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  1. Key factors when presenting EB-5 project to Chinese Agency By Gregory Finkelson

    “Documentation, documentation, documentation.” That is a standard axiom of well-run businesses. Operations auditors will tell you, “If it isn’t documented, it never happened.”

    When you search for a Chinese Agency, you will want to have documented evidence that they are what they say they are. They also have a right and responsibility to expect the same from you.

    The key factor when presenting an EB-5 project in China is documentation. Don’t expect to walk into an Agency with nothing more than a brief case, a business card, and a smile.

    USCIS monitoring of Regional Center activities in presenting projects has been somewhat lax. However, that oversight has been improving since 2007.[i] When the boundary lines are blurry, there is a tendency to draw outside of them. Aside from some outright scams, it is fair to say that some Regional Centers have had a tendency, as many B2B companies do, to “pre-sell” a product or project in order to be first to market. I have first-hand knowledge of more than one Regional Center that have fallen prey to this temptation by jumping the gun and presenting a project before it has been officially approved by the USCIS.

    I am not here to judge their motives. I am here to point out that, while “pre-selling” an EB-5 project may work in some countries, it will not fly in China, regardless of how far along the approval process it is. I am saying that it is wrong for you to present a project as “approved” while official approval is still pending. But I would submit that it might be a tiny bit foolish and a whole lot more expensive to travel to China without the documentation that establishes the legality of your Regional Center or the approval of your EB-5 investment project. No reputable Agency will discuss a project that has not been certified by the USCIS.

    WARNING: Unless you like wasting your time and money, do not go to China without adequate documentation that proves that your Regional Center and your EB-5 project are legitimate.

    Not having adequate, verifiable, supporting documentation does not mean that your business and project are not legitimate, but it does mean that Chinese agents will not be interested in spending their time with you. At the end of the day, all that your $10,000 trip to China will do is give you the chance to eat some authentic Chinese food, and maybe take a chance to visit the Great Wall.

    How Much Documentation about your EB-5 Project and Regional Center Is Enough to Present to Chinese Agency?

    The essential piece of documentation is the evidence of your current license to operate as a Regional Center or an EB-5 attorney and the official USCIS document(s) approving your project as EB-5 eligible. This information establishes your legitimacy, but it is not all you will need to adequately present your project.

    IDEA: Don’t lay all of your documentation on the table at once. Share what is needed at the point when it is needed, in an orderly fashion. Establish your credibility first. As the conversation moves forward, respond to your host’s inquiries with the documentation that answers their immediate question. Your credibility will be better established and your expertise will be confirmed when your answers to their questions begin with “Let me show you . . .”

    In addition to the fundamental documentation, the following paragraph lists some other items you may want to have available in anticipation of issues that will be put on the table.

    • A written legal description of the project.
    • Any additional state or federal authorizations or approvals of the project.
    • A summary list of EB-5 investment opportunities that you currently represent. This summary should include a brief overview that includes industry sector, business description, location or the project site, and total investment required for the project.
    • Evidence of any EB-5 projects that you have managed or represented in the past. You may want to include progress milestones and evidences of success in meeting them consistently.
    • Information about who will manage the company in which the clients will invest. For the greatest impact, this should include both executive and operational management.
    • Since it is possible that investors may want to play an executive or operational role, you may want to establish what roles are open to qualified individuals.
    • Market statistics and forecasts, such as:
      • What is the current size of the market?
      • What are the projections for the market?
      • Who is the competition?
        • How much market share do they have?
        • What competitive advantages do they have?
        • What is their vulnerability?

      • What is the current market share of the EB-5 opportunity, if any?

    • The business plan for your project, including:
      • What makes the project unique?
      • What makes the project compelling?
        • To customers
        • To investors

      • Is it reasonable to think that the goal of gaining Green Cards will be successfully reached?

    • Details about the operating budget for your project, such as:
      • Is the project adequately funded?

    • Information on the other investors, including:
      • What portion of the total project cost is my investment?
      • What voting rights come with my investment?

