Immigration Insider

Venezuela: Daring to Disrupt

When you think about it, there are very rational reasons behind the truism that the squeaky wheel invariably gets the oil.  In fact, but for the acoustic disruption triggered by said wheel, the bearings would silently grind down and bring the whole movement to a standstill, without warning. The disruptive squeak serves as notice that something is amiss and permits the possibility of corrective action by an attentive listener.

Today, in Caracas, Venezuela's squeaking is loud and clear to me. As I meet with successful business person after successful business person to discuss investment-based immigration, the growing concern over the current political and economic climate becomes increasingly obvious. The underlying vibe of "let's see what happens" which permeated last year's EB 5 one-on-one meetings has gradually shifted toward a quiet murmur of deep concern.  And while as an immigration attorney this shift may well mean more business for me, I have known and loved Venezuela for many years, so I share their concern.

The irony is that my professional friends here are all quite busy and doing very well.  The island of Margarita is booming with new construction; industry is busy, and the malls are packed.  In fact, to the naked eye, the Venezuelan economy appears more robust than that of the US.  But no matter the riches of this lush and beautiful country, nor the diamonds and petroleum enriching its soil, the disruptions which lead to the squeaking of the wheel serve to undermine the perceived affluence of an economy, and the world's confidence in it.

Both the government and the private sector are populated by strong and charismatic leaders with a deep abiding pride in the historical entrepreneurship and democracy of Venezuela.  Disruption -be it via social reforms intended to spread a nation's wealth or via the steady flow of new technologies, methods, and out-of-the-box ideas which fuel the growth of any market economy - is part and parcel of the cultural and economic evolution of every nation.

As a "serial disruptor" whose professional career has been defined by my unconventional approach toward investment-based immigration, I appreciate the fact that without such change, stagnation is inevitable.  For Venezuela, the challenge is to channel the disruptions in productive ways which can restore the confidence of its people, trading partners, and neighbors.  It is my sincere hope that as I begin my third decade of helping Venezuelans invest in the United States, said investments will be driven by entrepreneurial zest over the abundant opportunities to be found in the topsy-turvy US economy, and not by the ever-louder squeaking of the wheel which they fear just MIGHT run them over.

Understanding Venezuela's Prospective EB5 Investors

As I sit at the gate waiting to board for Caracas, I'm remembering the rules I have learned from my most recent trips to Venezuela to visit clients and prospective clients.

• Don't wear anything red unless you want to be perceived as a supporter of the government
• Don't pay for anything with your credit card unless you want to spend $500 on dinner; let your local clients invite you and square up later
• Don't take a taxi except from the safe hotel where you are staying
• Carry an extra wallet and cheap cell phone in case you are mugged; they are the sacrificial lambs.
• Stop expressing surprise every time you realize that despite all the politics, crime, and problems, you are actually visiting a petroleum-fueled economic hot zone where an awful lot of people are living pretty good lives.

So the good watch is at home and the $10 one is on my wrist, a client is picking me up at the airport when I land, and I'm staying at the same massive, effective, and overpriced hotel...again.  If it ain't broke, why fix it?

As I take my show on the road again, it is notable that Venezuelans are in so many different ways distinguishable from my other prospective EB5 Investor clients, who are eager to move to the U.S. ASAP.   Most Venezuelans, it appears to me, want the prospect of U.S. permanent residency as a sort of "Ace-up-the-sleeve, Plan-B" solution for a "someday" which may never come.  The truth is simple in Venezuela:  if you can afford to invest $500,000 in and EB5 visa to get you and your family U.S. residency, you are probably living extremely well...and reexamining your thoughts about the mighty Green Card.

I suppose that last thought applies to EB5 investors from anywhere except perhaps Europe, where the line between the privileged and the underprivileged is more blurred than it is in developing nations populated by distinct "haves" and "have nots".

In talking to wealthy prospects, I am often asked this question: 

"Jose, look at my life here...why on EARTH would I want to leave this to join the U.S. Rat Race"

I can't answer except to tell them that I'm going on year two of fighting for the Spanish passport to which I am entitled by virtue of my Barcelona-grandfather...even though I doubt I will ever live in Spain.

