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EB-5 Visas: Everything You Need to Know

Featured Marko Issever. Marko Issever.

U.S. Congress created the EB-5 Program in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. In 1992, Congress created the Immigrant Investor Program, also known as the Regional Center Program. This sets aside EB-5 visas for participants who invest in commercial enterprises associated with regional centers approved by USCIS based on proposals for promoting economic growth. We talked about EB-5 Visa with an expert, Marko Issever, Managing Director of Riverside Management Group, a merchant banking boutique.



Recently, we have been hearing a lot about the EB-5 Visa. I was wondering if you could give us a brief overview of it.
A foreign national who desires to immigrate to the United States to start a new life here needs to establish permanent residency in the United States. Traditionally, people obtain green cards either through sponsorship of a family member or by finding a permanent job in a US company. In either case the relative or the hiring company would sponsor the applicant. Of course, this avenue is not open to everyone. Until relatively recently, a perhaps less well-known route has been the EB-5 route. The U.S. government created the EB-5 Immigrant Investor Program to encourage foreign investment in U.S. businesses.

In exchange for investing in a business that creates jobs for U.S. workers, foreign nationals and their families are eligible to become permanent residents of the US. The program's name, "EB-5, comes from the visa category for which immigrant investors apply" the Employment-Based Immigration: Fifth Preference EB-5. The applicant would apply for the EB-5 Immigrant Investor Program, administered by U.S. Citizenship and Immigration Services (USCIS). Participating in the EB-5 program means making a capital investment, but as soon as USCIS determines that the receiving business of the investment qualifies for the EB-5 program, then the applicant, their spouse, and their children under 21 have a one-way ticket to obtaining a permanent residency "Green Card" from the United States.

Sounds quite interesting. Could you please elaborate on some of the requirements of EB-5 Visa? How does it work?

While the program has evolved considerably since its creation in 1990, there are currently two ways for foreign investors to obtain an EB-5 Visa:

Direct investment in a new or existing commercial enterprise that creates jobs.

Investing capital through a "Regional Center", a government-approved firm, that actively manages investor funds and the immigration approval process.

The EB-5 visa applicants have been required to invest at least $500,000 into a Regional Center project as long as the investment is either within a high-unemployment or rural area in the United States. If these conditions are not met, the minimum qualifying investment becomes $1 million. When these funds are deployed into the economy they need to result in the creation of at least 10 full-time jobs for U.S. workers. An investor need not worry about the timing of this job creation. Once the investor receives his conditional permanent residency status, the receiving company will have two years to generate ten or more jobs in order for the investor to change his status from conditional to permanent. These investment figures and some of the other workings of EB-5 are most likely going to change after September 30, 2017. Most likely, the minimum investment amount will be revised upwards from $500,000 to $850,000 or even higher. The Department of Homeland Security has proposed to increase the minimum investment amount. We encourage your readers to check out our website www.americaeb5visa.com  where we announced the postponement of the decision to raise this amount to September 30, 2017. It can be accessed directly by clicking the link.

www.americaeb5visa.com/blog

An excellent government source of news is the Federal Registrar. The proposed rule by Homeland Security Department is published there. It can be accessed by clicking the link.

EB-5-immigrant-investor-program-modernization

I think I understand the way the direct investment in a new or existing commercial enterprise would work. Frankly, it could be scary for most of the people who do not know the ins and outs of running a business in the United States. I suppose if things do not work out not only they would lose their entire investment but the chance to get the green card as well. I am interested to know more about the Regional Center route though. Could you please elaborate on the advantages of investing in a Regional Center?
Of course. Investing capital through a Regional Center provides several major benefits to immigrants seeking U.S. residency through the EB-5 program. One of the most important advantages is the ability to count both direct and indirect jobs towards the "job creation requirement". Direct job creation is a result of an investment which has created and sustained ten new actual identifiable jobs over a two-year period. Under the Regional Center program, investors can also satisfy the job requirement by showing the indirect job creation from pooled funds of all investors in the project. These jobs can be created collectively or as a result of capital invested in a commercial enterprise affiliated with a Regional Center. In other words, the investor does not need to show that he or she directly hired any employees and the burden of proving job creation is passed onto the Regional Center. The Regional Centers, in turn, hire experienced economists who perform economic analysis and prove that sufficient direct and indirect jobs are created as a result of the project.

