Monday, November 19, 2012

Proliferation of EB-5 "Funds" Spells Trouble for Developers

There is one indisputably clear "job creation" impact of this whole EB-5 business:  it is sure opening one heck of a lot of new collateral businesses within and without the U.S.  Consider:
  • While there were but a handful of immigration attorneys creating complex EB-5 Regional Center structures just a few years ago, we suddenly have hundreds of self-proclaimed experts all to happy to put together an RC.
  • China has the only organized, government-licensed (if somewhat less than ethically pristine) immigration agency structure on earth, but there are suddenly of "immigration agents" in Russia, Brazil, you-name-it aggressively marketing their proven EB-5 results (??) to U.S. EB-5 projects
  • The notion that there is this big, long-line of prospective EB-5 investors lined out the door of each of us who work in this business has triggered a rapid growth in mezzanine debt providers who claim they can use EB-5 investment "pools" to provide short term venture capital to desperate U.S. developers.
I'm not going to get into the cornucopia (hey, give me a break, it's almost Thanksgiving and I never get to use that word) of SEC violations associated with the notion of collecting money from an investor as the law requires (i.e., via a Reg D or Reg S exemption to registration) and putting that money elsewhere.  I won't dwell on the notion that you can raise venture capital via a private placement without fulling disclosing the specific use of the funds under U.S. securities and state blue sky lies (you CAN'T.)  And I won't harp on the AMPLE adjudicatory history, stakeholder dialogue, and regulatory guidance which makes it crystal clear that USCIS wants to see a specific EB-5 investor's money go into a specific, USCIS-approved EB-5 project and NOT into some vague, general-purpose capital stack distributed for multiple, unrelated projects.

I will simply leave you with a blog entry from my friend Boyd Campbell, who finds this whole mess as downright absurd as I do.  Be careful out there, my sophisticated developer friends, the investors in China aren't the only ones getting bamboozled. 

Boyd Campbell's excellent blog about USCIS policy wavering

Saturday, November 17, 2012

EB-5 Marketing: Time for a Post-China Vision

Last June, I had the privilege of serving as discussion leader in Nashville at ILW's annual EB-5 Summit, held in concurrence with the American Immigration Lawyers' Association's annual national convention.  During a morning break between sessions, my dear friend Sam Udani -- the founder of ILW, the Web's foremost resource on U.S. immigration law -- leaned over and whispered something he'd said to me a year earlier, in New York:
"Jose, never mind the expiration of EB-5; next year we are going to RUN OUT OF EB-5VISA NUMBERS!"
It made sense the first time he'd said it in New York, I'd had time to think about it...and history was rapidly proving him right: we knew that FY 2012 EB-5 numbers were going fast compared to FY2011 (in the end, 7500+ EB-5 slots went in '12, an increase of 3500+ in '11; what an awful lot of people in the EB-5 world don't seem to remember is that the 10,000 cap doesn't just count the EB-5 investors...it counts spouses and children as well, and that looming 10K cap is pretty much around the corner!).  I agreed with Sam, so I brought up the subject of hitting the 10,000 cap later that day at the seminar in Nashville; we echoed each other's comments, but, alas, we were two lone voices crying in the wilderness: the fear of the looming September 30th termination of the last EB-5 Pilot Program extension was all anyone wanted to talk about.
Well, fast forward a few short months and, as Sam predicted, we are there:  the December 2012 Visa Bulletin issued by the State Department -- the monthly calculation on the consumption of U.S. immigrant visa numbers --  says the following about EB-5 visa availability (excerpting the EB-5-specific language and highlighting key points excerpted):

Employment Fifth:  Current*

*The following advisory is based strictly on the current demand situation.  Since demand patterns can (and sometimes do) change over time, this should be considered a worst case scenario at this point.

