EB-5 in the Media

The anti-immigrant Senator Chuck Grassley of Iowa has now redirected his attack from H1-B (professional) and L-1 (intra-company transfer) visas to EB-5 visas. He is involved in raising a stink about USCIS Director Ali Mayorkas overriding the denial of former Democratic Party Chairman Terry McAuliffe’s EB-5 green car project in Mississippi.

Now the SEC is looking into the matter to see if there was an ineligible guarantee made to investors. This has gotten coverage in the New York Times, Washington Post, and other media.

There is a news report of the FBI looking into an EB-5 regional center in Texas, and a news story about a large EB-5 funded meat packing plant, Northern Beef Packers, in South Dakota which has filed for Chapter 11 bankruptcy. It has many Korean and Chinese investors.

The U.S. media does not understand the EB-5 program, and the Chinese media and EB-5 blogs pick up anything negative about the EB-5 program.

Government Investigates Government

Senator Grassley’s letters to the Department of Homeland Security located on his webpage (http://www.grassley.senate.gov/) and USCIS internal emails also found on his website (http://www.grassley.senate.gov/news/Article.cfm?customel_dataPageID_1502=46714) indicate various agencies are investigating Mayorkas, and auditing the EB-5 program as a whole. All regional centers LLCs have reportedly been sought by the SEC.

Our security agencies, including the FBI, Justice Department, State Department, and others, are also looking for criminals and security risks as they should – that is their job. Each investor must undergo three separate securities checks – at the I-526 stage, for the immigrant visa, and for the I-829. We knew about the latter two and suspected the first.

Pro EB-5 Congresswoman Runs for Senate

Democratic Congresswoman Colleen Hanabusa of Hawaii is running to fill the late Senator Inouye’s seat. I spoke with her last week. She is very keen on the EB-5 program and is aware of its capital and job creation benefits.

It would be very beneficial to the EB-5 community to have a senator in addition to Senator Leahy (D-Vermont) champion the positive aspects of the EB-5 program. I am sending her a contribution. I encourage others to also do so. Her contact information is: 238 Cannon HOB, Washington, DC 20515; phone: (202) 225-2726; email: https://hanabusa.house.gov/contact-me/email-me.

Teleseminar

Our teleseminar on the new security law with our two outstanding securities lawyers was most informative. Owners of many regional centers participated, as did our agents in China and others. We discussed:

• Criteria for general solicitation (advertising)
• Burdensome reporting requirements for using the solicitation rules
• Proposed SEC rules
• Aspects of both Regulation D and Regulation S
• Overall, how complex the new rules are to use in practice, and how important it is to work closely with securities counsel

Once we have some working experience with the new rules, we will have another similar teleseminar – in about four months.