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How will the EB-5 visa backlog affect EB-5 projects with EB-5 investment funds in escrow?

If the EB-5 investors' funds have been placed in escrow, but the investors' petitions have not yet been approved due to the application backlog, how could this affect the project from an immigration standpoint?

Answers

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    USCIS has considered funds placed in escrow to be invested. Some projects release funds upon filing the I-526, others upon the approval. Either way, USCIS will consider this an investment.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    First, you need to look at the terms of the escrow agreement. Most agreements do not require the conditional immigrant visa to be issued (which could take a few years for applicants chargeable to the China quota). Most escrow agreements provide for a holdback of a certain percentage of escrow, maybe 10-20% to cover denials of the EB-5 petition. Others may allow the money to flow where the petition has been approved. In most instances, that happens within 14-16 months.

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    Robert V Cornish Jr

    Securities Attorney
    Answered on

    Your question can be interpreted in more than one way. I surmise that the question is based on the fact that there is a completed project on a loan-to-equity type of investment, that loan has been repaid and the investor is in a holding pattern while the invested funds sit stagnantly. Those funds do need to remain "at-risk" while the application is pending. There are several ways regional centers may accomplish this and a careful reading of your PPM may provide insight on this issue. However, your money should not be deployed in a manner that does not involve your explicit instruction. This is why regional centers and investors should be using trust vehicles to deal with "at-risk" funds during what is called "retrogression" (which is the situation you are describing). On the other hand, if money is in escrow while a project is seeking approval from USCIS, that is an entirely different story. One would think the RC would file a mandamus action in court to get USCIS to process the I-924 before the April 28 deadline. All of these things, if not dealt with in an effective manner, can affect your application.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    Those EB-5 projects should have mixed funding and/or bridge financing already in place so they can wait for the EB-5 funds to clear I-526 before they need to access them. If properly vetted, projects should not be affected by the delays in processing.

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    Charles Foster

    Immigration Attorney
    Answered on

    There could be a serious problem if the investor funds go into escrow and, under the terms of the escrow agreement, cannot be released until the I-526 petition is approved. Currently, there is approximately a 14-month delay in adjudicating the aforesaid petitions, given the fact that there have been many I-526 petitions filed and the adjudicators'' review and adjudication processes have fallen behind. Therefore, today, many sophisticated project developers do not use an escrow agreement with similar terms, since the delay in adjudications prevents them from having access to the funds they need for the project and such a delay could even put the project into jeopardy. Thus, more projects now either do not have such provisions or they allow the funds to be released from escrow upon the filing of the I-526 petition or, in some cases, upon the approval of one or more I-526 petitions. It varies from project to project.

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    Vaughan de Kirby

    Immigration Attorney
    Answered on

    The answer will depend on the terms of the escrow agreement and the Private Placement Memorandum you signed. I recommend you immediately consult with your investment immigration attorney.

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