The EB-5 Immigrant Investor Visa: An Attorney and Service Provider’s Overview of Requirements for Eligibility and Implications under Different Areas of Law
By: Wassem M. Amin, Esq., M.B.A.
In 1990, the United States Congress created the employment-based fifth preference ("EB-5”) immigrant visa category for immigrants who invest in and manage U.S. commercial enterprises that benefit the U.S. economy and create jobs. Allotted 10,000 immigrant visas annually, the EB-5 immigrant visa was designed to attract foreign direct investment into projects that would directly impact the economy (i.e., not merely passive investments).
Immigrant investors may apply for an EB-5 visa through two primary routes. The first is through a direct investment into a qualifying “new commercial enterprise.” The second is through the Regional Center Pilot Program. Created by Congress in 1992, and recently extended by President Obama in the fall of 2012 an additional three years, the Pilot Program allows the United States Citizenship and Immigration Service (“USCIS”) to designate so-called Regional Centers to function as conduits or administrators of large or medium scale projects funded, at least in part, by EB-5 investors.
However, due to inconsistent administration by USCIS primarily caused by lack of proper training for its adjudicators, the Regional Center Pilot Program—as well as the EB-5 visa overall—was relatively under-utilized by practitioners, investors, and developers. For example, in Fiscal Year 2007, USCIS approved only 11 Regional Centers and issued 473 EB-5 Visas—out of the 10,000 available under the quota. In the following years, however, EB-5 visa issuances and Regional Center approvals exponentially increased in number. In FY 2012, EB-5 visas are projected to reach the visa cap for the first time in the program’s history. Furthermore, Regional Center approvals in the same period spiked to an all-time high of 209. The increased interest in EB-5 investments has been attributed to a combination of factors including: (1) the overhaul of the program by USCIS and the creation of a dedicated EB-5 adjudication department; (2) the decrease in domestic investment capital after the 2008 recession; and (3) the increased political instability in foreign countries leading many high-net worth immigrants to relocate to the United States.
Forecasts for FY 2013 estimate that EB-5 capital will account for over $2 Billion in foreign direct investment. Since 2005, the program has injected over $6 billion in capital to the U.S. economy and added over 95,000 U.S. jobs. There have been many EB-5 and Regional Center success stories. A particularly notable example is the Vermont EB-5 Regional Center. The Vermont EB-5 Regional Center is the only USCIS-designated Regional Center in the United States that is owned, controlled, and supervised directly by a state government. In fact, Brent Raymond, the Director of the Regional Center as well as International Trade and Foreign Investment for the state, noted that the Vermont Regional Center has had a 100% success rate with immigration filings for affiliated alien investors and with investment returns on individual projects.
Advocacy groups have also had a strong positive impact in promoting the EB-5 Visa. The Association to Invest in the USA (“IIUSA”) is non-profit trade association that lobbies on behalf of Regional Centers nationwide. Led by Director Peter Joseph, it was founded in 2005 and represents over 80 Regional Centers, accounting for approximately 95% of all EB-5 capital.
Unfortunately, due to the growing popularity of the program, unscrupulous individuals and entities in the United States, as well as so-called “visa consultants” abroad, have attempted to use the EB-5 visa to defraud foreign investors. Foreign investors must be diligent in their research and vetting process of such projects. Not surprisingly, counsel for the foreign investor or a Regional Center usually plays an integral role in this process. Unlike a traditional private offering, an attorney advising on an EB-5 visa, whether on behalf of the alien investor or the investment soliciting funds, must be well-versed in not only immigration law, but also corporate law, securities laws and regulations, tax law, international law, real estate law, and estate-planning—in addition to possessing a fundamental understanding of business and economic forecasting models. It is a unique intersection of several areas of the law, each with their own complex regulatory and statutory regime.
This Article summarizes EB-5 eligibility requirements as well as the issues under various areas of law that may be implicated.