I suppose there must be a lot of Regional Centers out there to choose from. If one has already decided to move forward with the Regional Center version of the EB-5 Visa application process, what kind of due diligence must they perform? In other words, how can they choose one Regional Center over another?
Yes. This is really where we encourage our clients to be careful. Clients must do due diligence on their own by the help of qualified, experienced immigration attorneys and financial advisors. You see, there are many components at play here. Some are purely financial in nature and some are immigration related. In our website, we list a comprehensive set of questions that should be considered. We have not answered those questions on purpose as there is really no single answer for each question. Depending on each situation, there are trade-offs that should be considered. The investor would be very well advised to enlist the help of a professional to sift through the private placement documents, the business plan written by the developer, the appraisal report if there is one, etc.,

While you could not list all the questions an investor should be asking, could you perhaps give us a couple of examples of questions with possible good answers?
Sure. You probably want to know how many EB-5 projects the company has completed to-date. While it does not mean that a novice would fail, it does give the investor tremendous comfort when the developer has both expertise in real estate, and a list of successful EB-5 projects that were completed with hopefully all applicants receiving their green cards.

You definitely want to know what percentage of the overall funding the EB-5 funds constitute. It is good to have a bank debt above the EB-5 in the priority of payments. That is because the investor would take comfort that a sophisticated financial institution has reviewed the project and has decided to lend funds against it. Having said that, bear in mind that the financial institution is ahead of the EB-5 investors. Therefore, you definitely would like to see in terms of priority of payments considerable developer skin in the game, in the form of equity, below the EB-5 investors financial claims.

You should also ask what happens if the investor is denied their visa for reasons beyond their control. Do they receive their investment funds back? You should also ask if the developer provides “project completion guarantee”

Last, but not least and perhaps most importantly, it is imperative to know if the developer has the right to borrow more senior level funds ahead of the EB-5 investors in case of financial hardship. If so, the collateral backing the EB-5 investment indirectly could be severely diluted and the chances of getting the investment back greatly reduced.

You should also ask what happens if the investor is denied their visa for reasons beyond their control. Do they receive their investment funds back? You should also ask if the developer provides project completion guarantee?
Last, but not least and perhaps most importantly, it is imperative to know if the developer has the right to borrow more senior level funds ahead of the EB-5 investors in case of financial hardship. If so, the collateral backing the EB-5 investment indirectly could be severely diluted and the chances of getting the investment back greatly reduced.

We have also heard that some developers promise a condo together with the green card for one lump sum payment? Is that true? Can the $ 500,000 investment in the EB-5 Regional Center project be used as part of the down payment for the future purchase of the condo?
Absolutely not. We get this question regularly. Allow me to explain. There is nothing wrong of course in applying for the EB-5 visa and then separately purchasing a condo unit. There is also nothing wrong in purchasing a condo in the real estate project one has made an EB-5 investment. However, the two transactions have to be treated as separate and distinct. The moment there is a tying of these transactions, the applicant could stand to lose his whole chance of a green card through the process. What I am trying to say is that there is no reason why a person could not invest in a New York based EB-5 project and then purchase a condo in Miami. If your readers would like to know more about these choices, they can get in touch with us at America EB5 Visa and we will be happy to answer any question they might have.

Thank you for your offer Mr. Issever. That would actually be very nice. At the end of our conversation, I was going to ask you how our readers can get in touch with you. Meanwhile, I am sure they must be wondering about the timeline to the green card. How long does the process take? Could you please enlighten us on that aspect as well?
Certainly. Firstly, I have to mention that there is a concept of retrogression which does not apply to Turkish citizens at the moment. Retrogression essentially means a delay in processing when countries with outstanding demand for the program reach their annual quota. Applicants who apply after the quota is reached are pushed behind the pile. The first thing we advise our clients to do is to engage an immigration attorney who can explain to them the whole EB-5 process. After that, the investor should engage a broker dealer, such as Riverside Management Group’s wholly owned subsidiary BCW Securities LLC, who has eligible, hopefully vetted EB-5 projects. After careful evaluation of the projects by reading the private placement memorandums, brochures etc., the investors, if possible should visit the developers.

