What can I do if my EB-5 Regional Center requests to pay a pro rata portion upon fund redemption? - EB5Investors.com

What can I do if my EB-5 Regional Center requests to pay a pro rata portion upon fund redemption?

After obtaining I-829 approval, I find myself in the phase of redeeming my investment fund. My Regional Center is requesting a 3% pro rata share of my capital to cover ongoing business expenses and anticipated liquidation costs. Is this common? What should I do if I do not agree with the terms?

Answers

Bernard P Wolfsdorf

Bernard P Wolfsdorf

Find an EB-5 Visa Lawyer: Immigration Attorney
Answered on

Read the documents and see if there is a legal basis to make this claim.

Green Card Fund, LLC

Green Card Fund, LLC

EB-5 Regional Centers
Answered on

Two questions here – is this industry norm and what should you do.
1) Regarding what you can do, the answer lies in the fund documentation. Specifically, the Limited Partnership Agreement (if Limited Partnership) or Operating Agreement (if Limited Liability Company). In your position, I’d ask the Regional Center to show you where in the Company Agreement (LP Agreement or Operating Agreement) and the PPM (risk-disclosure document) these terms were disclosed – they should provide you a section reference; if they cannot, there may be a question of the legal basis for deducting this amount from your investment capital. Further, ask for proof of business expenses and liquidation costs so you can determine the reasonableness of those items – this would include invoices for services rendered and proof of payment (bank statements, canceled checks…).
2) Is it the norm? In traditional fund structures (non EB-5 funds), this would not be uncommon to see business expenses and liquidation costs paid by the investment partners. However, in EB-5 because the EB-5 investor is usually receiving an insignificant financial return, and most of the investment return is being kept by the fund manager, this is more uncommon. The fund manager has already been compensated sufficiently to cover operating costs and liquidation costs; to reduce your investment principal by these amounts is aggressive.

Belma Demirovic Chinchoy

Belma Demirovic Chinchoy

Find an EB-5 Visa Lawyer: Immigration Attorney
Answered on

Check the investment documents you signed at the I526 stage and any subsequent amendments.

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