Below is an announcement from the SEC detailing charges brought against an unregistered EB-5 Brokerage firm. To learn how you can protect yourself as an EB-5 investor and EB-5 developer, contact Barella Law, P.C. to speak with EB-5 attorney Kyle Barella.
SEC Charges Unregistered Brokers in EB-5 Immigrant Investor Program FOR IMMEDIATE RELEASE 2015-127 Washington D.C., June 23, 2015 — The Securities and Exchange Commission today charged two firms that illegally brokered more than $79 million of investments by foreigners seeking U.S. residency. The charges are the first against brokers handling investments in the government’s EB-5 Immigrant Investor Program and follow earlier SEC actions against fraudulent EB-5 offerings. Ireeco LLC, originally of Boca Raton, Fla., and its successor Ireeco Limited, a Hong Kong-based company operating in the U.S., were charged with acting as unregistered brokers for more than 150 EB-5 investors. The EB-5 program administered by the U.S. Citizenship and Immigration Services (USCIS) provides a path to legal residency for foreigners who invest directly in a U.S. business or private “regional centers” that promote economic development in specific areas and industries. According to the SEC’s order, Ireeco LLC and Ireeco Limited used their website to solicit EB-5 investors, some of whom were already in the U.S. on a temporary visa. While Ireeco LLC and Ireeco Limited promised to help investors choose the right regional center to invest with, they allegedly directed most EB-5 investors to the same handful of regional centers, ones that paid them commissions of about $35,000 per investor once USCIS approved an investor’s petition for conditional residence (“green card”). “While raising money for EB-5 projects in the U.S., these two firms were not registered to legally operate as securities brokers,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “The broker-dealer registration requirements are critical safeguards for maintaining the integrity of our securities markets, and the SEC will vigorously enforce compliance with these provisions.” Without admitting or denying the SEC’s findings, Ireeco LLC and Ireeco Limited agreed to be censured and to cease and desist from committing or causing similar violations in the future. They also agreed to administrative proceedings to determine whether they should be ordered to return their allegedly ill-gotten gains, pay penalties, or both based on their violations. The SEC’s investigation was conducted by Brian Theophilus James in the Miami office, and the case was supervised by Assistant Regional Director Chedly C. Dumornay and Associate Regional Director Glenn S. Gordon. The SEC appreciates the assistance of the USCIS.
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A proposed bill was recently released by Senator Patrick Leahy (D-VT) requesting renewal and changes to the EB-5 Visa Program. While the nearly 80-page bill covers a variety of topics regarding the EB-5 investment, the main changes relate to the investment amount itself. EB-5 projects located in Targeted Employment Areas (TEAs) and Regional Centers would increase to $800,000. Direct EB-5 investments not located in a TEA would increase to $1,200,000. Other changes to the program include variations to counting indirect job and changes to the TEA designation process. The EB-5 Visa Program is due to sunset in September, and will likely be renewed with these proposed modifications. If potential EB-5 investors wish to take advantage of the current reduced EB-5 investment of $500,000, they should contact an EB-5 immigration attorney immediately to begin the EB-5 visa process. Petitions will need to be submitted before September 30, 2015, or investors may face the increased investment of $800,000 for TEA investments and $1,200,000 for non-TEA EB-5 investments. Contact EB-5 immigration attorney Kyle Barella to receive a free EB-5 consultation from Barella Law, P.C. Our EB-5 lawyers and professionals can assist potential EB-5 investors throughout the entire investment process. We are conveniently located in Northern VA, just outside of Washington, DC. Kyle Barella | [email protected] | +1 202.621.3198 | www.eb5investmentlaw.com Considering Immigration Through the EB-5 Visa? Now is the Time to Make an EB-5 Investment.14/5/2015 By: Kyle Barella Have you and your family been considering immigration to the United States by way of the EB-5 Visa Program? EB-5 immigration is a complex area of U.S. law, and you should seek the advice of an experienced EB-5 attorney if you are exploring the possibility of investing in United States. The EB-5 Visa Program is a path to a U.S. green card through investing $1,000,000 into a U.S. business, in turn creating ten full-time jobs for qualified citizens and permanent residents. Alternatively, an EB-5 investor can choose to invest $500,000 in a Regional Center project or a direct TEA project. Both scenarios lead to a green card. Why now is the time to make your investment. In