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What financial information do projects provide to EB-5 investors?

Do the EB-5 investors get quarterly/annual financial reports from the regional center project? Otherwise, how do they know whether or not the project is a fraud? What financial information do regional center projects provide to EB-5 investors?

Answers

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    It may depend, but investors should be receiving some type of financial reports regularly or upon request.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    Typically, most regional center and direct pooled investment projects will send regular updates to investors. Under most types of agreements, limited partners or limited liability members have certain rights to inspect the financial statements of the companies into which they have invested. If you are an EB-5 investor in a pooled-type investment project, whether direct or regional center based, and you have not received regular updates from the developer or person in charge of the project, you should contact them immediately and ask for that information.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    As a Limited Partner of a partnership, you are supposed to get at least an annual report of how the partnership did from the General Partner, which is the regional center. Most of the reputable and good regional centers have quarterly reports and a webcam installed to show 24/7 progress of the project that they are monitoring for you to see.

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    Charles Kaufman

    Securities Attorney
    Answered on

    Financial reporting is important and also often overlooked. The reports provided to investors vary widely. At a minimum, most state laws require that limited partners and LLC members receive annual reports, and U.S. tax laws require that they receive annual K-1 statements for income tax purposes. Many EB-5 funds will also provide investors with quarterly financial statements. Check the limited partnership agreement or LLC operating agreement to see what is required - this private placement memorandum should also provide this information. Audited financial statements provide a greater level of protection against fraud, but these can be expensive and currently very few EB-5 investments provide them. Remember that a truly dishonest company can often avoid detection through financial reports, even audited ones, so a promise of future financial reports is not a substitute for other due diligence about the quality of the company you are investing in. Remember also that a typical EB-5 investor invests in a fund, and it is the fund that invests in the project company, so financial reports at the fund level alone will not give the investor much information about how the project is doing. For full transparency, look for an EB-5 fund that will also provide financial reports of the project company. You can see what kind of reports the project company will provide by examining the loan agreement (in a "loan model" investment) or the LLC operating agreement of the project company. Here is a final hint. If the project company is borrowing some of its funding from a financial institution - like a construction loan from a bank - the institution will almost certainly require quarterly reports and audited annual reports. The EB-5 fund should be getting those same reports, and a careful EB-5 investor would want to see them as well.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    It varies, but good practice is regular monthly, or at least quarterly.

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    Robert Cornish

    Securities Attorney
    Answered on

    You should hire an independent party to perform due diligence on your prospective investment before committing funds. Once you are invested, as a limited partner or interest holder you have demand rights under applicable state law to request and review books and records. The fund in which you invest should be audited by a reputable firm; work with a sound fund administrator and provide financial statements. Securities counsel can assist in your review of these aspects of your investment.

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    John J Downey

    Immigration Attorney
    Answered on

    It all depends on the individual regional center. However, the fact that a center does provide adequate and timely information about the financials may be a good indicator of their credibility.

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    Ian E Scott

    Immigration Attorney
    Answered on

    You will get a full set of offering documents and other financial information from a regional center. If you need more information to make a decision, you should ask them for it.

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