Managing EB-5 Migration Agents / Retrogression Scenario

Managing EB-5 Migration Agents

I heard about an interesting exchange with a licensed FINRA agent who often works in China to refer EB-5 investors to regional centers. He reported that Chinese migration agents often run ads claiming, “100% guaranteed return of capital.”

U.S. regional centers first need to have clear contracts with migration agents including 1) prohibiting making any misrepresentation, 2) that the agents will obtain the regional center’s written approval of all ads and marketing materials, and 3) the regional center should monitor all ads and other promotional materials, including the emails to the prospective investors. Spot checks should be done as well as regular in-person meetings and telephone calls where notes are kept. Conferences and calls should always reiterate the importance of honest marketing. Regional centers need read and approve all ads and marketing materials. If the ads and materials are in a foreign language, such as Chinese, they should also be translated to English and reviewed with the regional center’s securities counsel.

I am not a securities attorney and I give no securities law advice. I advise all regional centers to work closely with their securities attorney. For your information, the FINRA agent stated that the SEC will hold the regional center liable for its agent’s misrepresentations, and the SEC has subpoenaed regional centers for regional center’s agent’s marketing materials. He stated that because the regional center would be responsible for the agent’s actions and that an investor may have a right to rescission if there are migration agent misrepresentations. Again, I am not giving securities law advice and I recommend all regional centers discuss this matter with their securities counsel.

An EB-5 Retrogression Scenario

Recently a colleague had a Chinese client invest in a regional center project which had I-526s pending for over a year. He filed his I-526 investor petition in September 2014. A few months later, the USCIS approved the project’s first investor’s I-526 and all others on file including our client who filed recently. Our investor’s I-526 was only on file for three months. Great news – but wait.

The China quota is expected to backlog in April, May or June of this year. The cutoff date for an available EB-5 visa number will probably be about July 2013. Only a person with a “current” available visa number for his/her priority date (date of filing the I-526) can proceed to the Consul for their interview and visa issuance.

Thus, the client will have to wait for his priority date of September 2014 to become “current” on the visa list. This could take one to two years, and his 19½-year-old son may possibly age out by that time and he may not be able to immigrate with his parents. My colleague is trying to get this family’s immigrant visa interview expedited.