EB-5 on the rocks … with a Kushner twist!

By Mona Shah, Esq.

Stirred but not yet shaken –the EB-5 program was given a final extension to September 30, without the much-anticipated reforms.  In a Washington Post article[1] last week, the extension was suggested to be an awkward political test for Trump as both he and his son-in-law Kushner, have benefited directly from the EB-5 visa program.[2]  Then came the torrent of news reports along with emails from clients and prospective investors relating to the appearance and speech of Jared Kushner’s sister, Nicole Meyer, at an EB-5 seminar in Beijing this weekend the latest twist in the EB-5 saga.  Across the board, the articles censured Ms. Meyer for flaunting the close relationship her brother has with the president, followed by considerable, unwarranted criticism of the EB-5 program.  Senator Dianne Feinstein (D)(CA), for example, used the opportunity to again demand that the EB-5 program be eliminated, stating that an effort by the sister of senior White House adviser Jared Kushner to offer U.S. visas to Chinese investors is a “stark conflict of interest”, confusing one issue with another.

Two days later, the torrent of publicity still did not abate, giving rise to further scrutiny by the press of the EB-5 program.  From the many news pieces, it is evident that there is still considerable ignorance surrounding the EB-5 program.    

To date, EB-5 has brought in $15.4 billion[3] in investments into the US, acting as alternative capital for countless projects which otherwise would not have been able to get off the ground. More than 25 countries, including Australia, Portugal, Spain, and the United Kingdom, use similar programs to attract foreign investments, however, the American program, is one of the few investment programs that requires the investment to be at risk. At this time, there are over 900 projects seeking EB-5 financing, a tough call for investors, often confused as to which would be the safest project to invest.

Seminars selling EB-5 projects are routine in China. Similarly, seminars with celebrities, Governors, Mayors and other political figures supporting the project being sold are also relatively commonplace as an effective means of persuasion. The difference here is that a Kushner project carries the inference of an endorsement from the highest political office in the U.S.  The press mostly focused on ethical issues, not necessarily concluding that Ms. Meyer’s appearance and the use of the Kushner name gives the Kushner’s project an unfair advantage over the many other projects vying for foreign investment.  This is because the glamor facet of the Kushner project overshadows the merits of other sound projects marketing without celebrities. This is the very reason the promoters of the project would have invited Ms. Meyer to speak and hardly differentiates this appearance from other celebrity appearances. Indeed, as reported by MSNBC, some event attendees told the newspapers that the company's connection to the White House was a definite bonus as they decided whether to put their money into the project.  Following a presentation in Shanghai on Sunday, the Times reported a prospective investor (Bi Ting) as stating: "The Trump relationship is an extra point for me."[4]

Experience has shown that EB-5 investors are not all swayed by celebrity appearances or name dropping. In fact, as EB-5 investors represent the top echelon of their countries, often with a net worth of $3 to 5 million, many are self-made, and have funded more diverse and often intelligently structured projects, not necessarily high-end real estate, albeit not in the same numbers. EB-5 financing can be found in manufacturing, green energy, transportation amongst others. The Trump administration cannot ignore such investments. What is important to note is that as Trump has ended negotiations from free-trade agreements such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) countries from these agreements are home to companies representing 90% of total inward foreign direct investment into the U.S.[5]  President Trump needs to allow investment and economic prosperity to continue in the United States, thus he is going to need to ensure that foreign investments continue to be welcomed here – which includes retaining the EB-5 program. EB-5 in particular, can effectively bolster Trump’s agenda, both in funding his infrastructure goals as well as revitalizing the rural and distressed urban communities.  A recurring criticism of the EB-5 program has been that the emphasis of investments has not been in rural or needy areas, but rather in prosperous locations such as Manhattan, Miami, LA, or D.C.  Ms. Meyer’s controversy may ultimately hasten the ability of so called “glamor projects”, like that of the Kushner family, to be able to amass EB-5 investments at the current lower threshold of $500,000. 

As we stand now, the EB-5 Program has been extended without any changes to the regulations. It is highly unlikely that the program will continue past September 30, 2017 without reforms.  Senator Grassley said in a statement Monday that the program “must be reformed or scrapped entirely,” noting that it had been extended “without needed reforms” –a direct reference to the ability of glamor projects to accept investment at the lower tier.   Last week, prior to Ms. Meyer’s controversial appearance, even the White House issued a statement referencing the same: “There are serious concerns held by the administration regarding the EB-5 visa program, in part because it is not being used as it was primarily intended. The administration is continuing to evaluate reforms to the program, which we believe is in need of substantial repair.”  (Michael Short, a White House spokesman.) [6]  

Whichever way one looks at Ms. Meyer’s appearance, it certainly brought considerable attention to the EB-5 program. Foremost, it is accepted that a Kushner project, Ms. Meyer’s appearance and the insinuation following the name dropping was taken as a vote of confidence for the program not only by the Chinese, but worldwide. The popularity of the program has grown tremendously despite the element of risk involved and despite negative press surrounding a few regrettable fraudulent cases. Factors spurring this popularity include the difficulty and delays in obtaining U.S. residence in other immigrant categories.  The EB-5 program has been proven to create and support thousands of jobs around the country and the prosperity has not been limited to rich coastal states either as the program has supported jobs in rust belt states. Overall, between 2011 and 2013, the program supported an average of 29,300 jobs each year[7].

The Kushner EB-5 project and Ms. Meyer’s appearance has certainly now shaken and not just stirred the EB-5 debate!

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Mona Shah, ESQ. :  

UK born, Mona, a dual licensed attorney, practiced as a Government Prosecutor with the British Crown Prosecution Service, before moving to New York, USA.

Mona has over 19 years of experience and extensive knowledge of all facets of U.S. immigration law; her practical expertise ranges from specialist business petitions to complicated, multi-issue federal deportation litigation.  Highly proficient and experienced in EB-5 law, Mona was voted top 25 EB-5 attorneys in the US 3 years in a row. Mona is a published author and regularly speaks at seminars worldwide, interviewed by mainstream news channels, quoted in major newspapers. Mona is a member of the IIUSA’s Leadership Council and a member of the Public Policy Committee and also an adjunct professor at Baruch University, New York City. 

Mona Shah & Associates (MSA)

Established in 1997 and headquartered in Manhattan, New York, MSA are recognized as Industry leaders and one of the leading law firms in EB-5. MSA is internationally licensed to practice law with an advanced Immigration practice, also specializing in Corporate and Securities & Exchange Commission. With exceptional skills, experience and understanding, the experience and exposure of the firm sets them apart. MSA has been instrumental in the success of numerous EB-5 projects. And have actively assisted in bringing millions of dollars of investment money into the US, including for major projects in New York.