just a few short months, in September 2015, the EB-5 Regional Center Program, which allows for the reduced investment of $500,000, is due to sunset. While it’s more than likely Congress will renew the program, there are serious talks the investment amount will be increased. As it stands, both a Direct EB-5 investment and a Regional Center investment can be reduced to $500,000 if the EB-5 project is located in a Targeted Employment Area (TEA). Washington politicians have discussed plans to increase the TEA investment amount to $800,000. This nearly doubles the current TEA investment amount of only a half-a-million. Some politicians, including Republican presidential-nominee hopeful, Jeb Bush, have called for the entire Regional Center / TEA EB-5 option to be eliminated. As a result, all investors would be required to make a direct $1,000,000 EB-5 investment. While increasing the investment amount to $800,000 is only speculation at this point, there is strong support among certain members of congress to raise the EB-5 investment threshold. Potential immigrant investors are encouraged seek out a qualified EB-5 attorney and get started on their investment today. Though the EB-5 visa is here to stay, the reduced investment has an uncertain future. The American Dream continues on, and people around the world are fulfilling their own American immigration dream by obtaining a green card through the EB-5 Visa Program. When compared to other countries, the United States is still a safe place to start a business, invest money, purchase a home or commercial property, and raise a family. The EB-5 visa and the various paths it offers allow immigrants to live and work anywhere in the country. There are even passive investment opportunities for those who don’t wish to work, or would like to work someplace other than the EB-5 project they invest in. Our team of DC area EB-5 lawyers and professionals are here to assist you throughout every stage of the EB-5 visa process. The United States was built by immigrant communities, and despite economic hardship across the globe, people still desire to move to the U.S. for a better life and more opportunities for their children. How can the EB-5 visa benefit you and your family? U.S. immigration law is designed in a way that unfortunately, doesn’t offer many opportunities for permanent residency (green card) to people without ties to the United States. Unless you have a relative to sponsor you, or an employer willing to sponsor you, getting your green card through the EB-5 visa may be your only option. The EB-5 Visa Program allows foreign nationals the opportunity to make a qualified investment into a U.S. business in exchange for their green card. Unlike other U.S. visas, there are no English language requirements, family ties or job offers needed. Provided the investor invests the requisite funds they likely qualify. What are your options for EB-5 Investments? Most EB-5 investment opportunities offer flexible options for potential investors. Depending on your needs and goals, you can take an active role in the project or a completely passive role. The investment amount is $1 Million but may be reduced to $500,000 in certain designated areas. Often, an investor wishes to fund the EB-5 investment and not worry about the day-to-day operations of the business and immigration requirements. This is absolutely possible and encouraged by immigration attorneys. As an EB-5 investor, you don’t want to be burdened with EB-5 compliance and immigration issues – leave those worries up to the EB-5 project management. Once invested, you are free to live and work (or not work) anywhere in the United States. To learn more about this exciting opportunity for you and your family to obtain green cards through the EB-5 Visa Program and how you can make your American Dream a reality, contact Virginia EB-5 attorney Kyle Barella at General Counsel, P.C., 703.556.0411, or by email at [email protected]. You can visit our website at www.eb5investmentlaw.com. Our office is conveniently located in the Washington DC Metro area in the McLean, VA Business Center. When researching the options for making an EB-5 investment, potential investors frequently hear about the two EB-5 investment paths - direct and indirect. But are there really three paths? The answer to this question is yes and no. This blog will explore the different options a potential investor has when deciding to make their EB-5 Green Card investment. The most popular option for the EB-5 Visa is the indirect regional center investment. The indirect regional center investment allows the client to make a completely passive investment in a project that will be the sole responsibility of a developer to maintain. These investments are often loan based, but in some cases equity based investments. The EB-5 investor will not have any managerial or day-to-day responsibility. They simply invest their money and leave it in the hands of the developer to meet the immigration