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US EB-5 Developer Welcomes Tighter Regulation of Program

The developers and real estate companies who use the US EB-5 investment immigration program lawfully have welcomed potential tightened regulations under Donald Trump.

US EB-5 Developer Welcomes Tighter Regulation of ProgramWhile the USA immigration program has received bad press for a series of problems with fraud, there are thousands of good-faith projects across America that would never have succeeded without EB-5 funding.

The program, which grants conditional US green cards in return for significant investment, was recently granted the latest in a series of temporary extensions by Congress, this time until September 30, 2017.

However, a White House statement since the extension described the program as ‘in need of substantial repair’.

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.

While such a statement may upset the alleged fraudsters, for those using the program properly anyway are not afraid of more robust regulations.

One such developer is South Florida-based Rodrigo Azpurina, CEO of Riviera Point Development Group.

The company has used $55 million in EB-5 funds to develop 1.2 million square feet of office space since 2012, helping 172 immigration candidates get their green cards.

“There are a lot of bad actors in the industry,” Azpurina told The American Bazaar website. “There have been quite a few scandals around the EB-5 project because there is not enough regulation.

“Some of these new bills that have been proposed give a lot of clarity and benefits to the industry. So, we are looking forward to it.”

Fraud Cases Linked to EB-5

  • Brokerage firm Raymond James paid a nearly $150 million settlement in a case involving alleged misuse of $200 million in EB-5 funds. Federal regulators say Ariel Quiros and Bill Stenger used investor money intended for a biomedical research facility in Vermont to buy a luxury ski resort in a deal facilitated by Raymond James. Some 169 investors will be repaid following the settlement.
  • 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.

Azpurina also gave a succinct definition of the intentions of EB-5, and why it cannot be terminated entirely, as several lawmakers have suggested it should be.

“EB-5 is about smart, purpose-oriented money for creating jobs, he said. “The only reason why the United States was able to recover from the Great Recession in 2008 is because the whole country was focusing on jobs creation.

“There is no other way to improve the economy – you have to create jobs. So, everything that results in jobs creation got to be the priority of every government, politician and local leader.”

Talk of a major overhaul prior to the most recent extension of EB-5 proved to be posturing as none of the multiple proposals put forward gained any traction.

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Several bills have been tabled with plans for EB-5, including raising investment levels and changing how a Targeted Employment Area (TEA) is defined.

Some of the uncertainty about Trump’s stance on EB-5 was cleared up in a government statement published by the Washington Post recently.

White House spokesman Michael Short said: “There are serious concerns held by the administration regarding the EB-5 visa program, in part because it is not being used as it was primarily intended.

“The administration is continuing to evaluate reforms to the program, which we believe is in need of substantial repair.”

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