It appears likely that a cut-off date will need to be established for the China Employment Fifth preference category at some point during second half of fiscal year 2013.  Such action would be delayed as long as possible, since while number use may be excessive over a 1 to 5 month period, it could average out to an acceptable level over a longer (e.g., 4 to 9 month) period.  This would be the first time a cut-off date has been established in this category, which is why readers are being provided with the maximum amount of advance notice regarding the possibility.

The above projections for the Family and Employment categories are for what could happen during each of the next few months based on current applicant demand patterns.  The determination of the actual monthly cut-off dates is subject to fluctuations in applicant demand and a number of other variables which can change at any time.  Those categories with a “Current” projection will remain so for the foreseeable future, with the possible exception of the China Employment Fifth preference category mentioned above
 


As someone who has spent roughly 50% of the past 12 months in and around China, I can tell you this: the momentum for interest in the EB-5 has never been greater, and the capping of investor visa opportunities in China's key historical outlets for this type of migration -- Canada and Australia -- has only increased demand.  It is my personal opinion that just as key family and work visa categories have historically backlogged from high-demand countries, the same will happen with EB-5...and China is the number one demand market for the EB-5 investor visa.

So, as a Regional Center just entering the EB-5 game or even pending approval, what do you do?  You develop a multinational marketing plan which identifies investor opportunities in different global regions.  While it would be silly to say that any one or even cluster of these other markets can numerically compete with Chinese EB-5 demand, consider the damage that has been done within the China market by unscrupulous projects, agents, and structures.  Chinese investors and the agents who, under Chinese law, MUST represent them, view even the most bulletproof deals with a jaded perspective as a result of all the really bad EB-5 deals pushed upon them.  (When I was Fraud Officer in Ciudad Juaraz, Mexico 20+ years ago, about 80% of the marriage-based visa interviews I conducted revealed sham marriages for visa purposes only; it is human nature to become cynical after repeated negative experiences, and I remember having to remind myself daily about the 20% of couples, the bona fide marriages...).

Add up this new reality, long ago foreseen by the inimitable Mr. Udani to this embattled China EB-5 market and the logistics of getting investment funds legally out of China after the accredited investor is on board and you have to ask yourself:  "is there an easier way?"  I'm not going to pretend I know the answer to that but I do know this:


  • There is increasing interest in the EB-5 materializing in countries like Mexico and Brazil, powerhouse economies with LOTS of qualified EB-5 prospects looking for a Plan B;
  • Chavez' reelection will trigger an assured continued exodus of the country's affluent business leaders, who are increasingly concerned about the careening Venezuelan economy;
  • Russian, Kazakh, and Pakistani business owners and professionals -- the men and women who meet the SEC definition of "accredited investor" not by virtue of bloodline but by virtue of decades of tireless hard work and relentless saving, often as expatriates in remote locations -- are seeing the respective implosions of their own nations in various ways, shapes and forms.
I've spent more than half my time this past year focusing on marketing Lake Point Capital Partners in the Far East, and it's been an amazing year.  Five years ago, when I was first carefully educated into even believing that EB-5 could really work fairly by Pat and Kraig of EB-5's game-changer, CMB, we experimented with marketing EB-5 in the Latin markets I knew so well.   Later, when Lake Point was an infant EB-5 deal in diapers, Jud and I hit Dubai.  The results in both cases were, candidly, less than spectacular.  But this past September, when I visited Pakistan, it was a different story.  The world, my friends, is catching up with EB-5 and America is still the best place on earth to assure a bright future for your children.

The point is this:  I'll still be pounding out seminars in the Far East, but I truly believe it is time for diversified marketing approaches for EB-5 projects.  As so many more legitimate U.S. developers understand and delve into EB-5 structures, it is MHO that, for new projects entering the world of EB-5, a China-only model is no longer feasible.