    • A well-defined exit strategy. Altogether too many companies do not plan their exit strategies at the front end. The Chinese Agents will help ensure that you do not forget, because they will want to know.

    Once the EB-5 Agencies see official documentation from the government of the United States and a well-conceived project, they should be willing to start a long-term business partnership with you.

    How much documentation is enough? The answer is: there is never enough. Be diligent. Be able to provide more information than you think you need. Anticipate every question. For instance, be prepared to not only indicate who the other investors are, but also what share of the project their investment represents. Be prepared for a good Agency to dig a little deeper. Make sure that there is more gold (that is, solid, clear answers) available every time they dig.

    This is an extract from the book How to Find Chinese Investors, Agents & Clients for Your EB-5 Projects & Services: A Practical Guide for Regional Centers, Attorneys, Developers and Businessmen”
    More information: http://www.business-visa-usa.com/Book.html

    [i] Stephen Yale-Loeher et.al., “USCIS Increases Oversight of EB-5 Regional Centers, ”http://www.abil.com/articles/ABIL%20...Yale-Loehr.pdf
  2. How to evaluate the marketing capabilities of Chinese EB-5 Agencies? By Dr. Gregory F

    The whole point of seeking the cooperation of EB-5 Agencies is to harness the potential of their established market area. High net worth individuals tend to gravitate toward and live in or near major cities, because that is where they will find the most customers and the larger labor pools for their existing enterprises. Using the same logic, it is likely that a potential EB-5 investor will attempt to contact an EB-5 Agency near his residence or business. The larger the population of a city, the greater number of potential investors are likely to live there. The greater the number of potential investors there are, the greater the number of EB-5 Agencies that exist to service them.
    Do not approach Agencies the first time with selling your project as your primary objective. Your primary objective is to qualify Agencies to actively and accurately represent your projects to their clients. Do not allow yourself to be smitten as you were when you first met your spouse. This is not a marriage that you are entering into, it is a business arrangement.
    Frankly speaking, you are, in effect, interviewing potential “employees.” If you were hiring an employee to represent your company in a critical position, you would not hire the first person to come through the door, nor would you hire on a single interview. You would process what you have seen and heard, and you would perform a background check. Qualifying an EB-5 Agency’s capabilities should involve a similar process.

    • Larger Agencies will be located in large cities.
    • More Agencies will be located in large cities.
    • More potential investors will be located in large cities.
    • The location and size of an Agency is not necessarily an indicator of its capabilities or its integrity.
    • The location and size of an Agency is an indicator of potential reach and sphere of operation.

    Evaluating By Interviewing

    Understand that you are going to be fed a lot of visuals, such as brochures and photos. That’s fine. There’s nothing wrong with that. However, think about that vacation you took to Hawaii. Remember the good looking model sitting by the pool in the travel brochure? She wasn’t there during your trip, was she?
    The point here is to be discerning. One way of doing that is to not take brochures and PowerPoint presentations at face value, but seek verification of what you are presented, preferably from someone other than the Agency staff you are interviewing.
    Experience counts. There is some credibility to the idea that the longer an Agency has been in the EB-5 business, the more credibility it should have. On the other hand, longevity is not necessarily a reflection of integrity or expertise. Honest, experienced people start new businesses every day. Just because an Agency is new does not mean that its ownership or staff are inexperienced.
    Ask to see examples of some of their marketing efforts, but remember that they are only going to show you their success stories. Ask to see their marketing collateral and examples of how they manage full-blown marketing campaigns. Try to determine the extent of their reach. Take some time to do your homework by investigating to determine if they have a good reputation among HNWIs.

    There are four important things to ascertain at this point in the process:

    1. Is this Agency able to expose my EB-5 project to enough qualified candidates?
    2. Will they expose my EB-5 project to enough qualified candidates?
    3. Are they able to communicate my EB-5 project thoroughly and without misrepresentation so that candidates are not ultimately dissatisfied?
    4. Is the welfare of the clients their highest priority?

