Friday, June 22, 2012

One EB-5 Lawyer With Too Many Hats?

Last week's ILW EB-5 Continuing Legal Education Summit in Nashville, as I've already told you, was the best ever...sort of a Woodstock of EB-5 Stars. Okay, perhaps that is not the right analogy. (-:  But the point is that when you get the best minds on a given subject together in one room, the whole becomes greater than the sum of its parts, and that is exactly what Sam Udani has been able to consistently pull off with his EB-5 CLE events.

In ILW's EB-5 event format, as in their new attorney's EB-5 book -- I'm a contributor -- Sam constructs a logical flow of events ranging from the formation of an EB-5 Regional Center or Project to filing the investor petitions, to troubleshooting and preempting problems in all of the preceding.  The book is a hands-on, practical handbook for business immigration attorneys delving into EB-5 or wishing to quickly catch up with the myriad official and unofficial USCIS policy changes of these past few years, distinguishable from the many academic treatises hovering around assumptions, presuppositions and speculations as to how USCIS will act in any given situation when neither statutory nor regulatory guidance exists.

But if there is one thing the ILW book cannot do -- in fact, no EB-5 treatise or practice manual could do -- is educate the EB-5 practitioner on understanding the complex dynamics of the EB-5 process as they relate to both the "formal" and informal roles played by the practitioner...as interpreted by the client

To begin, leading EB-5 practitioners are clear on the fact that you cannot serve both God and mammon; that is, you have to either represent the Regional Center/Project OR the EB-5 investors, and there is a fundamental ethical conflict if you try to do both.  A Regional Center attorney, whether (as in my case with American Venture Solutions Regional Center) a principal in the Regional Center or simply as outside structuring counsel, can't simply erase that conflict by asking a client on the other side of the world to sign a piece of paper acknowledging and accepting said conflict...any more that a fox can make his actions sacrosanct by having the hens sign of on his entry into the henhouse.  (Interestingly, given the much greater profitability in the business of representing investors in I-526/I-829 filings in comparison to the onerous, more rare, and ubercomplex task of putting together an EB-5  Regional Center or Project, it is easy to understand why a number of large national law firms are reaching out to me with clients needing RC formation; they know I won't touch the investor filings, and a modest $20M raise equals 40 I-529s, 40 consular processing/adjustment filings, and 40 (hopefully!) I-829 submissions.  As Sam has often commented to me, that , my friends, is where the real money is for EB-5 practitioners.

Besides the fundamental conflict of representing a Regional Center vs. an EB-5 investor, the next issue is that of referral fees payable to attorneys.  We had a spirited debate on the subject in Nashville, led by Denyse Sabaugh.  As attorneys, we are know we are ethically bound to avoid even the "appearance of impropriety".  While this is a complex subject in which I've expressed my opinion in a previous Immigration Insider blog posting I wrote on the subject of EB-5 Finders Fees and I won't get into it again here, it is still an unresolved matter and one of which we need to be aware.  Until last week I was pretty comfortable taking a referral fee from a good Regional Center to whom I'd referred an investor, with the investors full knowledge and with me having no role in either the RC or investor visa filing.  After last week, my position is the same...but I view the issue with a bit more understanding.  [Note: the above referenced blog entry addresses the issue of whether an attorney can take a referral fee (in a non-EB-5 context) from the standpoint of securities regulations; the position that I take in the 2010 piece (and still take today) -- that since successful and totally independant favorable USCIS adjudication of the 526 is a prerequisite to the payment of the referral/success fee, it is legally distinguishable from the BMW straight-referral-fee scenario prohibited by the SEC -- has been the subject of considerable discussion within the EB-5 community.  To date, the SEC has not formally commented but, for what it is worth, a friend who is an SEC enforcement attorney (and who would KILL me if I use his/her name) concurred fully with my reasoning.]

Finally -- and this is a new one to me -- there can be an erroneous inference by the client that the attorney's role makes him some sort of "partner" in the economic success of the EB-5 project he or she is structuring.  Let's be clear: my retainer agreement explains in exhaustive detail both the work I WILL undertake as the immigration counsel structuring the EB-5 Regional Center or Project; MORE exhaustively in detailing what I DON'T do and what I am NOT (e.g., securities counsel, marketing person, business planner, etc.)  However, the fact that I am in the business of marketing various global migration programs through Private Placement Partners, my consultancy, I can't rely on the clear language of the retainer agreement...I need to carefully explain to the client/developer what he or she is and is not retaining me to do.  If I am just structuring an EB-5 Regional Center or Project, they are engaging me as an attorney with a specific list of fees and responsibilities (which, in my case, includes the retention, supervision, and accountability for the other professionals involved in the structure, such as the economist, business plan writer, etc.)  If I am JUST being asked to market a project someone else built and got approved, then it is clear that Private Placement Partners would NOT be responsible for structural deficiencies resulting from another law firms legal work...right??