requirements so they can become full-fledged green card holders. It’s an affordable option because the vast majority of regional center projects are located in targeted employment areas that allow for the reduced investment of only $500,000. What are the positive attributes of an indirect regional center investment? The reduced investment amount is what makes the regional center path most appealing to clients. Some investors also enjoy not having to worry about the day-to-day burden of running the business. While a client may have created a successful business in their home country, they may be unfamiliar with US business practices and culture and opt to have the project managed for them. For these investors, the regional center path fits perfectly into their immigration plan. What are the negatives of an indirect regional center investment? Regional center investments will offer a low return. This isn’t to say that the project is bad – it’s just the nature of EB-5. A typical regional center project will generally yield a 0.5% - 1% return. This isn’t very high, so investors wishing to obtain a larger return should choose a different path for their EB-5 investment. Clients should be very wary of regional center projects offering them large returns. Another potential negative aspect is that the EB-5 investor doesn’t have any decision making power in the business. This may not be ideal for clients that consider themselves to be savvy investors. So what are the options for investors not wishing to invest through the indirect regional center path? Here is where the discussion of three paths to EB-5 comes up. Many clients (and immigration attorneys) misinterpret the rules regarding a direct (non regional center) investment. Often they think the investor must be involved in the day-to-day operation and running of the business. They believe they have to live in the same city and go into the business daily to qualify for EB-5. That is one option, what I refer to as a “true” direct EB-5 investment, but it’s not the only option for direct EB-5. So what are the two paths under the direct EB-5 umbrella? It’s first important to examine the rules regulating the requirement that the EB-5 immigrant investor be engaged in the management of the new commercial enterprise. The EB-5 Program requires the immigrant investor to be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial responsibility OR through policy formulation. 8 C.F.R. §204.6(j)(5). For investors courageous enough to take the plunge and run their own EB-5 business, they can do so through the “true” direct EB-5 path. They will be responsible for the creation and day-to-day management of the business, as well as meeting all the immigration requirements. Their investment return will be based solely on their own personal efforts. This path can prove to be risky and should only be undertaken by clients confident in their ability to meet all requirements under the program. This may work for some investors, but the majority of EB-5 clients do not want to assume full responsibility for their immigration future. These clients may benefit from a more “hands off” direct investment. This “hands off” direct investment path is great for investors wishing to invest in smaller projects that may yield significantly higher returns than the indirect regional center investment. In conformity with the rules, these investors will have a policy-making role by being a corporate officer or member of the corporate board of directors. Just like the regional center investment, this EB-5 Visa project can be placed in a targeted employment area and qualify for the $500,000 investment. These investors get the best of both worlds. Unlike the regional center path they have some control over the business and typically receive a larger return. However, there is no requirement for then to run the day-to-day operations and they leave the responsibility of meeting the immigration requirements to the project developer. The EB-5 investor is free to live and work anywhere in the United States, regardless of the business location. This path is ideal for all EB-5 investors frustrated with the lack of control and low returns of an indirect regional center investment. For more information on procuring your U.S. Green Card through the EB-5 Visa Program and which EB-5 path is most suited for your investment needs, contact General Counsel, P.C. EB-5 lawyer Kyle Barella today. Our EB-5 team serves EB-5 Visa clients in Washington DC, Virginia and around the world. Our office is located in Northern Virginia in the McLean Business Center. www.eb5investmentlaw.com | www.generalcounsellaw.com 6849 Old Dominion Dr. Suite 220, McLean, VA 22101 | 703.556.0411 | [email protected] Washington DC EB-5 Attorney | Virginia EB-5 Attorney Since the collapse of the Soviet Union in the early 1990s, the United States has welcomed a steady flow of immigrants from Russia – many settling in cities like Miami, New York, Denver, Los Angeles and Baltimore.
