Friday, January 29, 2010

EB5 Regional Centers: The Rabbit Hole Freefall

I have had a pretty busy week so the blog factory in my brain is a bit backlogged, but I didn't want you to head home for the weekend without a little "immigrant investor food for thought".

As you know, the past few months for me have been a pretty deep and full immersion into the world of the "modern" EB5 Regional Center.  I say "modern" because the fact is that a handful of currently-operating Regional Centers have pretty deep roots, going back to the 90's, when the EB5 was expanded to permit these pooled investment structures and indirect job creation.  These veteran organizations -- and those who run them -- have colorful histories, diverse backgrounds...and much to teach us about what constitutes a "good" EB5 Regional Center.

Information has been unearthed from different sources.  First, there was web research.  That led to limited useful information in that the bulk of results were either self-laudatory comments by the Regional Centers involved or, conversely, negative commentary posted by questionable resources (except in the most historically catastrophic RC fiascos, whose victims and their posted anger are legion).  I should hasten to add that I would include my own, vehemently anti-EB5 Regional-Center online commentary of the late 1990s and early 00's as a "questionable resource":  while I still believe the my fundamental assertions regarding the chaos and dishonesty of the investment schemes of that era, I really didn't look closely enough to see that a tiny minority WAS playing by the rules.  In retrospect, more homework needed to be done at that time and my commentary would have been more balanced)

Next came what I would describe as the "EB5 Coconut Telegraph": anecdotal and historical gossip, tales, and stories provided by those who have been in the game a long time.  Dozens of conversations with EB5 folks who were the pioneer Regional Center founders, attorneys...and, in abundance, victimized investors, many of whom remain in the U.S. a full decade later with no clear status resolution.

So, like Neo, I elected to take the Red Pill and see how deep the Rabbit Hole really goes...and I've yet to hit bottom.  The amount of information is colossal, and sifting the truth from the competitively-driven sass is not often easy. But the plunge was necessary if I am to achieve my objective of finding the truth about today's active EB5 Regional Centers and convey that truth to you.

Expect some fireworks.  I'm no Michael Moore, but when I find relevant stuff which is documented, I will tell you about it, both positive and negative.  Names will be named.  And based upon what I've seen so far, I suspect most of that will not be positive.  A few months back I took a potshot at an EB5 developer who got a lot of local press here by saying that the worst that could happen with the venture was that everyone would make "a bunch of money".  Sure.

As I continue to plummet down this EB5 Rabbit Hole, it is clear to me that a distinct dichotomy lies beneath the glossy surface of the whole Regional Center scene, and that, as in life, there are good guys and there are bad guys.  I have concluded that the only way to understand the integrity of the Regional Center is to look to the integrity of those who are responsible for its creation and operation.  When I hit bottom, or when the free-fall grows boring, I will be telling you what I have learned.  If history is to repeat itself, I will get nasty calls and possibly threatened with legal action. But, hey, it'll make for an interesting read, right? (-;

Have a great weekend and as the Templar Knight told Indiana Jones when he was trying to find the true Holy Grail amidst a vast number of impostors...choose wisely.

Monday, January 25, 2010

EB5 Piggybacking: an Option Worth Exploring

With this whole EB5 US Immigration foreign investment visa buzz, another target demographic has emerged for those of us who work with EB5 US investor visas: the US developers, development agencies, and assorted entrepreneurs who finally "get" the concept of infrastructure and project capitalization via foreign investment.  The events of the past few days and Wall Street's response to the Obama Administration's planned banking changes suggest that foreign direct investment capital will only get more attractive in the foreseeable future.

I used the marketing term "target demographic" because today I am specifically referring to the EB5 community as a whole...and to those who market to the various players.  Take, for example, immigration lawyers who are specifically looking for qualified foreign investors on behalf of a Regional Center they helped put together.  Their target demographic is the foreign investors they are able to identify.  In my own rather unconventional business structure, you could say that I really have dual target demographics: my primary target are the EB5 Regional Centers who hire me to help them market their enterprise.  My secondary target are the prospective investors themselves, whom I seek to identify on behalf of my paying clients.

The newest "target demographic" -- these folks and organizations who call us (members of the EB-5 legal community) up and express their interest in setting up a Regional Center -- may consist of some pretty sophisticated people, but I'm beginning to wonder if their needs are being represented in the best possible way. 

You see, there is a problem: the creation and USCIS approval of an EB5 Regional Center is not, as many think, the "finish line".  It is, in reality, the starting gun.  Because no matter how impressive the Regional Center's plan may sound, it doesn't really matter until the investors start investing.  Many of those who contact us to see about establishing an EB5 Regional Center have talked to other attorneys in our line of focus and have been assured that, yes, RC approval should work for them.  But as I see it, the attorney's job isn't simply to get their Regional Center approved while raking in the hefty fees for the admittedly complex process of USCIS certification; it is also to insure that they are giving the potential RC client the best possible counsel regarding the efficacy and marketability of their prospective project.

It is tempting, naturally, to take a deep-pocket client -- whether a sizable private developer, a public development agency, or even a private/public joint venture (as we occasionally see) -- and sell them what they want.  After all, the fees are big, and those of us who play in this part of the schoolyard are few in numbers.  And then there is the whole issue of client sophistication; how gingerly does an attorney have to handle a would-be regional center client who is armed to the teeth with bankers, investment counsel, tax counsel, and the barrage of professionals with whom they usually appear at our door?  We know from 2009, when the total number of approved EB5 Regional Centers more than doubled, that the USCIS is being fairly generous with adjudications...odds are good that a thoughtful EB5 RC filing will get approved.

So what's my problem with this?  It's simple: if I have a client who wants to invest $150,000 in what appears to me to be a dud investment and if that clients immigration future hinges upon that apparently dud investment proving successful, I will not hesitate to tell the client that the deal is not a good one.  (Not that clients necessarily want to hear the bad news; I still remember the client who got angry with me after I discovered that the $200,000 worth of restaurant furnishings and equipment in the overpriced restaurant he was about to purchase were not owned outright as the seller had claimed but, rather, all leased and delinquent!).

Sigh.  We lawyers can be real party poopers at times.

RC prospects are just like this and any other client: if I'm pretty sure that the project can be approved for Regional Center status but also fairly confident that in this crowded Regional Center market the odds of ramping up rapid sales for the particular project are remote, I have to express that to the client.

Which brings me back (if you are still reading after all my digressions) to the title and concept of my suggestion: piggybacking.  A simple concept upon which I will elaborate in the coming days...

If your project fits neatly into the periphery of an established, proven EB5 Regional Center, a strategic alliance may put more investors in your camp than a fresh start and an unproven reputation.

Wednesday, January 20, 2010

UM Law Gets Busy with Haitian TPS

In the blink of an eye, University of Miami School of Law professor and Director of the Health and Elder Clinic JoNel Newman and staff attorney Melissa Swain, with the help of the inimitable Linda Osberg-Braun and Melissa Venceslau, taught a roomful of law students and one TPS-clueless attorney (me) the ins and outs of filing Temporary Protected Status applications for Haitians in the U.S.

Having put together a lot of events over the years, I can tell you: this one was a serious coup.  Last night Melissa V. tells me on FB that she's putting together the Powerpoint and this morning she and Linda take us through what I can only describe as a clear, incisive, and supremely executed two hour presentation.  Incredible!  The law students asked incisive, intelligent questions (despite the fact that they were not University of Florida law students (-;<) and despite not having looked at a TPS form in well over a decade...I actually kept up!

But the seminar was only the beginning: Professor Newman and her team have quickly deployed their resources -- essentially, a group of compassionate and caring law students -- to do their first round of pro bono Haitian TPS applications Friday - as in the day after tomorrow -- on behalf of Haitian medical patients who qualify.  How's THAT for responsiveness?

As I reflect on what these four women have accomplished in the past 24 hours, I remember vividly why I so firmly believe that bureaucracy is the greatest enemy of social accomplishment.  (And, parenthetically, why I am increasingly convinced that theirs is the superior gender.) 

Hats off, props, kudos, etc. to Prof. Newman, Linda, and the matching set of Melissas for their passion and commitment toward justice!

Tuesday, January 19, 2010

Time To Roll Up the Sleeves for Haiti...Beginning with Uncle Sam's TPS Fee

Linda Osberg-Braun, Roger's law partner, knows a thing or two about TPS.  Actually, to be fair, there is not a lot about immigration relief and benefits about which Linda is NOT an expert.  So it is quite befitting that tomorrow,  Linda will be at the University of Miami teaching those of us who don't know much about Temporary Protected Status - both practicing attorneys as well as law students -- the basics we need to help qualified Haitians in the U.S. apply for this just-granted benefit.  Through the benefits of lawful temporary status and employment authorization, Haitians in South Florida will begin to plant the seeds of restoration and self-sufficiency that will ultimately rebuild the battered island nation.

Melissa Swain, UM Staff Attorney with the Children and Youth law Clinic/Community Health Rights Education Clinic and all-around superhero, put together the program.  Her idea was to let those of us who'd like to do our part "learn the ropes" about TPS form completion from Linda so that we can get out there and start helping.

Just days ago, TPS designation was made available to qualified Haitians in the U.S.  Historically, most TPS grants by the USG have been driven by political turmoil in the home nation; the regulations contemplate the issuance of TPS in cases of natural disaster...and the depth and scope of the Haitian earthquake eclipses anything anyone in Washington ever imagined.  Haitians in Florida, documented and undocumented, are fiercely loyal to
their families back home in ordinary circumstances.  I can tell you
from witnessing the dynamics at the big Haitian shipping yard several
hundred yards from my house on the Miami River, the mobilization and
effort by Miami's Haitian community toward sending emergency supplies has been extraordinary.  TPS will, in effect, permit those here to work legally on a temporary basis and send the money home to those most in need.

Two big hurdles for Haitian TPS applicants: the first problem, of course, is that to get immigration benefits under TPS (or under any other program, for that matter), you have to apply.  Already the scams are emerging, and between the language issues and the totally new appearance of TPS as a possibility, the community is ripe for exploitation here in South Florida.  Between the flood of shameless opportunists - which includes not only the "notarios" but several bottom-feeding attorneys, at least so far -- and Little Haiti's Coconut Telegraph, it's a race to educate the community and distinguish the good guys from the bad guys.  So far, the primary (sole?) resources offering pro bono TPS registration has been the overwhelmed Haitian Refugee Center and Catholic Charities.  After tomorrow, thanks to Linda and Melissa, there will be reinforcements to increase the volunteer ranks.

The second hurdle: filing fees.  Even with volunteers preparing the forms, the necessary filing fees are $470 per application...for people from a country where the per capita income is $480.52 per person. Source: Nationlink.  Yes, a fee waiver process exists...but it delays the processing of the employment authorization, step one which will significantly increase the influx of desperately needed capital into Haiti.  The U.S. government needs to act swiftly to administratively waive TPS application fees for Haitians, at least for several months, to get the money flowing from South Florida's Haitian community to their families back home.

Look, when we invaded Iraq and toppled Saddam Hussein, it took duffle bags full of cash to get uncooperative tribal leaders to chill out and cooperate with the ensuing chaos.  Is it so difficult to waive a filing fee, let these folks get to work, and jump-start the repatriation of earnings to those on the island.

Linda and Melissa(s): you guys rock and I'll be there bright and early tomorrow, dumb questions and all...

For information on filing for Haitian Temporary Protected Status (TPS), here is the new link from the USCIS:

USCIS Page on Haitian TPS

Friday, January 15, 2010

EB5 Public Relations Press Release

EB5 Public Relations Targets EB5 Regional Center Investors Overseas

Former US Diplomatic/Consular Officer and A/V-Rated Attorney Jose E. Latour launches EB5 Public Relations, an international marketing, publicity, and event management consultancy catering to US EB5 Regional Centers looking to reach prospective international investors overseas.

(PRWEB) January 4, 2010 -- EB5 Public Relations (EB5PR) has opened to offer USCIS - approved EB5 Regional Centers a broad spectrum of marketing and brand development opportunities including international seminars, industry resource/referrer outreach, and foreign-community-driven events designed to propel Regional Center clients into the global markets where their prospective investors are waiting.

In today’s global society, there are few more coveted prizes than permanent residency in the United States of America. The EB5 Regional Center Immigrant Investor program offers qualified international investors the opportunity to select an appropriate, US - government-approved Regional Center, invest $500,000, and secure permanent US resident card for themselves, their spouse, and their minor children.

José Latour, a former US diplomat and internationally-recognized immigration attorney founded EB5PR, the first public relations and marketing consultancy specifically designed to help approved EB-5 Regional Centers market their Immigrant Investor opportunities overseas. He sees as a unique opportunity to help US EB5 Regional Centers find the foreign capital they seek by taking them where it's most readily available...key international cities. EB5PR's 2010 seminar agenda includes seminars and events throughout Latin America, the Middle East, India and the Far East, with over 20 international seminars scheduled through April 2010.

Latour is confident in both the timing and the mission: "It took the U.S. Government about 15 years to approve the first 30+ EB5 Regional Centers, and just one year - 2009- to more than double that amount. Most of these folks have solid investment and development backgrounds but lack cohesive international networks. That is what EB5 Public Relations will provide clients: core branding and event-driven marketing in key offshore markets where prospective EB5 Immigrant Investors are most likely to be found.”

For further information regarding EB5PR's services and global marketing initiatives for EB5 Regional Centers, contact Jose E. Latour at jlatour(at)eb5pr(dot)com, at his blog at or at 786-379-1928.

EB5 Public Relations is a Florida fictitious company operating under license with LatourCreative, LLC.
# # #

79 Approved EB5 Visa Regional Centers and Counting...

The Legal Intelligencer reported earlier this week on how the EB5 Regional Center visa is, in the words of distinguished business immigration attorney Ronald Klasko, "the hottest thing going on right now in immigration".  Yet again I find myself nodding in agreement with Ron (only this time it isn't at one of his entertaining and enlightening business immigration CLE seminars conducted with the brilliant Tammy Fox-Isicoff.)

Hot indeed.  As of this moment, 79 EB5 Regional Centers have been approved by the USCIS, and they come in all shapes, sizes, and structures.  Having been introduced to this "new generation" of Regional Centers last year by Roger Bernstein, my re-immersion was somewhat cushioned in that Roger works only with the best amongst them.  To see a broader example of what's out there,  I've spent a great deal of time in the past few weeks surfing and snooping the smorgasbord of RC offerings.  The impression I've long held is confirmed:  there are many viable programs, some absolutely zany ones, and a minority of truly impressive ones.  So how can a potential investor separate the wheat from the chaff?

That is probably the biggest problem these days...with USCIS doubling the number of EB5 Regional Centers in 2009, and with each Regional Center having its own complex structure, financial/job-creation methodologies, econometric models, and myriad other details, it takes many, many hours to render the "thumbs up" or "thumbs down", at least from the perspective of an immigration attorney taking a serious look at an RC on behalf of a client.  For a financial adviser, I presume the task would be even more time-consuming.

Between the intricacies which must be disseminated, the sheer number of EB5 Regional Centers, and the need for immigration attorneys to constantly distance themselves from anything which even smacks of "investment advice", the responsibility for thoughtful evaluation lies in the least qualified hands: the prospective investor.  And as far as I can see, they aren't often willing to pay to do their homework.

Take Michael Gibson's service,  Michael presented at Roger's seminar in Caracas in October, and it's a service which makes a lot of sense.  Basically, a prospective investor who's narrowed down his or her choices to 2-5 EB5 Regional Centers hires Michael to conduct an objective comparative analysis of the various components of their possible choices, allowing a clear comparison of everything from the specific terms of escrow to the critical question of exit strategy to you-name-it.  As he did his presentation, I sat there thinking "what a GREAT idea!" and that any investor would be nuts NOT to retain the service.  But as great as it is, it is a massively complex undertaking if it is to be done right...and while his fees are eminently reasonable (especially for someone thinking about plunking down a half million dollars), not everyone hires him.  In fact, from anecdotal evidence, I would guess that the vast majority of folks who commit to an EB5 Regional Center haven't done any form of comparative analysis...they simply commit to the program marketed to them.  Bottom line: most EB5 Investors are taking whatever is being directly marketed to them and not making any meaningful comparison with other options.  Suddenly, who is doing the marketing becomes perhaps as important as the Regional Center choice.

Given that I've gone from advising EB5 Investors to promoting EB5 Regional Centers, the stakes are particularly clear to me.   Because unlike a conventional PR firm branding a product or service, I need to be very careful in selecting the EB5 Regional Center or Centers upon which I am willing to pin my name, reputation and A/V rating.  No matter how much I divorce myself from the liabilities associated with representing an investor's EB5 visa filing, I cannot fathom what it would feel like to watch a Regional Center I've promoted tank along with their investors' funds and visas.  What a nightmare.

The truth is that even the top lawyers in EB5 visas like Ron or Roger (or Karen Caco in Naples, who has visited more EB5 RCs than anyone I know, or a handful of others) only ever get to fully understand but a few of the centers out there.  There are, to be sure, new jewels to be discovered in the new approved EB5 Regional Centers, and you can count on more than a few duds.  Unfortunately, for prospective investors, the complexity of the structures make a comprehensive side by side analysis of ALL EB5 Regional Centers a financial costs too much and its a bill to steep for anyone to foot.

So what's a prospective EB5 Regional Center Investor to do?  Read a lot, for starters.  Take a good look at services like Michael's, which let you compare apples with apples.  Finally, look for the best and the brightest immigration attorneys.  Chances are that whether you are talking about an immigration attorney, an EB5 marketing entity, or, as in my case, an immigration attorney- turned - EB5 Regional Center publicist, like turns to like.  Find the good lawyers and you'll find the good EB5 Regional Centers; find the good Regional Centers and you'll find the good lawyers.

And steer wide and clear from the rest.

Have a great weekend!

Wednesday, January 13, 2010

The Death of the H-1B Entrepreneur

With a swift strike of the federal pen and in their typical rulemaking-without-notice-and-comment fashion of late, USCIS has singlehandedly and without warning eviscerated decades of pragmatic policies and court decisions relating to entrepreneurs who enter the United States in H-1B status.

In a memo dated January 8, 2010, and just posted on AILA, Donald Neufeld, Associate Director for Service Center Opearations, published a series of changes to the Officer's Field Manuel (AFM), the USCIS adjudicator's reference manual which provides instructions on the proper evalution of visa petitions.  The 19 page memo is not as big as it seems in that the first half spells out the changes while the second half repeats them by citing the numbered rule changes. 

The memo is obviously designed to address the problem of fraudulent H-1B petitions, off-site placement, and a host of other issues which come up in adjudication.  Tragically, however, USCIS continues its pattern of modifying existing regulatory policy NOT by surgically correcting what needs to be corrected but simply by throwing the proverbial baby out with the bath water.

The policy towards the determination of whether or not an employer-employee relationship existed has long been governed by both common law [read: common SENSE] and several Supreme Court decisions, most notably NATIONWIDE MUTUAL INSURANCE COMPANY, et al., PETITIONERS v. ROBERT T. DARDEN   and CLACKAMAS , which delve deeply into the minutiae of what defines an employer/employee relationship.  While the policy changes address legitimate abuses, the troubling language of the memorandum totally eliminates the possibility of an investor forming a corporation - clearly a juridical "person" within all concepts of both civil and common legal systems - and utilizing said corporation as the petitioning entity for his or her H-1B employment in the United States.

Why, you might ask, does anyone ever use the H-1B visa for self-employed entrepreneurship?  Lots of reasons, but here are the main two:

  • Because the entrepreneur is not from a country with a treaty of trade and commerce with the U.S. and E-1 and E-2 Treaty Visas are not possible.

  • Because the entrepreneur is not a principal in or employee of a foreign enterprise through which a qualifying intracompany relationaship can be formed with a new U.S. enterprise, so the L-1 visa is not possible.

I've done DOZENS of these over the last decade and a half and I can think of at least two which evolved into 10+ U.S. jobs which, but for the H-1B entrepreneur, would never have been created. But here's the really crazy part of this: everyone agrees (except for the CSC in certain bizarre decisions rendered in the past month) that an entrepreneur with a foreign company can start a brand new company in the U.S., structure share ownership in a qualifying way, and, if he qualifies for the balance of intracompany criteria, his relationship with the petitioning company is that of "employer-employee".  Furthermore, no one questions that the E-2 Treaty Trader visa procured by the sole owner of a U.S. based enterprise profitably exporting to her home country manifests an "employer-employee" relationship.

