, what people go through for their children, inspires me every day and I have two little kids. I’m just awed by the love in families of my clients.

Floyd Mitchell: It’s very selfless. I’ve heard stories of entire families pooling funds so that one child can have an opportunity to get an education in America and then pursue a life and career in America. After graduating from school. Can you speak about what that may look like for the international students who are also applying for the EB-5 program?

Sophie Alcorn: Absolutely… It’s a huge advantage. For example there are many international students from all around the world who live in the San Francisco Bay area which is where my practice is located. Young Indian software engineers look to many countries to have the opportunity to have good jobs after college when they’re adults. And there is migration out of India for example to Australia and Canada and the United States. So if somebody is trying to go as a young professional to Australia or Canada those immigration systems are point base, they’re merits based, you calculate how many, you know what your education is, what languages you speak, what professional certifications you speak, and if you get enough points then you have a chance to go live in that country. Well, that’s great for a lot of people, they like that. But a lot of people really want to come to the United States whether it’s for the culture, the work environment, the opportunity to start a business and have that business thrive from the resources in Silicon Valley. There are a lot of laws here that are favorable to business. So for many many reasons people really want to come to the United States. But our immigration system is set up differently so it’s kind of crazy if you think about it in a way. So for somebody to come to a United States University to get a bachelor’s degree, they typically would get an F1 student visa. And in order to do that they have to prove to the U.S. consular official at the embassy or the consulate in their home country where they’re going for the interview. They have complete ties to their home country. They’re just coming to be a student and after they graduate they’re going to go back home to their home country. They have money there, they have property, they have family, all of their ties are in their home country and they have no intention of staying in the United States after they graduate. And that’s just completely crazy because if you’re going to spend $100,000 so that your child can go to college in California maybe it’s $200,000 now, I don’t even know. You want your child, you want your adult son or daughter to be able to actually live in the United States and practice the profession that they’ve studied so hard for and that you’ve put so many resources into. So what typically happens for F1 students, is when they graduate if they get a bachelor’s degree or a master’s or even a Ph.D. they get one year of optional practical training. So they get a one year work permit and they’re allowed to stay here and they’re allowed to get a job and make money and they’re allowed to just work for one year and then they have to go home. If they’re lucky and they made the choice to study in a STEM field which is science, technology, education or math, they can get a conditional work permit for two years. So that means on the outside you’ve got three years to work after you get your degree and then what’s your next move? Well, you have basically one of three options in that situation. Either you find an employer who you like, and isn’t mistreating you, who’s happy to sponsor you for a green card and invest you know 10 or 20 thousand dollars if not more, into your immigration process. They sponsor you for an H-1B Visa. You’re lucky enough to get selected in the lottery that only happens once a year and only has a one in three chance of you getting selected and then the employer is still happy with you, they haven’t gone bankrupt, they don’t have layoffs. And then they sponsor you for the green card process. You know this could easily take 15 years if you’re from India or China. So that’s one option that has a lot of uncertainty. Another option is to fall in love and marry U.S. citizen and intend to spend a life together and get a green card that way. But I’m guessing most parents of 22 year olds who have just paid for their son or daughter to go to a U.S. university do not want them to follow that path. And so the third option where you actually have some control in the matter is the EB-5 route because if you can give your son or daughter the investment capital as a guest and they can apply as an investor themselves into a regional center to get a United States Green Card. And so we’ve helped people do that and the peace of mind that comes from knowing that you’re in control of the process is huge because the stress of the other routes can really wear on people psychologically.

Floyd Mitchell: There may be people in our audience listening today that are unfamiliar with EB-5. Can you give us a general overview of the program for example… What does EB-5 stand for and how does a program work in layman’s terms?

Sophie Alcorn: So EB-5 stands for employment based fifth preference. And there are three types of green cards in the United States. There’s the green card lottery which is only for certain countries and which is very random. There are family based immigrant visas or green cards which depends on your husband, mom, dad, sister, somebody with a certain relationship to you sponsoring you for a green card or there are employment based green cards which is what the EB comes from and employment based green cards could be for brilliant scientists with extraordinary ability that could be for university researchers. They could be for multinational executives transferring from one branch of the company to another that could be for professionals with advanced degrees that could be for skilled workers. So those are all the preferences. Number one through four. And then EB-5, the fifth preference is the investor green card option and this originally started back in the 90s with a route for which you invest one million dollars in a new U.S. company that creates 10 jobs for Americans. And if you do this then you’re able to get a green card and live for the rest of your life in the United States as a permanent resident. And once you’re a permanent resident you have a green card and you could potentially apply for citizenship one day. And then a little bit later on there was a new variation that came out which is with regional centers and so it has some benefits, it’s a lower financial threshold it’s only $500,000 and you also don’t have to actively run the company, you can be a passive investor and the 10 jobs don’t need to be created directly by the company. They can be created indirectly nearby in the geographic area in which you’re locating your project. So that opens up the possibility of having construction land development projects that use a lot of construction workers and contractors instead of directly employed employees. And those projects can qualify for this EB-5 Regional Center. So yes! With the EB-5 you can invest $500,000 into a regional center. It creates indirectly 10 jobs in the local economy. And the person who invests the money is on a path to getting a green card. There are some wait times but essentially you apply it could take anywhere from one and two and a half or three years right now to get your first green card. You have it and then it’s valid for two years. As in you’re a conditional permanent resident and then there’s the filing window at the end of the two years where you do another immigration application and you’re applying to remove the conditions on your permanent residence. And you’re saying “hey the project did everything it said it would, the jobs were created, the money was invested, there was no fraud, everything is legitimate”. And if the government says “Yes” then they say “OK so you’re no longer a conditional permanent resident, you did everything you said you would, you follow the laws, now you are a full fledged permanent resident for the rest of your life and you can live and work anywhere in America and you can become a citizen one day.

Floyd Mitchell: As you know, Sophie there’s always new people discovering EB-5. So thank you for explaining that.

Sophie Alcorn: Well and I think one of the values that my practice adds to somebody who is considering pursuing this is we do not limit ourselves to be five. It’s absolutely a substantial part of my practice and our and what our team does. But we’re familiar with the whole range of immigration options of every type of case really. And so that helps us advise our clients about is this really the best option for you. You know oh did you know that you actually have this other path that could be faster. Sometimes people want to know that. Often often that’s not the case. And EB-5 really is a great and the best route. But it’s important to have the whole universe of options in U.S. immigration law at our fingertips so we can provide the best advice and understand the whole immigration context for our client earlier.

Floyd Mitchell:  Earlier, I recall you mentioning the H-1B program and my understanding of that program is that it offers a way for America to invite and keep some highly skilled and talented individuals here from other countries in the United States. With the current administration deciding to delay and possibly rescind the international entrepreneurs rule. How is this affecting certain people? And do you have any advice for those affected? I mean, this is a big surprise to a lot of individuals who are here in the States on these visas. What can they do?

Sophie Alcorn: Thanks! That’s a great question. So, it raises very many things which are all important to touch on I think. And one of them is what’s so first let’s break it down. So what’s going to happen with H-1B. So the H-1B visa is for professional workers who have a bachelor’s degree or the equivalent amount of work experience in a certain field and they’re coming to the United States they’re being sponsored by an employer to do that job. And it’s required that the employer sponsor them and pay for the entire immigration process. And so it’s very difficult for qualified candidates to find jobs and employers who are willing to sponsor them sometimes because that’s a lot to go through. And on the other hand there are this has come into the news a lot because there are a few giants particularly Indian consulting companies which sponsor very many Indian workers each year. Tens of thousands for H-1B visas and then outsource them to U.S. corporations in the United States for project work. So Congress limited the number of H1-Bs each year to about 80,000 I believe. And last year for example there were over 230,000 people who applied for H1-Bs which is where that lottery comes in and why there’s a one in three chance of getting selected and the EB-5 has come under fire a lot because there have been reports of some companies firing U.S. workers and replacing them with H-1B workers. There’s been a lot of rhetoric by the current political administration against this type of visa. And so you often hear about is this going to be reformed? Is this going to be changed? And at the beginning of the most recent legislative session in January yes there were a lot of bills that were raised to reform it and some of them talked about increasing the minimum salary for H1-Bs to make it more prohibitive for companies to sponsor them. Some of those I think mentioned reducing the total number of H1-Bs. Other bills have proposed requiring the employer to go through a Labor certification analysis where they would have to try to recruit U.S. workers prior to being eligible to sponsor somebody for an H-1B. They have to prove that there are no qualified, willing and able U.S. workers to do that job. None of those bills have actually happened yet and the only change to this process has been the ending of the premium processing service. So it has made it more difficult for people to get quick responses on their H1-Bs. So instead of two weeks if you pay extra. Now everybody has to be in the same line which takes about seven months. This has made it a lot more difficult for professionals to change jobs and switch to new employers because there’s a lot more risk involved now. But then a few weeks ago there was some other leaked information that Politico reported about what immigration reform that the presidential administration is actually participating in what that reform would look like. And so… Four big likely changes that might happen if and when actual immigration reform happens with Congress will be that the overall level of immigration will be decreased. So right now there’s about 1 million green cards issued each year and in the future if this proposal goes through there would only be about 500,000 green cards being issued. They are also going to dramatically reduce family based immigration. They might cancel the green card lottery entirely. There might be additional options for merit based immigration based on professional achievements. This could definitely increase very long already very long wait times for people from China and India. But right now this hasn’t happened. The EB-5 program is still intact at least for the next couple of months until the next sunset every five reform will probably be addressed separately. Then more general immigration reform all of this turmoil and anti-immigrant rhetoric that we hear coming out of our government is leading to a lot of fear for immigrants and our clients about how is this going to affect me. What is this going to mean. How much are my chances for staying here. How much will they be reduced. And another thing you had mentioned Floyd was the cancellation of the immigrant entrepreneur rule. That is significant too. It was going to be a new immigration pathway that the Obama administration had created that would allow foreign entrepreneurs who have started companies and so usually in Silicon Valley they get angel investment or venture capital investment if their company would have raised over $250,000 and they own at least 10 percent and they want to come here to establish the company and run it and create jobs for Americans. They would have had an additional path to immigrating and staying in the United States. The Trump administration pulled that off the table. They’re looking at it again. So all of this is to say that an already complicated situation is becoming more complicated and so people are using the EB-5 five right now in a wide variety of situations to get them an option to émigré that they fear might be quickly disappearing. And so I’ll mention two recent clients who are in unique situations and I’ll do it anonymously because they need to protect their privacy. But just the general situation. So you know the typical profile over the last several years has been a Chinese family. Who wants to be able to get green cards and move here with a large focus on education for the children. But the two recent situations that we’re helping people with. One of them is an Indian professional on an H-1B who works at a U.S. company and they’ve sponsored him for a green card. But it’s probably going to take another 10 or 15 years if nothing changes. But as we just talked about things are going to change and it’s going to get more difficult. And he just really wants to be able to work independently from his current employer and have a startup and not need to worry about who’s who is going to get a paycheck from or that if his if there’s something goes wrong with his job that that could mean that he has to uproot his entire family and go back to India. So his family is helping him pool together money to meet the $500,000 threshold from their properties and with loans and various sources. He also has savings from his job in the United States. You can get a home equity loan line of credit. So he’s being very resourceful to make this happen because he wants to take control of his future into his own hands so that he and his wife can start a family and know that they’ll just be able to stay in the United States. And then another client is a startup that has a huge amount of success with raising venture capital recently and their valuation skyrocketed. And they have somebody in another country who’s been deeply involved in creating the product and they’re going to use some of that money that the company is now worth. So that the company can help this person get an EB-5 green card because they don’t even want to deal with the H1-B lottery and they know they’re serious. They just want them to be able to live here. It might take a while but let’s just make this happen in one of the least risky ways. If you find a good regional center, this is one of the least risky ways to do things (with EB-5) So there’s a lot of uncertainty. The law will probably change and people who hadn’t previously considered the EB-5 program as an option are now seeing it as a good option.

Floyd Mitchell: Are you seeing a trend with these Silicon Valley investors utilizing the EB-5 to retain their executives to keep these entrepreneurs here in the States.

Sophie Alcorn: Yeah I think it’s absolutely possible and that’s what’s happening with my client company. They really value this high level. C-level engineer’s contributions to the company and they just want this person to be able to stay here. And yeah it’s completely possible. Each company would have to make that determination. But if it’s a small company that’s raised a lot of capital. I’ve talked to many investors who would be supportive of using some of that for the entrepreneur’s immigration process because if it’s a young company and the person even though they’re brilliant and hardworking and have a great product even if they’re not been internationally acclaimed for many years so that they can get a green card based on extraordinary ability. It could be very difficult for the company in which this person has a bunch of equity to sponsor them for a normal employment based green card. So EB-5, absolutely. If a company has the money and really cares about the person, it could make sense as a way for that person to getting a green card, for sure.

Floyd Mitchell: I just look at this from the investor’s side Sophie and they’ve already made a substantial investment. You know a million dollars in some cases maybe several million dollars in these startups and to retain their CEO or to keep these top level individuals here in the United States so that they can focus and grow the company. It makes sense for them, the investors to maybe consider EB-5.

Sophie Alcorn: And I talked to a lot of investors, venture capitalists, angel investors and when they’re going through the due diligence process scoping out these companies more and more they’re asking, “What is the Founder’s immigration status”? “Are they here as a tourist for six months just trying to raise money and then at the end are they going to have to leave or are they going to overstay and get deported”? That’s a huge risk if somebody is investing potentially millions of dollars into a new venture, so yeah, if you’re committed to making this company work, then it could be an easy answer to add an EB-5 to the mix.

Floyd Mitchell: We’ve covered a lot so far in terms of EB-5 and immigration. What is the biggest misconception in EB-5 right now?

Sophie Alcorn: I think the biggest misconception is that it’s all fraud and abuses Americans. There’s been a lot of media coverage about some very shady bad practices that are definitely illegal. But you know just because there’s one bad apple doesn’t doesn’t mean that the whole bunch is spoiled. And I get the pleasure of meeting really good, decent, law abiding, driven, hardworking people who are in the EB-5 field who really just see this as a useful legal tool to help people. And so I think that’s one of the biggest misconceptions which mostly comes from people who aren’t really familiar with it or maybe have a fear of immigration in general. But this this type of green card that EB-5 really provides a lot to be gained for everybody because at its core the whole point is to create jobs for Americans and put more money into the United States economy.

Floyd Mitchell: In the EB-5 program, there’s the regional center route where you invest and then there’s the direct investment route where you create a company that creates 10 jobs. What percentage or mix would you say your firm handles between the two types?

Sophie Alcorn: We’re doing a mixture of both with a regional center, it’s a little bit more replicable. The main issue that we need to focus on as the immigration attorney for the investor is to help prove the source, and the path of the funds and how all of the money was legally earned and can be traced and got to the United States in a legal manner. For direct investment on the other hand, there’s a lot more questions it’s a lot more fluid and flexible. Obviously the investment amount is higher but it’s a more creative effort and for somebody who is an entrepreneur who has some experience doing with this we find that they’re more comfortable investing the larger amount of money or have or locating their direct investment company in a targeted employment area to still do it at the $500,000 level. But the difference is, they have to directly manage and control the 10 employees and they need to be actively involved in the business. So it depends on the investor. But with the direct investment we do have more creativity an opportunity to structure the business in a way that makes sense for the investor and their business plan and what their goals are. So it’s just two different styles.

Floyd Mitchell: And under the direct investment option you’re kind of doubling your risk because you not only have the potential of getting your green card on the line but you also have to run and manage a business. So you have to really know what you’re doing in business to be successful at that. With regional center route you just invest and kind of wait. Is that correct?

Sophie Alcorn: Oh yeah. You don’t do very much at all if it’s in a regional center. I only recommend the direct investment if you’re a seasoned entrepreneur who’s already succeeded at establishing several companies and this is not your entire life savings and you already know what you’re doing with running a business.

Floyd Mitchell: What is it like to be an immigration client at Alcorn Immigration Law? Can you give us a bit of an idea of how you work and what someone could expect if they were to hire your firm?