Potential Russian EB-5 investors, while prosperous in their home country, choose to leave when government corruption and unpredictability become a factor. These investors recognize that Russia cannot provide a suitable investment environment to protect their wealth, only economic uncertainty. This is evident with Russia’s recent annexation of Crimea, which has contributed to the Russian ruble and Russian stock market plummeting in March of 2014. The $500,000 EB-5 investment now costs up to 50% more in rubles than it would have just a few years ago. Fortunately, many wealthy Russians who qualify for the EB-5 Visa maintain dollar and/or Euro currency accounts outside of Russia. With the recent U.S. sanctions in place, can Russian investors expect other uncertainties during the EB-5 investment visa process? On its face, it appears that unless the EB-5 investor is part of President Vladimir Putin’s “inner circle”, most EB-5 clients will not be directly affected by the sanctions. However, although the sanctions appear insignificant to most individuals in Russia, recent sanctions against Bank Rossiya for example, prompted Standard & Poor’s (S&P) rating agency to downgrade its outlook for the lender from stable to a negative rating. As a result, the S&P foresees a deterioration of the bank’s future business and financial profiles. Further, Bank Rossiya can no longer engage in dollar-based transactions, and western banks will not be able to engage in business with them. This has created immense economic uncertainty in the country. The sanctions on Bank Rossiya were meant to directly impact Putin and other top government officials. The actual ramifications to potential investors is beginning to become evident. Economists predicted correctly that the crisis over Crimea would tip the Russian economy into a recession in 2014, which should serve as a push to potential EB-5 Investors to leave Russia sooner. For more information on obtaining your EB-5 Visa, contact Washington, DC EB-5 lawyer Kyle Barella. Our office is equipped to handle EB-5 clients in English and Russian. Kyle Barella - General Counsel, P.C. | +1 (202) 621-3198 | [email protected] | www.eb5investmentlaw.com | www.generalcounsellaw.com The Information contained in this blog is for information purposes only, and should not be considered legal advice for any individual case or situation. The information provided is not a substitute for consultation with an attorney. No attorney/client relationship is created by the information contained herein. As an immigration attorney representing EB-5 investors, one of the frequently asked questions is: what is the total cost of an EB-5 Regional Center investment? Savvy investors understand, in order to go through the EB-5 Visa process, they will incur other expenses in addition to the $500,000 capital investment. So what is the cost of an EB-5 investment? Unfortunately, there is no set dollar amount. Each client’s case is distinct, and there are a multitude of factors that may influence their costs. This article will address the most common EB-5 costs - but it’s important to keep in mind that expenditures for your specific case may vary. The Investment: One cost that is universal for all clients is the invested capital. Most Regional Center projects are located in a Targeted Employment Area, which allows for a reduced investment amount of $500,000. Legal Fees: Just as you wouldn’t forgo obtaining a doctor to perform a surgery, you also want to be sure to retain a competent EB-5 attorney to file your petition. Depending on whether your lawyer bills a flat fee or hourly rate for an EB-5 investment, you can expect to pay anywhere from $10,000 to $20,000 for legal services. Depending on the firm you choose, this may or may not include the services of an EB-5 Investment Advisor. Project Administration Fees: The majority of projects out there charge an administration fee when subscribing to their project. The typical administration fee ranges from $30,000 to $60,000. These fees are generally used to pay marketing costs, as well as “finder fees” for agents abroad. Filing Fees: With every I-526 Petition filed, USCIS requires the payment of a filing fee. Currently, the filing fee for an I-526 Petition is $1,500. Translation Fees: USCIS requires any documentation or evidence not in English to be accompanied by an English translation. Further, in their latest EB-5 stakeholder meeting, USCIS indicated that the entire document will need translating and abstract translations are not accepted. Translation service fees vary depending on the document content and number of words. You can expect to pay between $0.25 and $0.50 per word. Miscellaneous Costs: If you choose to travel to the US to speak with Regional Centers or your attorney, you might incur additional expenses such as travel, housing and visa costs. Although these are a few of the most common expenses associated with the EB-5 investor visa, additional costs may arise depending on your individual case. You may also be able to mitigate the costs of EB-5 through varies means. A conservative estimate of an EB-5 investment from start to finish will be around $568,000. On January 28, Barella Law, LLC spoke to a group of Quebeckers at the annual Conférence Snowbirds en Floride (Snowbirds Conference in Florida) in Aventura, Florida. The conference was a great opportunity to explain the different immigration options Canadians have to enter to the US. We also had the opportunity to meet others in professional industries that serve snowbirds in Florida. Along with our immigration firm, other speakers included a CPA, insurance representative, financial planner, and a Québec attorney. The conference attendees were very receptive and eager to ask questions. Barella Law, LLC continues to promote and build a relationship with our clients in Québec, as well as other parts of Canada, and around the world. We look forward to hopefully participating in next year’s conference. Conditional Green Card Through EB-5: Your Rights and Responsibilities as a Permanent Resident14/1/2014 The wait is over, and you have finally received your US Permanent