    You might also want to ask and answer the question, “Are they legally allowed to execute a deal?” For example, there is an understanding that the Chinese government does not permit an Agency to have cooperation agreements with more than two U.S. attorneys.[i] The folks you meet at the Ministry of Public Security may be able to help save you time and effort by directing you only to Agencies that do not already have two agreements executed.
    Finally, with respect to their marketing capabilities, try to ascertain what they know. Isn’t that a point of an interview process? Do they understand how to market EB-5? How do they market it? What does the marketing arm of their Agency look like? How do they make themselves stand apart from the crowd in their approach to potential investors? What makes their marketing unique and credible? Would you buy a car from this Agency based on their marketing? What is their definitive marketing plan? What is their value system, vision, and mission, and how do they demonstrate each successfully to potential clients?
    This is an extract from the bookHow to Find Chinese Investors, Agents & Clients for Your EB-5 Projects & Services, A Practical Guide for Regional Centers, Attorneys, Developers and Businessmen”
    More information: http://www.business-visa-usa.com/Book.html

    [i] Stephen Blayney, “EB-5 Regulation in China,” November 26, 2012, EB-5 Immigration Law, http://immigration.juliaparklaw.com/...r-eb-5-agents/

    Updated 04-11-2014 at 10:24 AM by EB-5Blog

  3. How to find a Reliable Chinese EB-5 Agency? by Dr. Gregory Finkelson

    Chinese law requires that every Agency be licensed by the Bureau of Entry and Exit Administration under the Ministry of Public Security. However, sorry to say, not all Agencies have legitimate licenses. So, the best place to search for a reputable Agency is not by contacting or visiting Agencies, it is by contacting both the Chinese Ministry of Public Security and the U.S. embassy in China. Consult the ministry for a list of duly-licensed Agencies. Don’t accept a document from an Agency that they claim is their license. People can create incredibly realistic-looking documents thanks to digital technology. If you have already begun a search by contacting Agencies directly, you have already made a major mistake. Back away and start over again.

    After obtaining all the pertinent information regarding EB-5 Agencies from the Ministry, the next step is to visit the U.S. embassy or consulate. The purpose of this visit is to ascertain any issues that the U.S. government may have had with any Agency, or, conversely, which ones have, to their knowledge, operated ethically and legally, and have truly provided the intended services to their clients without bilking or defrauding anyone. Before accepting to market a given project, an EB-5 Agency is supposed to use a given set criteria to find the best business partner. In the same way, an EB-5 developer needs to have some specified set of criteria to help him/her find a reliable EB-5 Agency.

    Once you have begun the third step, actually making contact with Agency heads, you will need to carefully observe their interactions with you. Especially note their apparent level of interest in your EB-5 projects. This is vastly different than observing a glad-handed welcome. It is even different than expressing their desire to see your presentation material. There is a paradigm in American culture that paying a visit to a potential client and leaving a brochure is a successful sales call. All you have done is leave material that is an expense against your company’s advertising budget. If this is the extent of your visit with an Agency, you may have gained nothing at all. You must expect to invest some time creating a real relationship.

    CAUTION: It has been the practice of some Agencies to extend you the courtesy of taking your portfolio of information and using it for nothing but evidence of their association with your Regional Center or EB-5 projects so that they have an easier time renewing their license with the Chinese government. A method worthy of consideration might be to invite the Agency executives to visit the U.S. and become familiar with your project first-hand. The trip, of course, would be at their expense. Leave little more than a business card with them. If they are interested in coming, then you are probably on to something. Once they are in the States, you then have the liberty to show them the project and, providing you still feel comfortable, share the greater details.

    Established EB-5 Agencies usually have associate Agencies in other cities. If you have done the work of establishing the credibility of a major Agency, you may be able to extend your reach by utilizing that network to expose your project to more potential clients.

    It is not uncommon for many Agencies to claim that they are the best. Keep in mind that U.S. Federal Trade Commission laws, which require proof of that claim, do not apply in China. Note, however, that such claims will be made off the record, because Chinese advertising law forbids comparatives and superlatives. A wise place to begin your search is not to look for “the best.” Obviously, all but one of them have to be prevaricating. It would be wise to seek Agencies that exhibit integrity. It may also wise to forget the idea that “bigger is better.” The fact is, that “bigger” is only “bigger.”

    CAUTION: The reason that an Agency is bigger, other than that it is located in a densely populated area, may be that is has a “good relationship” with the Chinese government.

    EB-5 Agencies tend to do their homework in order to stay on top of their game and improve their image, in the sense that they can “speak the EB-5 language.” In fact, Chinese Agency personnel can typically be expected to know the intricacies of the EB-5 program much better than their American counterparts.

    This is an extract from the book “How to Find Chinese Investors, Agents & Clients for Your EB-5 Projects & Services: A Practical Guide for Regional Centers, Attorneys, Developers and Businessmen”

    More information: http://www.business-visa-usa.com/Book.html
  4. The Good, The Bad, and The Ugly by Matt Gordon

    The Good, The Bad, and The Ugly - Getting Bad Actors out of the EB-5 Program - SEC Rule 506(d) and Beyond

    The EB-5 program is starting to get a somewhat shaky reputation overseas as word spreads on the prosecution of fraudulent project sponsors. First, there was the Chicago Convention Center case in February and then in October, a husband and wife Ponzi-scheme team from Texas. There is one business broker in Florida who is trying to sell direct EB-5 investments – he is a convicted felon and subject to deportation proceedings. I have recently heard rumors of one or more principals at major regional centers who have criminal backgrounds. It’s no wonder that potential foreign investors are becoming aghast at the seeming lack of quality control over who is and is not allowed to participate in the US Immigrant Investor Program. Given that the prosecutorial interest in the EB-5 program is recent, one could only imagine the number of prosecutions if the SEC and Justice Department would have started looking at practices much sooner. At this point, these prosecutions are probably the tip of the iceberg.

    It’s high time that we get the bad actors out of the EB-5 program.

    Fortunately, congress and the SEC have provided the legal infrastructure for doing so. Under Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, congress required the SEC to create rules to disqualify bad actors from private placements that rely upon Rule 506 of Regulation D, which is the typically relied upon exemption to registration requirements under the Securities Act of 1933. The SEC did so on July 10th of this year:

    “‘Bad actor’ disqualification requirements, sometimes called “bad boy” provisions, disqualify securities offerings from reliance on exemptions if the issuer or other relevant persons (such as underwriters, placement agents and the directors, officers and significant shareholders of the issuer) have been convicted of, or are subject to court or administrative sanctions for, securities fraud or other violations of specified laws.” See http://www.sec.gov/rules/final/2013/33-9414.pdf, P.7.

    The persons covered under this rule are:
    • the issuer, including its predecessors and affiliated issuers
    • directors, general partners, and managing members of the issuer
    • executive officers of the issuer, and other officers of the issuers that participate in the offering
    • 20 percent beneficial owners of the issuer, calculated on the basis of total voting power
    • promoters connected to the issuer
    • for pooled investment fund issuers, the fund’s investment manager and its principals
    • persons compensated for soliciting investors, including their directors, general partners and managing members

    See http://www.sec.gov/info/smallbus/sec...ance-guide.htm for the full text of the SEC’s compliance guide.

    Under the rule: “Disqualification will apply only for triggering events that occur after the effective date of the amendments; however, pre-existing matters will be subject to mandatory disclosure”. Accordingly, bad actors are getting a free pass for disqualifying events that took place before September 23, 2013. Disclosure of such act is still required, but is that really enough?

