Some of the popular proposed changes to the EB-5 visa program are:
1. Revoke EB-5 visas fraudulently obtained on the basis of laundered funds.
2. Require Regional Centers to prove that they've legally offered and sold securities overseas to EB-5 visa investors. This would essentially prevent regional centers from paying illegal commissions to immigration agents who charge commissions of USD 40,000 to 80,000 per EB-5 visa investor.
3. Require EB-5 visa investors to provide authenticated documents such as tax returns, bank statements, etc., in order to prevent illicit funds from being used to fraudulently obtain immigration benefits.
4. Only current employment rates should be used to determine TEA status.
5. Preventing Money Laundering in the EB-5 visa program by thorough audits of all regional centers.
6. Make regional centers comply with Reg D laws and FINRA regulations.
What is the potential impact of the above proposed changes on regional centers and EB-5 visa investors?
If even any of the above proposals are implemented, then the immediate impact will be a run on the regional centers and many projects will be shut down due to liquidity crunch, as Stenger's regional center is facing in Vermont. For all intents and purposes, banks won't touch regional centers, and this isn't even counting the subpoenas sent to 8 regional centers for starters, as well as the behind the scenes investigations being conducted by DHS + SEC + FBI, and the parallel congressional inquiries initiated by Senators Coburn and Grassley. Any regional center that has illegally paid commissions (which is pretty much every single one of them) will risk expensive fines and legal fees, in addition to significant disruption to their business, and those regional centers that are unable to prove that their funds weren't laundered will probably see their assets seized, pursuant to RICO statutes, as was done with Mr. Sethi's Chicago based Regional Center. If regional centers are forced to comply with Reg D and FINRA rules and regulations, then the obvious impact will be on their ability to market and sell securities, as they will then probably be required to provide AUDITED statements. In a nutshell, this basically means that regional centers will be unable to conduct business, and the only folks making money will be escrow companies, and the only folks losing money will be the suckers who shell out $50,000 or more in "administrative fees" to regional centers, as these fees are used to pay steep commissions to the immigration agents. It is believed that those who were subpoenaed are expected to see significant asset seizures soon enough.
Those EB-5 visa investors who chose to launder funds (by sending them in smaller chunks) and / or used forged documents will probably see their visas revoked. Many Chinese EB-5 visa investors are expected to look at Europe as an option, but are expected to run into the same issues over there as well.
As it is, the ROI from regional centers is quite low, and when other factors such as terrible exit strategy, lengthy delays, high risk of failure, securities law violations and conflict of interest are bundled on top of it, then the only option for an EB-5 visa investor is to opt for a Genuine Direct Investment Business.
Direct Investment Businesses usually offer the following advantages to EB-5 visa investors:
- Significantly higher ROI compared to regional centers.
- Extremely low risk of fraud and conflict of interest.
- Easy exit strategy.
- Decent capital gains.
- Quicker processing.
1. I offer a 100% fee refund guarantee in case a client is denied due to our fault.
2. I offer a guarantee of freedom from fraud and conflict of interest to my clients. NONE of the regional centers will EVER agree to this clause.
Mohammed Shaikh, MBA, CFE, Licensed Business and RE Broker (CA & FL)
Phone: +1 407 535 0616