I just don't know.   This week I had a client for whom I'm doing a simple, non-Regional Center pooled EB-5 structure ask me when I would be "beginning the seminars".  Huh??  WHAT seminars?  Despite the clear language of my retainer explicitly stating that I was JUST being hired to structure the deal, he inferred that because I also operate Private Placement Partners, some sort of "free marketing" deal was in place.  It was resolved readily and amicably, and he understood, but it left me very uncomfortable that a sophisticated developer could make such an assumption despite the clarity of our communications.

These EB-5 waters are murky, my friends, and if there is one thing I can see in them through my incredibly cool new Italian-made Maui Jim polarized fishing glasses, it's that it is up to US to make sure our clients understand exactly what our particular role is in realizing their objectives.

Thursday, June 21, 2012

Heading Back to Vietnam for Last Lake Point EB-5 Investors...


Miami Herald: Margaritaville Beach Resort EB-5 Project Faces July 1 Default

If there has been a recurring issue in my practice of structuring and marketing EB-5 projects this past year, it has to do with the reconciliation of the true EB-5 process timelines with the fabrications of EB-5 structure "brokers" who promise developers completely unrealistic timelines.  As is often the case in many things EB-5, many involved in the process are far more concerned about the lucrative EB-5 Project Structuring assignment than they are with giving the developer a real-world projection of WHEN they will actually SEE EB-5 money breaking escrow.

I don't know the details behind Margaritaville Beach Resort's problems, but I know this much:
  • The Margaritaville brand has been developed by none other than my favorite crooner/entrepreneur Jimmy Buffett, and it is as good as it gets and 
  • The project's developer, Lon Tabatchnick, has a sterling reputation in South Florida
The need to understand EB-5 structuring, marketing, and funding timelines is the single-most misunderstood aspect of project formation, and it is disappointing to see good projects affected by what were, most likely, unrealistic assessment of EB-5 funding timelines.  Today's EB-5 projects need to understand that for the foreseeable future, EB-5 financing should be seen as supplemental, inexpensive foreign venture capital which is there to enhance conventional developer, US venture capital, and bank financing.  If the project's feasibility hinges on the rapid deployment of funding via EB-5, there will be problems.

We sincerely wish Margaritaville Beach Resort continued success as it meets these new challenges and look forward to a frosty beer on Hollywood Beach in the near future.

See the full article in the Miami Herald:

Margaritaville developer still searching for funding - Hollywood - MiamiHerald.com

Monday, June 18, 2012

Everyone Relax, Marco Rubio has the DREAM Act Issue Solved...


Having personally engaged Mr. Rubio on the subject of immigration reform and the DREAM Act during a fundraiser at which I wrote a check (which, I should add, I ultimately regretted writing), it is quite odd to presume he feels capable of taking a leadership position on the issue of the DREAM Act.  As an admittedly-jaded independent voter who long ago gave up on a bipartisan politics, I feel very comfortable interpreting both Mr. Rubio’s efforts as well as Mr. Obama’s long-delayed response to the issue:

1.      Mr. Obama’s diluted, weird, last-hurrah suggestions are “too little, too late”
2.      Mr. Rubio’s “expertise’ (acquired, I assume based on our earlier conversation, by osmosis) is completely devoid of an intelligent understanding of a rather complex issue.

So here we go again: a valiant Democrat again promising to do what he promised to do four years ago and didn’t do, a spineless Wall-Street-o-Crat Republican front runner who can’t even answer THE QUESTION about his view on DREAM on a Sunday morning news hour…and the intrepid,  Dan-Quayle-esque Mr. Rubio, clarifying things for us.  Talk about the blind leading the blind.  Sigh.

When America cares about immigration reform, we will have an intelligent discussion on the subject and, God willing, fix a broken system. Until then, the subject of immigration reform will be bantered about by the clueless, manipulated to fuel xenophobia or dumb race-based voting responses, and we’ll look to hollow talking heads to determine how America’s future unfolds.