I guess it is just my own "Ace-up-the-sleeve, Plan-B" solution for a "someday"... which may never come.

Latour en Caracas para Citas de EB5: Mayo 17-19

Of Sheep and EB5 Regional Centers

"If You Build it…They Might NOT Come"....

                                                                        -paraphrasing the line from Field of Dreams

Sheep mentality is a terrible thing. It is something that has plagued mankind since the earliest written records, something which seems to be more a byproduct of fundamental human emotional patterns than the result of consistently flawed intelligence.

Recently, we have seen sheep mentality - and it's closely related cousin, greed - destroy our real estate markets, compromise the integrity of our banking system, and wipe out what was left of our already shaky faith in Wall Street. Today, a smug self - congratulatory European Union is basking in their "decisive" decision yesterday to inject nearly $1 trillion into the Euro economy, in the name of saving the Euro, Greece, and all the irresponsible megabanks throughout Europe who stupidly continued to purchase Greek sovereign bonds despite the litany of economic warnings, catastrophes and indicators which have been obvious to all for the past decade or more. All of these unfortunate catastrophes have one thing in common: they permit the "sheep" to walk away unscathed, while the collective irresponsibility of poor financial decision-making is borne by the totality of the population.

I've written about this before as it relates to the astonishing number of EB 5 regional centers which have been filed and approved in the past year. I've also told you about the "cottage industry" of attorneys who, like myself, knew comparatively little about the GOOD, new- generation EB 5 regional centers but who now profess to be "experts" and are aggressively marketing their "regional center formation services" to cash-strapped developers everywhere. Not a week goes by where I am not contacted by someone looking for "EB 5 money".

Yesterday, I was contacted by an old friend, precisely about this subject. My friend is a veteran real estate investor who well understands the vagaries plaguing our current economy. Still, word gets around, and the notion of setting up an EB 5 financing mechanism seems to be spreading through the development community in the United States with the eye-popping speed of a South Florida Ponzi scheme.

Getting a new regional center approved isn't the hardest thing in the world; establishing one that meets the complex criteria which both satisfies statutory requirements AND provides the foreign investor with a comparatively safe investment vehicle to his or her permanent residency IS.

As the number of approved regional centers continues to go up, the irony is that it gets that much easier to separate the proverbial wheat from the chaff.  Sift wisely.

The Rise of the Brazillionaire

After over two decades of representing hundreds of Brazilians investment-based  and professional immigrants in the United States, I finally made it to Brazil. My hasty January visit -- more than anything a glimpse into the still-Napoleonic tendencies demonstrated by the occasional US visa officer -- left me with a clear impression of Sao Paolo: a thriving metropolis as dynamic as its population.

Today's Wall Street Journal (page A10) discusses how Brazil's rapid economic recovery is starting to create concerns similar to those the US has had with China: the overheating of what has turned into a colossal industrial machine. The Journal predicts that Brazil's central bank "is likely to start a series of interest rate increases" to cool things down. Today I want to briefly discuss what this all means to wealthy Brazilians "on the fence" about US immigration intentions.

It is no secret the South Florida's Brazilian ex-pat population has thrived in our local economy; it is also not a secret that many Brazilian professionals who entered the US in H1B and L1 visas have overstayed for a variety of reasons. Some of them have started thriving businesses after losing their H1B sponsorship; still others have wound down the Brazilian home company... while still possessing apparently valid L1 visas in their passports, they are acutely aware of the reality that the closure of the foreign company renders their current US immigration status nothing more than an artifice easily discoverable by the US consul or airport DHS officer.

Brazil's economy is expected to expand some 5.5% this year, but some economists are warning of the 7% rate of growth. Like Indiana and China, this type of growth -- particularly in such a squiggly global economy -- means that Brazil will more than likely begin to tighten its money supply in order to avoid the inevitable inflation which have long leg economies like Brazil's. (The Journal reminds us that as recently as the early 90s, inflation was in the four-digit range in Brazil.)