Sophie Alcorn: Sure. So at Alcorn Immigration we put our clients front and center. We are our clients advocates and we work really hard to make sure that we dot every I and cross every T. And for us it’s all about our clients, it’s all about understanding what are your goals? What are your priorities? What are your options? How are we going to weigh all the pros and cons? And how can we use all of the tools that are available to us in U.S. Immigration Law to serve you. To help you find the best path for you and your family and your kids for their education and your career. So how are we going to structure this? In addition to the EB-5, do we need a short term temporary non-immigrant visa so that you can start living here sooner? How will that interact with the EB-5? We’re very hands on and we help our clients with every aspect of the process.

Floyd Mitchell: I’m sure you keep up with the latest in the immigration and EB-5 industries specifically. My understanding is that September 30th 2017 there’s going to be some new things that come about in the EB-5 world. Do you have any insights about what we can expect or any news or anything that you could share about EB-5 that you may have learned recently?

Sophie Alcorn: Well I have some some new updates that I think are interesting to share that we got last week from a USCIS stakeholder meeting. And so there are four or four important things from this. July of 2017 that I thought could be useful to share with our audience. So one of them is about the EB-5 backlog and the USCIS adjudicators are are trying to work to get through the backlogs that have been caused by the continual sunsetting of the EB-5 program every five months. But their goal for 2018 is to decrease the processing times for I526’s which is the first petition that you file in that process. And so hopefully that means that processing times will decrease. It’s taking USCIS about 21 months right now and hopefully that will go down next year. Another update is that the EB-5 backlog for China is going to increase and that U.S. Citizenship and Immigration Services is predicting the wait for Chinese individuals who have approved I526’s is to be eligible to get a green card based on the visa bulletin will go up all the way to a four year wait. Right now it’s about a 3 year wait but next year it might go up to a four year wait. And then additionally they’re restructuring some things internally at USCIS and they have a new pilot program where they have a team of economists and adjudicators who are all working together on the I829’s for the removal of conditions. And they’re doing this to experiment with how they can reduce the processing times. On the other end of the two years when you’re filing to remove the conditions after the investment has been made and then they also pointed out that there’s a part of the USCIS website online which is about how you can how you can prepare your I526 filing to make it easier for them to process and tips that you can do to help streamline the process and to help make it faster for you. So the update from USCIS is they’re trying to do a lot of things to speed it up because they know they’ve got problems but there are so many people applying that processing times are going up especially for China and so once again it’s just if this is something you’re interested in the sooner you start the less time you’ll have to wait. So I think that’s an important tip for anybody who’s seriously considering the EB-5 immigration program.

Floyd Mitchell: A lot of people in the industry are saying that the $500,000 amount is 20 years old. It’s the same amount that Congress first used in 1990 when they made the program. Some say it’s going to go up?

Sophie Alcorn: Yeah I’ve been hearing a lot about a lot of chatter about the amount increasing. I don’t know what the actual change is going to be but the numbers I keep hearing are that the regional center will go up from five hundred thousand eight hundred thousand at least and then the direct investment will increase from 1 million to maybe 1.4 million. But I’ve also heard higher numbers being tossed around. So this is really important for investors too until September 30th 2017. The amount is only going to be five hundred thousand dollars for regional center investments. So if it would be outside of your budget to get a green card by investing $800,000 – you really have two months from the time of this podcast to do everything to apply.

Floyd Mitchell: And for the investors listening today if they want to take advantage of that $500,000 amount before it goes up can they call you and do you have the bandwidth to help them with their EB-5 5 case?

Sophie Alcorn: Absolutely. The sooner you decide that this is something that you want to do, and let us know, the better. We still have capacity to take on more EB-5 clients as of July 2017. But as we get closer and closer to that September 30th deadline it’s possible that we won’t. Because there’s so much demand. So if it’s something that you’re interested in… Yes, we can absolutely hope you we’re at Alcorn.Law and you can contact us through our website. Please try to let us know as soon as you can to increase the chances that we’ll have the capacity to help you.

Floyd Mitchell: Well, it’s very apparent Sophie that you genuinely care about your clients and really enjoy helping people. And I just want to thank you so much for all of the information you’ve shared with me and our audience today. It’s just been really great. Can you tell us how you got into this line of work?

Sophie Alcorn: Well thank you Floyd. I really appreciate it. We care a lot about our clients the way I got into immigration law is because my dad was an immigration lawyer. He practiced immigration law for over 35 years during his lifetime. My mom is an immigrant from Germany. And so I grew up surrounded by immigrants and bridging two cultures and being exposed to two languages. And so I understand what it’s like to pick up your life and start over in a new country. And my dad inspired me because I saw him helping immigrants and fighting for immigrants all the time. And so when I started my practice I really wanted to carry on his legacy of advocacy and compassion.

Floyd Mitchell: That’s really, really cool to hear more about your background and that your father did this. You can hear your passion for helping people and this has just been a really fun podcast and we hope to have you on again soon. Thank you again.

Sophie Alcorn: Thank you so much. This was fun and I like what you guys are doing and I’ve been impressed with the level of professionalism with the other podcasts that you’ve done and I’m just happy to be a part of it, so thank you.

Disclaimer: This podcast and video constitutes attorney advertising the information in this episode is intended for general informational purposes only and is not a substitute for advice about your specific case. Each immigration case is unique and should be discussed in detail with an immigration attorney. Any email contact is preliminary only and does not form an attorney client relationship. Please do not include any information in an e-mail that you or someone else considers to be secret or confidential. Unsolicited emails containing secret or confidential information cannot be protected from disclosure. Attorney services are not available in any jurisdiction where such practice would violate the regulations of legal practice in that jurisdiction. Attorney makes no guarantee or warranty regarding the outcome of a legal matter. As a result of representation by the member attorney provides services in immigration and naturalization law and is licensed to practice by the State Bar of California.

 

Hello EB-5 investors. This is Floyd Mitchell with eb5eb5.com. Welcome to episode three of the EB-5 investor portal podcast, recording on Friday July 14th 2017. Today’s episode is titled The EB-5 Visa with a focus on India. Our guest today is immigration attorney, Swee Shankar of Shankar Ninan & Co LLP.

Swee brings a wealth of experience in Immigration and Nationality laws and is an active member of the American Immigration Lawyers Association, New York City Bar Association and the American Bar Association. Swee assists corporations seeking to hire foreign professionals or skilled workers and also assists corporate clients with transferring personnel to company branches within the United States. She also advises clients in U.S. EB-5 investor visa applications.

Are you an investor from India and curious about how you might approach the EB-5 process? Are you curious to learn more about applying for EB-5 as an individual from India? If so, today’s podcast is just for you. If you are listening today and happen to live in a country or region outside of India, you may still learn a lot from this episode and we encourage you to listen as well.

Swee, welcome to the show.

Swee Shankar: Thank you. Thank you for having me here.

Floyd Mitchell: Please tell us a little bit about your practice. Do you focus on clients coming to America primarily from India via the EB-5 program?

Swee Shankar: Yeah, absolutely. So I would say about 80% of my clients are Indian based. I really think it’s because I’m Indian, honestly, so I think people feel comfortable to seek advice from someone that they can relate to, you know? But we do have clients from all over the country, all different backgrounds, ethnicities, all that kind of stuff. My firm has been in business for over 25 years. We used to be called Shimanayd Syad PC but we have recently bought over that firm and now, as you have mentioned, we are known as Shankar Ninan & Co., LLP. We deal with all corporate business and family immigration ranging from all types of visas, students, work visas, green cards, naturalization, investment routes, etc. But yes, we do, primarily, deal with a large Indian based clientele.

Floyd Mitchell: What is the most common question you get from your EB-5 client in India?

Swee Shankar: That’s a good question. It’s hard to say that there honestly is just one. Most people want to know, of course, when they’re going to get their money back. But when we really start getting into the process, I think my client’s biggest concern is how to get all of their money here. And the differences between investing in their own businesses versus a regional center. And, which one is more beneficial to their interests.

Floyd Mitchell: What type of services does your firm offer in terms of the planning? Do you help them develop an immigration plan? Do you assist with source of funds?

Swee Shankar: When it comes to their immigration plan, we really take care of them from the day that they come into my office to the day that they get their green card. So, I will discuss with them their immigration status. What status they’re on currently. If they’re not in the country, the best way to get them here. The best routes for them to take. Of course, sourcing of funds is a huge issue. Regardless of who you are you need to be able to source your funds. And, also importantly, on to that topic, really just how it makes sense for them to come here. Bring their money here. Who can come in under, with them. Their spouses, their children. And the best route for them to take. We’re here when they need help with anything from business plans. We can help assist or talk with other vendors that we have, to help them get connected. And then, we also help once we file the I-526. If there’s any queries that come from USCIS, which is called a Request for Evidence. We’re there to assist with the entire Request for Evidence process. Provide all the documentation that they ask for. And respond to that. And usually after the I-526, there’s other steps. We help them with the next step, which is adjusting their status to actually get their green card. And we get them their adjustment of status. They get their temporary green card. And much longer down the road, we help them remove the conditions of their green card to get a permanent green card.

Floyd Mitchell: Are there particular issues that tend to commonly arise, or challenges that come up for these investors. I know you just touched on source of funds being a challenge. Can you speak to those challenges as they specifically relate to India? And the solutions that you recommend or common strategies that you deploy to help, in situations like that?

Swee Shankar: Yeah. Absolutely. In India, you can only transfer 250K per person per year. Okay. So usually that’s dealt with pretty easily, because most people will have a spouse, or a child, a family member. Someone that can transfer half of the money. And then the investor will transfer the other half of the money. Okay, so that’s not too much of an issue here at this time where the investment amount is 500K. Some other issues that we have is just, how do you source the funds? What can you do to really go all the way back and trace where that money came from. So we help with each of our clients to really go back and be able to show where all the money is coming from. So, that’s a big thing, too.
Floyd Mitchell: Can you tell us a little bit more about source of funds. Maybe give us some various scenarios that were challenging for you. Or describe to us what exactly it is that USCIS looks for in getting source of funds approved for these investor clients from India.

Swee Shankar: Yeah. Absolutely. So we’ve actually seen, recently, that USCIS is really questioning source of funds. More so than they ever have. So USCIS will go as far back as possible to source funds. Therefore, it’s very important to have a trail of where your money is coming from. Anything that is done, must be on paper. So for example, if the money is received by sale of property, let’s say. USCIS will ask, not only the proof that the property is owned by the investor, and the purchase sale agreement evidencing the sale of the property. But also, where the investor received the money, in the first place, to buy the property. So they’re going all the way back as far as they possibly can. So this always leads to more questions. Another way you can get sourcing your funds is, let’s say, the investor has a successful business wherein he received enough funds to buy the property. If he is employed, did he just save up his paychecks to buy the property? Or was the property gifted to the investor? Either way, regardless of which way he got the money to purchase the property, the trail of the money is what’s important. And we have to show that, we’ve seen in recent RFEs, that they’re asking us to go as far back as humanly possible to show where the money came from to buy the property. And then that the property was rightfully that of the owner. The investor. And then that the property which was owned by the investor, has now been sold to a third party. And the money given from the third party to the investor, and that money going into the investor savings account. Which is then being transferred to the United States.

Floyd Mitchell: So, for the investors that have the money to make this investment in the EB-5 program. One of your main roles as their immigration attorney is to help them prove source of funds, help them prove that that investment was obtained legally. Is that correct?

Swee Shankar: Absolutely. That’s the most important thing that we do when it comes to EB-5.

Floyd Mitchell: Have you ever had clients that just simply could not prove their source of funds. For whatever reason they couldn’t give you the documentation that you needed to be able to assist them in that process.

Swee Shankar: Honestly, it’s really hard because of how strict USCIS is right now. If you can not source funds, it’s not a good idea to even go the EB-5 route. We’ve, at least with the money that you’re able to show, if you can’t show where it came from, it’s hard to even do this as an option.

Floyd Mitchell: Have you had circumstances where clients, before retaining immigration counsel, may have started creating activity with their finances, moving money around. Do you have advice for the investor who may be planning for EB-5 and any suggestions that they just don’t do anything with their money before speaking with you.

Swee Shankar: Yeah. Absolutely. I mean, I definitely think that you should, anyone thinking about doing this, should come in and speak to an attorney before they do anything. Because, I think people read a lot on forums and different websites. And think that A, B and C is possible. But you don’t want to get yourself in a predicament where now you can’t move your money back to where you want it, and you’re violating whatever regulations in whatever country you’re from, without speaking to someone first. So I would definitely advise that anyone seeking to invest in EB-5, come and speak to an attorney, or come and speak to me before they do anything and move forward.

Floyd Mitchell: Are there any capital restrictions in moving funds from India to the U.S.? I know you mentioned a husband and wife team can each move 250,000 per year, out of india and into the U.S. Are there other details or requirements or restrictions around that. If so can you share that with us?

Swee Shankar: There really aren’t. India is pretty straight forward with it. It’s just 250K per person per year. And you’re able to do that from your bank account in India or wherever it may be, to your bank account in the U.S.

Floyd Mitchell: And how would a husband and wife team navigate that? Say the husband has the necessary funds and profits in his company. Would he write a distribution check to himself and also write one to his wife? Or vice versa. Would she write one to herself and one to her husband, if it was her business?

Swee Shankar: Yeah. That’s exactly how you would do it. But you have to make sure the correct documentation is in place. So for example, if you’re a partner of a company, you have to have board resolution from your company stating that this amount of money is okay to be given to the investor for this purpose. And that’s a simple document, you know. That’s not hard to do, at all. And then you can also say the same thing as for the wife. And then once both of those people have the money, they can then individually transfer it to the United States.

Floyd Mitchell: You mentioned this earlier, the current minimum is $500,000. Under the Targeted Employment Regional Center program the direct investment is a million, as I understand. But right now it’s five hundred thousand. There’s a lot of people talking in the industry, and a lot of chatter on the internet, about that going up to maybe eight hundred thousand, or even as much as 1.3 million. How would this impact that 250K per person currency restriction that’s currently in India?

Swee Shankar: Well, for Indians, they’re going to have to find another family member who is willing to transfer the money to reach the new capital contribution. So again, if you have the investor transferring 250. Now the spouse is transferring 250. Maybe you have an aunt or an uncle, transferring the other 250. You’re going to have multiple people transferring the money. That’s the only really way around it.
Floyd Mitchell: If the original investor has already prove source of funds, it’s perfectly fine for them to share some of that money, you know, basically send that money out to other friends and family members and say “wire this into my U.S. bank account?

Swee Shankar: I haven’t seen immigration … I haven’t seen UCIS, yet, try to source funds of each of these other people. But, anything is possible. And if they do, then each of these people will have to show that the money came from a legitimate source.

Floyd Mitchell: What are the different ways an investor can put together the 500K? And for each one doing that, what are those supporting documents? Are they tax returns, payroll? Can you tell us a little bit more about this?

Swee Shankar: Yes. I think I touched on this slightly a little bit earlier. But, it really depends, again, on how the investor has the money, right? So, has he saved it from employment? Does he own a company? Did he buy and sell property? The documents needed really, would be based on those questions. But generally speaking, we’ll need to trace the money as far back as possible. So for example, if the investor owns a business, the USCIS, the same thing with the property example earlier, can go as far back as to say, “How did the investor obtain the money to start the business in the first place?” So then you’ll have tax returns, financial statements, pay stubs. All that kind of stuff to show revenue in the company. And, of course, most importantly, you have to be able to prove the investor has ownership in the company, and rights to this money. And again, the board resolution allowing the company to loan or get the money to the investor for this investment purpose.

Floyd Mitchell: And for the investors listening that are in India, specifically, is there anything you recommend they do before calling you, that would help your work with them to make their case be easier or more well prepared? Let’s say they have 6 months to prepare, what can they do?

Swee Shankar: They can definitely start even making a flow chart for themselves. Okay, here’s my 500K, how did I get it? Go back as far as they can, to see where that money came, and to really be able to see whether they’re able to prove that through traceable funds. Do they have evidence to prove every single step of the way? Also, if you’re overseas, you have to make sure that you have a way of bringing the money to the U.S. – Again, 250K per person per year. So do you have a spouse that’s willing to bring the other half? Or do you have another family member? And then, lastly, they have to determine how they want to invest their money. Whether it’s a Regional Center or a direct investment.

Floyd Mitchell: Can you please describe to us the major differences between regional center and direct investments and which scenarios would you recommend one over the other to your investor clients from India?

