If there is a single imperative rule when it comes to
selecting an EB-5 Regional Center in which to invest, it's this: look at the resumes of those
responsible for organizing and managing the deal. In my many conversations with Michael Gibson,
the EB-5 due diligence expert who visits EB5 Regional Centers on an ongoing
basis, it has become apparent that there is much more to defining EB5 success
than simply having a "good idea."
From the cockamamie to the clever, from the fiscally prudent to the
reckless, an emerging pattern of success is disproportionately attributable to
the Regional Centers with the most intellectual horsepower, tenacity and
business savvy under the “hood” of the investment vehicle (pun intended). Invariably, what the organizers have put
under the “hood" determines not only the economic feasibility of a
particular EB 5 project, but also the level of transparency investors can
expect from the project’s management.
Show me the entrepreneurial histories and current financial
positions of the principals behind any Regional Center and I'll give you a
pretty good idea of what you can expect from their project. There are EB-5 Regional Centers approved
today which are nothing more than fanciful ideas woven together by an attorney
with no actual business experience; there are others which, in altogether new
ways, are pungent with the smoke and mirrors of the noncompliant structures
which heralded disasters for so many EB 5 investors 10 years ago. Some are operated by individuals with long
histories of less-than-stellar results in investing.
The other deal is this: just because a reputable attorney created the Regional Center doesn't mean it will be operated reputably. Recent unpublished I-829 denials have certainly proven that, particularly when it comes to deviations from the original business plan which REQUIRE USCIS amendments. The USCIS isn't shy about denying petitions when A,B, and C were promised but D,E, and F delivered. Even worse, fundamental balls dropped at the RC filing and I-526 stage are being recovered by an increasingly sophisticated EB-5 Adjudications Unit: one recent decision determined that since the Regional Center had never documented that the particular project was situated within a Targeted Employment Area (TEA), each investor would have to chip in ANOTHER $500,000 at the I-829 level to meet the requirements for permanent residency. Can you IMAGINE...
"Excuse me, uh, Mr. Investor, there's been a little mistake. We need another half million dollars..."
Good grief. Doesn't anyone use a checklist anymore??
In any event, be forewarned and know that all that glitters is NOT gold: the USCIS is itself policing approved Regional Centers more proactively these days, to their credit, and enforcement is actually happening. Here's a link to one Regional Center that is under serious USCIS scrutiny: