Wednesday, August 31, 2011

New Shark in the House...

Okay, in the past week days I've had two existing EB-5 RC clients come to me after hearing flat out lies from securities attorneys attempting to make a fast buck...and today I had a THIRD (prospective) client ask me the same question.

It would appear the latest incarnation of the Man in the Gray Suit (i.e., shark) on the EB-5 scene is The Securities Lawyer, Part II.  Now some are pushing a “Reg D filing” fear...when, by DEFINITION, an offering made under the Reg D exemption to 17 CFR § 230.501 is an “EXEMPTION TO REGISTRATION”.  Don't believe me?  Here's what the SEC has to say:

The only thing an EB-5 funded project has to file is the horrific Form D...but only AFTER investments start coming in.  Form D, a pain in the neck 15-pager humorously referred to by the SEC in the above link as a "brief notice" is a admittedly a bear and something for which you SHOULD have a securities attorney -- here is the link -- 

About a year ago, there emerged the barrage of know-nothing deportation lawyers buying "EB-5 expert" Googlewords, next came The Securities Lawyer, Part I (AKA the "I'll be happy to review the PPM USCIS has approved repeatedly for Jose for only $35,000" scumbags) this.  SHAME on you guys.  A qualified Securities Attorney is and should be part of any Regional Center structuring process, and their role is critical.  But fear-mongering through the clever manipulation of cryptic SEC terminology in order to trick people into thinking they need your services is not only unethical and a breach of bar is fraud.  Enticing someone into paying you to do something they don't need is FRAUD.

Newsflash to the short-sighted: big, fat, bald-faced lies do not build a law practice.

Hollywood: Swingin'! New Cali EB-5 Regional Center APPROVED

Just received the attorney's copy of the USCIS letter of approval for Hollywood International Regional Center, LLC, and high-fives are flying!  Richard Heyman's brainchild, HIRC, like most of the best EB-5 Regional Centers, stems from the dual sources of relentless entrepreneurship and deep affection for a particular geographic region.  In Richard's case, that "geographic region" begins in the legendary streets of Hollywood, California, practically right around the corner from the new LatourLaw West Coast office (of which I'll be telling you soon.) Covering the five counties of Los Angeles, Orange, Riverside, San Bernardino and Ventura, HIRC will focus on the hospitality industry, particularly hotels and restaurants situated with the economically-challenged-yet-still-beloved sectors of this glitzy slice of America. 

When Richard first approached me on this, his enthusiasm and commitment to the region was one of the first things which struck me.  let me tell you: this guy CARES about Southern California's ailing economy.  Acutely attuned to the vast economic opportunities existing within this way-undervalued commercial sector and passionate about seeing the return of the region's Glory Days, Richard's reaction to the approval is the kind I like to see: brief celebration followed by an intense shift to "time to get busy".  I, for one, am STOKED about this new RC and look forward to working with HIRC as they ramp up their operations.

Props must go out:  Jo Ann Clarke's mastery in crafting business and marketing plans was instrumental in the securing the USCIS EB-5 RC approval, as was Scott Barnhart's number-crunching and "beyond-the-call-of-duty" involvement in refining industry and geographic plans.  But if anyone deserves a big hand here, it's the USCIS adjudicator who went WAAAAY beyond the call of duty in emailing specific questions to me, asking the right questions, requesting clarifications, and, in the process, shaving weeks off the approval time. He or she adjudicates the way I tried to adjudicate when I was a consular officer, and I continue to be delighted with the level of service we are getting out of Laguna Niguel.

On another quick note: unless my math is wrong, tomorrow is the deadline USCIS promised in its announcement on August 2 that "within 30 days" some form of “premium processing" would be in effect for Regional Centers. We sure would love to unveil that nice surprise tommorow! But if that doesn't happen, I hope Washington gets that in order sooner rather than later.  Just as Richard Heyman has been given the USCIS green light to begin seeking EB-5 capital for much needed jobs in Southern California, there are many others like him throughout the nation, eager to put foreign venture capital to work for America.

