Thursday, May 14, 2009

EB-5: Yes, I really think there are better choices...


Yesterday I apparently offended a few folks with my comments regarding the EB-5 Visa. Most of the comments I got back are not printable -- hey, these ARE attorneys involved (-;. One gentleman expressed himself courteously, and his comments merit a response.Stephen Parnell is joint managing partner of Which EB5 (www.WhichEB5.com), an organization which describes itself in its press releases as "advocates of immigrant investors and have chosen to be independent from any regional center. They have worked with more than 800
families and more than 100 who have opted for an EB-5 regional center investment
visa". Mr Parnell wrote yesterday:





How
on earth can you call the EB-5 a scam? Are you not aware of the numbers of
investors who are currently seeing the return of their original investment?
Yes, the investment is at risk which is why very careful consideration has to
be given to the choice of regional center. Calling the program a scam is as you
call it "a flat out lie".


Stephen, I'll take those as you raise them:


1- The number of successful EB-5 investors is paltry in comparison to the number applicants. Honestly, how may of the 800 with whom you have worked have their permanent residency? This is not a debatable point but, rather, the subject of a 2005 GAO Report to Congress entitled "IMMIGRANT INVESTORS: Small Number of Participants Attributed to Pending Regulations and Other Factors."
The title is pretty self-explanatory and you can view the report in its entirely at:


http://www.amlife.us/corp_info/EB-5.pdf


I respectfully submit that it is impossible to read that report and argue that 900 families who were in limbo for over 10 years were better off with an EB-5 than with self-managed L-1-to-EB-1 immigration paths.


2- I am NOT aware of the number of investors who are seeing the return of their investment and would invite you to share that with my readers, Stephen. My experience is anecdotal -- and I suppose it is correct to assume that those who HAVE navigated the EB-5 program successfully would NOT be contacting me for help -- but that experience has been consistently my seeing people pour in a fortune into an investment and never seeing their green card. I invite you to share this info with me and I'll publish it but please include the numbers of those who have NOT seen a return in their investment to make the comparison valid.


3- Agreed: some Regional Centers have delivered while others have not. I am not aware of how this is being handled today, but in the 90's I was approached by a number of regional centers offering me "participation" in the form of hefty ($20,000+) fees if I "referred" clients. I blasted this practice in editorials, steered my clients AWAY from this, and watched as who knows how many lawyers quietly violated their bar oaths by pretending to be disinterested referrers when, in fact, they were being paid by an RC to send clients. Does that sound like a scam to you? It does to me, Stephen, and if any RCs are still giving commissions to referring attorneys, the scammers are BOTH the RCs AND the attorneys accepting the money.


For the record, Ifiled one of the very first independent EB-5s when the initial regs came out. The then-INS bungled and stumbled their way through it and while ultimately successful, it was apparent to me that it was NOT faster than a well-structured L and that the arbitrary establishment of both job creation and investment requirements. I've since steered dozens of would-be EB5 clients to L-1-to-EB-1 green cards since that first experience and not a one of them has had to put up a $500,000 investment to get their green card. So I stand by my opinion that the L-1 is a better solution for the vast majority of would-be EB-5 investors in cases where the investor has a viable business abroad.


That being said, I certainly didn't mean to call the entire program and everyone involved with it dishonest, Stephen, and I do apologize if that was the impression my rant gave. Ultimately, we are in agreement when you say that "very careful consideration has to
be given to the choice of regional center".
Yes, the EB-5 program is not a "scam". But there have been too many scammers, including commission-accepting attorneys, who have made the program problematic. When I do an L-1 for a client, he/she does NOT have to worry about avoiding fraudulent purveyors of visas. To me, the EB-5 remains the category of choice for those very limited number of clients who:

1- Have abundant liquidity
2- Have no active business in their home country and
3- Are not interested in doing business in the U.S.

Except for wealthy retirees, I haven't met many such clients.

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