Resident Card (“Green Card”) through the EB-5 program. What happens now? Chances are you’ve spent countless hours researching the EB-5 visa, regional centers, projects, attorneys etc. However, do you know what your rights, obligations, and responsibilities are as a newly arrived Permanent Resident? Firstly, an approved EB-5 visa entitles you to a two-year conditional Green Card. A conditional Green Card is exactly what it sounds like. There are certain conditions that must be met before you receive a “full-fledged” and renewable Permanent Resident Card. At the conclusion of two-years, you will need to have an attorney file for you, form I-829, Removal of Conditions. Provided you show that your EB-5 investment has created the requisite number of jobs among other factors, you will be issued a Permanent Resident Card, valid for ten years. In the future, you need only apply for renewal of your card before it expires. As a legal permanent resident, you are entitled to many of the same privileges as United States citizens. You may live, work, or travel anywhere in the United States. You and your children can attend school and qualify for in-state tuition breaks. However, you may not vote in elections, or make any false claims of US citizenship. One question many immigration attorneys receive is, whether legal permanent residents can spend a significant amount of time outside the US. The goal of permanent residency is just that – to be a permanent resident of the United States. Any prolonged period outside of the country may be seen as abandonment of your permanent resident status. It is important you remember to make the United States your permanent home. After maintaining permanent residency for a period of five years, you may be eligible to apply for US citizenship. Benefits of US citizenship include, the right to vote, obtain a federal job, sponsor family members for residency, and travel with a US passport. For more information on the EB-5 visa program, or any other US immigration matters, please contact our office. The Information contained in this blog is for information purposes only, and should not be considered legal advice for any individual case or situation. The information provided is not a substitute for consultation with an attorney. No attorney/client relationship is created by the information contained herein. EB-5 investors are becoming increasingly aware of the Securities and Exchange Commission (SEC), the top U.S. securities regulator, and its involvement in the EB-5 Visa Program. As a result, investors are anxious to learn the connection between the nation’s financial watchdog and the immigration program. Created by the Securities Act of 1934, the SEC was designed to protect investors from fraud by enforcing securities laws requiring complete disclosure of information and regulating the people involved in the securities transactions. Attorneys handling EB-5 Visa clients should be prepared to provide a competent explanation on both immigration and securities issues involved in the EB-5 process. In the past, securities law was considered a specialty area of law reserved for large firms in cities such as New York. However, at present, to practice as an EB-5 attorney, it is important to have at least a minimum understanding of the U.S. securities law. The SEC defines a security as any stock, bond, debenture, note, transferable share, investment contract or certificate of interest in a profit-sharing agreement. In general, all securities offered in the United States must be registered with the SEC and comply with the regulations, or be eligible to claim an exemption from registration. A typical EB-5 Regional Center Project is structured in the form of a Limited Partnership and according to SEC, interest in the partnership is an investment contract and therefore, a security . To further elaborate on the term “investment contract”, the Supreme Court of the United States determined the definition in the landmark case of SEC v. Howey. According to the Supreme Court, an investment contract is any transaction in which (1) a person invests money (2) in a common enterprise (3) is led to expect profits and (4) solely from the efforts of others. The four elements combined are commonly referred to as the Howey Test and are used to determine whether an instrument qualifies an investment contract. The first element is interpreted as the investor not purchasing a consumable commodity or service, rather, making an actual bona fide at risk investment. The second element of commonality is determined by multiple investors having interrelated interest in a common scheme (it is sufficient if a single investor has a common interest). The third element of expectation of profits is interpreted as expected returns must come from the earnings of the enterprise. Lastly, earnings must come from the efforts of others, this is broadly construed to mean that the efforts of managers must predominate over the passive investor. EB-5 Regional Center Projects structured as a Limited Partnership meet all 4 elements of the Howey Test and are therefore defined as an “investment contract”. Foreign investors (1) invest at minimum $500,000 (2) into a common enterprise, Limited Partnership, (3) with an expectation of returns on the investment and (4) through the efforts of the managing partner. Simply meeting the definition of a security is just the beginning of the complex regulations of U.S. securites. In our next blog, we will elaborate on the scope of the regulatory authority of the EB-5 Visa Program by SEC. For more information on the EB-5 Visa and SEC compliance, please contact our office today. Barella Law, LLC | + 1 (202) 621-3198 | [email protected] | www.eb5investmentlaw.com 9128 Strada Place | Suite 10115 | Naples, FL 34108 The Information contained in this blog is for information purposes only, and should not be considered legal advice for any individual case or situation. The information provided is not a substitute for consultation with an attorney. No attorney/client relationship is created by the information contained herein. |
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