What happens when an EB-5 regional center is terminated?

I think it all depends on the reasons for termination, but for the most part, once it is terminated, that is it. Investors could lose their money, etc.

Regional centers may be terminated for a variety of reasons, such as failure to do annual reports on Form I-924, mishandling of funds, fraud, or other reasons. A terminated regional center will have to reapply for redesignation by USCIS before it can make offerings to prospective EB-5 investors, be sold or rented out.

A terminated regional center may no longer offer EB-5 projects that rely upon indirect job creation. The regional center entity could conceivably continue to exist after its USCIS designation has been terminated, but unless and until it can comply with all the USCIS requirements for designation, there is no point to it reopening, or being sold or "rented."

An EB-5 regional center may be terminated for several reasons, for example if they do not do the yearly filing of the I-924, they are shut down by the SEC or USCIS. The regional center would have to reapply to get the designation after the termination.

An EB-5 regional center can be terminated for numerous reasons including fraud, failure to file reports and a variety of other reasons. If it is shut down, depending upon where the EB-5 investor is in the process, it can adversely affect their application as well as the investment itself. Yes, a regional center may have an opportunity to reopen or to reorganize under certain conditions. This most likely will be the subject of future legislation.

Generally, the termination of a regional center carries a number of negative connotations and effects. First, it means the regional center in question had failed to fulfill its obligations and purposes. Second, the regional center can no longer sponsor investors for EB-5 filings. Third, the investors of such regional center may lose their investments depending on the reasons for the termination. In addition, those investors who only have just conditional green cards at the time of termination may not have any opportunity to get their permanent green cards. While it is possible that a regional center can come back from termination, the prospect is not necessarily bright and good. For instance, before the decision to terminate a regional center is imposed, the regional center would have been issued a Notice of Intent to Terminate for failure to meet some conditions as a regional center. The notice would have put the operator of the regional center in question in the know that the regional center will lose its designation if it fails to fulfill certain conditions. If for any reason the regional center is unable to either satisfactorily answer or simply ignores the Notice, then an actual terminal decision of termination is handed down. Thus, reinstatement of a regional center designation usually requires more effort. The transfer of ownership or renting of a regional center is better done prior to termination if it can be effected.

Presently there is very little protection for investors if the regional center is terminated. Most important is whether another regional center can take over the project and it appears we are in new territory as there appear to be few precedents. The new bill H.R. 5992 does have a provision that allows investors to make a new investment. Unfortunately, the bill does not provide adequate protection for good faith investors who were defrauded.

Technically, without a regional center, there is no basis for a project to exist and accept investors. Can it be turned into a direct project? Can a new regional center snatch up old projects? It is all unclear at the moment.