Swee Shankar: Yeah, absolutely. So, I always tell people that, if you are willing to open up your own company and spend your time doing that, spend your time in the company, managing your company. That’s your full time job, okay? If you’re willing to do that, then you can invest your money into your own company. That’s a direct investment. Okay, basically saying I am going to invest five hundred thousand dollars into my company for the purpose of creating ten jobs. Okay? America is not so much concerned with the money that you’re giving them, but the fact that you’re creating jobs for the American people. So that being said, when you do a direct investment, and after you get your I-526 approved and your temporary two year green card, you must show that you have created ten jobs, full time jobs, prevailing wage salaries, for two years. Okay? If you do not show that, you will never get your conditions removed on your temporary green card. And you will never get a permanent green card. Now, the difference really is between the direct and the Regional Center, is that in the Regional Center, all of this has to take place as well. However, it’s not your responsibility to do so. The Regional Center will create jobs for you. Okay? And so, your responsibility at the end of the day, is to invest the money and get your green card. Once you invest the money, you don’t really have much else of a responsibility to that company other than being … other than the investment that you make. So those are the two big differences. And I think it really depends on the person who comes to me and wants to know, whether to do direct or Regional Center. It really depends on what their goals and ambitions are. If they just want a green card, and they don’t really want to have to worry about doing anything else, I always say, go the Regional Center route. Okay? Now if they actually want to
start their own company, and they have experience with this company. And they have experience in this industry. And they think it will be successful. They think that they’re able to employ the ten people, then I say, okay, go ahead and do a direct investment. I think the reason a lot of attention isn’t given to the direct investments, is because people are scared that they’re not going to be able to create the ten jobs. And what happens if they’re short one job. Or what happens if their business isn’t exactly what they thought it would be when they created the business plan, you know. And if USCIS sees a material change in your business plan, versus what you’re doing, then that can be an issue too. So you really have to stick to the business that you say you’re going to create, and you have to really be able to show the ten jobs, full time, prevailing wage employment.

Floyd Mitchell: So that I’m clear the direct investment can be $500,000 if it’s in a Targeted Employment area. But if it’s not, it’s a million. Is that right? So a great candidate for the direct investment coming from India may be a small software company that already has a great product, great recurring revenue maybe they just want to relocate to Silicon Valley to hire top engineers and have this international pool of developer that they can hire. That might be a great opportunity for them, is that a good scenario?

Swee Shankar: Oh yeah. Absolutely. I mean, that’s a really good idea for many Indians, because many Indian people do have experience with the IT, engineer and computer science world. So absolutely, that’s a great option. But we see direct investments with all types of businesses. I’ve done it for Dunkin’ Donuts. I’ve done it for gas stations. We’ve done it, you name it. It’s been done. So, at the end of the day, as long as you can prove those things, it’s a great idea. And, I’ve noticed a lot of Indian people want to go this route, but they don’t realize how much money that they actually have to put in. Because you’re not only putting in the five hundred thousand dollar investment, remember? You’re also paying ten people. Payroll for two years at prevailing wages is much more than five hundred thousand. So I think that’s where people don’t really realize the difference. So you really have to be willing to want to own a company. Start a company and have that be the rest of your life, essentially. But it is definitely a great option for people that want to do that, and are willing to do that with their time.

Floyd Mitchell: So the Regional Center route is … I would say it’s almost half the risk. Because with direct investment, you’re banking on yourself as a business person on top of navigating this process with your immigration firm helping you get EB-5. You’re kind of doubling your risk, almost. Is that a safe assumption?

Swee Shankar: It’s absolutely half the risk. I mean, like I said, you invest your money and then you kind of sit back. And a lot of these Regional Centers are already approved immigration projects, right? So as long as you can prove that you can source your funds, and your money came in a legitimate fashion, then most everything else is already taken care of. You don’t really have to do much else.

Floyd Mitchell: When does the investor get their money back, Swee?

Swee Shankar: It really depends on the Regional Center. But most Regional Centers will give you your money back in five years. And, a lot of them will do anywhere between a half of a percent and one percent interest.

Floyd Mitchell: And is there any chance that they will receive a green card, but they won’t get their money back? How certain are you, as their attorney, handling their case, that they will get their money back? How confident are you in saying, “Everything should be great. You should expect this money back within X amount of years, somewhere in that range…

Swee Shankar: What I always tell people is, “Your money is at risk. That is the law. I cannot guarantee anything.” However, that being said, if you sign up for a Regional Center, okay, and it is your fa ult that the I-526 didn’t get approved because you couldn’t source your funds, for whatever reason, then you’re still going to get your money back. I have no doubt that you’ll get your money back. You just might not be the first person that the Regional Center is going to give their money back to. Okay? However, if it has anything to do with the Regional Center. For whatever reason, the Regional Center wasn’t able to create the ten jobs, or any other reason to do with the Regional Center. You are going to be the top person on their list to get your money back. And I have never seen a case where they have not gotten their money back. And if that ever happens, there’s lawsuits, after lawsuits, after lawsuits. So you will get your money back at some point.

Floyd Mitchell: Before these investors have an opportunity to invest in these projects, they have gone through some type of vetting system correct? To get the i526 approval there’s a tremendous amount of paperwork and information that has to get submitted to USCIS before they can even start accepting investors, correct?

Swee Shankar: Absolutely. So like I said, when you’re investing in these projects, in order for a Regional Center to be approved, they have to go through a very rigorous set of standards. So the investor really has a high chance of getting his money back.

Floyd Mitchell: What are the biggest disqualifying things that happen throughout the course of the EB-5 process? The person applying, investing, the petitions. Is there anything that’s an immediate disqualifier? I understand source of funds can be challenging but what are the big ones?

Swee Shankar: Yeah. So there’s different steps to getting your green card. Any route you take to get your green card. For EB-5 purposes, there’s three different steps. Okay? So the first one is I-526. The I-526 gets approved as long as you can show source of funds. That’s the main thing, as long as you can show that, it will get approved. Now the second thing to actually get your green card, there’s two ways you get it. If you’re in the country, what you do is something called an I-485 application, to adjust your status. Now when you apply for I-485, this is when they check, have you maintained your status while you were in this country? And your medical background. Those are the two big things. Now if you have been out of status for more than six months, you will never get an I-485 approval. Okay? Meaning you’ll never get your green card. Same for health. There’s certain tests that immigration does that you have to get. And if you have a certain background, certain negative results, then the same thing applies as a disqualifier. Okay? If you’re not in the country, if you’re outside of the country, then you have to go through the consulate. You have to do consular processing and get your visa stamped in order to come into the country and get your green card. Now this works in a very similar fashion. Most consulates, and especially the ones in India, will do the exact same thing. You have to get your medical done. And, well of course, there’s no maintenance of status here, because you’re not in the country. But for this purpose, they’re really just going to look at your medical. And they’ll look at your background. Have you ever had any criminal convictions? Have you ever had any trouble with the law? Have you ever been in the country and overstayed? If so, how long did you overstay for? Are you barred from the country because you overstayed for a year, or two years, or what have you? But either way, they are going to look into your background in order to give you that temporary two year green card. And after you get the temporary green card, remember that’s when you have to look to the creation of jobs, and that the investment was fully made. That the five hundred thousand dollar investment was fully made. Okay? And at that point you will remove the conditions on your two year green card, and you’ll get a ten year green card. So, that’s what they’re going to look to at that point.

Floyd Mitchell: Can you speak to us a little deeper about that. I thought it was like a permanent green card. Is it only ten years, but it’s permanent?

Swee Shankar: Right. That’s exactly how it works. So green cards are only given for a ten year period. So after the ten year period, you have to renew it, or you can apply for citizenship. Once you have your green card for five years, you’re eligible to apply for citizenship. So either you renew your green card every ten years, or you apply for citizenship. You become a citizen. And then, at that point, there is nothing else for you to do.

Floyd Mitchell: What does it mean, the term “Removal of Conditions”?

Swee Shankar: Yes. So the reason they call it removal of conditions is, it’s not a particular condition that’s being removed, per se. But the two year green card is called a conditional green card. So hence, you’re removing the conditions from the green card to now get your ten year permanent green card.

Floyd Mitchell: How many clients that go through all three steps you just walked us through., how many of them can actually get permanent citizenship after that five years? Is it all of them?

Swee Shankar: Every single one.

Floyd Mitchell: The EB-5 program truly is a path to citizenship. And that’s why it gets marketed as such, right?

Swee Shankar: Absolutely. And as long as they pass the same test that anyone else is taking for citizenship, they are eligible for, and they will get their citizenship.

Floyd Mitchell: What about the people who have overstayed their visa? Do they have no shot at all of ever getting citizenship through EB-5? Or could you work with them to help them do the right thing and reapply?

Swee Shankar: Well, what happens is, if you overstay for more than six months, you’re barred from the United States for three years. If you overstay for more than one year, you’re barred for ten years. So if you keep staying in this country, there’s nothing I can do to help you. However, through the EB-5 route, that is. Okay, however, if you leave the country and say, okay, I understand that I’m barred for three years or I’m barred for ten years, but after that I’ll come back in. So let’s say you get your I-526 approved, and then you’re in the country. You leave the country, you’ve overstayed for one year, or you’ve overstayed for eight months, let’s say. Okay, and then you’re like, all right, I’m going to go back. You go back to your country. You stay there for three years. And then you go through consular processing. You use that approved I-526 and you come in and get your green card. It’s just a matter of time, at that point.

Floyd Mitchell: Within India, are there any programs or rules or government requirements that basically preclude their citizens from participating in EB-5? Is there ever a lottery that says, “only X amount of people can apply for EB-5 within India.

Swee Shankar: No. No.

Floyd Mitchell: So this program’s good for anyone who has the available funds to invest and who can follow the proper steps?

Swee Shankar: Absolutely.

Floyd Mitchell: Swee, can you give us some timelines for each of those three steps? Some milestones, for example how long each of those steps may take in terms of months or years?

Swee Shankar: Sure. So currently, the I-526 petition is taking about sixteen to seventeen months to get approved. Once that is approved and you’re not in the country, let’s say, you go for consular processing. The consular processing timeline takes about six to eight months for them to call you in for an interview and for you to get your green card stamped and come into the country. So you’re looking at about a year and a half to get your temporary green card, okay? Same thing for if you are in the country. The I-485 to adjust your status takes about six to eight months. I-526 takes sixteen to seventeen months. Again, a year and a half. I always tell my clients about two years just in case there’s any Request for Evidences or any other pitfalls in the application. Always give yourself about two years to get that initial two year green card.

Floyd Mitchell: Okay, within eighteen to twenty-four months the investor can move here, they can buy a house, enroll in school, start a job?

Swee Shankar: Absolutely. Once you have your green card you are able to do all of those things. You can buy a house. You can enroll in school. Really it depends if you are investing in your own company, or really supposed to be working there. But if you’re doing a Regional Center you can get a job. All of those things. It’s one thing to keep in mind, as a permanent resident, you can not leave the country. If you leave the country, you must re-enter into the country every six months, okay, to avoid any issues. Because remember, once you get your green card you’re supposed to be a permanent resident of this country. So if you’re not really a permanent resident here, the consulate officers can give you issues. But there’s also ways around this, as well.

Floyd Mitchell: I understand that you’ve worked with EB-5 investors and lots of other forms of immigration, specifically for India clients. Is there one thing that these clients have shared with you after they’ve come here and gone through this process is there something really exciting that they’ve told you about America that may paint a picture about America and the American Dream?

Swee Shankar: That’s exactly, you said it. The American dream. I think everybody, regardless of what country you’re from, but India specifically, people hear about this American dream. Once you are given the opportunity to be part of that, I think, that’s what makes it so amazing. And Indians, more so specifically, you notice we’re very big on family. So you notice that a lot of people do this for their children. They say, “I went through this entire process. It took me however many years. I worked so hard to get the money to invest. But it wasn’t for me. It’s for my children. I want them to have the life I couldn’t have.” And hearing that kind of melts your heart a little bit, you know? Because they’re doing that for the next generation. So, that’s really nice.

Floyd Mitchell: That is really nice. That’s really, really special. I’m sure a lot of the wealth that has been created in India is from, just good old fashioned hard work. Creating value for people.

Swee Shankar: Absolutely, correct.

Floyd Mitchell: Can we talk about students for a moment Swee? What are the advantages that foreign students attending Universities in the U.S. may have if applying for the EB-5 visa as opposed to the other students who may be here on a student visa. What are those advantages for the EB-5 students?

Swee Shankar: Yeah, absolutely. If you’re here in this country on a student visa, and your parents, or anyone in your family has the money to invest in your green card, you’re really taking a leap ahead of many students because you’re going to get your green card way faster than anyone else. The reason I say this is, most people, what they do is, Indian’s specifically, is they come here on a student visa, okay? And then they apply for their H1-B visa, which will have to go through a lottery system to even get an H1-B visa. So at that point, themselves, they’re taking a chance. Once they go that route, now they have an employer. An employer usually then applies for their EB-2 or EB-3 green card in both categories. Now, the unfortunate thing about EB-2 and EB-3 categories for Indians, is that it is very far backlogged. What that means is every country gets a certain number of green cards per category. Once that number is hit every month, only a certain number of those can be given per category. So for example, for Indians, EB-2 category, those who applied for their green cards in 2009 are now getting their green card. So, I mean, that’s about eight or nine years backlogged. So now these people are just extending their H1-B visas, hoping that they’re date becomes current and they can get their green card. So many times I see students who come here and it’s been twelve years, and still no green card. So EB-5 is a great option because you’re going to get your green card much faster than any of your peers or your colleagues because you don’t have to wait nearly as long. There is no backlog for EB-5 in India. And like I said, you can do it simultaneously while you’re getting your education. So you can pretty much get your four year degree, graduate with a bachelor’s or a master’s degree and simultaneously, also get your green card. Which is fantastic. It’s amazing, actually, compared to everyone else who is not applying an EB-5 and applying an EB-2 or EB-3. Furthermore, Indians do not have the benefit of E-2 or E-3 visas which are investor visas through treaties or through investments. Just a visa, not a green card. Because India doesn’t have a treaty with America to benefit them with an E-2 or an E-3. So that investment option isn’t even available … They don’t even have that choice. So, if they want to get their green card through an investment route, the only option for them is EB-5.

Floyd Mitchell: Do some families pool their money and come up with the investment amount to support one child who is going to come here and go to school and then get their permanent residency through EB-5? Does that happen?

Swee Shankar: Absolutely. And I’ve seen that happen with my clients. They pool all their money. They put it together. They get a green card for this individual who’s here on a F1 visa and it’s very possible. And it happens all the time, actually.

Floyd Mitchell: And so that green card would cover that investor and their spouse, does anyone else get a green card?

Swee Shankar: So, a green card … A five hundred thousand investment covers the investor, the spouse and any children under the age of twenty-one.

Floyd Mitchell: Once that investor and his or her spouse and children all become American citizens, down the road is there anything they can do to help their family members become american citizens? Is there any advantage created there?

Swee Shankar: Yeah. Once a child is 21 and becomes a citizen, you can sponsor your parents for green cards, which is great. And they’ll get their green cards right away. Year and a half. As far as visiting goes, anyone can apply for a visitor’s visa. And as long as you have a legitimate reason to visit your child, your friend, your sister, they will give you a visitor’s visa to come to America and visit. Also, once you’re a citizen, you can apply for your siblings and things like that. So yeah. It’s definitely a different route that you can take to help the people who helped you.

Floyd Mitchell: That is really wonderful. And, let’s just say they get here and they get a little homesick. Can that investor travel home freely, to visit? Just for our audience listening today that may not understand that process, can you talk about that a little bit. Do they get to go home when they want to basically?

Swee Shankar: Absolutely. Once you’re a citizen, you can leave the country for as long as you want. As I said, if you’re a green card holder and you’re not a citizen yet, you can of course leave the country. But you have to come back within six months to avoid any issues at the consulate.

Floyd Mitchell: How do you help your clients in picking the right Regional Center project for their investment? And do you recommend that they work with a Broker Dealer?