In a powerful, diversified, and commodities-driven economy such as Brazil's, all of this growth means one thing: an increasing number of affluent Brazilians trying to reconcile their country's economic boom with the historical lessons taught by the instability of Latin American politics. For many -- both those remaining in Brazil and those already semi-transplanted into the United States -- this combination of elements opens up the possibility of international relocation... usually to the US.

The main issue, at least as far as the uber-wealthy, is the worldwide tax liability which comes with permanent residency in the United States.  Yesterday, Melissa and I had a dynamic meeting with Steven Cantor and his team.  Steve, whose practice focuses on foreign investors “transplanting” to the U.S., is a distinguished tax attorney with whom we collaborate on a regular basis.  Besides being just plain outstanding in his area of expertise, Steve is the only tax guy I've met who approaches problems creatively, a bona fide "outside the box" thinker in a profession known more for counting beans than seasoning them.  I asked a lot of questions about pre-immigration tax planning and the like, and, as usual, Steve had the answers we needed...and those answers open many doors for our Brazilian clients with one foot in America and one eye on the tax implications of what that second foot will mean.

As we prepare for next series of EB5 investment seminars for Latin America, the white-hot economy of Brazil is squarely within our sights. Like so many others on this planet, many Brazilians with whom we speak simply like the idea of U.S. residency as a Plan B, “just in case”, given the quality of their current lives in Brazil.

There are legal ways to both immigrate to the U.S. AND to minimize tax implications through intelligent pre-immigration compliance structured by the right folks.  Email if you have more questions and we'll get them answered!

The Quagmire of Advising EB5 Visa Clients: Walking the Tightrope

Learning more and more this past year about the EB5 immigrant investor visa has proven to be a double-edged sword. As an immigration attorney, my professional background sorely lacks the formal training in finance, securities, and investments which are not only essential in determining the quality of any particular investment opportunity, but also critical in relation to observing US securities laws.  So no matter how much I learn, I really can't impart that aspect of my knowledge to my clients in a comprehensive manner.

 

The problem is this: the more I read, the more I learn; the more I conduct my own, admittedly imperfect, due diligence on the ever-growing number of approved regional centers, the more I come to my own, admittedly imperfect, conclusions. While I would like to believe that these conclusions are based upon 20+ years of investment visa experience, a growing understanding of the components which define a "good" regional center, and my sincere objectivity, etc., I doubt the SEC would care very much about any of that. The bottom line is that no matter how well I educate myself, I am not a licensed securities agent and despite the specific exemptions written into EB5 provisions, an immigration attorney is not legally qualified to offer investment advice to his or her clients.

 

What does that leave the prospective investor client? Well, there are a number of online resources, many of them independent agencies, where a prospective investor can gather a great deal of objective data regarding service centers. Then there are the regional center's own sites, which range from intelligently written, substance filled resources to schlocky offerings more reminiscent of a used car lot than of a serious investment opportunity. Finally, there are guys like Michael Gibson, who will serve as a "hired gun" for a prospective investor seeking a truly objective, "apples to apples" comparison of potential EB 5 regional center investments.

 

So the problem comes back full circle to the immigration attorney: when a client is sitting across from my desk asking me point blank "which do you think is the best EB5 regional center investment out there?"... I can only smile and regretfully explain that I am not qualified to answer that question and that he or she must conduct their due diligence either independently or via a qualified agent.

 

That's never the answer the client wants to hear.

 

There is undoubtedly an ethical tightrope which must be walked in this business of advising prospective EB 5 visa clients and is one upon which I tread very carefully. Unfortunately, a disproportionate number of the immigration attorneys who tread this line less carefully are entrenched in conflicting interests ranging from undisclosed dual representation to actual ownership interests in the EB5 regional centers they are enthusiastically recommending to prospective investors. In the coming weeks and months I will be exploring this issue more deeply and seeking specific guidance from the Florida Bar as to how we can, as immigration attorneys, walk this tightrope without violating ethical rules.

 

Hopefully, the answers which will reveal themselves will prove useful to prospective investors bewildered by an avalanche of marketing and propaganda originating from that most unqualified of investment resources…the immigration attorney.  Stay tuned.

