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EB-5 Due Diligence

People ask us how to evaluate a regional center (RC) and conduct due diligence. This involves the investor or their financial advisor analyzing the economic risk of inadequate financial return or business failure; and analyzing immigration risks or likelihood that the RC will not provide a green card. Lawler & Lawler is not involved in economic or financial matters, only immigration law.

We are immigration experts and cannot advise on the economics or financial aspects of a project. Evaluating the RC immigration risk is quite complex, as it involves analysis of:

  • · Job creation, including economic input/output models and the factors used for those inputs;
  • · The application of targeted employment area (TEA) regulations;
  • · The business plan for verifiable data to support the economic analysis, proper use of EB-5 capital and other requirements; and
  • · The business instruments to ensure no disallowed provisions.

The investor and/or his/her financial advisor should look at the regional center and/or developer’s track record. I suggest all investors meet the developer and see the project.

Usually, this type of analysis can only be done by very experienced EB-5 immigration attorneys, such as those at Lawler & Lawler.

Due Diligence Factors Investors Should Evaluate and Consider

  • Factor 1

    Is the RC approved by the USCIS or is the application pending? If the RC is approved, the investor should obtain a copy of the approval.

  • Factor 2

    What are the RC’s USCIS approved industries, and do these cover the industries involved in the project?

  • Factor 3

    Is the project in an approved targeted employment area (TEA) at the time of investment? (Obtain the State certification letter.)

  • Factor 4

    Does the economist report of direct and/or indirect job creation project sufficient jobs for all EB-5 investors? Is there a safety net margin? Is the economist experienced with EB-5 matters?

  • Factor 5

    When are the jobs forecast to be created? Within 2.5 years of the I-526 approval?

  • Factor 6

    Has USCIS “approved” the project in an I-924 or another I-526 petition decision? Any I-829 approvals?

  • Factor 7

    How many investors have invested to date?

  • Factor 8

    What is the regional center’s track record with prior projects? (The investor should obtain the resumes of RC principals and/or project developers.)

  • Factor 9

    What is the expertise and experience of the RC in the project’s industry – i.e., is the project’s management experienced?

  • Factor 10

    Is there non-EB-5 capital invested in the project? Look at the investment documents and if possible, verify the investment.

  • Factor 11

    Is the project’s business plan detailed and reasonable?

  • Factor 12

    Does the RC have enough assets to reimburse the investor if the I-526 is not approved? If not, are the investor’s funds securely in escrow until I-526 approval?

  • Factor 13

    Does the RC employ a successful and experienced EB-5 attorney?

  • Factor 14

    How much is the RC paying migration agents, and is this amount disclosed?

  • Factor 15

    Research the RC owners on the internet.

  • Factor 16

    Ask for current photographs of the project.

  • Factor 17

    Are the financials for the project reasonable? (For example, in a hotel project is the cost per room in excess of the industry standard?)

  • Factor 18

    If you cannot conduct your own due diligence analysis, hire a risk analyst, accountant, or business attorney to perform the due diligence for you.

  • Factor 19

    Consider hiring an experienced immigration lawyer to assist you rather than solely relying on migration agents in China. Have Lawler & Lawler’s expert EB-5 attorneys review the project and the business instruments to determine whether they are USCIS compliant. If possible, visit the project and talk to the regional center owner. There are other factors to consider as each project is different. There are special issues with hotels, buildings with tenants, construction workers, and direct employees. Please let us know if you would like projects evaluated. Call Martin J. Lawler at 415-391-2010.