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- RED CARPET ROLLED OUT - ORIGIN AND NATURE
The US Congress created the EB-5 (Employment-Based Fifth Preference) immigrant investor visa program in 1990 to encourage foreign investors to invest significant funds into the American economy for the purpose of stimulating the U.S. economy through job creation and capital investment by foreign investors. Also know as the Immigrant Investor Program, the EB-5 is an immigrant visa that allows investors to become conditional legal permanent residents first and later a formal permanent resident if they meet the requirements of the visa by investing a certain amount of money and creating jobs for U.S. workers. The conditional status can be removed after an initial 2-year period and the immigrant visa will formally become permanent if the investor has maintained the requirements during the initial period. The EB-5 requirements, covered in greater detail below, can principally be summarized as making an investment of $1,000,000.00 or $500,000.00 (depending on the location of the business) and creating and maintaining 10 full-time jobs. The US Congress and USCIS have designated an annual quota of 10,000 EB-5 visas, but since its inception to the present, that annual quota has never been reached.
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- EB-5 INVESTMENT STRUCTURES AND THRESHOLDS
The EB-5 immigrant investors may be eligible for the US immigrant visa and permanent residence if they have invested or are actively in the process of investing the required capital into one of the following business types:
- A new commercial enterprise (created after 11/29/1990)
- An enterprise which will expand to 140% of pre-investment net worth or number of employees
- A troubled business in which jobs will be preserved
The standard investment requirement for the EB-5 visa is $1 million. However, if the investment is used in a Targeted Employment Area (TEA) the investment requirement drops to $500,000.00. TEAs are defined as areas experiencing unemployment rates that are at least 150% of the national rate or rural areas outside of metropolitan statistical areas with 20,000 people or less.
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- JOB CREATION REQUIREMENT
Each EB-5 immigrant visa investor must demonstrate that their capital investment will create/preserve at least 10 jobs for qualified U.S. workers within the United States. A qualified U.S. worker is a U.S. citizen, a legal permanent resident, an asylee, or a refugee. Jobs created for nonimmigrant workers and/or family members of the investor's family do not qualify towards the 10 job requirement.
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- EB-5 REGIONAL CENTER INVESTMENT
In 1992, a pilot immigration program was enacted and then regularly reauthorized. Since then, certain EB-5 investor immigrant visas are set aside for investors in "Regional Centers" designated by USCIS based on proposals for promoting economic growth.
The Immigrant Investor Pilot Program ("Pilot Program") was created by Section 610 of Public Law 102-395 (Oct. 6, 1992), and has been extended through Sept. 30, 2012. Under the immigration law, "A regional center shall have jurisdiction over a limited geographic area, which shall be described in the proposal and consistent with the purpose of concentrating pooled investment in defined economic zones. The establishment of a regional center may be based on general predictions, contained in the proposal, concerning the kinds of commercial enterprises that will receive capital from aliens, the jobs that will be created directly or indirectly as a result of such capital investments, and the other positive economic effects such capital investments will have."
In other words, a Regional Center is "any economic entity, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment". Such entities have to be formally designated by the USCIS as a Regional Center upon meeting certain requirement. Once certified or designated, the Center can pool investment capitals from EB-5 investors for the investment within the Center.
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- USCIS CERTIFICATION TO EB-5 INVESTMENT REGIONAL CENTER
As mentioned above, only units or entities certified by the USCIS can be named as a Regional Center for the EB-5 Investor Visa purpose. Hence, the organizers of a regional center seeking the "Regional Center" designation from USCIS must submit a proposal, supported by economically or statistically valid forecasting tools, showing:
(1) How the regional center plans to focus on a geographical region within the United States. The proposal must explain how the regional center will promote economic growth in that region.
(2) How, in verifiable detail (using economic models in some instances), jobs will be created directly or indirectly through capital investments made in accordance with the regional center's business plan.
(3) The amount and source of capital committed to the regional center and the promotional efforts made and planned for the business project.
(4) How the regional center will have a positive impact on the regional or national economy.
As of June, 2012, there are 225 certified Regional Center in the US.
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- REGIONAL CENTER IS NOT A GOVERNMENT AGENCY
It should be noted, however, that Regional Centers are not government agencies. The designation does not mean that the regional center's capital investment projects are backed or guaranteed by the government. Further, there are no guarantees that an investor may ultimately be granted conditional or unconditional permanent resident status through an EB-5 investment. For example, if it is determined that the investor's money is not truly at risk or that insufficient jobs were created through the investment, then the investor's petition may be denied. In other words, the USCIS approval of an EB-5 Regional Center certification application does not in any way:
(1) Constitute USCIS endorsement of the activities of that Regional Center;
(2) Guarantee compliance with U.S. securities laws; or
(3) Minimize or eliminate risk to the investor.