F-1 Seminar Series Off to a Great Start at USC

The crowd was small, the questions were rapid-fire, and the first "Taking Charge of Your Green Card: New Millennium Options for F-1 Students" seminar went off with barely a hitch.  ("Barely" because the projector I was REQUIRED to rent - I travel with my own - was forgotten>)

The attendees covered a broad spectrum of nationalities and ranged from freshmen to post-grads.  Although the feedback they gave me was very positive -- they especially loved the portion of the presentation which covers self-marketing suggestions to neutralize "visaphobia" in prospective employers -- I think the Powerpoint is a bit too long.  Going to trim it down for this afternoon's presentation at UC Irvine.  In any event, the one hour presentation was followed by nearly two hours of Q & A, so apparently they found it worthwhile.

LA is absolutely spectacular, with 70 degree days and lots of sunshine...to be further enjoyed via the free upgrade I got on the rental...a convertible Sebring...

Hoooooboy.

"Live and Nationwide"...Like ZZTOP...(well, sort of...)

LA Seminar Press Release

A Passage from India...to America??

While everyone knows that the Chinese have emigrated to Canada in vast numbers in the past decade and a half, not a lot of us on this side of the border are aware that, from investment visa numbers, Canada has been a powerful magnet for Indian immigration.  It might simply be that the numbers of Indian health care, science and IT professionals who have entered the U.S. have made us overlook the fact that when it comes to drawing in the investors who ultimately create the jobs, Canada's beat us to the punch again with India.

That's changing.  I'm seeing a stronger interest from Indian nationals exploring the EB-5 option and the buzz on the Internet shows the EB-5 to be an increasingly hotter topic in major Indian city discussion boards.  As the EB-5 has gotten more proven and reliable, the Canadian options have lagged; the USCIS reorganization channeling all EB-5 activity to Laguna Niguel has certainly been a large factor in the improved adjudication times we are seeing, as well as in the reduction of silly RFE's.  The folks in California know what they are doing and the results are being manifested in the form of reliable approval patterns that are a welcome sight for everyone.

In the past two months, I've had two long-gone prospective investor clients reappear, calling me from Canada, both European.  Each had decided against the U.S. several years ago.  After two numbing winters and continued curiosity, they are looking to the U.S. again...maybe not as EB-5s since both have other options.

I would encourage our Canadian immigration colleagues to familiarize themselves with EB-5 Regional Center basics because it may just be that an expanded line of options is what their clients are looking for!  I'm here if you have questions.

A Case of the "EB Jeebies": Dodging the EB-5 Hard Sell

I was talking with a friend of mine - a securities attorney --  the other day about the dramatic surge of EB-5-pushing attorneys, a stark contrast to the reality only a year ago, when few immigration attorneys were actively pursuing the visa category.  My friend, a partner with a major national law firm and former SEC attorney, said that it is only a matter of time before some of us in the visa business - and in the Regional Center business - get in trouble.

Here's why: the EB-5 Regional Center Visa is a "security" within the meaning of U.S. law, which includes any note, stock, bond,  or “investment contract”.  And as my distinguished colleague Angelo Paparelli and his co-writers explain in this excellent analysis re the relevance of securities laws to the EB-5 visa , an “investment contract” is made when a person:

"(i) invests money, (ii) in a common enterprise, (iii) with an expectation of profit, (iv) to be earned solely from the effort of others. The U.S. Securities and Exchange Commission ( “SEC”) has determined that interests in a limited partnership are an investment contract, and therefore, a security."

So, you see, an EB-5 Regional Center invest IS indeed a security...so how is it possible to market these investments except through, say, an investment broker?  Paparelli, et al, explain the regs concisely in the aforementioned document:

"The Securities Act requires that all securities sold must be registered with the SEC, unless exempted by its rules. Rule 506 of Regulation D promulgated under the Securities Act provides the exemptions to the registration rules that regional centers typically use to avoid the burdensome and expensive process of registering the securities to be offered and sold to EB-5 investors.5 To meet the exemption provided by Regulation D, a regional center must comply with certain conditions set forth in Rule 502 of Regulation D,including:

           1. Information requirements. If all of the investors are “accredited investors” then             there are no informational requirements under Regulation D, though issuers6 are             still subject to anti-fraud requirements under securities laws. An accredited                     investor is a person whose:

(i) individual net worth, or joint net worth including that person’s spouse, at the time of the purchase of the securities exceeds $1,000,000;

(ii) individual income exceeded $200,000 in each of the two most recent years and who expects to reach that income level in the current year; or

(iii) joint income including that person’s spouse exceeded $300,000 in each of the two most recent years and who expects to reach that income level in the current year."

