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April 5 2013

USCIS/SEC Stakeholder Call

USCIS/SEC Stakeholder Call

On April 3, 2013, USCIS held an EB-5 stakeholder call about securities law issues. The discussion covered registration requirements for securities, broker-dealers, investment advisors, pooled investments, and the exemptions and exclusions to each of these registration requirements. It also covered fraud, for which there are no exemptions.

The following are some of SEC’s statements that could apply to regional centers, and their projects and principals:

  • Registration as a broker-dealer can still be required even if all the activity takes place abroad, if the individual resides in the United States. However, if there is no transaction-based compensation – including a “salesman’s stake” in which payment is contingent upon a sale – then individuals may have a safe harbor pursuant to Rule 3A41.
  • Pooled investment vehicles run by a third party (such as a regional center) that assesses a fee for running the pool may be required to register as investment companies. There are exclusions for private funds with fewer than 100 investors and those with only “qualified” investors.
  • Both Regulations D and S exemptions may be affected by website content.  Regulation D will not cover securities for which there are general solicitations, including those via the internet. Regulation S does not cover direct offers in the United States, which can include internet offers.

There are additional requirements that pertain to each of the above rules, which are extremely complex. If any of the above rules appear to cover an EB-5 regional center, principal, or project, then a securities attorney should be consulted. We are not securities attorneys and cannot provide securities law advice. However, USCIS has hired securities lawyers and appears to be very interested in ensuring that regional centers are following SEC rules.

It is extremely unusual – and in fact we do not remember – USCIS or its predecessor INS on their own initiative scheduling a public forum with another regulatory and law enforcement agency. SEC has been consulting with USCIS. This collaboration probably had a lot to do with the IRCTC case, and may even be driven by USCIS.

The Venture Capital Model

I am often asked whether a regional center can create a company which takes in capital to invest in a number of other firms. USCIS makes this policy complex.

In the past, USCIS has said that failure of any one of the companies in which the capital was invested would mean the immigrant investor failed to maintain their investment.  Also, USCIS says a business plan must be provided for each enterprise in which the capital is placed. Because all the enterprises capitalized must be known in advance, there is no real venture capital model. Dividing capital into more than one business is possible, but it compounds the complexity of an already complex process.

Senator Leahy’s EB-5 bill (which is still being drafted) would permit a commercial enterprise to invest in other businesses without identifying them in the business plan. However, the commercial enterprise’s investments in businesses located in TEAs cannot be commingled with those not located in TEAs.

Review Board Operational

USCIS’s EB-5 Review Board is now in operation. USCIS will request the applicant’s appearance before the Review Board, although it may be possible for an applicant to ask USCIS to request the hearing. The hearing is either in person or telephonic.  It is not clear how long scheduling the hearing will take, but USCIS will not do so until after reviewing the applicant’s response to the Notice of Intent to Deny.

USCIS will then contact the applicant with the time and date of the requested Review Board appearance via the USCIS Immigrant Investor Program mailbox atvog.shd.sicsu@margorProtsevnItnargimmI.SICSU. The hearing will last an estimated 60 minutes, during which time the applicant may present additional information. The California Service Center will then issue a written decision at a later date.

Travel Advice

I highly recommend that American citizen frequent travelers sign up for “Global Entry” by going to It allows one to be admitted to the U.S. by means of an electronic kiosk, without having to wait in line to be inspected by a human immigration officer. It saves a lot of line waiting after a long flight. The cost is $100 and a trip to the local international airport for an “interview” – to learn how to use the machine and to show your I.D.  Global Entry also allows one to use the rapid line through TSA, if your airline is set up with TSA (for example, as of today United Airlines is; Virgin Airlines is not).

From Xbox to Green Card

José Muñoz entered the United States when he was one year old and grew up to graduate from high school with honors in 2007. Because his visa had expired and he would not be able to get a job after college, he stayed at home, did chores, and babysat his little brother. He also played sports video games . . . lots and lots of video games.

Then, in the summer of 2012, he heard about President Obama’s Deferred Action for Childhood Arrivals, which covered people just like him – those who had entered the U.S. before they were 16 and who were under the age of 31 on June 15, 2012. Because he had lived with his parents and had not worked or attended school since 2007, Muñoz could not establish continuous residency since 2007 through usual methods. However, Muñoz’s Xbox records noted his purchases, downloads, communications with other users, as well as his address and account information. Using those Xbox records, Munoz successfully obtained deferred action and now holds down two jobs and is saving up for college. Read the full article here:

Whether helping EB-5 investors or DACA applicants, it is always very rewarding to help people immigrate to the United States.