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The funds to be invested should not be able to be viewed as
supporting future development or later phases of the project,
but must be directly and integrally tied to a project created by
the pooled funds held by the enterprise. Likewise, the evidence
of job creation needs to be tied to the number of jobs associated
with the specific commercial development of the project.
In reality, the structure and description of a large-scale hospitality development project that involves the use of pooled investment
funds should be expected to generate the evidence necessary for
an investor to document the type of at-risk investment in a new
commercial enterprise that is required for EB-5 approval.
Conclusion
The “at risk” discussion offers a direct foil to immigrant
investor programs in other countries, where in many cases, the
return of the investment is guaranteed. The very elements of
investment “at risk” that have caused investors to be cautious
of EB-5 have actually proven to be an advantage. The EB-5
program in the United States has avoided all of the vices that
caused the halt of the Canadian program. The EB-5 program
compels the investors to invest “new money” into mostly
privately owned new commercial enterprises, the investment is
placed at risk and the return of the funds or a portion of the
funds cannot be guaranteed in any form. The funds are invested
into job-creating and economic development initiatives. Such
a structure mitigates the government’s risks in underwriting
20
the projects and conducting due diligence, leaving the project
assessment and due diligence to the private sector. Investment
“at risk” and the actual capital commitment are legal safeguards
to attract new foreign investment to the United States, allowing
the EB-5 program to provide alternative financing to high-risk
and low-return privately-owned projects that otherwise may not
be funded.
★
Mona Shah
Mona Shah has over 17 years of experience in
immigration law, with extensive hands-on proficiency in EB-5 law and practice. She has founded major regional centers and has assisted many
regional centers and investors in navigating this
complex, nuanced, and constantly changing area.
Mona’s substantial litigation background includes
her representation of clients in
courts nationwide. Mona has
authored numerous publications
and has spoken extensively on
EB-5 both in the United States
and overseas.
Yi Song, Esq. is an attorney at Mona Shah &
Associates focusing on EB-5 and securities law.
She is also admitted to practice law in New York
and People’s Republic of China. She has authored
published articles on EB-5 financing and securities law. She practiced tax law in China and has
experience in class action securities litigation
cases. Yi is a graduate of Georgetown University Law Center in
Washington, D.C.
Yi Song
E B 5 I n v e s to r s M ag a z i n e