Swee Shankar: Yeah. So they should be working with a securities firm, broker-dealer that’s licensed with the SEC. Because these people, what they do, their entire job is to do a lot of due diligence on the EB-5 component, as well as the financial stability of the project. So when you know that a broker-dealer is involved, you know that this project is really is going to be financially stable. Okay? The broker-dealer really should be part of the professional team. And it’s at no additional cost to the investor. I always tell people, when you’re looking of r projects, look for these key components in these projects because then you know that it’s a successful or financially stable project.

Floyd Mitchell: Will the investor have time to speak with … or the investor’s accountant or legal team there in India, will they have the opportunity to speak with that broker- dealer and look at projects? And maybe come back to you and ask you a couple of questions?

Swee Shankar: Absolutely. And if they’re in the country, too, I know many Regional centers will allow you to go to wherever they’re located. Visit them. Visit the project. Ask as many questions as you want. Speak with whomever you need to speak with, to make sure you’re comfortable with the investment. At the end of the day, you’re investing a lot of money into their project.

Floyd Mitchell: And it can be really good sometimes to just get in a room, meet the people, and get a better understanding of where your investment is being made so that you have a better sense of confidence in that investment.

Swee Shankar: Exactly. If you have the ability to be in the country. Or you have a visa, and you can come into the country, I always tell people, you want to go to that Regional Center and really get a feel for whatever it is that you’re investing in.

Floyd Mitchell: Our number one goal at the EB-5 Investor Portal is to create awareness and education around EB-5. And to help international families. Help them realize the American dream. Help them get into this country and live the American life. What safeguards, red flags, warning signs … What should these investors be careful about with regards to the internet and information out there about EB-5 Swee? Immigration agents have been known to pitch people on ideas. Where do they fit into this dynamic? Can you give us some cautionary tips and safety tools that these investors can use when they’re navigating and considering EB-5?

Swee Shankar: Of course. I think I mentioned this before, but there are a million forums out there. And I know, Indians especially, love reading these forums. And stating, “oh whatever on this forum and this forum.” It is very important to keep in mind that forums are just other peoples opinions and experiences. Just because someone else had a certain experience with a consulate officer or for their particular case, that does not mean that it’s the law. And that everyone will encounter the same experience. So, that’s very important to keep in mind. So really, unless it’s on a USCIS website or government website coming directly from DHS, Department of Homeland Security, Department of State, Department of Labor, or USCIS, then it really is not 100% credible information. And, of course, at the end of the day, if you are doubting anything that you read, it’s probably because it is doubtful. And you should always go to an immigration attorney who knows the law and can advise you on that law.

Floyd Mitchell: There’s a lot on the internet about people who call themselves Immigration Agents or Consultants and they say “I know a guy, I know a person, let me just handle everything for you, I’ll manage your money and get you a green card. What do you have to say about this type of scenario?

Swee Shankar: There’s always people out there. If you hear anyone say to you, “Let me handle it. I’ll get your visa. Don’t ask questions. Just come with me.” That right there should be a red flag to you. Okay. You should be able to ask how many ever questions that you have. And you shouldn’t be pitched on just one project, ever. These people should be giving you options. If you’re not given options, and you’re not really given the ability to ask questions, then I would walk the other way immediately.

Floyd Mitchell: That is really great information and great to hear from an Immigration Attorney, the real take away here is that there are no “gatekeepers” so to speak. This is an opportunity that is available to anyone that has the money and a very specific way to go about it. Be sure you are working with an immigration attorney in the U.S. that knows the law.

Swee Shankar: Absolutely. That’s correct. Floyd Mitchell: Okay. Got it. Swee is there anything else you’d like to share? Or anything I might not have covered?

Swee Shankar: I think we were pretty thorough here. We covered almost everything that we could with EB-5. But, you know, if you have anymore questions, or if you are ready to file your EB-5 case or invest in a company. Go to a regional center. Anything of that nature, you can always call me. Reach out to me. You will see that my website is in this podcast. My phone number and all of my information.

Floyd Mitchell: Thank again so much Swee for participating in today’s podcast and for sharing so much information about EB-5 and we look forward to having you on the show again.

Swee Shankar: Awesome, thank you so much!

 

The EB-5 Investor Portal Podcast – Episode #2

Video Version (below)

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Introduction: Hello EB-5 investors. This is Floyd Mitchell with eb5eb5.com. Welcome to episode two of the EB-5 investor portal podcast, recording on Tuesday, June 27, 2017. Today’s episode is titled Origin of Funds and EB-5 Investments. Our guest is immigration attorney, Andrew Johnson, of law offices of Andrew P. Johnson in New York, New York. Mr. Johnson was a government prosecutor until he entered private practice in 1998. He has authored numerous articles on immigration and international litigation, some of which have been published by the American Bar Association and the American Immigration Lawyers Association. In addition, Mr. Johnson has been featured in the New York Times, quoted by the New York Daily News, and interviewed by CBS News on the topic of immigration. He has represented large corporations, nonprofits, and small companies in all aspects of immigration law. Mr. Johnson has spoken to business organizations in conferences around the world on the various strategies for immigrating and sending employees to the United States. Mr. Johnson practices immigration law exclusively and is an active member of the American Immigration Lawyers Association. Andrew is admitted into the United States Supreme Court first, seventh, ninth, and eleventh United States circuit court of appeals, New Jersey district court, and the State Bar of New Jersey. Today he will be sharing information about origin of funds in EB-5 transactions. Andrew, welcome to the show and thank you so much for joining us today.

A: My pleasure. Happy to talk about the most primary issue with a EB-5 applicant, which is the origin of funds.

Q: Can you share some insight about origin of funds and why issues or challenges tend to present themselves with this particular component in EB-5 investments?

A: Absolutely. There’s two issues with origin of funds. One, sometimes applicants think it’s no problem whatsoever and then they realize, after going into detail, there are some problems based on those country’s specific tax laws. Two, some clients think they absolutely cannot prove their origin of funds and realize once they talk to an attorney who’s done this for many years, there’s absolutely many avenues in which you can prove origin of funds. With that information, let me tell you about the basic requirements. Origin of funds simply means how to prove that the money was obtained legally for USCIS purposes. That’s the most important because a lot of people explain that in my country it was obtained legally and the government knows it’s obtained legally, however it might not be considered legal origin funds under USCIS regulations. The general rule about legal origin of funds is you have to come from an origin of which it was earned or legally obtained, and let me give you some examples. An easy one would be real estate. A house was sold and the proceeds of that money is used to show USCIS the legal origin of where the money came from. You also can do it from inheritance, just simple savings, investments, business profits or business salary, gifts from relatives or friends, and also you can use all types of variations. People don’t understand that you might have 10% come from inheritance, 10% come from business profits, 10% come from savings all the way through. You don’t have to have it come from one source. There is one other issue that often people don’t fully understand. They simply say, “Okay, I’m selling a house I owned for two years and therefore that’s the profit and I’ll show that and prove that as my origin of funds.” Because it’s a recent sale of a house, USCIS will want to know where that money came from to purchase the house two years ago. If it’s a home 20 years old the requirement for documentation showing how that money was earned is much less and can be usually drawn from affidavits or statements by the applicant.

Q: In your experience how would one go about showing detail for the origin of funds on a transaction that dates back 20 or 30 years or more? Can you tell us how secondary evidence may be helpful in situations where the origin of funds date back so long and the investor may have a difficult time producing the proper detail to satisfy USCIS requirements?

A: First of all, we, in our ideal world, if it’s 20 years, try to show all the lay and actually how the money was earned 20 years ago. You would have to show how the money was earned, even if the house is owned 30 years or 40 years. The issue is it’s just easier, usually you can show, “Okay, this money was earned by salary and here’s …My father worked for a company and he made roughly $20,000 a year over 10 years and then bought the house in 1992.” It usually can be established that way, so you always still want to establish it. It becomes, I guess the best way to explain it is if it’s two years ago clearly you should be able to find where the money came from two years ago. If it’s 15 or 20 you can do it with what they call secondary evidence, in other words not directly from bank accounts where the money was transferred over because people might not be able to have records of that bank account.
I apologize, it’s not an exact answer. We want to do our best to approve the money from a direct source as best we can, it’s just USCIS usually accepts what’s reasonable. It’s reasonable to show by affidavits and statements how the money was earned 30 years ago to purchase the house. It’s also reasonable that the house was bought two years ago to actually show where it came from out of bank accounts.

Q: I’d like to clarify for our audience, are origin of funds and EB-5 investments an item that only immigration attorneys work on? Or do other players get involved in this area at all?

A: Very good question. In fact, it’s our primary role. The other parts that we have to do are quite easy. It’s just identification documents and so forth. No, the investment banker, the regional center, they specifically don’t want to go into that issue because it’s a legal issue and requirement by USCIS. That is absolutely … That’s the most important job for the immigration attorney. As I had mentioned before, if the applicant can prove origin of funds there really is almost no other issue to make them ineligible to file for the EB-5 program.

Q: What are some of the common problems or misconceptions clients have with origin of money?

A: Most clients naturally earn money … Let me give you an example. If they earn money through business income and it goes into their business account and they move it over to their personal account. Then they take that money, obviously, and most people don’t keep $500,000 or $300,000 into their personal account and let it sit there. The money will either be spent on cars and jewelry and living expenses or the money will be invested in stocks. Then the money is used to purchase stocks or investments, and then someone might cash out on that investment and then spend it on something else. Now, often clients say to us, “I’ve made $750,000 over the last two years. I can prove that.” The problem is they can prove it from their business account to their personal account, but then if the money has been used, or sent out, or spent, they have to be able to show how they can bring that money back into their personal account to USCIS. In other words it has to be fully tracked back. The reason why it is as difficulty as it is, especially with things that you expense, that’s sometimes very difficult. A lot of clients have money from sources that we can’t use for USCIS, where they want to refill their personal account back up. They can say, “Okay, I can put $750,000 back into my personal account.” The problem is they can’t show where that money came from, they’re just refilling, in a sense, the personal account. Often, after we have those discussions, it’s easier for the applicant to almost do another business deal in order to get the money back into the business account moved over to the personal account, and have it stay there. With a lot of businessmen that’s actually quite easy. That issue, obviously, is what I had mentioned before. Some clients say, “Oh, well I make $500,000 a year, this should be no problem, it goes from my business account to my personal account, I have it invested and so forth.” They have to be able to legally show how that money is properly brought back into their business account without being replenished by money that’s from, in a sense, an ineligible source or an untraceable source. I know that gets a little complex but that’s what they really have to be worried about if they want to use money that they have saved or earned in the past. Where it went to and where it needs to go back. We have to draw it up in a sense where we actually track it and write up exactly the pathways, and sometimes even graph it up on a computer to make sure we can show the legality of it. Then we usually circle the sections or the amounts of money that would be considered questionable. Then with that we might say, “Okay, we have $75,000 that’s going to be untraceable, let’s try to find another source in order to prove that money,” which is often quite easy to do.

Q: Can an investor sell stock or other assets to come up with the investment required?

A: Absolutely. I don’t want to make it sound too difficult. If, for example, they earn income through salary or the business they own, they move it to their personal account, and then they purchase stock, then they sell that stock, it goes back to the personal account, we have legal origin of money, no problem whatsoever. The problem is, as I mentioned earlier, is often that money gets moved from stock, three years later it’s sold and goes to another stock, or then sometimes money is pulled out and expensed, that’s what I’m saying. When it has three or four multiple transfers you have to bring it back through all three of those transfers… Or trace it back from all three of those transfers to show the legality of it.

Q: In essence, USCIS wants to know where the funds came from, they want to know that they were obtained legally, and a large part of your role as an immigration attorney representing the investor is to assist them with this critical aspect of the EB-5 process.

A: Absolutely. What we do is we explain what we can explain right here, but also the client would tell us, “Okay, this is my portfolio which I think I can use.” They would then tell us where and how they got certain sets of money. Then between us we would choose the easiest route, we believe, that they could take which would have the least amount of tax consequences to them in their own country. Remember, USCIS doesn’t evaluate tax consequences in foreign countries. They don’t know the tax law, they don’t want to go into that. Everything is done outside. We give the applicants the best few options we believe and then they choose which option they want to with the least amount of tax consequences in their country.

Q: Does an immigration attorney help an EB-5 investor optimize or reduce their tax obligation in some cases?

A: In some sense. Our clients will know their tax laws from their country much better than we. We have a general idea of what it is. We just want to make sure there’s no tax problems within the US and the simple … We don’t do anything special, we just say don’t do the transaction or the gift transfer in the United States. Once that occurs, then they usually pick the route of how they want to do it in their own country. For example, if there’s three or four pathways we can choose, and let’s say if it’s in India, they get hit with high real estate taxes, they might want to avoid a high real estate tax sale to show that much profit. That’s just an example but we defer to the clients on their tax laws.

Q: Can you share with us some of your solutions where the applicant experienced difficulty showing how the money was legally earned or they just could not produce the necessary paperwork?

A: Absolutely. What I said earlier, when we would just say, “Lay out your portfolio,” and that’s probably a business term. “Lay out all where your money is right now, then we go over every possible option.” Then even if, let’s say, there’s an extreme difficulty with everything they told us we often go, “Okay, you’re often wealthy or have wealthy relatives and wealthy friends. It might be easier for a wealthy friend or relative to simply gift you the money.” We had a case where it was very difficult to show any tracking. As I mentioned, the money was earned but it was transferred out in so many variations and been out and resent to different places over the years. The person said, “Well I have a friend who is a salaried employee that owns his own business but is also salaried by a company based out of Singapore.” Our client was Bangladeshi. That friend, who had some control over the business he was getting salary payment, simply told his boss, “I run this operation in Bangladesh. Advance me $300,000.” He already had $250,000 saved. His boss, like I said, who he had an excellent relationship with, just advanced him and just said, “We wrote a letter from that business saying we are advancing our employee 200 or $300,000,” and that was it. In fact he wanted the money to be wired out of Singapore and not wired out of Bangladesh, which is often common. The nicest thing about that is that money that we used we didn’t even have to try to move out of Bangladesh. The money in transaction was wired into a Singapore account and to our client’s friend. He, then, just gifted it to his friend in another Singapore account and the person wired it to the regional center. That was one way to deal with it. Although that might sound fact-specific to that case you would be surprised how many people in the wealthy field who can afford $550,000 have friends or relatives who have a much better way to show how they legally earned their money because it might have been some recent real estate sale by a relative or a friend, or a friend might have a business that does import/export, that might easily earn $700,000 on a business deal. We would just show the contract on that deal, show the $700,000 earned, that friend puts it into his business account, moves it to his personal account, and then gifts it to our client. If our client has an international business where they buy and sell, or they have a friend with an international business buy and sell, and they don’t want to deal with the money inside their country they can set up deals where they have a transfer. They can do the transfer where the farm equipment goes to a country which our applicant lives at, or applicant’s friend lives, whether it’s Bangladesh or India or Pakistan or whatever country. The money can go to a place where they want it to go. The money could be transferred to a Kuwait bank account and we just show the contract, it says, “This import was from a farm equipment deal between an Indian client and another person from whatever country,” because that’s the seller. Once that transfer occurs we want the money to go into this Kuwait bank account. If that’s in the initial contract then they actually can keep the money out of the country, which some countries, Vietnam was another example, really don’t want money coming in if they’re going to do that transfer. USCIS does not care if the person is Vietnamese, Bangladeshi, Indian, or Pakistani, and a business deal occurs where the money is transferred to their account or to their friend’s account in Kuwait. Then moved from Kuwait into the US government regional center. That’s another way where people can avoid taxes, or, which we might deal with in another podcast, restrictions on how to transfer money out of that country. It sometimes solves two separate problems.

Q: If the funds are gifted to your client from a friend or family member, or in some cases multiple friends and family members, and let’s say one family member owns gold and sells their gold to get the funds, and maybe a brother of the investor sells a house and gives the investor a couple hundred-thousand dollars. Through a few sources this investor puts together the money required to make the investment. Do you have to prove the origin of funds from those original family members and friendsthat are gifting their money to the investor? Do you have to produce some sort of diagram or flowchart with supporting statements or affidavits?