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- CERTIFICATION AND TERMINATION OF REGIONAL CENTER DESIGNATION
The approval of a Regional Center means USCIS recognizes the economic entity as a designated participant in the EB-5 Pilot Program. When USCIS approves a regional center, the US government acknowledges that the econometric models and business plans appear to be feasible and that jobs should be directly or indirectly created through investment in the approved industry categories.
However, if a regional center designated for participation in the EB-5 pilot program no longer serves the purpose of promoting economic growth, improved regional productivity, job creation and increased domestic capital investment, USCIS can terminate the Regional Center designation.
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- STEPS TO OBTAIN UNCONDITIONAL GREEN CARD THROUGH EB-5 INVESTOR IMMIGRANT VISA
There are four main steps to becoming an unconditional Lawful Permanent Resident (LPR) through the EB-5 Investor Immigrant Visa Program.
1. Submitting Form I-526 immigrant petition and gaining approval.
2. Applying for an immigrant visa either through adjustment of status (if you are in the United States currently) or through a consulate/embassy with the Department of State (if you are outside of the US).
3. After approval the alien is granted two-year conditional permanent resident status.
4. At the end of the two-year conditional period the alien must file an I-829 petition to remove the conditions on the LPR status. If the alien has continued to fulfill all the EB-5 requirements the conditions will be removed and the alien will be an unconditional LPR.
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- STANDARD EB-5 INVESTOR PROGRAM VS. REGIONAL CENTER INVESTMENT PROGRAM
A. Standard EB-5 Investor Immigrant Visa Program
The standard EB-5 Investor Program follows the general guidelines given above and has its own pros and cons. The standard program would suit a more hands-on and active investor, as they would be expected to:
- Start and directly manage their business
- Create the required jobs up front
- Be directly responsible for the profit and loss of the investment
- Live near the invested business in order to have managerial control
However, the requirements under the standard EB-5 Investor Immigrant Visa Program are the most scrutinized of all of the EB-5 programs. The stand-alone investor also has continued financial exposure in that additional investments may become necessary to keep the business operating and to ensure that the job creation requirements continue to be met. For these reasons, majority of current EB-5 applications choose to go with the Regional Center Program option.
B. Regional Center EB-5 Investor Immigrant Visa Program
As described above, Regional Centers are USCIS approved business entities that coordinate foreign investment within that area in compliance with the EB-5 framework. Regional Centers fill a variety of industries around the country, with varying levels of success. For this reason, it is extremely important for prospective investors to conduct their own investigation or research into the interested Regional Center to make sure they are making informed investment decisions.
The requirements for an investor under the Regional Center Program are essentially the same as in the standard program, except that Regional Centers are allowed a less restrictive job creation requirement based upon the creation of "indirect" jobs as well as "direct" jobs. Other characteristics that make the Regional Center Program option more desirable to investors include:
- Regional centers have established businesses that do not need the investor's direct management;
- Investor is not directly responsible for creating the required jobs;
- Investor will be able to live anywhere in the U.S.;
- I-526 processing is generally quicker for Regional Center investors.
The major advantage of the regional center, as noted above, is that indirect employment creation is allowable. Indirect jobs are jobs that have been created collaterally or as a result of capital invested in the Regional Center's enterprise.
Normally the sole remaining issue is tracing the funds from the investor to the Regional Center and proving the lawful source of the investor's funds. This eliminates the need to deal with the many complicated issues involved in a standard EB-5 application, such as whether the investment entity qualifies as a "new commercial enterprise;" whether the investment is in a "troubled business" and whether the requisite "direct employment creation" has taken place.
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- DEFINITION OF COMMERCIAL ENTERPRISE
For standard EB-5 program investors, they must invest in a new commercial enterprise, which is a commercial enterprise:
- Established after Nov. 29, 1990, or
- Established on or before Nov. 29, 1990, that is:
1. Purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results, or
2. Expanded through the investment so that a 40-percent increase in the net worth or number of employees occurs
Commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to:
a. A sole proprietorship
b. Partnership (whether limited or general)
c. Holding company
d. Joint venture
f. Business trust or other entity, which may be publicly or privately owned
This definition includes a commercial enterprise consisting of a holding company and its wholly owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business.