So, you see, it is an EXCEPTION to SEC regulations under which EB-5 Regional Centers ordinarily operate, and why the seriousness and integrity of both the underlying investment AND those who structured it is the primary thing to consider...and why you, as a prospective investor, should steer wide and clear of any Regional Center whose website or marketing approach looks like a big, glossy, "AS SEEN ON TV" hype type presentation.  Ultimately, it is the self-policing of SEC compliance by a Regional Center which will be determinative of whether or not they really are staying within the Rule 502/Reg D exceptions.

Until now, my quarrel with the hard sell of many of my colleagues has centered around ethics issues pertaining to bar rules; the more I learn, however, the more I see that in "serving both God and mammon", so to say, the attorney is playing with a far hotter fire than potential bar sanctions. One more excerpt from Angelo's super article, and serious food for thought for all of us in this business:

"General solicitation includes any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio and any seminar or meeting whose attendees have been invited by the foregoing methods. This applies whether conducted in the United States or abroad. In addition, sending mass e-mails, newsletters or other mailings is considered general solicitation.

Activities by any third party intermediary assisting the regional center, such as immigration brokers or finders, are included in the evaluation of whether a regional center has complied with Rule 502(c). If an immigration attorney assists a regional center and accepts fees from someone other than his or her own EB-5 investor client for services rendered to that client, then the immigration attorney would be acting as a third party intermediary and his or her activities should also be evaluated within the context of Rule 502(c)." [Highlighting supplied]

As bright as we might be on the subject of immigration law, we, as a group, are most definitely NOT "securities" experts.  But that's increasingly hard to tell these days, given the proclivity of many immigration attorneys to push the EB-5 RC visa as the sole and definitive solution for a prospective client...even though better options exist.

A recent example: a young couple came to me after having been advised by no less than three immigration attorneys that their U.S. future depended upon an EB-5 visa.  Armed with reams of offering papers and all kinds of documents, they told me that they were afraid to invest in what they'd been shown (as they SHOULD have been, given the particular Regional Centers thrust upon them) and had come to the conclusion that they were ready to invest $1+ million in their own EB-5 U.S. enterprise, since both were degreed professionals with entrepreneurial plans and a checking account that made those plans possible.

I kid you not: FIVE MINUTES into our conversation I learned that:

1. Both have been employed for the past two years by dad's company back home which
2. Has over 500 employees, 30+ years in business and is rock stable AND
3. The business they want to do in the U.S. has to do with the foreign employer's already existing activity in the U.S.

Helllooooooooooooo?  Can anyone say "L-1A" leading to EB-1??  It took me another 10 minutes to convince these folks that I was NOT the one who was nuts and that the three other attorneys, in their eagerness to shove an EB-5 Regional Center visa down their throats, had not even explored other visa categories!  They are happily building their L-1 business today, with an investment which is a fraction of what they would have spent on an individual EB-5.  And I know three immigration attorneys, one a very competent and experienced attorney,  who should be slapped upside the head.

There is no reason to hard-sell an EB-5 Regional Center, and attorneys who do so are risking a great deal.  Besides, except for the mass marketing of the Far East, I haven't met a single EB-5 RC prospect who could be "sold" via a hard sell...these people didn't make their money by being dumb.  As a Regional Center friend of mine always says, there IS a way to do this legally and transparently, it's just that many of the programs out there are built on shortcuts.

The truth about selecting an EB-5 Regional Center is simply the Field of Dreams theory: if you build the smarter, more transparent, compliant Regional Center which makes the most sense...they will come...no hard sell required!