EB-5 Investor Due Diligence Questions

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Wednesday, January 29, 2014 - 1:30pm
Jan Pederson, Esq.

EB-5 Regional Center Due Diligence Questions for Investors to Ask and Have Answered Before Investing!

The EB-5 Green Card program is an attractive immigration option for retirees, entrepreneurs, investors, professionals, students and other high net worth individuals who are able to make an investment which creates 10 jobs. An EB-5 investor can get a Green Card as fast as one who marries a U.S. citizen.

Maggio+Kattar Shareholder Jan Pederson has helped many EB-5 investors and their families obtain U.S. permanent residency and provides the following due diligence questions for EB-5 investors to consider before investing. The schedule a consultation with Jan, or another of our experienced attorneys, call us at 202-483-0053, or e-mail [email protected].

Investors Due Diligence

  1. What is the project return on investment? (in Prospectus)?
  2. Obtain documentation from the Regional Center on the profits on past EB-5 investment projects.
  3. How many projects has EB-5 company completed?
  4. May EB-5 applicant need to invest additional money over and above $500,000 at a later date?
  5. Does EB-5 project have U.S. investors as well as immigrant investors?
  6. What per cent are U.S. investors and what per cent are immigrant investors?
  7. Does applicant get interest on money from the time the investment money reaches the Regional Center escrow account until it is used on the investment project? If so, how much and when is it paid?
  8. When and how are profits paid to investors? (Monthly, yearly, end of project, etc.)
  9. How is return determined?
  10. In Subscription Agreement or Purchase Contract, is there a provision for return of money if I-526 is denied? How much is refunded and when?
  11. Does the investor have to make any deposit or pay any fee for the offering materials?
  12. What is the total amount required to be paid by the investor (investment and administrative fees)?
  13. Does the Regional Center provide regular reporting of the status of the investment to the investors? At what intervals?
  14. Does a referring attorney get any fee from the Regional Center? How much?
  15. Has any Regional Center project lost money? Been in default? Investors lost money? Any lawsuits filed? Be sure to get details.

Investors Immigration Due Diligence

  1. How many I-526 approvals?
  2. How many I-526 denials? Reasons?
  3. How many I-526 RFEs? Reasons?
  4. How many Conditional Green Card approvals?
  5. How many Conditional Green card denials? Reasons?
  6. How many Removal of Condition approvals?
  7. How many Removal of Condition denials? Reasons?
  8. How many RFEs on Removal of Condition applications?
  9. How many AAO appeals of denials? Results of appeals?

Investors Due Diligence on Regional Center

  1. Will Regional Center company and principals be in business in the future for Removal of Conditions?
  2. Obtain Bank references for EB-5 general partner and/or principals.
  3. Obtain Dunn and Bradstreet on general partner and/or principals.
  4. Obtain resumes of general partners and principals.
  5. Any past lawsuits? (Regional Center, general partner or principal)
  6. Any indictments or criminal convictions? (General partner or principals)
  7. When was Regional Center established?
  8. How long has EB-5 company been doing business? Any previous businesses?
  9. When can the investment be sold? When can client get money ($500,000) back? How many investors have received return on investment? How much return?
  10. How many years of experience does the general partner or principal in the investment project have in working with immigration investor program?
  11. . How many years of experience does the general partner or principal in the investment project have in working with immigration investor program?
  12. What precautions are taken to monitor job creation? What steps are taken if the requisite job creation has not occurred?

CAVEAT: This due diligence list is provided for informational purposes only and does not constitute an attorney-client relationship. We do not provide tax, investment, financial or securities investment advice or advice on compliance with foreign tax, currency or other laws. The due diligence list provided above is only a guideline. EB-5 investors are most strongly advised to have their financial advisor review the proposed investment, incorporating this due diligence list into the analysis.