By Terrence Ayala, Esq.
The EB-5 Investor Visa Program offers a significant opportunity for foreign nationals to realize the American dream. However, the structure of the program is such that, for many immigrant investors, that dream can turn into a financial or legal nightmare. Indeed, concerns about the Program are so significant that, in late 2019, U.S. Senators Leahy and Grassley introduced the “EB-5 Reform and Integrity Act of 2019” (S. 2540). In support of this legislation, Sen. Grassley said: “For many years, I’ve expressed concerns about the rampant abuse and fraud in the EB-5 program”. The case of the notorious “Jay Peak” project provides more than enough evidence to show that these concerns are valid. In that case, federal prosecutors charged the promoters and managers of Jay Peak with misusing $200 million in investor monies for more than a decade.
One structural concern about the EB-5 program is that investors frequently make the investment decision for immigration reasons and give less consideration to the underlying business or financial structure of EB-5 project. Investors frequently learn of EB-5 investment opportunities through their immigration counsel. Immigration counsel then assists with preparation of the investor’s immigration I-526 application. After that form is submitted, immigration counsel’s engagement with the investor is concluded. So, the foreign investor is then left without a qualified attorney to assist in overseeing and managing a substantial investment in a business about which he or she knows very little. Then the troubles start.
In light of the COVID-19 Pandemic and the related stresses in the worldwide economy, we anticipate that problems with many EB-5 Projects will become readily apparent. If it appears that an EB-5 project is experiencing financial distress or other difficulties, EB-5 investors will want to act sooner rather than later. Most importantly, each EB-5 investor needs to evaluate whether there are any actions that could be taken now to protect their investment, so that the EB-5 investor will ultimately qualify for approval of his or her I-829 petition and recoup his or her investment.
We have experience representing EB-5 investors in troubled EB-5 projects. Because these evaluations may be very time consuming and time-sensitive, we recommend that affected investors contact us without delay.