Congrats, Richard, and save me spot on the Red Carpet...(-;

Monday, August 29, 2011

New EB-5 Regional Center vs. Strategic Alliances for FVC

With USCIS’ announcement on August 2 that "within 30 days" some form of “premium processing” will be announced for EB-5 Regional Center applications, our sector is abuzz with speculation.  Those 30 days toll this week, and we are hopeful that Mr. Mayorkas will deliver as promised.  That news – plus USCIS’ affirmation that a EB-5 Regional Center may be indeed owned by non-U.S. persons -- has generated a burst of inquiries and requests for EB-5 Regional Center formations.  Simultaneously eliminating any speculative market for the resale of existing, approved EB-5 Regional Centers AND acceding to the President’s initiative to stimulate foreign capital investment in the U.S. by creating a more “investor-friendly” climate, the rush of activity – most of it driven by capital-hungry U.S. projects and investment-hungry Chinese investors – creates a fertile climate for new flavors of scams and hustles.  So let’s refresh ourselves on the basics.  Most EB-5 Regional Center began their existence in one of two capacities:

1-     As a project-specific Regional Renter, created to fund one pre-identified venture and nothing else OR

2-     As an "umbrella" Regional Center, envisioned to serve as a Foreign Venture Capital (“FVC") conduit for multiple projects.

Attorneys with “EB-5 – heavy” practices – myself included -- have been delighted with the surge of interest by both US projects and foreign investors suddenly in a hurry to form an EB-5 Regional Center, now that “premium processing” has been sort-of, kind-of, promised.  But just because everyone suddenly WANTS their own Regional Center doesn't mean it is their best solution!  Sadly, with the circa $100,000 price tag associated with forming a new RC, it is proving difficult for a number of my colleagues to "unsell" the idea that a new RC is to every project manager what an Ipad is to every teen.  It may be cool...but is really necessary?

Here's the problem: just as a significant number of investors arriving at my door (or, more accurately, my Skype, my email, my phone) have been thoroughly convinced by someone that the EB-5 is their absolute best option when it isn't (and they are better served by another less costly, more direct green card alternative), a lot of folks inquiring about the formation of a new EB-5 Regional Center really should not be dropping the $100K to secure one. They just don't need it!

Now, don't get me wrong...I love forming new RCs.  When I'm approached by a serial entrepreneur or governmental entity indicating that they want to form a Regional Center for the purpose of funding multiple projects, I'm thrilled.  I can honestly say that there is no more rewarding (or, for that matter, complex)  legal undertaking for me than the formation of a new EB-5 Regional Center...weaving together the business model, creating the structures which will insure maximum probability of job creation, hammering away at the marketing and online presence of the venture with Alejandro Barrere (my partner in Private Placement Partners).  When I believe in the deal and I know I can help the client access foreign funding they might otherwise never see, it is a blast.  Many a Sunday afternoon have I spent at the dining room table with Alejandro, jousting over the best way to convey the distinguishing features of the project and arguing over my cheesy taste in stock photos as we watch his sons run amok with my dogs alongside the Miami River.

There are worse ways to spend a Sunday, you know.

But it's a different matter altogether when I'm approached to form a new Regional Center by principals in a cash-strapped private venture project which has, IMHO, little “EB-5 Appeal”.  New commercial construction in an urban zombie wasteland?  Hmmm.  Don't think I can sell that to a guy like John Jiang. (-:  Seriously: I tell them to save their money and create a strategic alliance with a reputable, established EB-5 Regional Center whose umbrella they can use to raise FVC.  Why drop $100K when you don't need to?

While several of the strongest EB-5 Regional Centers have established “serial” investment patterns involving their own sequential projects, and while ONE of them -- CMB -- has delivered both the green card and return of investment funds --  the notion of a Regional Center specifically designed to serve as an “umbrella” entity through which other independent investment projects can access EB-5 FVC is a relatively recent phenomenon…but often the smartest option for a principal with one specific project to fund.

