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How can an EB-5 regional center legally accept administrative fees?

How can an EB-5 regional center legally accept administrative fees from investors? Does the regional center need to be a registered broker-dealer to be able to accept administrative fees? Or are they just that, administrative fees, and not compensation for an offering?

Answers

  • Avatar

    Julia Roussinova

    Immigration Attorney
    Answered on

    Administrative fees are permitted for professional fees and administration costs. They are usually paid to a project within a regional center. Offering documentation must identify what the administrative fee is and what it is paid for by EB-5 investors.

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    Ed Beshara

    Immigration Attorney
    Answered on

    The corporate managers of the Fund or the New Commercial Enterprise (which is the Issuer) usually receive the administration fees for covering the cost of the management. The offering documents to be signed by the investors should clearly state what the administration fees are being used for. Please note that the regional center, which is a separate legal entity than the new commercial enterprise, does not receive the administration fee.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    Admin fees have never been classified as compensation for the offering.

  • Avatar

    Jinhee Wilde

    Immigration Attorney
    Answered on

    The administrative fee is just that: the administrative fee for the regional centers to operate, review the projects, prepare all the documentation to be able to accept EB-5 investments, etc.

  • Avatar

    Vaughan de Kirby

    Immigration Attorney
    Answered on

    This is something that should be directed to your securities attorney because it is not only yes or no; it turns on how your transaction is structured and memorialized. Generally, a regional center as the "issuer" can accept administration fees, but this depends on much more than yes or no.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    Regional centers can and do accept administrative fees that cover costs of professional fees and other administrative costs. Regional centers can (and probably should) have a registered broker-dealer on staff if they are going to be facilitating the offering themselves. An experienced professional team is important to any and every regional center.

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    Robert Cornish

    Securities Attorney
    Answered on

    Much will depend on what you are using the administrative fees for. If you are using them to pay transaction-based compensation to a finder or solicitor, you will need to comply with broker-dealer regulations and discuss how to do so with experienced securities counsel.

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    John J Downey

    Immigration Attorney
    Answered on

    Administrative fees are allowed. The regional center has reporting duties, record keeping, etc., which are all legitimate costs.

  • Avatar

    Russell C Weigel, III

    Securities Attorney
    Answered on

    Generally speaking, a regional center can receive an administrative fee from an investor if the fee is not used as compensation to an individual for capital-raising efforts.

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