A: You’re exactly right. For everybody, as I mentioned before, let’s say the applicant can’t prove his legal origin of money. He’s just going to work off gifts from relatives and from friends. You were right, each relative or friend has to prove their origin of money. I think one case we had close to 18 different sources and we had to prove origin of money from 18 different sources. When that relative says to you, “I’m gifting to you $50,000 for this,” we have to show how that relative earned the money. Often it’s not that hard, it might be salary. “I receive a salary, it’s wired into my account. Here’s my last year wiring it. Here’s $7,000 a month from that savings. I am giving them $50,000.” That might be an example. Or what you had stated, a relative has gold. They said, “I earned this gold,” or, “This gold was transferred through my family for this many years.” We would have an affidavit or a statement proving that and then we would show that as that original transfer. Each one, in a sense, would be, for legal terms, an exhibit. Exhibit A, $50,000 transferred to applicant. Then we’d have on the top of that exhibit the gift, it’s a simple gift letter, it’s nothing involved. The gift letter goes, “I’m giving $50,000 to my friend or relative in order for him to apply for the EB-5 program.” Underneath that would be proof of how that person earned that $50,000.

Q: What do you say to the investor listening today who has the necessary funds to invest in EB-5 but may think that they just can’t prove their origin of funds and may feel that they never will get approved and thus just never apply?

A: We’ve had people in the past who have told me just that. “Mr. Thompson there’s no way. I’ve looked through things and I can trace it, just my country doesn’t allow it or it just doesn’t work that way.” First we obviously go to the option, as I mentioned before, we go, “Well talk to our wealthy friends and family members and see if that’s an option.” That, like I said, usually clears up the problem because if you’re wealthy, like I said, you have wealthy relatives or friends.” The second option is, if they don’t have anything and they are wealthy and they have this, we simply tell them, “You can go ahead and sell property or you can go ahead and create, in a sense, a new business deal,” if they are import/exporters and everything goes through their business account. This is very challenging, especially people who have accounts in Kuwait. In other countries they don’t have personal account. They do everything out of their business account, which is completely legal within that country. They say, “Look, nothing comes from me, from my business or personal.” We would tell them, “Okay. It’s time to start gathering and putting our deals together and collecting them, any business account, new deals. Once you have 550,000 based on new deals into your business account I want you to open up for the first day a personal account and move that money into your personal account.” USCIS has to have that occur, although it sometimes seems silly to some of our clients or unnecessary. Even if they open up a personal account one day before they wire the money to the regional center. They have to do it. It’s just a sign the money came from their personal assets rather than their business. As you stated before, we usually can find a way, even if the applicant doesn’t believe there is a way, to prove the legality of the money.

Q: What are some examples of secondary evidence that can be used in providing origin of funds detail?

A: Let’s use a direct example of that. I’m just using gold for the reasons of this example. There’s other issues. For example, if someone has a house that’s 30 years old that cannot prove at all how they purchased the house 30 years ago, I always speak about Vietnam because their documents are very limited. In other words, there’s no real estate contract. Often things were written in scrap paper or there was no documents whatsoever. Secondary evidence is literally an affidavit from the person who bought the house, the relative who bought the house or the applicant themselves saying, “30 years ago I purchased a house for this amount of money. I paid it on collecting my salary because I worked as a professor at a university. We didn’t keep our money in banks at the time because our country didn’t have banks,” or, especially with Russian cases, a lot of the banks in the ’90s had closed so they cannot pull any evidence whatsoever for that reason. They often give an explanation. There was no banking system in Vietnam in the 1980s, in the Russian case they would say most of the banks closed in the 1990s, there was no records kept. Then they provide statements from themselves or whoever actually had the transaction. Another example is we had someone who had gold from their … They actually owned it but it was from their parents. The father had passed away in, I think it was, late 1988 or something. They had never put the gold anywhere. They kept the gold at home. The father had written a note in Vietnamese that stated, “I am giving my gold that I have to my oldest son.” It’s simple, on a scrap piece of paper, just a handwritten note. We use that plus a statement by the son, the applicant, who is now 50 years old, saying, “My father gave me through inheritance gold which I, three years ago, deposited and it was worth …” When I say deposited or cashed out, “It was worth $240,000 and here’s the best records I have from that direct deposit.” Whether it was receipt by the … The gold business might have given them a receipt or sometimes they can even get a letter from the people that they sold the gold to. Even if they can’t they often, a letter themselves, writing what happened can be what we call secondary evidence.

Q: Just to clarify, when you use the term statement you literally mean it could be a pen or pencil written on a piece of paper. Am I correct in assuming that? It doesn’t have to be some official document or form to be accepted by the USCIS?

A: Absolutely. I have always told my clients, what USCIS requires, documentation of evidence which is reasonable. If housing transactions occurred in the ’80s and ’90s in Vietnam, where they literally just transfer and give each other money on it, and maybe, like I said, get a deed at least from the government or some documentation. That’s all the evidence that’s available, that’s all the evidence USCIS can expect. When you said scrap, a piece of paper and pencil, absolutely right.
We do like to give the background of the situation in Vietnam. We have country conditions that talks about the banking system in Vietnam, how it was rarely used, no one trusted the banks, banks didn’t even exist in the 1980s. We can provide a newspaper article, roughly, that explains how sales were done in the ’80s and ’90s in real estate, whether it’s in India or Bangladesh or Pakistan or some of those countries.
Once again, if we’re talking about Germany … Now Germany, the expectation would be to have a paper trail if you’re dealing with in 1992, to have some type of document. Even if those banks were closed, let’s say someone, even in Germany, used a bank but can’t get records from that bank in 1992, they’re going to have real estate documents at least showing the sale. That, probably, would be expected. A lot of countries, and I would say the majority of countries that do EB-5, those type of direct documents are not expected if they’re 15 or 20 years old.

Q: Do experienced EB-5 immigration attorneys assist clients in producing historical documents that may support their origin of fund detail such as old newspaper clippings, as you’ve mentioned, or official statements from their respective governments?

A: Yes, absolutely. The nice thing is we’ve done so many that we already have the documents. We use the previous documents, we have articles explaining the banking system of that country at the time if need be and the country of course. All of that is quite simple to get the background because if it’s a national program or national issue there’s clearly been reports written about it.
I also wanted to mention that often people say, “Okay, I earn the money, my father earned this money to purchase the house because he worked 20 years as a janitor from 1970 to 1990.” The father can write, if the father is alive, he can literally write, “I worked as a janitor for this school at this time.” If they can get a letter from the school that would be also great, but the school could’ve closed down. In a sense he’s saying, “I can’t even prove anything whatsoever where I got my money, but I worked at this job and I’m writing a statement, this is how I earned my money. This was my salary per month and this is the money I used to purchase a real estate house.” Salary statements are also very valuable when you want to have to prove secondary evidence.

Q: Can applicants use money sources in countries other than their citizenship?

A: Absolutely. It’s, I would say, pretty common. Often clients from these countries have bank accounts already in foreign countries. It’s already there to do the transaction. The reason they’re usually doing that is it’s just a little more difficult to move money out of their country. As I spoke before, people in some of those countries use a transfer agent to move it out if they don’t have accounts in other countries. One, they could have an account in Singapore, they can have an account in Kuwait. The money coming from those countries to USCIS is not an issue whatsoever. They also can open up a brand new account in Kuwait and Singapore and USCIS does not have a problem with it. They don’t say, “Wait a minute, why did you suddenly open an account?”
USCIS knows there’s absolutely restrictions for countries moving money out of that country and they expect the applicant to go ahead, as I stated before, to sometimes use either their transfer agents, which have to move the money outside the country, or to actually use accounts outside the country. For example, standard Chinese cases are where they loan or gift $50,000 to 10 friends or relatives within China, and then that money is often moved, that 50,000 is then gifted back to the applicant in a Hong Kong or Singapore account. The money is then moved to a US regional center. That’s, I would say, extremely common and Chinese are probably 50% of all applications. That’s nothing that raises red flags within USCIS regulations. They actually expect that.

Q: Can investors take loans out, either personal or commercial, to invest in EB-5?

A: Very good question. Once you said loan I have to give you the recent regulation. USCIS allows loans. First I want to state that. Generally US immigration attorneys say, “Let’s avoid loans in every possible way.” For this reason: the case law has tried to delineate or clarify, and … The best way to explain it is USCIS requires, for someone tried to take a loan, based on collateral, it has to be based on collateral, and that loan has to be paid off within two years. As an immigration attorney, USCIS is going to give a request for evidence and just delay the case we believe, or sometimes, to wait until that loan is paid off. We do everything we can. We usually can work around it to avoid any loans. A loan is a red flag, not as an illegality, but it’s for USCIS to challenge it. What you said, can they sell off a piece of their factory, that’s great. If they go into a bank on a mortgage too, a lot of people want to just not sell the home but take a mortgage out on the home, absolutely. Legal but problematic because they eventually have to pay off the loan within two years. The cases actually run a year to a year and a half. They’re going to essentially have to go and pay it off. It’s just, like I said, it definitely stops from a clean approval and we do everything we can to avoid a loan. If it has to be paid off in two years we’re just adding an extra problem to our application.

Q: What advice do you have for investors out there that know very little about EB-5, they just know that they have the funds and they want to become an American citizen, they want their childrento go to better schools, they want to have access to better healthcare, they want to participate in the American dream but they know nothing about this process. Where do they begin, Andrew?

A: If you can’t prove origin of money it doesn’t matter what regional center you like or what your plans are. You first have to prove origin of money. Once you prove origin of money then all it becomes is what regional center you want to choose. Absolutely it comes from … Also, I know this is a side issue, but it’s related to everything, is often some very rich are worried about tax consequences. Sometimes they have their wife do the EB-5 program because, just what you said, they want to bring their children over and go to US schools, get all the benefits with that, but they, themselves, don’t want to be taxed as a green card holder.
What they do is they do everything we had spoken about and their wife does the EB-5 program because all the money the father earns, he just gifts to his wife and then she just wires … Then they both wire the money to the regional center. There’s no extra transfer needed when the wife just wants to do it. The whole family sometimes becomes green card holders and the father, then, just comes back and forth on a visa. Sometimes they like to do that for a temporary time because the family is going to become US citizens eventually. Once they become US citizens they can bring their father over as US citizens, as a green card through family, immediate relatives.
Sometimes the father is like, “I don’t want to be taxed for the next five years as a green card holder, I want to construct my assets in a way to once I become a green card holder there’ll be no tax consequences or limited tax consequences.” That’s another angle which is quite easy for us to do.

Q: What do you recommend an investor not do with their funds as they prepare to apply for their visa through the EB-5 program? Are there any recommendations you give to the majority of your EB-5 clients to help them improve their chances of an approval?

A: Absolutely. The first advice is … You can’t imagine how often people ignore me on this. Do not move your money or transfer your money anywhere if you’re thinking about this EB-5 program until you talk to an immigration attorney. I can’t tell you how many times clients have moved money to, let’s say, a Kuwait account from their home country and say, “Okay, I have this money in Kuwait, I’m all ready to go.” After I ask them don’t move the money. Then we trace it back and they didn’t properly prove the origin of money. We either have to move all the money back, or reconstruct a whole other situation, and the whole point is, as I stated before, to reduce their problems. The talk to attorney and then the attorney helps plan them out of how they want to deal with transfers and prove origin of money. Sometimes it becomes a giant headache on their side because they have to move all the money they tried to transfer to different places and so forth back to the origin to redo everything. That’s the biggest no-no, and I can’t tell you how often that has happened, is do not move money … Or even, I apologize, or do a transaction for the EB-5 process until you discussthat with an attorney. The attorney has to go first, “That’s a good way to go ahead and prove the origin of money,” or, “We can go that route.” Second, I make sure, I go, “If you do that route can you get these documents to support this transaction or this sale?” If it’s yes and yes, and the route is correct, we can go ahead and go forward. There’s a lot of those things that you speak to an immigration attorney, where we actually help them plan it out. Once it’s planned out then they can execute the plan. To try to do it in the middle is disastrous.

Q: I think you’ll agree that a lot of the negative press that the EB-5 industry sees stems from unlicensed brokers and agents who are misguiding these investors. The investors should instead call an immigration attorney. Is it safe to say that the investors should not rely on any information they’ve heard from unlicensed brokers or immigration agents? My understanding is that a lot of these investors are just wiring $500,000plus into regional centers without having an investment banker or a licensed broker-dealer review the offering. Can you speak for a moment about safeguards and the proper way for the investor to go about this?

A: Absolutely, and you’re right. I’ve heard stories to that effect. When money has always been wired into the US, which it’s just shocking to me without any map or routes or instructions by an attorney, and like you said, there’s some shady middleman that I don’t even know, I barely can grasp their job title. There are some really bad situations. An attorney who does this a lot, when the client tries to ask prices on, and what do they charge, and so forth, we stop them. We go, “Wait a minute. We’re not taking your case unless we can prove origin of money,” because most attorneys who actually specialize in this field obviously get referrals based on approvals. When clients would jump over that step it’s worrisome. First of all, they shouldn’t do it at all until they can prove origin of money. The prove origin of money at the first step and then from that step, as you said, do not deal with anybody unless they’re a licensed broker. They first can walk around saying, “Okay, I’ve spoken to my immigration attorney. I now can prove the origin of money. My next step is to choose a regional center.” It definitely should be in that order. If it’s not, like I said, there can be a lot of problems and a lot of unnecessary problems. The person could have a legal way to prove the money just with an easy route but they would want to first make sure that’s set in order before they take any other steps.

Q: What is your advice, Andrew, for an investor who may have already wired the funds into a project before hiring you or an immigration attorney? Maybe they’ve gotten the cart before the horse so to speak? What do you do in those situations?

A: No, if the money is moved over we backtrack it. We go, “First of all, where did the money come from?” They explain it and then if we can piece it together the best we can … First of all, as I had mentioned before, sometimes we make our clients wire the money back. If there’s no way to prove it we would call the regional center and say … Like I said, the case is going to be denied. We explain that to the regional center and most likely a respectful regional center is going to be very willing to move the money out with the hopefully expectation that they clean it up. When I say clean it up means money goes out and then they find a different way to either use different money or to show how that money correctly came in a better route. Most regional centers will return the money back to let them redo it. This is hoping we’re not dealing with a deadline. Sometimes USCIS acts like they’re going to raise it 300,000 and then does not. For two years they had promised that for every September 30. We have a lot of rushed time. That last two months will be stressful because we have to hit that deadline and then USCIS says they’re not going to do it. Once again, the same issue is this year. We’re not sure if they’re going to raise it but they have explained they will. If the client says, back to your question, “Okay, I have 600,000. I am not moving it back to my home country. I’m going to go forward with this.” We would look at it and if there is less than, I would say, 60% chance of success we probably won’t take the case. We would just tell them, “It’s just ridiculous, why would you do this to you?” Hopefully it’s not utterly disastrous. You would think they would have some way … Like I said, we would sit there and go, “Okay, we’re going to try to piece this together. We think your chance of success is 60%, 65%.” Then we’d go forward on the case. With our other cases we at least explain to our clients, when they ask the percentage of success, we can tell them, “With respect to origin of money we can tell you that issue is 100%.” If they ask our opinion of that and that’s how we can construct most cases. We give them that assurety because we’ve done so many cases, we know what immigrational challenge and what they accept. We can really tell them … Or we can tell them, “Look, there are some issues here. There’s a high percentage you might get a request for evidence on that and then we’ll come back with more supporting documentation,” if they’re worried about this part of the origin of funds. We can do a lot of predictionson that issue. Once again, if they follow our instructions from the onset, and our pathway, usually there’s no issue whatsoever.

Q: Andrew, thank you for this great information and your time today in helping our investor audience understand the importance of origin of funds. What can you say to the investor listening who may feel overwhelmed by this information or who may feel as though none of these examples apply to them?

A: I guess the best explanation is they shouldn’t give up, even when they see me talk about all these examples, heard me talk about all these examples because I’m worried that the applicant is like, “I don’t fit into any of those, I have no chance for EB-5.” I’m not going to go over the hundreds of cases, each individual case and provide examples. There’s hundreds of thousands of ways you can prove origin of money. You just have to look at that individual situation and there is a extremely high chance that we can figure out a way to prove the origin of money. I don’t want people to go, “All his examples I don’t fit into therefore I’m not eligible for the EB-5 program,” I just don’t want to give that impression. It’s probably the exact opposite. If you have that type of money there’s a good chance that we can prove origin of money.

Q: Even in the most complex situation there is hope in the possibility of an approval for investors who follow the right path and guidance of an experienced EB-5 immigration attorney like yourself.