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- DOCUMENTS PROVING SOURCE OF INVESTMENT FUNDS
The documents required for both the Standard and Regional Center programs are relatively similar. The most important documents, in both cases, are documents that can prove that the funds used in the investment were gained through legitimate means. The requirement for such documents are extensive as the USCIS wants to make sure that the EB-5 Investor Visa program is not used as a means of money laundering and the money used in the investment is from legal sources. Documents required to prove the legal source of investment funds includes:
- Five years of tax returns;
- Five years of bank records;
- Proof of legal transactions if proceeds from transactions were used to fund the investment;
- Proof of employment if the funds invested were earned from salary, wages, commission, etc.;
- If the funds for the investment were given as a gift, the gift-giver must provide certification confirming the gift, as well as documentation supporting how he or she earned the money;
- If the money was inherited, a copy of the will or other relevant documentation showing the amount investor received from the estate;
- Copies of Family Certificates for each and every derivative joining the investor's primary application;
There are additional documents that may be needed depending on the program and which will be specific to each investor's situation and/or the business set-up of their investment.
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- DOCUMENTS PROVING INVESTMENT AND BUSINESS OPERATION
In addition to proving the legal source of invested funds, the applicants will also have to prove the investment has been made, capital has been contributed, and jobs will be created. To prove these questions, the applicants have to submit documents including but not limited to:
- Formation documents of the invested entity;
- Certified copies of any judgments, or any pending litigation, involving monetary judgments within the past 15 years;
- Documents proving the contribution of the invested capital into the invested entity;
- For the standard program investor, documents about the duties performed and role undertaken by the investor;
- Documents showing the creation of the required jobs in the US;
- Business plan;
- If the invested entity has hired employees, documents and record proving that they have done so;
- Documents proving investment, e.g. purchase agreement, leasing agreement, or other documents showing the investment.
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- REMOVAL OF CONDITIONS - THE I-829 APPLICATION
As mentioned above, approval of an applicant's Form I-526 immigrant petition results in USCIS granting the applicant Conditional Lawful Permanent Resident status for two years. The "conditions" must be removed so that the aliens may reside in the U.S. indefinitely. Failure to remove the conditions results in the termination of CLPR status and will result in the commencement of removal proceedings. The filing fee for the I-829 application is $3,750.00 as well as an $85.00 fee for biometrics. (Current as of July 2012)
Removal of conditions is sought by filing the I-829 petition in the 90-day period immediately preceding the second anniversary of the grant of CLPR status. In support of the petition, the alien investor must document the full investment in the enterprise, sustaining the investment continuously since becoming a CLPR, and compliance with the requirement that ten (10) employment positions have been created as a result of the investment. In order to prove that the applicant has met these conditions, the following documentation will need to be provided to USCIS:
1. A copy of your Permanent Resident card, and the Permanent Resident cards of your dependent spouse and children;
2. Evidence that you have established a commercial enterprise. Evidence includes the company's organizational documents and Federal tax returns;
3. Evidence that you have invested the total required funds. Evidence includes audited financial statements, bank statements, and wire transfers;
4. Evidence that you sustained your enterprise and your investment in that business throughout your period of CLPR. Evidence includes:
a. Invoices and receipts;
b. Bank statements;
d. Business licenses;
e. Federal or State income tax returns or quarterly tax statements
5. Evidence of the number of full time employees at the beginning of the investment and in the present. Evidence includes:
a. Payroll records;
b. Relevant tax documents;
c. Form I-9s.
* Note: Regional center affiliated cases must show that the capital investment was made in accordance with the regional center's business plan in order to be credited with the creation of indirect jobs. The regional center should be able to provide much of the requested documentation.
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- EB-5 vs. EB-1C (and EB-1C with previous L-1A approval)
For becoming a LPR through employment or investment, one of the other options available is the EB-1C application. The EB-1 application is an Employment-Based Immigration petition, and the C sub-classification requires that the applicant be a multinational manager or executive. .
Unlike the L-1A nonimmigrant visa for multinational manager or executive, the EB-1C petition does not have an exception for companies that are launching a new office in the U.S. Instead it requires that the U.S. company be in business for at least one year before the petition is filed. This limits the "New Office" L-1 beneficiary's ability to immediately file an EB-1C petition. Those beneficiaries who have come to the U.S. to open a new office must wait until a year of business operations has passed and the first-year extension has been approved.
The L-1 Visa and EB-1 section located on our website will give prospective applicants a good basis for deciding if this path towards lawful permanent residency is right for them. Lin & Valdez have successfully petitioned for many EB-1Cs on behalf of a wide range of clients, and will be able to help you with your petition if this is the path that you choose.