    Immigrants under the EB-5 program are held to a higher standard. An immigrant who seeks admission to the United States as a conditional lawful permanent resident would be denied entry based on a great number of felonies committed before September 23, 2013. Are we telling the world that it is fair and acceptable to deny entry to felons who have paid their debts to society, but that the same person, if a US citizen, who committed the same crime, is perfectly free to sell EB-5 investments?

    If congress will not hold the EB-5 industry to higher standards, then we must impose these burdens on ourselves. With this article, I am calling on IIUSA, all regional centers and all direct EB-5 investment sponsors to make the following pledge and to certify to all their investors: That no person who has ever been convicted of any felony be allowed to hold the position of an officer, director, general partner, managing member or otherwise have control over a sponsor or issuer of EB-5 investments.

    I call on all broker dealers and law firms that work on EB-5 projects to conduct the needed due diligence to ensure sponsor compliance with the existing Rule 506(d) and the heightened standards proposed here for all sponsors who agree to the pledge.

    We do not need the SEC, Justice Department and state prosecutors to do this job. We can and should do it ourselves. If we, the EB-5 sponsors, do this ourselves, we can get rid of both the bad actors and the ugly projects. Projects can and will fail, that is the essence of risk, which is fundamental to the EB-5 program. An immigrant’s dream should never be dashed because of the bad-faith and ill-intent of criminals in our midst. Every immigrant participant in the EB-5 program should have a fair and fighting chance to realize their dream to walk among us on American soil. Let us work hard, so that the good prevail.

    Updated 11-18-2013 at 04:52 PM by EB-5Blog

  5. Are YOU an EB-5 Lemming? By Joseph P. Whalen

    Are YOU an EB5 Lemming?
    By Joseph P. Whalen (October 17, 2013)

    “Because of their association with this odd behavior,
    lemming "suicide" is a frequently used metaphor in
    referenceto people who go along unquestioningly
    with popular opinion, with potentially dangerous
    or fatal consequences.” [1]

    What “odd behavior” you may ask? Well, I shall endeavor to explain.

    These small rodents that inhabit the tundra have been known; at least in pop culture; and at least since the mid-1500s; to do such things as:

    · attempt to swim such vast bodies of water that they die trying;
    · jumping off a cliff en masse [the most popular image of them];[2]
    · following a lousy leader off of that cliff. [also very popular]

    If you have ever read any of my musings before then you know I can and will make a point and tie it up with a bow all while relating it to whatever I want. In this case, I want to relate my opinions and feelings about some of the outrageous misconceptions and the behaviors associated with them that I have witnessed both near and far. People around the world want to come to America and live free but some have nobody to file a petition for them. They have no qualifying relative; or eager potential employer that just can’t get along without them. Still others do have kin or a boss but the waiting time may be years which, just won’t suffice. Their only hope is EB5.

    EB5 or employment-based fifth preference immigrant visas are for folks willing to take a chance by investing a million bucks and hopefully creating at least ten (10) full-time jobs for qualified U.S. workers. Great! That sounds easy enough; where do I sign up and how is USCIS going to put my money to use to create those jobs?

    That last sentence contains three (3) popular misconceptions.[3]
    1. That it is easy!
    2. You merely hand over the money.
    3. The government will use the money to create jobs.

    I suppose that some poor souls out there truly believe all three of those myths. Well, I don’t just “suppose”; I know it for a fact as surely as I know that water is wet in its liquid form. Did you notice how I qualified what I was willing to say exactly and precisely what I knew for a fact? If I had merely said “water is wet” then I would be open to challenges from folks who want to argue about such nuisance notions as; ice and steam are “not wet” but they are merely water in another form; ice as the solid and steam as the gaseous, forms of water.

    Once “debunking” the error of the obviously flawed moron (me) who declared that it is a fact that “water is always wet”; the great new leader is followed by his or her flock of sheep (or bunch of EB5 Lemmings) into the abyss, for a hefty finder’s fee of perhaps 50K per sucker.