So what's the difference between L-1, E-1, and E-2 entrepreneurs with new ventures and an H-1B with a new venture. Absolutely NADA, folks, as far as the law is concerned.  There is no legal basis whatsoever to distinguish a self-employed H-1B situation (i.e., where the beneficiary is the sole shareholder of the U.S. petitioning company) from identical folks in L or E status.  Let's take a look at the one critical paragraph in the memo:

"The following scenarios would not present a valid employer-employee relationship:

Self-Employed Beneficiaries

The petitioner is a fashion merchandising company that is owned by the beneficiary. The beneficiary is a fashion analyst. The beneficiary is the sole operator, manager, and employee of the petitioning company. The beneficiary cannot be fired by the petitioning company. There is no outside entity which can exercise control over the beneficiary.9 The petitioner has not provided evidence that that the corporation, and not the beneficiary herself, will be controlling her work.

[No Separation between Individual and Employing Entity; No Independent Control

Exercised and No Right to Control Exists]"

Based upon this new rule, the USCIS:

  1. Is chucking existing federal decisions and common law and replacing them with its own subjective law.

  2. Has created its own threshold definition of what is and is not an "employer-employee" relationship with language which patently prohibits not ONLY new enterprise self-employed H-1Bs but effectively ALL new enterprise petitions where the beneficiary - be they L, E-1 or E-2 - is the sole shareholder/"controller" of the new U.S. enterprise.

  3. Totally disregards fundamental legal concepts which define what a corporation is and IS FOR, i.e., to create a legal entity which has the operational and legal rights of an individual (e.g., enter into contracts, trade, engage in financial transactions, etc.) -- what is called in Spanish civil law countries "persona juridica" while

  4. Simultaneously rewriting the Internal Revenue Code as far as what constitutes a valid "employer-employee" relationship.

I called a friend who is a former IRS attorney to tell him about this and he found it all rather quite funny (needless to say, he's a tax lawyer and not an immigration attorney.)  He said it was "nonsense" and used the word "silly".

I say it's more of the same: an ill-conceived knee-jerk reaction which, yet again, keeps America's shores safe from foreign dollars, vital entrepreneurship and desperately needed job creation.

If I was a litigator, I'd be all over this, but I can't litigate my way out of a parking ticket.

Ira...inspired??? (-:

Sunday, January 10, 2010

Claims Swap in Cuba? Interesting...

My friend Tim Ashby, a fellow member of the U.S. Cuba Legal Forum, is in the forefront of the effort to both normalize trade relations with Cuba while still helping those whose properties were illegally expropriated by the Castro regime find justice.  He was quoted a bunch in this article regarding a group of foreign investors which is seeking a U.S. government license to
buy claims against Cuba for American-owned properties seized in the
1960s, and then swap them with Havana in a debt-for-equity exchange.  The link:

Article On Cuban Claims Proposal

This kind of stuff isn't necessarily sexy, but it IS brilliant.  Since the early 90's  I have said that the best way for Cuba to settle it expropriation claims is simple: repay those whose properties were illegally taken with "units" of ownership in raw Cuban land which is ripe for development.  Hundreds of miles of pristine beachfront encircle the island and if the Cuban government were to carve out select sections while preserving major tracts as national parks, there would be A) more than enough compensation identified to settle all post-Castro claims and, perhaps more importantly, B) structure a long term land use plan for the most spectacular chunk or real estate in the Caribbean -- I know I'm biased, but it honestly is -- while creating a sense of investment, entrepreneurship...and reintegration by the Cuban diaspora.

Hardliners in Miami will tell that isn't viable: they want their exact house back, period.  To me, the solution of throwing out the 40-year squatters - who didn't do the expropriating out -- so that I can get my dad's property's back is absurd, selfish, and cruel.  But, admittedly, I'm a softie.  Besides, after meeting the guy who has lived in the house we left in 1966 and the three families at our Mi Conuco ranch (where four generations of Latours were taught to ride horses by my father, the late, great Pepe Latour), and having gotten the warm reception I'd never is out of the question.  Scoring a bottle of Chivas and drinking it with the 70 year olds while toasting my papi Pepe and hearing of his legendary exploits was as good as owning it again...I own the memories, they grow the black beans, and I am welcome anytime.

Hats off to Tim for his efforts and may the door to my beautiful birthplace be open to all Americans soon.