The major difference between EB-5 and EB-1C is that EB-5 is an individual's petition, but the EB-1C is a petition by a US company with foreign parent/subsidiary/affiliate company even though the beneficiary may be the owner of the companies. Because of the difference, the focus of case preparation between EB-5 and EB-1C is completely different.
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- EB-5 vs. E-2
Another option available to certain foreign nationals is to come to the United States to operate their own business on the E-2 Treaty Investor's Visa. The E-2 visa is a nonimmigrant visa and does not lead to a direct path to permanent residency.
However, successful E-2 applicants will be able to live and work here in the United States for as long as their business remains viable. Additionally, their dependent spouse will be able to work, and their children will be able to attend school here (but not work) in the states as E-2 dependents. E-2 dependent children will be able to stay in the U.S. up until the age of 21, at which point they will have to apply for their own visa classifications in order to remain in the U.S.
The E-2 visa application is a flexible option for foreign nationals from the "Treaty Countries" interested in being business owners in the United States. The investment money required depends on the type of business that will be opened, but is substantially less than the strict requirements of the EB-5. As long as the business remains viable and the E-2 visa holder is able to provide documentation of this, then they will be able to extend their classification in indefinite times and remain in the U.S.
The biggest difference between EB-5 and E-2 is the nature of the status granted. Again, EB-5 if for permanent residency, but E-2 is for nonimmigrant status and visa. Secondly, E-2 is only available to individuals from "Treaty Countries", but EB-5 is available to any qualified individual from any country. Thirdly, the investment amount required is very different between the two. In E-2 applications, it is not rare that the investor invests less than $100,000.00. The EB-5, on the other hand, requires at least $500,000.00 or $1,000,000.00 of investment.
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- SERVICES LIN & VALDEZ LLP PROVIDES FOR EB-5 INVESTORS
Our service to our EB-5 Investor Visa clients principally consists of the following:
(1) Evaluation and Consultation
(2) Researching and contacting Regional Centers
(3) Coordinating clients' investment into the Regional Centers
(4) Forming Invested Entity
(5) Business Transaction and Consultation
(6) Drafting and Revising Business Plan
(7) Document Preparation
(8) Petition Submission
(9) Consulate Interview Preparation
For each EB-5 case, we always start with a detailed evaluation of the client's background, financial capability, and business needs. With the information gathered, we will advise our clients whether EB-5 is the desirable route our clients should take, whether they are more suitable for the standard application or for the regional center application, and will advice them if they have other options.
In the event clients opt for regional center investment, we can help clients investigate and screen out the targeted regional centers. Once the targeted centers have been narrowed down or decided upon, we will help our clients contact the centers and coordinate the client's investment with their chosen center.
To facilitate client's investment into Regional Centers, we coordinate the contact and work between the Regional Center and the investing client. If, on the other hand, client opts for the self-operated standard investment, depending on where the invested enterprise will be, we may help client form the invested entity and recruit the assistance of other professionals, e.g. CPA. If client opts to purchase an existing business, depends on where the transaction will occur, we may handle the transaction, or recruit the help of other legal professional to handle the transaction.
In addition, we can either draft the business plan based on the information provided by the client, or have outside professional draft the business plan. Through out the course of the matter, we will help and advice client in document preparation, and eventually submit a professionally-prepared petition. We will also help client in the preparation for consulate interview if client is outside of the US.
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- WHY LIN & VALDEZ LLP FOR YOUR EB-5 APPLICATION
Lin & Valdez LLP is a well-respected law firm headquartered in Texas with a long history of providing excellent service to clients worldwide. Attorneys of Lin & Valdez have accumulated tremendous experience serving clients in the business sector and in investment immigration applications. Most importantly, our attorneys are well educated in business and economic fields and hence are well versed in caring for clients' business needs and related applications. In addition to his law degree, our chief attorney Mr. Stewart Lin also has a master's degree in International Banking Law from the prestigious Boston University Banking Law Center. With 15 years of experience in legal practice, he has helped countless clients from around the world obtain green cards through their business and/or investments.
In addition to Mr. Lin, Attorney Zack Huang of our office is also well-trained in economic and business subjects. Mr. Huang earned his bachelor's degree majoring in Economy from Cornel University, an Ivy League college in the US, and he later received his J.D. from Washington University in St. Louis.
With such a strong background in business, combined with our focus in detail and pursuit for excellence, our firm is prepared and more than capable in helping our client to pursue their goal. Our strong credentials in business-related practice also provides our clients the best assurance of success for their applications.
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