By Suzanne Lazicki and David Hirson
What are the roles of the different EB-5 professionals?
EB-5 professionals prepare and file documents for EB-5 petitions and applications, provide legal and financial services, and give guidance. The industry requires service providers in a range of specialized professions, because immigrant investment involves immigration law, securities law, economic and labor market analysis, business planning, financial planning, investment advice, due diligence, accounting, fund administration, marketing, and, occasionally, litigation.
Table 1. Overview of EB-5 Service Providers
| Professional | Role |
| Immigration counsel | · Responsible for compliance with immigration law.· Shepherd investors and regional centers throughout the EB-5 process.· Review all documents filed with EB-5 petitions and applications for immigration compliance.· Coordinate with a team of EB-5 service providers to assist the EB-5 process and prepare documents.· Work with investors to prepare personal and financial information for the I-526 petition, specifically source of funds (SOF) reports.· File petitions with USCIS and receive/respond to correspondence from USCIS on behalf of clients.· Coordinate response to any evidence requests (RFE) from USCIS.· Provide guidance for the consular interview or adjustment of status process.· Prepare the I-829 petition to remove conditions. |
| Securities counsel | · Responsible for compliance with securities law.· Prepare transaction documents such as the private offering memorandum, subscription agreement, limited partnership or offering agreement, and escrow agreement.· Ensure that offering documents include appropriate material information and risk disclosures, and conform to requirements of offering exemptions.· Ensure that offering documents protect the client’s interest in securities matters.· Provide pre-offering planning for ongoing securities compliance during the lifetime of the EB-5 offering.· Provide guidance for matters such as investment marketing, conditions for accepting investors, and how to structure investment transactions. |
| Business plan writer | · Prepare the comprehensive business plan that must be filed with all I-526 petitions, and that demonstrates compliance with EB-5 requirements for investment and job creation.· Assist with pre-offering planning, EB-5 business strategy, due diligence, marketing materials and evidence requests. |
| Economist | · Prepare the economic impact analysis that must be filed with I-526 petitions for regional center investment, applications and annual reports.· Assist with pre-offering planning by calculating potential job creation impacts.· Prepare targeted employment area (TEA) analysis. |
| Litigation counsel | · Pursue litigation in federal court, if needed. (Litigation may arise in connection with processing delays, review of I-526 and I-829 petition denials, review of regional center denials, and defense of securities law violations.) |
| Escrow agent | · Act as an agent, holder, or administrator for escrows of EB-5 investor funds.· May provide fund administration service. |
| Fund administrator | · Implement due diligence fund control measures in order to track the lawful source, transfer, use and disbursement of funds.· Oversee the release of capital to the project and verify that the capital is being used for authorized expenditures.· Control or supervise the escrow to ensure full compliance with the law and the terms of the relevant agreements. |
| Investment advisor | · Conduct expert due diligence and make recommendations regarding investment options as a registered advisor.· Can be part of a securities compliance program, protecting issuers and EB-5 investors in connection with redeployment of EB-5 capital. |
| Broker/dealer | · Help ensure that the EB-5 offering is properly marketed and sold.· Participate as registered professionals with oversight from federal and state regulators as well as self-regulatory organizations such as FINRA.· Find private investors for EB-5 offerings, while assisting with legal compliance and risk management.· Provide independent due diligence, offering oversight, investment suitability assessment and consulting at the deal-formation stage. |
| Sales intermediaries/immigration agents | · Assist in the marketing and education of EB-5 programs and investments overseas. |
| CPAs and other financial advisors | · Help to track and document investor source of funds.· Prepare financial statements that will be filed with USCIS to explain source of investor funds and document expenditures and revenue for job creation.· Assist issuers with tax law compliance, internal accounting requirements, and investor reporting.· Advise investors on tax and estate planning and worldwide income tax planning.· Assist investors to review financial projections and information provided by issuers. |
EB-5 service providers have roles defined by their EB-5 experience combined with professional qualifications and expertise. The best EB-5 immigration lawyer is licensed and may be certified as a specialist in immigration law, provides services specific to immigration only (not also offering tax or securities legal advice, for example), and brings extensive knowledge, track record, and connections in EB-5. The immigration lawyer prepares collates and files the applications to the USCIS and other government agencies.
