The EB-5 investor visa is increasingly becoming the visa of choice for high net worth Indians planning to relocate to the US. This fact is evident from the 70%-80% annual hike in the EB-5 petitions from the sub-continent in the last three years. The hike can also be attributed to the drop in H1-B visa petitions owing to Trump administration.
The EB-5 visa is presented as the sure-shot way of obtaining a US Green Card. However, the legal facets of the application play a crucial role in reaching the final goal of securing a permanent green card. The EB-5 investor visa programme is as risky or as safe as any other business venture. The programme has been in existence for the last 25 years and has attracted a large number of high-net-worth individuals.
One of the perks of investing in the programme is that as long as the money is invested on the EB-5 project and the jobs are created, there is little or no likelihood of denial of the green card. For this reason there was a spike in the number of regional centres and project during and post-recession. It should be noted that although there have been thousands of success stories, there have also been some failures. One major reason for such failures is the lack of independent due diligence. The root cause of most failures in the EB-5 industry is investing in projects based on the sales pitch of the regional centers, instead of relying on due diligence of independent EB-5 lawyers. In some cases investors get swayed by a discount of few thousand dollars in legal fees or administrative charges offered by the regional centres and put their principal amount of $5,00,000 at a very high risk.
We have seen that Chinese investors are extremely vulnerable to frauds and failures as they highly rely on ‘agents’ to make an investment. These agents are compensated by regional centers and therefore, there is an inherent conflict of interest. We have seen similar conflicts in other countries including India, where immigration consultants and attorneys are compensated directly or indirectly by regional centers for encouraging the investors to invest in the said compensating regional centers. Ethically, an attorney should not be involved in recommending regional centers or EB-5 projects to their clients. A successful EB-5 attorney is one who lists the pros and cons of each project to help the investors make an informed decision.
In Indian States like Gujarat and Punjab, we have seen migration agents compensated by regional centres,offering package deals to investors in order to control the choice of the investor’s attorney and the investment. In such cases the attorneys are conflicted because if they disagree to represent the investor on the project they will lose the investor as a client and thus, agree to be a part of these package deals. This leads to pushing investors into projects that may be inherently risky. While the EB-5 law requires the investors’ funds to be placed at business risk, it does not require them to make a risky investment.
It is advised that in order to minimise the risks of the EB-5 programme one must treat filing of their immigration petition like filing any other petition in a court of law and invest in good legal representation.
The writer is Mark Davies, Global Chairman of Davies & Associates, llC