Friday, November 9, 2012

Lake Point EB-5 in Vietnam

I know, I know...I've been a terrible slacker blogger person.  BAD Jose.  I have been a rolling stone/flying MACHINE since the beginning of September and Immigration Insider has been dormant.  No more Global Entry booths in sight till next year and I'm actually going to remain in the U.S. for the rest of the year -- longest time in U.S. in well over a year!  The plan is to get back into the daily habit of updating Immigration Insider before I am again China-bound on 1-1-13!

But that's for Monday.  Right now I'm on day 5 of non-stop EB-5 conference calls so I'll leave you with this cool HLG ad for Lake Point seminar in Vietnam last month and my sincere wish that you have a great weekend!

Lake Point Seminar for Vietnam Migration Agents

Sunday, September 16, 2012

Why I'm Bearish on the Chinese Yuan


[This article isn't really about EB-5 or immigration; rather, it is one of my occasional detours into tangential subjects which are closely related to foreign direct investment in the U.S.  Just humor me....(-;]


The global financial world, for the most part, remains very bullish on the Chinese currency, commonly known as the "yuan".  Through purported "loosening" -- a process where China's all-controlling central bank trickles a bit of free market freedom into the artificially-priced currency -- conventional thinking in currency circles would lead one to believe that it will rival the dollar as a global currency sometime soon.  Before I tell you why I don't believe that can happen, let's take a Wiki Moment to explain the yuan:

The yuan (play /jʊˈɑːn/ or /ˈjuːən/; sign: ¥; code: CNY; Chinese: yuán [ɥɛ̌n] ( listen)) is the base unit of a number of modern Chinese currencies. The yuan is the primary unit of account of the Renminbi.  A yuán (元) is also known colloquially as a kuài (块 "lump", originally of silver). One yuán is divided into 10 jiǎo (角) or colloquially máo (毛 "feather"). One jiǎo is divided into 10 fēn (分).

Got that?  Quiz at the end, you know...(-;

Since there are about 1000 online blogs by qualified experts each of which explains in great detail why the yuan is going to take over the world, all written by men and women who understand currency markets infinitely better than this immigration attorney, why am I even writing this, you ask?  Two reasons:
  1. Because my foreign investors in Asia -- Chinese and otherwise -- have educated me from a perspective which is not what the People's Bank of China wants the world to believe and...
  2. Because I believe that Foreign Venture Capital ("FVC", an acronym which is gaining favor and which, based on a Google search I just did, I appear to have popularized if not created!) will increasingly flow into the U.S. from China, resulting in rich inbound resources for my U.S. developer clients AND for a shakier yuan on a global scale.
Just last week Reuters in Shanghai reported that the People's Bank of China continued its trend of fixing stronger yuan midpoint against the dollar for the third straight trading day, "with spot prices posting their strongest close since late May following a dramatic overnight plunge in the dollar index."  The article mentions that "Chinese leaders, facing intensified concern that the domestic economy is having difficulty weathering sustained weakness in its exports markets, have said that Beijing will take steps to support exporters, which many interpreted as an official endorsement of a weakening trend in the yuan."  Simulataneously,  Guo Jianwei, deputy director of the central bank's monetary policy department, said the yuan's yo-yoing "had reduced the incentive for speculators to go long on the yuan on the assumption the only direction it could go was up."  But here's the problem: while the People's Bank of China can mimic the Fed, unlike the Fed, the PBC is there only to implement the will of the Government of China.  There is no voice for the private sector in China's management of its monetary policy, PERIOD.

Although the bulk of the aforementioned online commentary is a servile repetition of what the Chinese Central Bank wants the world to believe, cracks are appearing.  On August 28, the Wall Street Journal published a telling article about China Construction Bank, the country's 2nd largest in assets, which has seen a vast rise in nonperforming loans and has rolled over 8 billion yuan ($1.26 billion) in just first half of this year.  I'm not money trader, but does that sound to you like a currency ready to export?  The truth is that the chaos of the Euro, still undefined and very volatile for the foreseeable future, is the main reason the West is buying into this new "globalization" of a tightly-regulated currency whose leash can be summarily tightened just as fast or faster than it has been loosened.    (Moreover, China funneled over $20B into Europe the first half of this year, much to their concern and chagrin.)  The second reason we in the West buy into this "yuan as dollar/euro" bit is the sheer economic might of China as the world's major production powerhouse. 