Tomorrow I’ll tell you about one of my project-specific EB-5 Regional Centers with an unusual storyline…and its current mutation into an “umbrella” model serving other projects.


Friday, August 5, 2011

USCIS/DHS Gets Serious About EB-5

To the ABSOLUTE DELIGHT of the EB-5 Community, on August 2, 2011 Secretary of Homeland Security Janet Napolitano and U.S. Citizenship and Immigration Services (USCIS) Director Alejandro Mayorkas just unveiled a series of policy, operational, and outreach efforts “to fuel the nation's economy and stimulate investment by attracting foreign entrepreneurial talent of exceptional ability or who otherwise can create jobs, form startup companies, and invest capital in areas of high unemployment.” To paraphrase, they’re clued in on the fact that slo-mo timelines mean foreign venture capital (FVC) takes a loooooooong time to get to job-starved U.S. communities. I’m linking the Press Release HERE but here are the main points:

• For the first time, they gave legit airtime to Startup America, the White House-led initiative to reduce barriers and accelerate growth for America's job-creating entrepreneurs, is being publicized FINALLY. (Hey, if EB-5 attorneys aren’t aware of it, it isn’t an “initiative”.)

• They talked about the President's Council on Jobs and Competitiveness

An academically-interesting part of the PR was their clarification that entrepreneurship is now officially a gateway to the National Interest Waiver. While cases like this have certainly been approved, it’s the first time the USG comes out and says it welcomes top tier business veterans to consider the NIW.

The single-most simple correction “revelation” involved the reversal of the very dumb policy statement made by USCIS in January of 2010 regarding H-1B entrepreneurs. As any first year law student can tell you, a formed legal entity – a corporation, LLC, etc.- constitutes a “legal person” within the framework of the law. Despite this, and despite the 50+ entrepreneurial H-1B visas I recall from the past two decades – all adjudicated favorably without even a question regarding this issue – last year USCIS decided that an individual could NOT form his or her own company for the purpose of establishing an H-1B situation between the company and the owner. Now, USCIS fixed this (based upon the hounding we all did) and clarified that “an H-1B beneficiary who is the sole owner of the petitioning company may establish a valid employer-employee relationship for the purposes of qualifying for an H-1B nonimmigrant visa”.

Bravo, USCIS, seriously. It shows that Laguna Niguel isn’t the only part of USCIS who’s listening to the stakeholders. I’ve told at least 10 prospective clients in the past year that a sole proprietor H-1B situation would not work…the last client I said this to was YESTERDAY. Your prudent decision will mean that dozens of folks who do not want to be beholden to third party employers will now bring their skill and capital to the U.S. to launch their dreams…and create U.S. jobs!!

But the stuff everyone is yapping about is the ambitious list of plans USCIS has for improving the EB-5:

• extending the availability of premium processing for certain EB-5 applications and petitions

• implementing direct lines of communication between the applicants and USCIS (very welcome but, honestly, they answer when you ask nice (-;)

• providing applicants with the opportunity for an interview before a USCIS panel of experts to resolve outstanding issues in an application. Way cool.

But the part of this that is most notable is their statement that USCIS is “poised to begin implementing the first of these enhancements within 30 days.” Wunderbar!

Last but not least, they spoke of “launching a new series of engagement opportunities for entrepreneurs and startup companies. These opportunities will focus on soliciting input from stakeholders on how USCIS can address the unique circumstances of entrepreneurs, new businesses and startup companies through its policies and regulations in the employment-based arena.” I’m not sure exactly what this means but this is one seasoned old lawyer who greets all of this with high-fives and “hallelujahs!”.

USCIS, you have a very supportive EB-5 bar ready to help you pave the road through these positive changes and we are at your service! Jose