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What are the fiduciary duties for EB-5 regional centers?

Do EB-5 regional centers have a fiduciary duty to protect their investors' interests? What about fiduciary duties for regional centers that are rented out?

Answers

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    Fiduciary duties are determined by the agreements signed by the parties and the relative positions/relationships between the parties (by operation of law). It is likely that a regional center does owe a fiduciary duty to an investor, but the existence and level of that duty is determined by the written agreements and by whether or not the regional center is part owner in the NCE or JCE or otherwise handling the investor's funds. A rented out regional center would be in the same position.

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    John J Downey

    Immigration Attorney
    Answered on

    Fiduciary duties should be outlined in the initial documents between the regional center and the investor. Leaving it up to "generally accepted practices" is risky.

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    It is expected that regional centers have a duty to protect their investors' interests. This fiduciary duty does not in any way diminish regardless of whether a regional center is rented out or not. In addition, it is eminently reasonable to argue that even if the fiduciary duty is not spelled out in black and white in a regional center's partnership agreement, a regional center bears fiduciary duty at all times.

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    Ed Beshara

    Immigration Attorney
    Answered on

    It is in the best interests of the regional center to make sure the sponsored EB-5 projects follow best practices in complying with the EB-5 regulations and policies concerning clarity and transparency to the investors.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    These issues are not presently well-defined. However, pending integrity legislation will change that.

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    Raymond Lahoud

    Immigration Attorney
    Answered on

    Renting a regional center is an interesting vehicle for those seeking to develop an EB-5 project. As to duties, those are typically spelled out in respective agreements and the like. The partner (renter) is responsible for all costs and liabilities with the project, including insurance. The regional center sponsors the project. Indeed, there exist responsibilities for those managing the respective regional center, which are often spelled out, in some form in respective agreements and the like. Nonetheless, there are many times that the regional center chosen may be poorly managed or outside of the renter's conceptions/ideas. When picking a regional center, it is important to conduct substantial due diligence to ensure you partner up with the right regional center.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    Currently, not so much, but the proposed EB-5 regulations and laws all include regional center integrity provisions that put much more responsibility on the regional center for the projects and investors. It has been and will always be the best practice of a regional center (even when renting!) to perform due diligence on their sponsored projects, keep good records of all investors, and act in the best interests of their investors and projects.

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