The Donald Trump travel ban has thrown a cloud of uncertainty over candidates for the U.S. EB-5 investment program who come from one of the seven targeted Muslim countries.
In several cases, candidates have been accepted for the program, paid their $500,000, but are now wondering how safe that money is as Trump attempts to crack down on U.S. immigration.
While Chinese investors dominate applications for the investment visa, another key source of candidates is Dubai, a city that draws residents from all over the Middle East, including the seven banned countries.
Investors hoping to secure passage to the U.S. to provide a better future for their children have now had their situations thrown into doubt.
Current US EB-5 Investment Requirements
- An EB-5 investor must invest in a new commercial enterprise.
- The investor must invest at least $1 million when investing in a general area of business or at least $500,000 when investing in a targeted employment area (“Regional Centres”).
- Within two years of admission as a Conditional Permanent Resident, the investor must create or preserve at least 10 full-time, direct or indirect jobs belonging to qualified US workers.
- See Tax Implications of Gaining Permanent Residence Through US EB-5 Visa.
Although the travel ban is currently suspended, Trump is working on a new executive order he hopes will avoid some of the legal pitfalls that saw it put on hold by the U.S. courts.
The new order is expected to be signed in the coming days, as Trump’s team works frantically to put it together in a more considered way.
The original order created havoc, with people already on planes to the U.S. stopped from entering the country when they arrived.
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A lack of guidance on how to implement the new rules saw green card holders and dual citizens being stopped at the U.S. border or prevented from boarding planes in the first place.
The situation is now in an uneasy limbo, with the ban suspended while Trump works on his new order.
EB-5 clients do not only have the Trump ban to worry about, as it remains unclear what the president intends to do with the controversial program.
Despite Trump’s anti-immigration position, real estate industry sources firmly believe he will separate a crackdown on people in the U.S. illegally from a program that has generated billions in foreign investment.
The current program was temporarily extended to April 28, 2017 recently.
There have been calls for the investment threshold to increase, with separate proposals suggesting $800,000 and $1.3 million respectively as the minimum requirement, but nothing has gained significant traction.
It has faced criticism from several sources, who want it abolished. There are several ongoing court cases linked to potential EB-5 fraud. There are calls for a body to be formed to oversee these transactions, to ensure transparency.
Fraud Cases Linked to EB-5
- The developer behind a biomedical research facility in Vermont, which benefitted from EB-5 funding, is currently being investigated for misusing the money. The project had attracted $83 million of investment from 166 foreigners, many of them Chinese, who now risk losing their money. Developer Ariel Quiros, and several of his associates, stand accused of using the funding to buy a ski resort, a luxury New York condo and to pay tax bills.
- Developer Lobsang Dargey was accused of defrauding Chinese investors out of money for a tower in Belltown. Dargey no longer has control of the project and denies any wrongdoing.
- American Life, a recipient of more than $1 billion in EB-5 investment money, was fined $1.2 million for facilitating payments to unlicensed intermediaries in the U.S.
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