EB-5 Visa Due Diligence Best Practices & Challenges

EB-5 Visa Due Diligence Best Practices & Challenges

The US EB-5 program offers permanent residence to investors making at-risk investments of $1 million in an enterprise or Regional Center, which is reduced to $500,000 if such enterprise or Regional Center is located in a rural area or a Targeted Employment Area. Further, the investment must, in order for the applicant to qualify for the green card, comply with additional job creation requirements.

Pending the announcement of a revised program requiring increased investment thresholds, the EB-5 visa is also cheaper than many other programs offering citizenship or permanent residence and thus very popular amongst investor, globally. High demand for the visa has led to an increase in abuses of a growing number of projects affecting the status of thousands of the investor applicants. With the program under ongoing scrutiny over regulatory violations and other issues, investors are advised to carry out effective due diligence of their proposed investment to ensure it complies with INS requirements. This is an ongoing requirement.

Due Diligence in EB-5 Regional Center Investments

Regional Center financing typically falls under federal SEC legislation and requires issuers and all parties acting on behalf of issues to reasonably ensure that all information provided to purchasers of the securities is accurate and complete at all times. During due diligence, the investigator verifies that this requirement has been met by the issuers. The investigator must adhere to that standard of assessment that he or she would follow in a transaction involving his/her own property.

Most investments made under the EB-5 program are liquid in nature and can be recovered by the investor only after the enterprise earns enough profits to repay its investors. Failed ventures may ultimately result in litigation between the applicant and all other parties on the grounds of fraud, negligence, mismanagement etc. Benefits of due diligence include-

Independent assessment of the viability of the project for the EB-5 applicant.

Comprehensive investigation ensuring compliance with all rules and regulations governing disclosures.

Evidence of exercise of reasonable care by parties when facing litigation or government investigations.



  • New York

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