    Notice that I added the word “always”. It happens that it was the key element needed by the great new leader (foreign “agent”) to debunk the person urging caution. Not all foreign EB5 agents are unscrupulous. Some are and some are just as confused as MOST people are about EB5. Lastly[4], some of the foreign EB5 agents truly believe that they understand EB5 and that the misconception de jure, is actually true. There are too many “dead lemmings” in EB5!

    EB5 Stakeholders’ vs. USCIS’ “Misconceptions”

    EB5 stakeholders may be the intending immigrant investor Petitioners, EB5 “agents”, EB5 practitioners of all sorts[5], EB5 detractors[6], Regional Center Applicants, as well as Designated Regional Centers. USCIS is represented by its EB5 economists and business analysts (if any), adjudicators, OCC, management, and of course AAO. The cast of characters is quite large, dauntingly so! I believe it is the sheer magnitude of opinions that is at the heart of the problems in EB5. The adage “too many cooks spoil the broth” has no better real life example than the EB5 Immigrant Investor and Regional Center Program.

    I will list and link some examples of situations, cases, notions, and questionable decision-making and leadership; that pushed, pulled, kicked, dragged, or blindly lead some EB5 Lemmings over the cliff:

    · In the Carlsson case[7], the actual on the ground specific project that was happening was insufficient and unsuitable for an EB5 investment of that magnitude. Re-read the case. EB5 Lemmings!
    · As the Chicago Convention Center case still crawls to the bitter end, we see that perhaps some “EB5 agents”, hmm, what’s the best way to put it? Oh yes! They LIED through their teeth as they smiled all the way to the bank. But this case also tells us that probably 290 investors did absolutely ZERO Due Diligence—EB5 Lemmings!
    · The Chung case, involving the Winters Dairy Farm, had EB5 Lemmings on both sides of the equation. This is best illustrated in the AAO Decision. In this one, CSC was somewhat of a lemming in trying to revisit things inappropriately (they attempted to deny on the issue of multipliers it had previously OK’d). They didn’t have to and should not have gone there. The I-829 could not be approved based on an illegal alien workforce and fraudulent documents submitted. Also, the investment failed when the farm went under! EB5 Lemmings!
    · The issue of FTEs (full-time equivalents) was a central problem in TSC and CSC Culture of NO! EB5 Attitudes for years. FTEs are a staple in econometric modeling but USCIS and Legacy INS simply fought it tooth and nail. Since the issue of FTEs ONLY arises in the Regional Center context because it is the context where “reasonable methodologies” arises, that’s where it should stay. The May 30, 2013, Memo, goes a long way towards fixing this problem. It has inadvertently caused a new one. There are folks out there right now trying to pass off the idea that in a non-Regional Center NCE it will be OK to add up part-time jobs and are offering ****ty projects to desperate wannabe immigrants. Watch out for the backlash when USCIS gets blamed for it! Until such time as Congress changes the basic ten (10) full-time jobs requirement, anyone swindled through reference to the Memo will likely sue USCIS for denying their greencards. On this issue, there may be quite a lot of EB5 Lemmings in waiting!

    Once a strong leader with a charismatic smile and the accompanying forceful personality figures SOME ANGLE of any sort to swindle the EB5 Lemmings around the world; all hell may break loose. Do me a favor; remember where you heard it first! There are other ways than described.

    That’s my two-cents, for now.

    [1] From: http://en.wikipedia.org/wiki/Lemming#cite_note-10 Text is not italicized in original.

    [2] See: http://www.drbeetle.com/lemming.html

    [3] There are MANY more misconceptions but I don’t want to overwhelm the reader.

    [4] At least for this article at any rate.

    [5] Including but not limited to: attorneys, consultants, project developers, brokers/dealers, bloggers, various associations, advocates, many authors, etc… . You know who you are.

    [6] Includes but is not limited to: the press, lobbying groups, certain members of Congress, various associations, so-called advocates, many authors, etc… . You know who you are.

    [7] Visit http://www.slideshare.net/BigJoe5/ where I have at least 9 items posted. Search “Carlsson” 2 ss’s.
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