Thursday, December 20, 2012

Possible Failure of EB5 Program




When it comes to choosing the right Regional center to invest hard-earned money, there is understandable fear among investors. Most investors feared because they or their friends or families were scammed before or their trusts are not justifiable given to anyone untested. Yet, many investors don’t actually know specifically why a regional center could fail other than scamming. Instead, they follow the crowd thinking they could be safe. Needless to say, this decision making strategy can justifiably be called “set up for failure”. 

Needless to say, It is important for an investor to understand the actual reason of a particular EB-5 Project’s failure on each stage. Failure of regional centers investment can manifest itself at several stages.  Failure of the I-526, failure for removal of conditions or failure to create the required jobs, failure to complete construction of a project, failure of the business you have invested into and potentially a failure to repay your investment at the agreed upon time. 

In addition, when a Regional Center forms a Limited Partnership; the Regional Center must comply with federal and state laws in conducting the offering of securities. In light of the fact that the investor’s focus is on the EB-5 for the purpose of attaining the green card, often the parties involved, including the investor and the principals within the Regional Center, have no idea that the Regional Center is offering a security with implications under the Securities Exchange Commission (SEC.) The Securities Act requires that al securities sold must be registered with the SEC, unless exempted by the rules. The punishment from Federal Government can be destructive if a regional center failed to comply with the rules. 

With this being said, if individual due diligence is conducted with these possibilities in mind, tragedies and heart-breaking experiences can be greatly avoided.