Thursday, June 14, 2012

Bullet Points from Last EB-5 Stakeholders Meeting

As you no doubt have heard by now, the last meeting with USCIS' EB-5 team was a big disappointment for the hundreds of folds physically present and listening at home. Here are few statistical tidbits worth reporting, as relayed by Steven Yale-Loehr in Miller Mayer's latest newsletter:

According to the latest EB-5 program statistics based on preliminary data for the second quarter of fiscal year (FY) 2012:

  • USCIS received 2,771 I-526 (Immigrant Petition by Alien Entrepreneur) petitions and had approved 2,101 and denied 384 so far. This was an 85 percent approval rating, compared to an 81 percent approval rating for all of FY 2011 and an 89 percent approval rating for all of FY 2010.
  • As of the second quarter of FY 2012, USCIS had received 375 I-829 (Petition by Entrepreneur to Remove Conditions) petitions and had approved 522 and denied 24 so far. This was a 96 percent approval rating, matching a 96 percent approval rating for all of FY 2011 and exceeding an 83 percecnt approval rating for FY 2010.
Despite these nice numbers, word is that new Regional Center applications are getting denied at a "higher than ever" rate, to paraphrase a USCIS contact who declined to be identified.

Recap on ILW.COM's EB-5 CLE Seminar Yesterday in Nashville

While most immigration lawyers finding themselves in Nashville today are waking up in the opulent Gaylord, ready to begin the 2012 American Immigration Lawyers' Association (AILA) national gathering, I instead woke up at a friend's home, somewhere in the lush suburbs of the Music City, being stared down by grinning 2 year old wearing a cowboy hat.

A combination of too many miles and too many CLE credits led me to forgo this year's AILA National Convention, and my job ended at 6 pm yesterday, with the wrap up of Sam Udani's (ILW.COM) EB-5 CLE seminar, and today is "catch up with the 800 emails from 24 time zones" day before heading back to Miami tomorrow.  After speaking at a number of ILW events, Sam asked me to be the moderator for the panel and, as usual, Sam delivered a line up of the best and brightest in this rapidly evolving field of EB-5.  Again,"as usual", all of the presentations were invaluable for the mixed crowd of seasoned EB-5 practitioners and other immigration attorneys just dipping their respective toes into the EB-5 pool.  These were, for me, the highlights:
  • Ryan Conway's (Dominus Property Partners) candid, insightful presentation on the reality of being in the business of running an EB-5 Regional Center and the endless struggles to identify intelligent investments while worrying about an often-inconsistent USCIS adjudication process;
  • Ignacio Donoso's superb presentation on "perfecting the I-924 petition" (which, as I told him, made my own presentation on the same subject in NY last month seem pretty lame!)
  • The brilliant Bob Gaffney's energized, high-speed discussion on proving Source of Funds in EB-5 filings;
  • Mona Shaw's intriguing analysis on an emerging topic, "Removal issues in EB-5".
As if all that wasn't enough, AILA National Past Presidents Steven Yale-Loehr and Denyse Sabagh presented genuinely fascinating - that's not hyperbole, honest -- discussions on I-829 issues/solutions and legal ethics as relating to EB-5, respectively.  Having the attention span of a gnat, I can only tell you that ending a 9.5 hour day at 6 pm while still taking notes and enjoying the snappy Q&A is not the norm for me. (-:  You did it again, Sam, congrats and thanks for letting me be a part of a great event!

I have a lot stuff to tell you guys regarding the latest from Far Eastern markets (from which I just got back this past weekend), big changes at LatourLaw, and exciting new collaborations...I'll get on that as soon as I can climb off the email mountain.   In the meantime, best wishes to my colleagues in Nashville for a successful AILA National Conference...look for me somewhere near the Wildhorse tonight, where I'll be with my friend Jack Daniels, watching the Heat try to regain momentum.  Peace. J

Saturday, June 9, 2012

Let Saigon be Saigon

Hi everybody, sorry I've been so quiet. Just back from two very exciting weeks in Vietnam and my first visit to the capital, Hanoi. I will update you soon on the latest developments in this very exciting country, which is proving very hungry for both EB-5 and non-visa-related investment opportunities in the US. (US Secretary of Defense Panetta happened to visit Vietnam while I was there, and it is clear that US expects to establish much closer ties with this country.)

Before that, just a heads up: I will be moderating ILW.COM's EB-5 continuing legal education program this coming Wednesday in Nashville. This will be the years top EB-5 CLE event, where EB-5s most experienced attorneys will teach other business immigration attorneys what they need to know to properly structure and handle client matters in this complex and rapidly evolving visa category. The event, which is the day before the AILA national convention, will feature an all star cast of EB-5 experts including Steven Yale-Loehr and Denyse Sabagh. Hope to see you there!