A: Exactly. We’ve seen so many situations and prepared cases that were very complex with complex transactions or numerous origins of funds from different locations and different sources that were comfortable in setting up a plan that we have seen be successful, already sent to immigration and already been approved. We believe we can go ahead and give them, like I said, a game plan or a map of how to go about it to prove their origin of fund.

Summary/Ending: Well we’ve reached our time limit for today’s episode but I’d like to quickly recap what we’ve learned about origin of funds. In preparing to make an EB-5 investment it’s really important to not start moving your funds around until you speak to an immigration attorney who can assist you in coming up with a plan and outline. Although loans are allowed, US immigration attorneys advise against them for EB-5 investments as they may delay or complicate the process. Even when you think you may not be able to prove origin of funds there are options, such as secondary evidence that may be used to help you with your case. You may receive the funds necessary to invest in the form of gifts from friends and family members. With the proper guidance and counsel of an EB-5 immigration attorney you’ll greatly improve our chances of an approval. Please note, these are generic instructions and hypotheticals as every EB-5 applicant’s case is different. Every potential EB-5 applicant’s origin of funds needs to be analyzed by a qualified attorney who has experience specifically in the EB-5 field. This podcast information should not be considered as legal advice and does not create an attorney/client relationship. More on Andrew Johnson may be seen at lawapj.com. It is imperative for investors to have talented immigration counsel but also strongly consider only looking at EB-5 investments which are also represented by a securities firm to be in compliance with US laws. It’s great to have them on the team and at no extra cost. Please visit eb-5eb-5.com to learn more about the EB-5 investor portal and how we may help you in the EB-5 application process. Andrew, thank you so much for joining us today. We look forward to having you on the show again real soon.

Introduction: Hello EB-5 investors. This is Floyd Mitchell with eb5eb5.com. Welcome to episode two of the EB-5 investor portal podcast, recording on Tuesday, June 27, 2017. Today’s episode is titled Origin of Funds and EB-5 Investments. Our guest is immigration attorney, Andrew Johnson, of law offices of Andrew P. Johnson in New York, New York. Mr. Johnson was a government prosecutor until he entered private practice in 1998. He has authored numerous articles on immigration and international litigation, some of which have been published by the American Bar Association and the American Immigration Lawyers Association. In addition, Mr. Johnson has been featured in the New York Times, quoted by the New York Daily News, and interviewed by CBS News on the topic of immigration. He has represented large corporations, nonprofits, and small companies in all aspects of immigration law. Mr. Johnson has spoken to business organizations in conferences around the world on the various strategies for immigrating and sending employees to the United States. Mr. Johnson practices immigration law exclusively and is an active member of the American Immigration Lawyers Association. Andrew is admitted into the United States Supreme Court first, seventh, ninth, and eleventh United States circuit court of appeals, New Jersey district court, and the State Bar of New Jersey. Today he will be sharing information about origin of funds in EB-5 transactions. Andrew, welcome to the show and thank you so much for joining us today.

A: My pleasure. Happy to talk about the most primary issue with a EB-5 applicant, which is the origin of funds.

Q: Can you share some insight about origin of funds and why issues or challenges tend to present themselves with this particular component in EB-5 investments?

A: Absolutely. There’s two issues with origin of funds. One, sometimes applicants think it’s no problem whatsoever and then they realize, after going into detail, there are some problems based on those country’s specific tax laws. Two, some clients think they absolutely cannot prove their origin of funds and realize once they talk to an attorney who’s done this for many years, there’s absolutely many avenues in which you can prove origin of funds. With that information, let me tell you about the basic requirements. Origin of funds simply means how to prove that the money was obtained legally for USCIS purposes. That’s the most important because a lot of people explain that in my country it was obtained legally and the government knows it’s obtained legally, however it might not be considered legal origin funds under USCIS regulations. The general rule about legal origin of funds is you have to come from an origin of which it was earned or legally obtained, and let me give you some examples. An easy one would be real estate. A house was sold and the proceeds of that money is used to show USCIS the legal origin of where the money came from. You also can do it from inheritance, just simple savings, investments, business profits or business salary, gifts from relatives or friends, and also you can use all types of variations. People don’t understand that you might have 10% come from inheritance, 10% come from business profits, 10% come from savings all the way through. You don’t have to have it come from one source. There is one other issue that often people don’t fully understand. They simply say, “Okay, I’m selling a house I owned for two years and therefore that’s the profit and I’ll show that and prove that as my origin of funds.” Because it’s a recent sale of a house, USCIS will want to know where that money came from to purchase the house two years ago. If it’s a home 20 years old the requirement for documentation showing how that money was earned is much less and can be usually drawn from affidavits or statements by the applicant.

Q: In your experience how would one go about showing detail for the origin of funds on a transaction that dates back 20 or 30 years or more? Can you tell us how secondary evidence may be helpful in situations where the origin of funds date back so long and the investor may have a difficult time producing the proper detail to satisfy USCIS requirements?

A: First of all, we, in our ideal world, if it’s 20 years, try to show all the lay and actually how the money was earned 20 years ago. You would have to show how the money was earned, even if the house is owned 30 years or 40 years. The issue is it’s just easier, usually you can show, “Okay, this money was earned by salary and here’s …My father worked for a company and he made roughly $20,000 a year over 10 years and then bought the house in 1992.” It usually can be established that way, so you always still want to establish it. It becomes, I guess the best way to explain it is if it’s two years ago clearly you should be able to find where the money came from two years ago. If it’s 15 or 20 you can do it with what they call secondary evidence, in other words not directly from bank accounts where the money was transferred over because people might not be able to have records of that bank account.
I apologize, it’s not an exact answer. We want to do our best to approve the money from a direct source as best we can, it’s just USCIS usually accepts what’s reasonable. It’s reasonable to show by affidavits and statements how the money was earned 30 years ago to purchase the house. It’s also reasonable that the house was bought two years ago to actually show where it came from out of bank accounts.

Q: I’d like to clarify for our audience, are origin of funds and EB-5 investments an item that only immigration attorneys work on? Or do other players get involved in this area at all?

A: Very good question. In fact, it’s our primary role. The other parts that we have to do are quite easy. It’s just identification documents and so forth. No, the investment banker, the regional center, they specifically don’t want to go into that issue because it’s a legal issue and requirement by USCIS. That is absolutely … That’s the most important job for the immigration attorney. As I had mentioned before, if the applicant can prove origin of funds there really is almost no other issue to make them ineligible to file for the EB-5 program.

Q: What are some of the common problems or misconceptions clients have with origin of money?

A: Most clients naturally earn money … Let me give you an example. If they earn money through business income and it goes into their business account and they move it over to their personal account. Then they take that money, obviously, and most people don’t keep $500,000 or $300,000 into their personal account and let it sit there. The money will either be spent on cars and jewelry and living expenses or the money will be invested in stocks. Then the money is used to purchase stocks or investments, and then someone might cash out on that investment and then spend it on something else. Now, often clients say to us, “I’ve made $750,000 over the last two years. I can prove that.” The problem is they can prove it from their business account to their personal account, but then if the money has been used, or sent out, or spent, they have to be able to show how they can bring that money back into their personal account to USCIS. In other words it has to be fully tracked back. The reason why it is as difficulty as it is, especially with things that you expense, that’s sometimes very difficult. A lot of clients have money from sources that we can’t use for USCIS, where they want to refill their personal account back up. They can say, “Okay, I can put $750,000 back into my personal account.” The problem is they can’t show where that money came from, they’re just refilling, in a sense, the personal account. Often, after we have those discussions, it’s easier for the applicant to almost do another business deal in order to get the money back into the business account moved over to the personal account, and have it stay there. With a lot of businessmen that’s actually quite easy. That issue, obviously, is what I had mentioned before. Some clients say, “Oh, well I make $500,000 a year, this should be no problem, it goes from my business account to my personal account, I have it invested and so forth.” They have to be able to legally show how that money is properly brought back into their business account without being replenished by money that’s from, in a sense, an ineligible source or an untraceable source. I know that gets a little complex but that’s what they really have to be worried about if they want to use money that they have saved or earned in the past. Where it went to and where it needs to go back. We have to draw it up in a sense where we actually track it and write up exactly the pathways, and sometimes even graph it up on a computer to make sure we can show the legality of it. Then we usually circle the sections or the amounts of money that would be considered questionable. Then with that we might say, “Okay, we have $75,000 that’s going to be untraceable, let’s try to find another source in order to prove that money,” which is often quite easy to do.

Q: Can an investor sell stock or other assets to come up with the investment required?

A: Absolutely. I don’t want to make it sound too difficult. If, for example, they earn income through salary or the business they own, they move it to their personal account, and then they purchase stock, then they sell that stock, it goes back to the personal account, we have legal origin of money, no problem whatsoever. The problem is, as I mentioned earlier, is often that money gets moved from stock, three years later it’s sold and goes to another stock, or then sometimes money is pulled out and expensed, that’s what I’m saying. When it has three or four multiple transfers you have to bring it back through all three of those transfers… Or trace it back from all three of those transfers to show the legality of it.

Q: In essence, USCIS wants to know where the funds came from, they want to know that they were obtained legally, and a large part of your role as an immigration attorney representing the investor is to assist them with this critical aspect of the EB-5 process.

A: Absolutely. What we do is we explain what we can explain right here, but also the client would tell us, “Okay, this is my portfolio which I think I can use.” They would then tell us where and how they got certain sets of money. Then between us we would choose the easiest route, we believe, that they could take which would have the least amount of tax consequences to them in their own country. Remember, USCIS doesn’t evaluate tax consequences in foreign countries. They don’t know the tax law, they don’t want to go into that. Everything is done outside. We give the applicants the best few options we believe and then they choose which option they want to with the least amount of tax consequences in their country.

Q: Does an immigration attorney help an EB-5 investor optimize or reduce their tax obligation in some cases?

A: In some sense. Our clients will know their tax laws from their country much better than we. We have a general idea of what it is. We just want to make sure there’s no tax problems within the US and the simple … We don’t do anything special, we just say don’t do the transaction or the gift transfer in the United States. Once that occurs, then they usually pick the route of how they want to do it in their own country. For example, if there’s three or four pathways we can choose, and let’s say if it’s in India, they get hit with high real estate taxes, they might want to avoid a high real estate tax sale to show that much profit. That’s just an example but we defer to the clients on their tax laws.

Q: Can you share with us some of your solutions where the applicant experienced difficulty showing how the money was legally earned or they just could not produce the necessary paperwork?

A: Absolutely. What I said earlier, when we would just say, “Lay out your portfolio,” and that’s probably a business term. “Lay out all where your money is right now, then we go over every possible option.” Then even if, let’s say, there’s an extreme difficulty with everything they told us we often go, “Okay, you’re often wealthy or have wealthy relatives and wealthy friends. It might be easier for a wealthy friend or relative to simply gift you the money.” We had a case where it was very difficult to show any tracking. As I mentioned, the money was earned but it was transferred out in so many variations and been out and resent to different places over the years. The person said, “Well I have a friend who is a salaried employee that owns his own business but is also salaried by a company based out of Singapore.” Our client was Bangladeshi. That friend, who had some control over the business he was getting salary payment, simply told his boss, “I run this operation in Bangladesh. Advance me $300,000.” He already had $250,000 saved. His boss, like I said, who he had an excellent relationship with, just advanced him and just said, “We wrote a letter from that business saying we are advancing our employee 200 or $300,000,” and that was it. In fact he wanted the money to be wired out of Singapore and not wired out of Bangladesh, which is often common. The nicest thing about that is that money that we used we didn’t even have to try to move out of Bangladesh. The money in transaction was wired into a Singapore account and to our client’s friend. He, then, just gifted it to his friend in another Singapore account and the person wired it to the regional center. That was one way to deal with it. Although that might sound fact-specific to that case you would be surprised how many people in the wealthy field who can afford $550,000 have friends or relatives who have a much better way to show how they legally earned their money because it might have been some recent real estate sale by a relative or a friend, or a friend might have a business that does import/export, that might easily earn $700,000 on a business deal. We would just show the contract on that deal, show the $700,000 earned, that friend puts it into his business account, moves it to his personal account, and then gifts it to our client. If our client has an international business where they buy and sell, or they have a friend with an international business buy and sell, and they don’t want to deal with the money inside their country they can set up deals where they have a transfer. They can do the transfer where the farm equipment goes to a country which our applicant lives at, or applicant’s friend lives, whether it’s Bangladesh or India or Pakistan or whatever country. The money can go to a place where they want it to go. The money could be transferred to a Kuwait bank account and we just show the contract, it says, “This import was from a farm equipment deal between an Indian client and another person from whatever country,” because that’s the seller. Once that transfer occurs we want the money to go into this Kuwait bank account. If that’s in the initial contract then they actually can keep the money out of the country, which some countries, Vietnam was another example, really don’t want money coming in if they’re going to do that transfer. USCIS does not care if the person is Vietnamese, Bangladeshi, Indian, or Pakistani, and a business deal occurs where the money is transferred to their account or to their friend’s account in Kuwait. Then moved from Kuwait into the US government regional center. That’s another way where people can avoid taxes, or, which we might deal with in another podcast, restrictions on how to transfer money out of that country. It sometimes solves two separate problems.

Q: If the funds are gifted to your client from a friend or family member, or in some cases multiple friends and family members, and let’s say one family member owns gold and sells their gold to get the funds, and maybe a brother of the investor sells a house and gives the investor a couple hundred-thousand dollars. Through a few sources this investor puts together the money required to make the investment. Do you have to prove the origin of funds from those original family members and friendsthat are gifting their money to the investor? Do you have to produce some sort of diagram or flowchart with supporting statements or affidavits?

A: You’re exactly right. For everybody, as I mentioned before, let’s say the applicant can’t prove his legal origin of money. He’s just going to work off gifts from relatives and from friends. You were right, each relative or friend has to prove their origin of money. I think one case we had close to 18 different sources and we had to prove origin of money from 18 different sources. When that relative says to you, “I’m gifting to you $50,000 for this,” we have to show how that relative earned the money. Often it’s not that hard, it might be salary. “I receive a salary, it’s wired into my account. Here’s my last year wiring it. Here’s $7,000 a month from that savings. I am giving them $50,000.” That might be an example. Or what you had stated, a relative has gold. They said, “I earned this gold,” or, “This gold was transferred through my family for this many years.” We would have an affidavit or a statement proving that and then we would show that as that original transfer. Each one, in a sense, would be, for legal terms, an exhibit. Exhibit A, $50,000 transferred to applicant. Then we’d have on the top of that exhibit the gift, it’s a simple gift letter, it’s nothing involved. The gift letter goes, “I’m giving $50,000 to my friend or relative in order for him to apply for the EB-5 program.” Underneath that would be proof of how that person earned that $50,000.

Q: What do you say to the investor listening today who has the necessary funds to invest in EB-5 but may think that they just can’t prove their origin of funds and may feel that they never will get approved and thus just never apply?

A: We’ve had people in the past who have told me just that. “Mr. Thompson there’s no way. I’ve looked through things and I can trace it, just my country doesn’t allow it or it just doesn’t work that way.” First we obviously go to the option, as I mentioned before, we go, “Well talk to our wealthy friends and family members and see if that’s an option.” That, like I said, usually clears up the problem because if you’re wealthy, like I said, you have wealthy relatives or friends.” The second option is, if they don’t have anything and they are wealthy and they have this, we simply tell them, “You can go ahead and sell property or you can go ahead and create, in a sense, a new business deal,” if they are import/exporters and everything goes through their business account. This is very challenging, especially people who have accounts in Kuwait. In other countries they don’t have personal account. They do everything out of their business account, which is completely legal within that country. They say, “Look, nothing comes from me, from my business or personal.” We would tell them, “Okay. It’s time to start gathering and putting our deals together and collecting them, any business account, new deals. Once you have 550,000 based on new deals into your business account I want you to open up for the first day a personal account and move that money into your personal account.” USCIS has to have that occur, although it sometimes seems silly to some of our clients or unnecessary. Even if they open up a personal account one day before they wire the money to the regional center. They have to do it. It’s just a sign the money came from their personal assets rather than their business. As you stated before, we usually can find a way, even if the applicant doesn’t believe there is a way, to prove the legality of the money.

Q: What are some examples of secondary evidence that can be used in providing origin of funds detail?

