Tuesday, June 18, 2013

Solid facts demonstrate why Direct Investment Businesses are safer than Partnerships or Regional Centers for EB-5 visa investors.

Partnerships are basically regional centers in disguise, and feature the same truly terrible characteristics of regional centers listed below:

1) Conflict of interest: The promoter of the partnership or regional center is essentially like a crack addict, addicted to OPM (Other People's Money). Their interest is NOT to help EB-5 visa seekers make money or to follow the law, their interest is to line their pockets by treating the business as their own little piggy bank, and acquiring goods and services from related parties (such as friends and family) for the business at inflated rates.

2) Fraud: Regional Center and partnership promoters usually commit securities fraud by failing to disclose material facts and also violate securities laws by illegally offering and selling securities in the US and abroad.

3) Terrible exit strategies: Regional Centers and partnerships lock in your capital for 5-10 years, and this means an investor's money is still stuck even after the investor gets their green card. In contrast, owners of Direct Investment Businesses are free to sell their business right after they get their green card.

4) Capital loss: It is usually quite common for investors in regional centers and partnerships to experience capital loss. In contrast, my EB-5 clients who invested in direct investment businesses have never suffered capital losses.

5) Low ROI: It is usually quite common for investors in regional centers and partnerships to experience very low or no ROI as the funds are siphoned off to pay inflated salaries to the promoters or for procuring goods and services at inflated prices from individuals related to the promoters. In contrast, my EB-5 clients who invested in direct investment businesses have always earned 15% or more annual ROI each year.

 The easiest way to get an objective assessment of what truly offers the best value for money for EB-5 investors is to do an objective comparison to decide what serves the interests of investors better.

Questions to illustrate the differences:

How much money have the promoters of a regional center or partnership invested and how much equity and profits will they get in return?
How much salary will they get?
Do they have a policy to obtain goods and services in a competitive manner or are they acquiring from related parties?
Do they hire employees and managers in a competitive manner or are they hiring related parties?

Crucial questions to ask promoters of partnerships or regional centers:

1) Are you willing to offer a notarized statement confirming that you will fully disclose all material facts in an ongoing manner and refrain from engaging in conflict of interest?
2) What is your practical experience? How many clients have you helped so far and how long have you done so?
3) What is your track record? Have your clients experienced capital loss, visa loss or operating loss?
4) What do you do to help me avoid getting defrauded?
5) What is the exit strategy?
6) What is the typical approval time?
7) Do you fully comply with the securities laws of the US and overseas jurisdictions where you offer and sell securities?
8) Will you refund my fees in case my petition is denied due to your negligence or incompetence, or am I expected to pay for your mistakes?

Crucial questions to ask promoters of substandard franchises:

1) How many people have obtained EB-5 visa through this franchise?
2) Have they experienced capital loss or operating losses?
3) Can we review their CPA audited financials?

At the end of the day, EB-5 visa seekers should remember that most of the service providers and promoters of regional centers and partnerships are out to cheat them out of the money. We specialise in helping EB-5 visa seekers get their visas (green cards) in a safe, rapid and usually profitable manner.

For further details, please contact me directly.

Yours truly
Mohammed Shaikh, MBA, CFE, Licensed Business & RE Broker (CA & FL)

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