EB-5 Financing

EB-5 financing can be a useful tool for developers. But planning and structuring a deal with EB-5 funding takes time. Developers seeking this capital need to balance concerns of senior lenders with those of an EB-5 lender, if EB-5 financing comes into a deal as a loan subordinate to a senior loan.

The Wall Street Journal recently published two articles about the EB-5 Regional Center Program: a blog entry and a front page editorial-like review of the program.

Section 4A(c) of the Securities Act of 1933 ("The 1933 Act"), 15 USC § 77d-1(c), is part of the new crowdfunding regime. The JOBS Act of 2012, Pub. L. No. 112-106, 126 Stat. 306 (2012), created a liability scheme for issuers and intermediaries in an exempt crowdfunding offering.

On August 25, 2015, the U.S. Securities and Exchange Commission (SEC) filed a civil fraud suit against Lobsang Dargey, a Bellevue, Washington-based real estate developer and alleged fraudster, who also happens to be a brother-in-law of tennis star Andre Agassi.

On August 3, 2015, United States Citizenship and Immigration Services (USCIS) published updated processing times for EB-5 immigration benefits. The news continues to be bleak.

Last month, the United States District Court in the Eastern District of Pennsylvania (Philadelphia) ordered a default judgment against an interest in a limited partnership connected with an EB-5 investment. 

Change is on the EB-5 horizon. With the Regional Center Program nearing its expiration and recent legislative efforts coming from lawmakers, we may see some action by Congress or the Senate before the end of September.

The Securities and Exchange Commission (“the Commission” or “SEC) recently published an overview of Foreign Corrupt Practices Act (“FCPA) enforcement actions. Since 2010, the SEC has had a specialized unit devoted to enforcement of the FCPA.

Recently, a question about Regulation S came to me from a team of very well regarded EB-5 regional center directors. I wanted to share this question with you, as well as our brief response.

The Securities and Exchange Commission (“SEC”) appears to be stepping up enforcement in the EB-5 area. On July 6, 2015, the SEC filed a complaint and a separate cease and desist order against the perpetrators of a Ponzi scheme targeting EB-5 investors.

In a recent action, SEC v. Luca International Group, LLC et al. ("SEC v. Luca"), the Securities and Exchange Commission (SEC) has charged a California-based oil and gas company and its CEO with violations of securities laws in connection with a $68 million Ponzi scheme and affinity fraud.

Created by the Immigration Act of 1990, the Immigrant Investor Program, more commonly referred to as the EB-5 program, offers foreign investors an opportunity to secure permanent residency in the United States by making a minimum capital investment of $1 million per investor into a New Commercial Enterprise (NCE) that will create at least 10 jobs for US workers.

Check out the latest on prospects for legislative changes to the EB-5 Program.

On June 23, 2015, the Securities and Exchange Commission (SEC) issued a press release in connection with charging two firms that unlawfully brokered more than $79 million of EB-5 investments to more than 150 investors seeking U.S. residency under the EB-5 Investor Visa Program.

On May 20, 2015, United States Citizenship and Immigration Services (USCIS) released guidance and frequently asked questions (FAQs) relating to the filing of H-4 employment authorization applications for spouses of certain H-1B nonimmigrants.

Late Tuesday afternoon, the House of Representatives voted 257-167 to fund the Department of Homeland Security (“DHS”) through September 30, 2015, covering the remainder of the fiscal year.

The Senate remains at a stalemate over funding of the Department of Homeland Security (“DHS”), with funding running out on Friday, February 27. A full budget was passed for the rest of the US government in December.

The Department of Homeland Security (“DHS”) announced that, effective May 26, 2015, the agency is extending employment authorization to certain H-4 dependent spouses of H-1B nonimmigrants.

The Obama administration announced on Tuesday, February 17th that it will comply with an injunction temporarily blocking its plan to shield millions of people who are in the United States illegally, suspending applications for deferred action.