A: Let’s use a direct example of that. I’m just using gold for the reasons of this example. There’s other issues. For example, if someone has a house that’s 30 years old that cannot prove at all how they purchased the house 30 years ago, I always speak about Vietnam because their documents are very limited. In other words, there’s no real estate contract. Often things were written in scrap paper or there was no documents whatsoever. Secondary evidence is literally an affidavit from the person who bought the house, the relative who bought the house or the applicant themselves saying, “30 years ago I purchased a house for this amount of money. I paid it on collecting my salary because I worked as a professor at a university. We didn’t keep our money in banks at the time because our country didn’t have banks,” or, especially with Russian cases, a lot of the banks in the ’90s had closed so they cannot pull any evidence whatsoever for that reason. They often give an explanation. There was no banking system in Vietnam in the 1980s, in the Russian case they would say most of the banks closed in the 1990s, there was no records kept. Then they provide statements from themselves or whoever actually had the transaction. Another example is we had someone who had gold from their … They actually owned it but it was from their parents. The father had passed away in, I think it was, late 1988 or something. They had never put the gold anywhere. They kept the gold at home. The father had written a note in Vietnamese that stated, “I am giving my gold that I have to my oldest son.” It’s simple, on a scrap piece of paper, just a handwritten note. We use that plus a statement by the son, the applicant, who is now 50 years old, saying, “My father gave me through inheritance gold which I, three years ago, deposited and it was worth …” When I say deposited or cashed out, “It was worth $240,000 and here’s the best records I have from that direct deposit.” Whether it was receipt by the … The gold business might have given them a receipt or sometimes they can even get a letter from the people that they sold the gold to. Even if they can’t they often, a letter themselves, writing what happened can be what we call secondary evidence.

Q: Just to clarify, when you use the term statement you literally mean it could be a pen or pencil written on a piece of paper. Am I correct in assuming that? It doesn’t have to be some official document or form to be accepted by the USCIS?

A: Absolutely. I have always told my clients, what USCIS requires, documentation of evidence which is reasonable. If housing transactions occurred in the ’80s and ’90s in Vietnam, where they literally just transfer and give each other money on it, and maybe, like I said, get a deed at least from the government or some documentation. That’s all the evidence that’s available, that’s all the evidence USCIS can expect. When you said scrap, a piece of paper and pencil, absolutely right.
We do like to give the background of the situation in Vietnam. We have country conditions that talks about the banking system in Vietnam, how it was rarely used, no one trusted the banks, banks didn’t even exist in the 1980s. We can provide a newspaper article, roughly, that explains how sales were done in the ’80s and ’90s in real estate, whether it’s in India or Bangladesh or Pakistan or some of those countries.
Once again, if we’re talking about Germany … Now Germany, the expectation would be to have a paper trail if you’re dealing with in 1992, to have some type of document. Even if those banks were closed, let’s say someone, even in Germany, used a bank but can’t get records from that bank in 1992, they’re going to have real estate documents at least showing the sale. That, probably, would be expected. A lot of countries, and I would say the majority of countries that do EB-5, those type of direct documents are not expected if they’re 15 or 20 years old.

Q: Do experienced EB-5 immigration attorneys assist clients in producing historical documents that may support their origin of fund detail such as old newspaper clippings, as you’ve mentioned, or official statements from their respective governments?

A: Yes, absolutely. The nice thing is we’ve done so many that we already have the documents. We use the previous documents, we have articles explaining the banking system of that country at the time if need be and the country of course. All of that is quite simple to get the background because if it’s a national program or national issue there’s clearly been reports written about it. I also wanted to mention that often people say, “Okay, I earn the money, my father earned this money to purchase the house because he worked 20 years as a janitor from 1970 to 1990.” The father can write, if the father is alive, he can literally write, “I worked as a janitor for this school at this time.” If they can get a letter from the school that would be also great, but the school could’ve closed down. In a sense he’s saying, “I can’t even prove anything whatsoever where I got my money, but I worked at this job and I’m writing a statement, this is how I earned my money. This was my salary per month and this is the money I used to purchase a real estate house.” Salary statements are also very valuable when you want to have to prove secondary evidence.

Q: Can applicants use money sources in countries other than their citizenship?

A: Absolutely. It’s, I would say, pretty common. Often clients from these countries have bank accounts already in foreign countries. It’s already there to do the transaction. The reason they’re usually doing that is it’s just a little more difficult to move money out of their country. As I spoke before, people in some of those countries use a transfer agent to move it out if they don’t have accounts in other countries. One, they could have an account in Singapore, they can have an account in Kuwait. The money coming from those countries to USCIS is not an issue whatsoever. They also can open up a brand new account in Kuwait and Singapore and USCIS does not have a problem with it. They don’t say, “Wait a minute, why did you suddenly open an account?” USCIS knows there’s absolutely restrictions for countries moving money out of that country and they expect the applicant to go ahead, as I stated before, to sometimes use either their transfer agents, which have to move the money outside the country, or to actually use accounts outside the country. For example, standard Chinese cases are where they loan or gift $50,000 to 10 friends or relatives within China, and then that money is often moved, that 50,000 is then gifted back to the applicant in a Hong Kong or Singapore account. The money is then moved to a US regional center. That’s, I would say, extremely common and Chinese are probably 50% of all applications. That’s nothing that raises red flags within USCIS regulations. They actually expect that.

Q: Can investors take loans out, either personal or commercial, to invest in EB-5?

A: Very good question. Once you said loan I have to give you the recent regulation. USCIS allows loans. First I want to state that. Generally US immigration attorneys say, “Let’s avoid loans in every possible way.” For this reason: the case law has tried to delineate or clarify, and … The best way to explain it is USCIS requires, for someone tried to take a loan, based on collateral, it has to be based on collateral, and that loan has to be paid off within two years. As an immigration attorney, USCIS is going to give a request for evidence and just delay the case we believe, or sometimes, to wait until that loan is paid off. We do everything we can. We usually can work around it to avoid any loans. A loan is a red flag, not as an illegality, but it’s for USCIS to challenge it. What you said, can they sell off a piece of their factory, that’s great. If they go into a bank on a mortgage too, a lot of people want to just not sell the home but take a mortgage out on the home, absolutely. Legal but problematic because they eventually have to pay off the loan within two years. The cases actually run a year to a year and a half. They’re going to essentially have to go and pay it off. It’s just, like I said, it definitely stops from a clean approval and we do everything we can to avoid a loan. If it has to be paid off in two years we’re just adding an extra problem to our application.

Q: What advice do you have for investors out there that know very little about EB-5, they just know that they have the funds and they want to become an American citizen, they want their childrento go to better schools, they want to have access to better healthcare, they want to participate in the American dream but they know nothing about this process. Where do they begin, Andrew?

A: If you can’t prove origin of money it doesn’t matter what regional center you like or what your plans are. You first have to prove origin of money. Once you prove origin of money then all it becomes is what regional center you want to choose. Absolutely it comes from … Also, I know this is a side issue, but it’s related to everything, is often some very rich are worried about tax consequences. Sometimes they have their wife do the EB-5 program because, just what you said, they want to bring their children over and go to US schools, get all the benefits with that, but they, themselves, don’t want to be taxed as a green card holder.
What they do is they do everything we had spoken about and their wife does the EB-5 program because all the money the father earns, he just gifts to his wife and then she just wires … Then they both wire the money to the regional center. There’s no extra transfer needed when the wife just wants to do it. The whole family sometimes becomes green card holders and the father, then, just comes back and forth on a visa. Sometimes they like to do that for a temporary time because the family is going to become US citizens eventually. Once they become US citizens they can bring their father over as US citizens, as a green card through family, immediate relatives.
Sometimes the father is like, “I don’t want to be taxed for the next five years as a green card holder, I want to construct my assets in a way to once I become a green card holder there’ll be no tax consequences or limited tax consequences.” That’s another angle which is quite easy for us to do.

Q: What do you recommend an investor not do with their funds as they prepare to apply for their visa through the EB-5 program? Are there any recommendations you give to the majority of your EB-5 clients to help them improve their chances of an approval?

A: Absolutely. The first advice is … You can’t imagine how often people ignore me on this. Do not move your money or transfer your money anywhere if you’re thinking about this EB-5 program until you talk to an immigration attorney. I can’t tell you how many times clients have moved money to, let’s say, a Kuwait account from their home country and say, “Okay, I have this money in Kuwait, I’m all ready to go.” After I ask them don’t move the money. Then we trace it back and they didn’t properly prove the origin of money. We either have to move all the money back, or reconstruct a whole other situation, and the whole point is, as I stated before, to reduce their problems. The talk to attorney and then the attorney helps plan them out of how they want to deal with transfers and prove origin of money. Sometimes it becomes a giant headache on their side because they have to move all the money they tried to transfer to different places and so forth back to the origin to redo everything. That’s the biggest no-no, and I can’t tell you how often that has happened, is do not move money … Or even, I apologize, or do a transaction for the EB-5 process until you discussthat with an attorney. The attorney has to go first, “That’s a good way to go ahead and prove the origin of money,” or, “We can go that route.” Second, I make sure, I go, “If you do that route can you get these documents to support this transaction or this sale?” If it’s yes and yes, and the route is correct, we can go ahead and go forward. There’s a lot of those things that you speak to an immigration attorney, where we actually help them plan it out. Once it’s planned out then they can execute the plan. To try to do it in the middle is disastrous.

Q: I think you’ll agree that a lot of the negative press that the EB-5 industry sees stems from unlicensed brokers and agents who are misguiding these investors. The investors should instead call an immigration attorney. Is it safe to say that the investors should not rely on any information they’ve heard from unlicensed brokers or immigration agents? My understanding is that a lot of these investors are just wiring $500,000plus into regional centers without having an investment banker or a licensed broker-dealer review the offering. Can you speak for a moment about safeguards and the proper way for the investor to go about this?

A: Absolutely, and you’re right. I’ve heard stories to that effect. When money has always been wired into the US, which it’s just shocking to me without any map or routes or instructions by an attorney, and like you said, there’s some shady middleman that I don’t even know, I barely can grasp their job title. There are some really bad situations. An attorney who does this a lot, when the client tries to ask prices on, and what do they charge, and so forth, we stop them. We go, “Wait a minute. We’re not taking your case unless we can prove origin of money,” because most attorneys who actually specialize in this field obviously get referrals based on approvals. When clients would jump over that step it’s worrisome. First of all, they shouldn’t do it at all until they can prove origin of money. The prove origin of money at the first step and then from that step, as you said, do not deal with anybody unless they’re a licensed broker. They first can walk around saying, “Okay, I’ve spoken to my immigration attorney. I now can prove the origin of money. My next step is to choose a regional center.” It definitely should be in that order. If it’s not, like I said, there can be a lot of problems and a lot of unnecessary problems. The person could have a legal way to prove the money just with an easy route but they would want to first make sure that’s set in order before they take any other steps.

Q: What is your advice, Andrew, for an investor who may have already wired the funds into a project before hiring you or an immigration attorney? Maybe they’ve gotten the cart before the horse so to speak? What do you do in those situations?

A: No, if the money is moved over we backtrack it. We go, “First of all, where did the money come from?” They explain it and then if we can piece it together the best we can … First of all, as I had mentioned before, sometimes we make our clients wire the money back. If there’s no way to prove it we would call the regional center and say … Like I said, the case is going to be denied. We explain that to the regional center and most likely a respectful regional center is going to be very willing to move the money out with the hopefully expectation that they clean it up. When I say clean it up means money goes out and then they find a different way to either use different money or to show how that money correctly came in a better route. Most regional centers will return the money back to let them redo it. This is hoping we’re not dealing with a deadline. Sometimes USCIS acts like they’re going to raise it 300,000 and then does not. For two years they had promised that for every September 30. We have a lot of rushed time. That last two months will be stressful because we have to hit that deadline and then USCIS says they’re not going to do it. Once again, the same issue is this year. We’re not sure if they’re going to raise it but they have explained they will. If the client says, back to your question, “Okay, I have 600,000. I am not moving it back to my home country. I’m going to go forward with this.” We would look at it and if there is less than, I would say, 60% chance of success we probably won’t take the case. We would just tell them, “It’s just ridiculous, why would you do this to you?” Hopefully it’s not utterly disastrous. You would think they would have some way … Like I said, we would sit there and go, “Okay, we’re going to try to piece this together. We think your chance of success is 60%, 65%.” Then we’d go forward on the case. With our other cases we at least explain to our clients, when they ask the percentage of success, we can tell them, “With respect to origin of money we can tell you that issue is 100%.” If they ask our opinion of that and that’s how we can construct most cases. We give them that assurety because we’ve done so many cases, we know what immigrational challenge and what they accept. We can really tell them … Or we can tell them, “Look, there are some issues here. There’s a high percentage you might get a request for evidence on that and then we’ll come back with more supporting documentation,” if they’re worried about this part of the origin of funds. We can do a lot of predictionson that issue. Once again, if they follow our instructions from the onset, and our pathway, usually there’s no issue whatsoever.

Q: Andrew, thank you for this great information and your time today in helping our investor audience understand the importance of origin of funds. What can you say to the investor listening who may feel overwhelmed by this information or who may feel as though none of these examples apply to them?

A: I guess the best explanation is they shouldn’t give up, even when they see me talk about all these examples, heard me talk about all these examples because I’m worried that the applicant is like, “I don’t fit into any of those, I have no chance for EB-5.” I’m not going to go over the hundreds of cases, each individual case and provide examples. There’s hundreds of thousands of ways you can prove origin of money. You just have to look at that individual situation and there is a extremely high chance that we can figure out a way to prove the origin of money. I don’t want people to go, “All his examples I don’t fit into therefore I’m not eligible for the EB-5 program,” I just don’t want to give that impression. It’s probably the exact opposite. If you have that type of money there’s a good chance that we can prove origin of money.

Q: Even in the most complex situation there is hope in the possibility of an approval for investors who follow the right path and guidance of an experienced EB-5 immigration attorney like yourself.

A: Exactly. We’ve seen so many situations and prepared cases that were very complex with complex transactions or numerous origins of funds from different locations and different sources that were comfortable in setting up a plan that we have seen be successful, already sent to immigration and already been approved. We believe we can go ahead and give them, like I said, a game plan or a map of how to go about it to prove their origin of fund.

Summary/Ending: Well we’ve reached our time limit for today’s episode but I’d like to quickly recap what we’ve learned about origin of funds. In preparing to make an EB-5 investment it’s really important to not start moving your funds around until you speak to an immigration attorney who can assist you in coming up with a plan and outline. Although loans are allowed, US immigration attorneys advise against them for EB-5 investments as they may delay or complicate the process. Even when you think you may not be able to prove origin of funds there are options, such as secondary evidence that may be used to help you with your case. You may receive the funds necessary to invest in the form of gifts from friends and family members. With the proper guidance and counsel of an EB-5 immigration attorney you’ll greatly improve our chances of an approval. Please note, these are generic instructions and hypotheticals as every EB-5 applicant’s case is different. Every potential EB-5 applicant’s origin of funds needs to be analyzed by a qualified attorney who has experience specifically in the EB-5 field. This podcast information should not be considered as legal advice and does not create an attorney/client relationship. More on Andrew Johnson may be seen at lawapj.com. It is imperative for investors to have talented immigration counsel but also strongly consider only looking at EB-5 investments which are also represented by a securities firm to be in compliance with US laws. It’s great to have them on the team and at no extra cost. Please visit eb5eb5.com to learn more about the EB-5 investor portal and how we may help you in the EB-5 application process. Andrew, thank you so much for joining us today. We look forward to having you on the show again real soon.

 

EB-5 Broker Dealer

In this EB-5 Podcast Episode you’ll learn some key information about the Broker Dealer and their importance in EB-5 investments. A few things you’ll learn in this article and podcast are:

  • What is an EB-5 Broker Dealer?
  • Why are EB-5 investments securities that require an EB-5 Broker Dealer’s involvement?
  • What background and experience does the Portal’s Broker Dealer have?
  • What can you expect when working with an EB-5 Broker Dealer?
  • Read on or listen to learn more about the EB-5 Broker Dealer.

Video Version

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Charles “Duke” Runnels of T.R. Winston speaks with us about the role of a Broker Dealer in EB-5 Transactions. Podcast – 28 mins.