The best EB-5 business plan writer and economist bring educational qualifications in business and economics, and also a history of approvals for EB-5 documents. Experience is essential in EB-5 because the field is complex, evolving and not transparent. A business plan, financial strategy, or litigation approach that works in other contexts may not be appropriate to the special circumstances of immigrant investment. Knowledge comes through experience. At the same time, EB-5 experience is insufficient without professional expertise. A service provider with no qualifications as an economist should not be relied on for economic analysis, even if that person happens to have amassed some EB-5 experience. No matter how experienced in EB-5, an immigration attorney cannot provide investment advice or sell investments unless also appropriately licensed or registered in those professions.
EB-5 service providers play roles that are shaped by the client. An immigration lawyer will provide different services depending on whether the client is a regional center or an investor. The role of an economist varies depending on whether she is preparing analysis on behalf of a developer or vetting analysis on behalf of an investor. The performance of a sales intermediary will be influenced by who provides the compensation. In selecting EB-5 professionals, and in evaluating work by service providers, it is necessary to consider interests and conflicts of interest. Often the immigration lawyer will be the single point of contact for instructing and reviewing the work of the other professionals and advisors. The immigration lawyer should review the work of each third-party provider to ensure compliance with immigration law.
Who should investors consider having on their team?
Every EB-5 investor must retain immigration counsel, to file immigrant petitions and advise on immigration compliance. The immigration attorney shepherds the investor throughout the process from I-526 to I-829, and helps to coordinate the team of professionals who contribute to investor petitions.
Beyond an immigration attorney, the EB-5 investor’s team will depend on individual circumstances and needs.
Most EB-5 investor petitions use documents prepared by professionals who were hired by the regional center, project or issuer. In this case, the investor doesn’t need to individually engage securities counsel, business plan writer or economist. The investor may still want to consult such EB-5 professionals in context of due diligence, to review documents and provide second opinions.
In the due diligence process, investors may consider professional help from financial advisors, investment advisors and broker dealers. They may also consider informal sources. Other EB-5 investors at later stages in the process can be particularly helpful as mentors. Regional center representatives, while not independent, can be a valuable sources of information, support, and EB-5-specific as well as industry-specific expertise. The due diligence team should be able to help the investor review documents based on EB-5 visa requirements, assess investor funds protection and corporate governance, and evaluate project feasibility and project management.
The investor team may include professionals who assist with the transition to the United States. Most investors will, for example, consult an international tax lawyer or other tax professional to help navigate worldwide taxation.
In case of trouble with the investment project or immigration process, litigation counsel can become an important part of the team. Some immigration law attorneys are experienced in handling litigation that involves immigration law. All litigation involving a U.S. government agency or representative will take place in a federal court having jurisdiction over the case.
Responding to a RFE, NOID or NOIR
EB-5 service providers are particularly important at the beginning of the EB-5 process, to prepare the documents that will be filed with the investor’s I-526 petition. The professionals apply their expertise and experience to preparing petitions that can be approved without question. However, questions and problems sometimes arise. USCIS may issue a Request for Evidence (RFE) or Notice of Intent to Deny (NOID) a pending petition, or even a Notice of Intent to Revoke (NOIR) an approved petition. A Notice of Intent to Terminate (NOIT) is used by USCIS at the commencement of proceeding to terminate a regional center. Responding to such notices may involve a variety of professionals, depending on the issues raised by USCIS.
If an RFE raises questions about documents, immigration counsel may involve the professionals who originally drafted those documents, or who bring extensive experience with RFE responses. Business plan writers and economists can provide updated reports and clarifications, as well as assistance with additional research and business evidence. If the RFE raises questions about source of funds, the service of a forensic accountant can be helpful. CPAs or other experts may be consulted to provide expert opinion letters. Immigration counsel may also consider consulting other attorneys with particularly extensive experience with EB-5 RFEs.
In case of difficulty, investors may consider litigation. It may be strategically advantageous to have litigation counsel guide immigration counsel with responding to a NOID, in anticipation of taking the case to court. Federal court litigation can challenge I-526 and I-829 denials that are unreasonable or based on USCIS’ retroactive application of a new or changed policy.
Read about the next step in the EB-5 process: Application I-526 Petition Requirements and Processing