The latest SEC enforcement action at Jay Peak is another black eye on the EB-5 program. At a time when the program’s future hangs in the balance, with regular hearings on Capitol Hill to debate whether to reform the program or terminate it, and in an election year, the timing is horrible.
Appallingly, there are solutions available today that could have prevented this from happening, yet some in our industry continue to question the need and value of adopting and deploying these solutions.
The Jay Peak case is particularly high profile as it has historically been used as an example of the “right kind” of EB-5 project, but the alleged fraud that occurred is disconcertingly similar to other recent fraud cases. In all of these situations, the failure of the projects had little to do with the quality of the project but had everything to do with the lack of financial and operational controls of the issuer.
These types of fraud cases can be prevented through the implementation of third-party fund administration and oversight. Third-party oversight and tracking of funds has always been the right thing to do to provide investors the security and transparency they deserve, but now it’s also the right thing to do to protect the future of our industry.
NES Financial has been a leading advocate for increased security, transparency, and compliance in EB-5 for more than six years and recognized the need for third-party administration as a best practice long before high-profile incidents of fraud became commonplace.
As a result, we have developed an entire suite of technology and services that fulfills these needs. In addition to our widely deployed Intelligent Escrow Solution, the suite also includes Fund Administration, Fund Accounting, Immigration Workflow, Loan Administration, and Draw Down Accounts.
Clients who adopt one or more of these solutions are recognized with a Medallion Award. This award is promoted to agents and investors in China and elsewhere as a way to identify projects that embrace true best practices.
If your project has not been designated with a Medallion Award it’s not too late. These solutions can be deployed separately to complement existing projects or as a bundle on new projects.
NES Financial is committed to the future of the EB-5 industry, and we believe it’s essential for projects to implement third-party administration as a standard practice if the industry is to survive. For that reason, we will be featuring these solutions at this week’s IIUSA event, with incentive promotions to help get your project where this industry needs to go before it’s too late.
Please stop by booth #25 at IIUSA, or contact your NES Financial representative to learn more.
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