By Laura Reiff
The Senate Judiciary Committee process of marking-up S. 744, The Border Security, Economic Opportunity, and Immigration Modernization Act of 2013, will begin for a second full day on Tuesday, May 14, 2013. The first full day was dedicated to amendments dealing with border security. We expect amendments to be considered concerning legal immigration beginning on Tuesday. One of those amendments we will be watching closely is Senator Leahy's Amendment Number 2.
This amendment, offered by the Senate Judiciary Committee Chair and major proponent of the EB-5 Program, would make some significant changes to the program. The base bill already proposes making the Regional Center program permanent; see our previous blog here. This amendment, if passed, will codify current guidance and provide for a more expedited processing of applications but also makes significant changes to the penalties and investment amounts. In particular, the legislation provides for:
-Preapproval of business plans for Regional Center Investments that shall be binding on the adjudication of investor petitions
-Expedited processing of investor petitions with preapproved business plans
-Consultations on designation with the Secretary of Commerce
Some of the concerns include:
-Additional Regional Center Reporting Requirements
-Penalties for Violations of the Financial Statements and Other Reporting Requirements that could be imposed merely if there is a determination that the “Regional Center is conducting itself in a manner inconsistent with its designation could be grounds for termination of designation.”
-Civil Fines could include up to five percent of the total capital invested and a suspension of the Regional Center, permanent bar from the program and termination of Regional Center status
-Review of individuals – precludes anyone from being in anyway involved with the RC if there is any criminal or civil violation of ANY law involving fraud or deceit, or law with respect to a securities violation, or any reason to believe the individual might be involved in certain aggravated felonies. This reason to believe standard for assessing penalties as opposed to a knowing standard on other criminal violations is troubling.
-Unreviewable discretion to terminate a Regional Center by the Secretary
-New compliance provisions for Securities compliance
The amendment would also provide for an adjustment of the amount of investment. It would no longer be just either $1 million or $500,000, but the amount would be controlled by the Secretary of Commerce. If the Secretary of Commerce did not adjust the amount, there would be an automatic change in the amount of investment based on the Consumer Price Index every 5 years. This could potentially vary dramatically.
We do believe that this amendment, if offered in mark-up, will pass. Senator Leahy may also wait for full Senate floor debate on this amendment.