Introduction: (Episode Transcribed)

Hello EB-5 Investors this is Floyd Mitchell with eb5eb5.com and welcome to episode #1 of the EB-5 Investor Portal Podcast.

Recording on Friday June 23rd 2017. Today’s episode is titled:
The Role of a Broker Dealer in EB-5 Investments”.

Our guest is investment banker, Charles “Duke” Runnels of T.R. Winston & Company. Duke has an impressive background in not only EB-5 Investments but real estate as well. Some of Duke’s notable projects included the Minnesota World Trade Center, the Louisville Galleria along with its two adjoining office towers, the CCH Computax Headquarters building and the Torrance Marriott Hotel. 

Since 2014, Duke has been acting Director for Capital Markets for TR Winston & Company, a privately owned merchant, corporate and investment banking firm. Today Duke will share with us some keen insight into the role of a broker dealer in EB-5 investments. Welcome again and I hope you find today’s show informative and helpful. 

Are you an investor doing your research and trying to find the right project, or the right team? Are you familiar with the role of a broker dealer and how much this person can help you reach your dream of U.S. Citizenship? Have you read the bad news about EB-5 as it so often is published by the media? We’ll if so, today’s episode should bring clarity and give you confidence that there is a proper, safer and professional way to make your investment and improve the likelihood of you reaching your goal of becoming an American Citizen.

I’d now like to welcome Duke Runnels to the show. Duke, we appreciate your time today and really look forward to learning more about what you do as an investment banker and broker dealer for immigrant investors. 

Q:
Let’s start with the basics Duke. There are many advisors that are not actual Droker Dealers like you out in the world promoting various EB-5 projects and giving advice to prospective investors. I understand that this can be quite risky and that there are actual safeguards in place for these investors. What are EB-5 Investments and why are they regulated by FINRA and what is your role in all of this as a broker dealer? 

A:
EB-5 investments are securities and securities come under the purview and guidance of FINRA and its member firms. The Broker Dealer (also referred to as an investment banker) role is a critical role as one looks towards making an investment in the EB-5 arena. The reason for that is that you know that investment has gone through a certain amount of scrutiny, a certain amount of due diligence, investigation and that there has been a full identification of the risks along with the opportunities. Call it an enhanced vetting process that the project goes through before it is even made available to the investor for their consideration. So the role of a broker dealer or the role of an investment banker becomes a critical one. In the EB-5 industry this is somewhat of a new phenomenon because many people have been acting as advisors in this role without going through the various guidelines that are developed by FINRA. A Broker Dealer adds another avenue of safety that the investor may rely on.

Q:
What is involved to get approved as an investment banker to be licensed as an EB-5 broker dealer?

A:
What’s involved there is making application to FINRA to actually expand your firm or the investment banking firms suite of services. And when one makes that application to FINRA there is a process that is a laborious and expensive process to go through in order for that broker dealer to be authorized if you will to transact in the EB-5 arena. There are very few investment banking firms to my knowledge that have gone through that process as we have at T.R. Winston.

Q:
What is the process for an investor to work with the EB-5 Investor portal and yourself at T.R. Winston & Company to make an investment in one of the EB-5 projects you represent?

A:
Sure. The process would look something like the investor has been made aware of the web site EB-5 Investor Portal which has been fully reviewed by FINRA. They’re made aware of a project through that portal. Most often they’ve been made aware of that project through their own immigration attorney or an immigration attorney that they have been working with, once they decided to pursue making an application for an EB-5 Visa. Once the attorney is involved and they’ve started to pull together information, they have been in contact with the EB-5 Portal and have been made aware of a project at that point in time should their interest be sufficient enough they are put in touch with someone such as ourselves a T.R Winston, with an investment banker or broker dealer if you will. What will happen before then, what they can expect from that conversation with an investment banker is that we will have already reviewed the project, not only the project itself and its economic viability. We will have reviewed the viability coupled with the reports as to it’s job creation, we will have reviewed and done extensive background checks on the sponsors of that real estate development. In other words, it is our role to uncover everything there is to know, everything there is regarding the proposed project. What that brings to the table is another layer of safety, another layer of due diligence, another layer of vetting that the investor and his immigration attorney can rely on as they study and peruse and decide if the investment is correct for them. It really means there is another layer of comfort to be gathered by talking with the underwriter of the program which would be the investment banker and that’s where the interface with us and that’s where that conversation starts to lead.

Q:
Do you speak with the investor directly or do you work with any number of people they may have on their team such as immigration attorneys, wealth managers, accountants etc.?

A:
That’s a great question Floyd and I would say yes to all of the above. One of the unique aspects of the way this program is set up is that the investor does not need to let go of his individual advisers that he’s been accustomed to relying on. In other words they can retain their own immigration attorney as well as retain their own wealth managers or accountants or things on those lines. It is important though, that as the investment banker, we do interface directly with the investor but we can do that with the immigration attorney in most cases, accountants if need be. Bearing in mind that we are not accountants we are not legal attorney, so the investor would want to rely on his expanded team if you will. Be it individual conversation with the investor or conference calls with the investor and their advisers. All of those are tremendously encouraged.

Q:
Why is T.R. Winston qualified to help any investors out there that may be listening to this podcast? If you can as well, please tell us about your real estate experience and how that may help the investors you work with.

A:
Well I think there’s a number of things to consider. One of them is that the firm in this case T.R. Winston has been vetted and approved as part of their business operation to participate in the EB-5 arena. So that’s number one. Then secondly it is important that the actual investment banker or the actual adviser be someone that has real estate knowledge and experience because in most cases that’s where the EB-5 investment will rest in the real estate industry. And in our particular situation my particular career as well as our team has been rooted in the real estate industry both from a standpoint of equity and debt and more particularly in terms of real estate development. So our ability to underwrite to verify projections or challenge them as the case may be is a little bit more enhanced because of our career experience in the real estate market as it spans the United States and different product types. So as I circle back it’s important that the firm be authorized by FINRA to participate and EB-5 is a part of their business operation and it is critical that the actual investment advisors or investment bankers have extensive real estate experience and that that is a part of what they bring to the table not just financial projections and a process.

Q:
Because so many EB-5 projects really do involve real estate in some capacity and EB-5 investments are securities as you mentioned earlier, this must have created a very unique and interesting legal and vetting climate. You’re dealing with two different and uniquely regulated industries. What are your thoughts about this and can you expand on how EB-5 and real estate mesh together in the case of these investments?

A:
Well it is unique because there are two separate industries real estate and securities but they have started to blend themselves together and what I’m referring to there is the nature of real estate development and our experience there in developing projects such as mixed use projects with retail and office and senior living as well as high rise development as well as suburban office development, that experience and that industry has evolved to where oftentimes as one raises equity or raises debt, it has crossed over and has become a security as defined by FINRA. Once something has been defined as a security then by definition and by law you need to be licensed and a member of FINRA in order to make those offerings, or to offer those to the public. In the case of EB-5 that investment is in the form of debt and by definition is a security and that’s where FINRA guidelines come into play. What makes it very unique is that the licensing requirements for real estate as well as securities are significantly different. Real estate is licensed by the state. Each state where that development or that real estate property is located, Securities on the other hand are licensed on a national basis. Series 7, Series 63 and others that allow an investment representative as well as an investment banking firm to participate and make offerings around the country. So there’s a unique difference but there’s a unique blend here and that our experience, our resume, our credibility spans both industries.

Q:
How do you choose the right project for your investor clients? What are the types of projects that you look for when making your recommendation to EB-5 Investors and how do you increase the potential for success with the projects you recommend?

A:
They have to fall into an area of interest for that investor. Though I would hasten to add that I believe every investor’s primary objective is to obtain a visa through the EB-5 offering mechanism. Having said that, once a project or a number of projects are identified one may hold greater interest to an investor. That is all very well and good and yet our role is to make sure that the project is a viable project. That it’s one that can be built, it’s one that the city or the various governing authorities will allow to be developed through the permitting process. And then most important is that, that development will create the number of jobs necessary to warrant granting an EB-5 Visa. And that is critical. Now, coupled with that is the economic viability of the project itself. It’s one thing to say “I will build it”. It’s another thing to raise the money for it but then, is the project economically viable? And that’s one of the areas that we underwrite as well. Now do we present a number of different projects to various investors? If they are interested in that, Yes we do. But I think what is critical in nature is that whatever is presented to an investor is one that is a project that has already passed the scrutiny of diligent underwriting from a security standpoint so that they have another level of comfort that their investment is safe and they have a reasonable, or better than reasonable expectation that they will receive their investment back as called for in the offering documents. There is a risk to any sort of investment made and as a matter of fact that is required by law, that in order for the investment to be qualified for EB-5 consideration it must be “at risk”. But our role as an investment banker is to quantify that risk, to identify that risk and hopefully minimize that risk as much as possible, but having said that it’s still a requirement of law that their funds be at risk. We go to the lengths of not only testing a proforma, making sure the cities have provide appropriate permits, making sure that all documents for the development are in order and even going so far as to doing extensive background checks on the developers themselves and their credibility, their resume as well as just their legal background check. So we go to all ends to try and verify that everything is as presented and is as safe and secure as possible.

Q:
C
an you tell us about escrow, fund control and how the investors money is being managed after it has been invested?

A:
Sure. The process that has been set up in this particular EB-5 portal process is that all the funds that are invested go into a third party escrow. I’ll say an independent escrow, the funds are not released until the appropriate request for release has been made, or the appropriate progress has been made on development along with the appropriate jobs creations identified in process of the development. So there are a number of different checks and balances that have been established. It’s not simply one invests their money and it’s gone, or it goes into a whole not to be seen again. The distribution of those funds are ones that are subject to checks and balances as well. And once again, that is simply another layer of safety which has been established.

Q:
I understand that there in the TEA (Targeted Employment Areas) the minimum investment is 500k and also calls for an admin fee of 50k for a total of 550k. Are there additional costs that an investor needs to plan for in engaging a broker dealer as part of their professional team?

A:
That’s a great question. There are no additional costs. The cost for broker dealer involvement and everything associated with that and the costs of being legally compliant is all embodied within that investment amount that $550,000.00 that you refer to again. As it goes up, as the Congress may require that to go up in the coming months, that does not impact the cost of securities or the other administrative costs of getting into the EB-5 program. So it’s all self-contained.

Q:
First can you make referrals to a few good immigration attorneys if the investor comes directly to you and doesn’t already have one? And lastly many people practicing in the EB-5 industry are not using a broker dealer. Is it safe to caution investors who may be looking at projects that don’t involve an investment banker like yourself?

A:
Absolutely. Absolutely. And I think you hit on one very important topic. One of the major benefits of having a broker dealer involved and following the process that all of us have identified for this EB-5 investment is one of transparency because everything is completely transparent. There are no hidden costs, hidden fees and it’s all laid out very clearly. At the end of the day every investor knows that this has complied with all US rules and regulations regarding securities and investment in an EB-5 program.

Q:
Our goal with this podcast and having you as our first guest is we want to help create awareness that there is a professional and a safer way to make EB-5 investments that the media may have led you to believe. To the investor listening today that feels a bit of fear or uncertainty around the EB-5 space, what can you say to make them more comfortable with this process?

A:
From the standpoint of recognizing that $500,000.00 or $550,000.00 is a lot of money. And we have to acknowledge that and respect that. We also have to look at a situation to say if we were going to invest that money ourselves we would want to know who we’re investing it with. We would want to know what type of project we’re investing in and we would like to know with reasonable certainty that it what we believe to be a safe investment. Now the only way to accomplish that, is to abide by the rules and the rules that have been set out for transparency, the rules that have been set out for underwriting standards, understanding not only the process but who the sponsors are who are behind the projects. What is their track record? What is their reputation? And you know when there have been problems in the past and there have been quite a few and it has all come from someone being surprised. In every situation that I’m aware of, someone chose not to follow all of the rules because let’s be honest, following all the rules means a little bit of extra work. Between the EB-5 Portal and T.R. Winston and all of the people involved in this effort, we chose to do the extra work in order to have a safe and secure investment opportunity for the EB-5 investor.

Q:
Why do EB-5 investments sound so risky in the news? When done right, the EB-5 program can actually lead to permanent residency for the investor and their entire family. What should any investor expect when working with the EB-5 Investor Portal and T.R. Winston & Co. 

A:
So this whole process should not be like going to Las Vegas. It should be a process that if you follow all the steps and follow all the rules you should be able to expect a visa at the end of the day. That’s the goal. That’s the goal of everybody involved and that should be not only the goal but the expectation of the investor. That’s what our objective is at T.R. Winston & Co., to provide that.

Q:
What are the potential red flags that you may come across in working with a potential investor and what kind of advice can you give investors to increase their chance of an approval?

A:
You know one of the big red flags that can pop up, is Source of Funds. Where is the money coming from? And to make sure that it is clean money, if you will. That’s one of the reasons why we absolutely love to have the investors working in tandem with their immigration attorneys, because as I said we are not attorneys but their immigration attorneys will have a real good handle on that in terms of their source of funds and they will have a relationship that can help them understand exactly how the investment is being made, with what funds where they’re coming from and how they’re to be delivered. That is one particular area and I would say that, that may be the most common area. Not necessarily a red flag is thrown up but it’s something for everyone to be attuned to for everyone to be cognizant of, or to be aware of. So that’s one of the areas that does receive some attention and probably the greatest one that receives attention or the most scrutiny but it is certainly a topic that can be worked through and making the assumption that most people are upfront and honest and if they’re working with the right team of which T.R. Winston would be one of them. If they’re working with the right team of attorneys and whatnot. it’s certainly a challenge that can be easily overcome.

Q:
What about the immigration attorney who may be listening today…Many of these attorneys are just referring clients directly to regional centers instead of investment bankers like you – Do you have any advice for these attorneys?

A:
It’s a wonderful question and one that’s not asked too often Floyd because in most situations if an attorney refers their investor client to a regional center or to a sponsor or whatnot that is not set up the way that we’re set up, that is the last that, that attorney sees of their investor because the regional center or whoever they’re referred to will put them in touch with the regional centers’ immigration attorneys. As I mentioned at the onset, our goal and our objective is to work together with the team that the investor already has set up. So if an attorney calls us to refer an investor into the program, we not only respect that relationship we encourage that relationship to continue and the investor is not handed off to someone totally separate. They’re very strongly encouraged to keep their own legal representation. As a matter of fact, that is included within the administration fee upfront as we discussed earlier. I think the benefit to immigration attorneys is knowing that when they refer somebody into this program they absolutely get to keep their client and preserve the relationship and expand and grow the relationship. So I would see that as a big advantage.

Q:
So the attorney keeps the client and flies the necessary legal paperwork. You don’t take the client from them?

A:
That is absolutely correct.

Q:
D
uke, thank you for your time today and for such great information on this topic. As we are coming to a close, I’d like to ask if there is anything else you’d like to contribute or that I might not have covered?

A:
I really can’t stress enough that when one steps back and looks at various opportunities for an EB-5 investment, that transparency just has to be a huge key. If there’s one thing that an investment banking firm such as T.R. Winston, if there’s one thing that we do and do well it’s ensure that there is absolute and full transparency to the transaction, as well as just another layer of underwriting, another layer of offering security of knowledge to the investors. If one is looking for a safer investment, one that they can feel more comfortable with, this is certainly the way to look.

Q:
It sounds to me that working with a broker dealer in any EB-5 Investment is right way to go about it.

A:
Well it’s not only the right way to go it is how the entire process is evolving because it’s the only way that the government can ensure that the problems we talked about earlier don’t happen again. The whole industry will continue to evolve as we do.

Ending Segment:

EB-5 Investors thank you for listening. We hope you enjoyed the episode and I’d just like to recap some of the big takeaways that I’ve learned in speaking with the Broker Dealer today. 

Broker dealers add an extra layer of safety. They also vet the projects well before they are presented to you. When working with the right team and following the process properly – you should expect a visa as the end result of your investment. EB-5 Investments are securities and should be handled by FINRA licensed broker dealers and investment bankers. If the consultant you are working with is not licensed, we recommend you exercise a great deal of caution before making an investment. You may also reach out to us with any questions you may have at our website eb5eb5.com and we’ll answer them in the order we receive them. More on TR Winston and Co can be seen at TRWINSTON.com.


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