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How can a non-accredited investor participate in the EB-5 program?

I am a non-accredited investor living in the United States and I will be gifted $500,000 - $1 million from my brother also living in the United States. His net worth is way more than $1 million. Will that help me become an accredited investor to qualify for investment in a regional center EB-5 project?

Answers

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    Regional centers, technically, can allow a certain number of non-accredited investors. You should consult with EB-5 immigration counsel and securities law counsel to review your position.

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    Robert V Cornish Jr

    Securities Attorney
    Answered on

    Your ability to participate in an investment may depend on the exemption of the fund vehicle used by the project. If the fund is using one sort of 1940 Act Exemption from registration, the fund may have slots for 35 non-accredited investors. Very few EB-5 funds use this exemption due to the fact that there is a real estate exemption available that is easier to manage. You should work with a broker/dealer to identify the investment suitable for you.

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    Charles Kaufman

    Securities Attorney
    Answered on

    First, keep in mind that the USCIS does not require an EB-5 investor to be an "accredited investor." However, most EB-5 issuers require this so they can comply with U.S. securities laws when offering an EB-5 opportunity to a U.S. resident. To be an accredited investor, an individual generally must have net worth of $1 million (including the spouse's net worth), or income of $200,000 (or $300,000 jointly with spouse) in the past two years and to reasonably expect income at that level in the current year. (If you are an officer or director of the issuer, or a similar affiliate, that would also make you an accredited investor, but EB-5 investors seldom have such a relationship.) To meet the net worth test, you can include the value of the investment you are making. So, if you have $1 million in net worth, and invest $500,000 in an EB-5 opportunity, you should qualify as an accredited investor. In calculating net worth, please note that if you own your own home, you cannot include its value as an asset, but you also do not have to count the mortgage as a liability. Gifted funds may be used to qualify as an accredited investor, so long as they truly are a gift and not subject to an understanding that they will be repaid to the giver. U.S. and state securities laws do have some exemptions that could allow a non-accredited investor to invest in an EB-5 opportunity. However, few EB-5 issuers use these exemptions because they either involve extra expense and effort, or give the issuer less certainty of legal compliance. Nevertheless, if you do not have a way to meet the net income test or accredited investor tests, you may try to find one of the few issuers who is willing to structure their offering so it can lawfully accept an unaccredited U.S. investor. This response outlines some general requirements of "accredited investor" status. Confirming accredited investor status requires a close reading of the applicable regulations and administrative guidance under the Securities Act of 1933, and may require advice of legal counsel.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    You are not required to be an "accredited" investor in order to participate in the EB-5 program. One of the EB-5 requirements is that you can trace your funds to a lawful source (i.e., your brother) and he can show his financial standing (income, assets, etc).

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    Vaughan de Kirby

    Immigration Attorney
    Answered on

    If your brother were to gift you $1 million, you would then qualify under Regulation D as an accredited investor. I recommend you immediately consult with a registered broker dealer.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    You do not have to be an accredited investor if the investment fund is being gifted to you by a family.

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    Raymond Lahoud

    Immigration Attorney
    Answered on

    You can qualify with money given to you as a gift, as long as you can source it back.

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    Irina Rostova

    Immigration Attorney
    Answered on

    Many projects are allowed to accept a certain amount of non-accredited investors. You should check with the projects you are considering to see if they can accept you as a non-accredited investor.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    As soon as he gifts you $1 million, you should be eligible to qualify as an accredited investor.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    Yes, but the limits are expected to increase soon.

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