I've told you about Mr. Bo's Wild Ride and the various other factors which have affluent Chinese extremely nervous and looking abroad more and more.  And I  haven't even gotten to tell you about this past weeks "Now you see me, now you don't" disappearances/reappearances of China's presumed next leader, Xi Jinping, a Chavez/Castro-like set of maneuvers which has China's business leaders wondering what on earth is happening even as the most significant and unusual change in party leadership looms just months ahead.

For now, I'd hang on to my U.S. dollars if I was a currency trader.  The short term gains smell more like the Facebook public offering, a greed-driven, wheel-and-deal situation which is the operational opposite of the climb of the mighty Apple.  The world is still reeling from the revelation as to the UK banks' hijinks in manipulating the Libor; compared to the absolute governmental policy driving the valuation of the yuan, the Libor scandal barely registers in terms of global currency manipulation.

China has much to offer the world in terms of productivity and manufacturing leadership, but the U.S. manufacturing sector -- led by the stunning, yet-unnoticed cost reductions in advanced robotics which allowed President Obama's auto industry bailout to result in a happy ending (who knew??) -- will be giving China a run for its manufacturing money in the coming decade.  Perhaps one day the yuan will be akin to the U.S. and Canadian dollar, to the pre-chaos Euro, or to the pound sterling.  But that day is anywhere but near.

Observations: 36,000 Feet Over Kazakhstan


At 36,000 feet, 2 hours from Lahore.  Severe clear skies and staring out window for the last hour as we’ve turned SE over Kazakhstan, then Uzbekistan, and then Kyrgyzstan. Nothing but rolling dunes and bone dry flatlands. I mean nothing: not a shack, not a vehicle, not one tree, not a sign of human civilization, just a surreal brownish-gray moonscape which reminds me of the history, tribalism, and isolation of the peoples of this elusive part of the world.

Finally: a settlement of one large building and 6-7 small ones, connected to who-knows-where via a razor thin road stretching forever southwest into the endless plains.  I wonder who lives there and why?  Military outpost?  Probably.  I wonder: are they looking up at the jet, themselves wondering:  "who goes there and why?"...

Friday, September 14, 2012

EB-5 Extended 3 Years by House, on President's Desk!

Yesterday, September 13th,  the U.S. House of Representatives passed S. 3245 (412-3) – providing in part a three year re-authorization of the EB-5 Regional Center Program through September 2015.  (As I told you back in August, the Senate passed the bill on August 2nd.)
 Now that both chambers of the U.S. Congress have approved the extension, it goes to the White House for President Obama's signature.  Here's what this means to EB-5 investors:

  1. Although others online are reporting that the President is expected to sign it into law this week, a former State Department colleague who works in the White House says not to hold our breath:  the violence in the Middle East means their energies are on other priorities.  That being said, I would say that it is virtually certain that since the current legislation expires on the 30th of September, the President WILL sign before that date, ensuring uninterrupted continuity of the EB-5 program
  2. Although we had HOPED that this time the so-called "Pilot Program" would be made permanent, it is easy to understand that with the election looming, engaging that option is not realistic.  We'll take the three years! 
  3. Based upon statistical EB-5 usage trend, Sam Udani of ILW and I both believe that this fiscal year of 2013, which begins on October 1, 2012, will be the first year EB-5 numbers run out.  (Remember: it's not just the investor who counts toward the 10,000 visas...family members do, too.)
The bottom line is that we are full steam ahead on EB-5 AND that those of you on the fence as far as investing need to get busy and lock up the last remaining Lake Point Capital Partners EB-5 slots before they are gone!!

P.S. answer is YES, I flew out of Pakistan the day before the violence began and am in Miami safe and sound, thanks for your concern!