There is no substitute to seeing the people behind the papers and the numbers, talking with them face to face, and if possible, visiting the prior projects and the site of the project in which they intend to invest. Once they pick a project, they have to fill out the investor questionnaire and compile documentation for the source of their funds. You would think this step should be the easiest but we find it is the most challenging for many of the investors as they might not have proper books and records to track how they acquired the funds. Once they fill out the subscription agreement they are ready to file Form I-526 which is their initial application for the green card.

The process of getting the I-526 petition conditionally approved as well as the interview scheduled and completed, takes around two years. At this point, the applicant comes to the United States and starts living here as a permanent resident with conditional approval. They have all the rights of a regular green card holder. We also count the period from this time onwards for the eventual US citizenship which requires 5 years from this date onwards. After a two year conditional green card period, the applicant can apply for the removal of the conditions beginning 90 days before the end of the two year period. This petition is called I-829 and usually takes six months to process. Once this petition is approved the investor becomes a full-fledged green card holder. At this point, if the project is completed, the Regional Center can return the investment back to the investor subject to the Limited Partnership Agreement.

Thank you so much Mr. Issever. If our readers would like additional information how can they reach you?
As a first step, I strongly urge them to visit our website. The address of the website is www.americaeb5visa.com. They can also email us at This email address is being protected from spambots. You need JavaScript enabled to view it.. We can also be reached over the phone at + 1 917 355 9251 in the United States and +90 535 894 65 31 in Turkey. I would like to take this opportunity to thank you personally and to all the TurkofAmerica staff for giving us the opportunity to address your readers this afternoon.


WHO IS MARKO ISSEVER?
Marko Issever is the Founding CEO of America EB5 Visa, LLC (www.americaeb5visa.com), a company dedicated to connect EB-5 issuers of carefully evaluated projects to investors. He joined Riverside Management Group as a managing director in May 2016 in order to, among other things, lead the firm’s EB-5 capital raising and placement activities, via its wholly owned subsidiary, BCW Securities LLC. He is also the founding partner of BH Capital Management, LLC, a real estate investment company that specializes in opportunities in development and investment.

Mr. Issever’s clients include EB-5 regional centers, real estate companies who plan to raise funding through the EB-5 process, and investors who are in search of projects to invest in as part of their EB-5-based immigration process.

Prior to establishing America EB5 Visa, BH Capital Management and joining the Riverside Management Group team, Mr. Issever was a managing director at The Bank of New York Mellon Global & Capital Markets, leading the firm’s derivative business to financial institutions globally. Mr. Issever has been in Wall Street for over 30 years and was also a founding member of the derivative business in Sakura Global Capital, a Japanese bank subsidiary that subsequently merged with Sumitomo Capital Markets to form SMBC Capital Markets.

Mr. Issever started his Wall Street career in Prudential Securities’ Financial Strategies Group where he specialized in mortgage backed security opportunities such as CMO’s, risk-controlled arbitrage transactions, as well as other asset backed securitizations including securitization of policy holder loans.

Mr. Issever is a graduate of The Wharton School of University of Pennsylvania where he earned his MBA degree in finance and MA in economics. Prior to attending Wharton, he graduated from Bogazici University and Robert College, located in Istanbul. He speaks Turkish (native) and Ladino Spanish fluently. He is the founding president of Aleph Learning Center, a Jewish outreach organization and board member of Manhattan Sephardic Congregation. He holds the series 7 & 63 securities licenses. He lives with his wife and three children in New York City.

ABOUT RIVERSIDE MANAGEMENT GROUP

Riverside Management Group is a merchant banking boutique. BCW Securities LLC (Member FINRA/SIPC) is a wholly-owned subsidiary of Riverside Management Group. Securities may be offered through BCW Securities LLC.


Last modified onTuesday, 18 July 2017 19:42

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