22 Oct Ensuring a Sound Investment through Due Diligence
As a potential EB-5 investor, it is imperative to perform your own due diligence in the firm you are investing with as well as the project you are investing in. In partnership with IIUSA, US Immigration Fund would like to offer a checklist for investors to be aware of when deciding upon investing in a Regional Center’s project.
Confirm that the regional center is USCIS-designated
Investing through a Regional Center is a popular choice among those who are searching for American visas and returns on investments. For a complete list of USCIS-designated regional centers, please visit USCIS.com.
Obtain copies of Regional Center documents provided to USCIS
Regional Centers must file an initial application (Form-I924) to obtain USCIS approval and designation, and must submit an information collection supplement at the end of every tax year.
Make your information requests in writing
Ask for a copy of the investment offering memorandum or private placement memorandum from the issuer. Follow up with any questions you may have. If you do not understand the project information, or the center is unwilling to cooperate, do not invest.
Ask if promoters are being paid
Promoters who are supposedly unaffiliated with the company – consultants, lawyers or immigration agencies – may be receiving benefits in connection with recommending the specific project you are interested. Be aware of information provided by promoters that does not match the offering memorandum.
Seek independent verification
Confirm whether claims about the investment are true with a third party. Public records include county construction permits and property tax assessments. If other companies have signed onto the project, call them directly to verify.
Examine structural risk
It is your responsibility to carefully examine the loan documents and offering statements to determine if the loan is secured by any collateral pledged to investors.
Consider the developer’s incentives
Regional centers partner with developers and principals that make investments in the projects they manage. Realize that if the principals and developers do not have a vested interested in the project, their financial incentives may not be linked to the success of the project.
Always be aware of warning signs:
Investing in EB-5 projects makes you eligible to apply for a conditional visa. It does not guarantee that USCIS will grant you and your family conditional visas or remove the conditions on your lawful permanent residency.
Claims of guaranteed returns and no investment risk
Money invested through the EB-5 program must be at risk for the purpose of generating a return. Be aware of claims that say otherwise.
Even though a regional center may be a USCIS-designated entity, their commercial enterprise investment opportunities are not registered with the SEC or state regulators. If an offering is unregistered, the issuer may not provide access to key information to the project, such as management, products, services and finances. Investors must make sure they obtain the information necessary to ensure a strong investment.
Federal and state securities laws require investment professionals and their firms who offer and sell investments to be licensed or registered. Keep in mind that designation as a regional center does not satisfy this requirement.
US Immigration Fund performs thorough due diligence on all its projects, and reminds investors they are always welcome to request the information they need to verify all facts about the project they are interested in investing in. For more information on US Immigration Fund, and its EB-5 projects available for investment, please visit usifund.com, or email [email protected].