Wednesday, August 15, 2012

Mikael & Jose Powwow in MIami, Visit St. Kitts

My HLG Partner and our China Managing Partner Mikael Charette arrives this afternoon in Miami for a busy overnight stay.  He and I will be meeting with:
  • Greg Denton to discuss marketing of hotel EB-5 projects in China.  Greg is a veteran in structuring venture capital deals in the hospitality sector and literally "wrote the book" on hotel asset management.  He is my collaborating partner on all hotel EB-5 deals I structure;
  • Bianca Saltz, my partner in Private Placement Partners, our EB-5/VC marketing development company, to discuss integration of China-driven marketing for HLG-managed EB-5 projects and;
  • my partners in American Venture Solutions EB-5 Regional Center and the owners of the Lake Point EB-5 Project to discuss Lake Point Capital Partners, the second and final EB-5 limited partnership currently filling its final investor slots.
Tomorrow, Mikael, Greg and I head to St. Kitts to continue our discussions as well as to learn more about the exciting new St. Kitts Park Hyatt project, which will be exclusively marketed in China and Vietnam by Harvey Law Group.

New HLG Global Migration Newsletter!!




Monday, August 6, 2012

EB-5 Extension Update from Sam at ILW.COM


FROM SAM UDANI IN TODAY'S DAILY ILW NEWSLETTER:
Comment - First Hurdle Clear For EB-5 - Late Thursday night, the Senate unanimously passed an amended S. 3245, sponsored by Patrick Leahy (D-VT) and Charles Grassley (R-IA), which reauthorizes four immigration-related policies for three years. This includes a renewal of the EB-5 investor visa category and the E-Verify program, a workplace verification system used to determine whether a job applicant is legally present in the country. The bill extends certain medical professional and religious worker visa categories as well. The House is already on recess, but will take this up via suspension of the rules, meaning there will be no floor debate, in early September. The bill should pass the House. The makeup of the chamber suggests that, even if Democrats try to block it, there will be sufficient Republican votes for passage, though such an attempt by Democrats seems unlikely. One puzzling component of the amended bill is why the extension of these programs was for three years, rather than the more customary one or five years or the permanent extension that was originally proposed."


HLG Marketing New St. Kitt's Park Hyatt Investor Passport Program


Harvey Law Group is pleased to announce that the firm has been given exclusive territorial rights for China and Vietnam for the stunning new Park Hyatt St. Kitts.  St. Kitt's is the preferred jurisdiction for international investors who seek more than third country permanent residency and prefer an investment opportunity which secures them a new passport in a trusted sovereign jurisdiction.

St. Kitts is today's preferred choice for such folks, offering a stable economic climate and the best designed renationalization program we've seen.  Range Developments is developing Park Hyatt St. Kitts, which will be an ultra-luxury 5 star resort hotel.  Set within the breathtaking landscape of the Christophe Harbour resort community and surrounded by world class amenities including a superyacht marina, Tom Fazio golf course, and exclusive beach club, Park Hyatt St. Kitts promises an unrivaled experience...and a new passport!   HLG partners Mikael Charette and Catherine Dulude sealed the deal in Dubai several weeks ago and HLG is eager to begin presenting the immigration program, through which an investor secures the right to become eligible for citizenship of St. Kitts & Nevis, a member of the British Commonwealth. The key advantages of St. Kitts citizenship include visa-free travel access to 139 countries across the world, as well as a tax-free environment.

Next week I make my first-ever trip to St. Kitts with Mikael and am very excited to see this great new offering for our Chinese and Vietnamese clients.  You can see the Park Hyatt St. Kitts site HERE

Friday, August 3, 2012

Senate Passes EB-5 Extension Before Recess

FROM AILA:

S. 3245, introduced by Sen. Leahy (D-VT) on May 24, 2012, provides an extension of:

EB-5 Regional Center program
E-Verify
Special Immigrant Nonminister Religious Worker Program
Conrad State 30 J-1 Visa Waiver program
On August 2, 2012, the Senate passed S. 3245 with unanimous consent. The bill was amended to provide a 3-year extension of the four programs.

