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How are EB-5 funds usually returned after I-829 approval?

When conducting due diligence, what should I look for in terms of a regional center project’s exit strategy? After I commit to a project, is it allowed to change its exit strategy?

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    Julia Roussinova

    Immigration Attorney
    Answered on

    You should carefully review the terms of a project''s offering documentation, such as the private placement memorandum and limited partnership agreement, which will spell out the exit strategy for EB-5 investors who are most often limited partners in a limited partnership with the regional center being a general partner. It is highly advisable to have an experienced attorney help you with analysis of documentation prior to investment.

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    Oliver Huiyue Qiu

    Immigration Attorney
    Answered on

    An exit strategy is not mandated in U.S. immigration law when it comes to EB-5 investor green card. On the contrary, the law forbids the project to guarantee the return of the investment. Obviously, it is an important issue for EB-5 investors. An Exit Strategy pretty much depends upon the languages found in the Subscription Agreement and/or Private Placement Memorandum. On top of all the other factors affecting how to pick an EB-5 project, you need to carefully compare and pick one that best suits your interests. Due to the complex nature, there is no cookie-cutter solution. It must be reviewed case-by-case. If the regional center attempts to change the exit strategy at a later stage, it should generally seek the investor''s permission. Otherwise it could be interpreted as a violation of the fiduciary duty that a regional center owes to the investor.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    The project should not change items like that without express approval from the investor. When investing, you will review and sign numerous offering documents that will, among many other things, explain the exit strategy. That is a legally binding contract and should not be changed without your review and approval. Projects cannot guarantee a return of the investment funds (as per USCIS policy), but can allow for sale of the interests at fair market value.

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    Ed Beshara

    Immigration Attorney
    Answered on

    In an EB-5 regional center loan model, the job-creating entity will repay the loan to the new commercial enterprise, but only after the I-829 is approved.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    Usually in a regional center setting, you are one of several/many investors who are forming a limited partnership with the regional center as the general partner who controls what the partnership does with minimal reporting back to you and other limited partners, along with the annual interest disbursement. The exit strategy for the investment funds return depends on whether you are participating in an equity-based or loan-based project. If you are in an equity project, often, the only way you are able to get your money back is to have all the limited partners agree to sell their share with the general partner''s consent, which may not be easily allowed. If you are in a loan-based project, the loan agreement will spell out when the money is returned and how, along with how the loan is collateralized.

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    John J Downey

    Immigration Attorney
    Answered on

    Make sure you and/or your legal representative have the exit strategy in writing. They cannot guarantee a certain outcome, but there should be alternatives. For example if return of capital cannot be done, then perhaps ownership of a condo unit, if that was part of the development or project.

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    Shahzad Q Qadri

    RC Creator
    Answered on

    EB-5 funds are returned based on the terms set forth in the PPM.

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    Robert Cornish

    Securities Attorney
    Answered on

    A regional center can certainly change its exit strategy, but this would have to be disclosed through an amendment to offering documents and likely amendments to documentations sent to USCIS. The offering document you are reviewing should have some disclosure on notice of these things, or lack thereof.

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    Ian E Scott

    Immigration Attorney
    Answered on

    The EB-5 exit strategy will be summarized in the documentation provided by the project/regional center. Your lawyer should read it carefully as the wording in the document will govern. Usually funds are held for five years, but there are many options of how long EB-5 funds can be held.

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