Tuesday, July 31, 2012

E(BS)-5: The New Visa Category

It's been awhile since I've decanted the last batch of misleading, dishonest EB-5 deals beings marketed in China and the Far East for you guys. In Florida, we're wearing thigh–high rubber waders at this point to navigate the muck.

Since they taught us in law school that truth is an incontrovertible defense to an accusation of defamation, and since I've been reviewing a lot of creepy EB-5 offerings these past few months, I expect I'll be uncorking some of that decanted truth for you in the near future. (-; J

Thursday, July 19, 2012

A Negative Sovereign Rate of Return

A lot of people believe I'm being Mr. Hyperbolic when I say that international investors are FRANTIC for safe markets. This is why more Chinese are asking me even more about direct investment than they are about EB-5!

I'm connecting in Dallas to head home and just saw an article in today's USA TODAY: in the wake of the Euro fears, super stable Germany just auctioned 5 billion Euros...at a NEGATIVE 0.06% ROI! See the picture...and invest in America fer cryin' out loud!!

Sunday, July 15, 2012

St. Kitts & Nevis Yacht Visits Booming

As many of our international readers know, Harvey Law Group is now offering the St. Kitts & Nevis immigrant investor program, one of the few which goes beyond offering residency for investors and actually offers investors nationality in the country, issuing them passports. My HLG partners Mikael Charette and Catherine Dulude just returned from Dubai, where they met with Kittitian authorities to discuss the program as relevant to HLG clients in China and Vietnam.

While I'm still beating the Lake Point EB-5 drum loudly and will do so until our 40th investor slot is funded, the St. Kitts option is becoming increasingly attractive to our very high net worth clients concerned about the tax implications of US residency.

Well, the Kittitian appeal goes beyond its migration program: according to the St. Kitts Minister of Tourism and International Transport, the Hon. Richard Skerritt, there has been a 222% increase in the number of private yachts visiting the dual island nation in the first quarter of 2012, compared to the same period last year.

As I write this sitting at the St. Thomas, USVI airport, about to head home to Miami after a long weekend in crystal clear waters, nose to nose with sea turtles, these stats reminded me that long before St. Kitts & Nevis became a prudent and conservative immigration and offshore banking solution…the islands were yet another staggeringly beautiful destination in this magnificent Caribbean of mine...(-;

Monday, July 9, 2012

Congratulations to Empire State EB-5 Regional Center, our freshly approved new bouncing baby Regional Center!  Dave and Keith, start passing out the cigars....(-;

Thursday, July 5, 2012

Lake Point 4th of July Newsletter

...from Lake Point Restoration


LPR logo 
 



Freedom is nothing but a chance to be better. 
 ~Albert Camus


On Independence Day many Americans are taking time to reflect on the principles and values that define our great nation. We are grateful each day for the opportunities that freedom allow us to have.    Along with our Freedom comes the opportunity to be free thinking and the opportunity to be the best we can be. 

At Lake Point Restoration, we appreciate the opportunity to work with you and wish you continued success in your ventures.   



 
Quality Products    Strategic Location     Unique Public-Private Partnership 
 

Located on SR 76 in the heart of Port Mayaca, FL, just 9 miles west of the Beeline (SR710) Highway,  Lake Point Restoration is an FDOT Certified Mine #89-673. We produce a wide variety of products, which include coarse aggregate, base rock, Rip Rap and specialty sand products.  Contact our sales department for material pricing on your job.


Our Materials:

Commercial # 4 Stone
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FDOT Ditch lining
FDOT  Bank and Shore
FDOT Code F-20 - Asphalt Screenings
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25818 SW Kanner Hwy.
Port Mayaca, Florida 33438