account prior to simply recycling the funds into a new,
un-studied, illiquid investment. After all, every investment
is subject to a range of risks, necessary disclosures and
possibly, even, investor consent.
WHAT DO THE RULES SAY ?
USCIS has yet to issue concrete guidance on this issue,
short of a brief non-agency binding comment during a
stakeholder call and a USCIS Draft Policy Memo in 2015
(Draft Policy Memo), which generally state that the EB-5
investments must remain at risk, cannot be returned to
investors prior to I-829 adjudication and which further
contemplates that as long as the NCE undertook the
commercial activities initially contemplated in the
original business plan and that the requisite jobs were
created, the NCE may redeploy capital to a new venture
without cause for a petition denial or revocation. Such
guidance also notes that there is no further requirement
for job creation following a possible redeployment of the
EB-5 investment proceeds.
Nonetheless, given that such guidance has not been
formalized, the industry awaits a definitive policy that will
address basic issues such as the limitations on types of
investments and the permissible time period between
return of funds to the NCE and redeployment of such
funds.
its investors’ changing priorities as well as to minimize
the cost and effort required to satisfy the redeployment
requirement while creating the best-possible outcome
for all concerned. NCE priorities include: compliance
with EB-5 policies, ensuring investor success at the
I-829 stage, preservation of capital/minimized risk
associated with a redeployment investment, minimizing
redeployment costs and efforts associated with its
oversight; paying returns to stakeholders, and generating
new minimal-risk redeployment revenue opportunities
that are liquid enough to match the investors’ I-829 time
horizon.
MAKING REDEPLOYMENT PAY
Once stakeholder priorities are taken into account, it
quickly becomes clear that the ideal return may be
beyond the reach of the safest investment opportunities
available in today’s market. The “at risk” requirement
creates a hazy picture. The Draft Policy Memo, when
paraphrased, indicates that for capital to be deemed “at
risk,” there must be a possibility of loss or opportunity for
gain. As such, municipal bonds that are backed by the
full faith and credit of, say, the U.S. government, may not
be interpreted to fit in line with USCIS’s interpretation of
the “at risk” requirement. So, what are the options?
WHAT INVESTORS SHOULD PRIORITIZE
In order to assess redeployment options, it is important
to first understand what EB-5 investors might consider
to be their priorities. Investors understand that the
investments they make in EB-5 projects have a degree
of risk that is inherent in the creation of a new business.
Once these requirements are met, however, it should
be anticipated that investor priorities will shift if
redeployment becomes necessary.
At that point, the initial hurdle for I-526 approval has,
hopefully, been overcome. Therefore, the investor’s risk
tolerance/priorities are likely to be modified to align with
the following formula: Preservation of immigration status
by keeping investment funds at risk, preservation of
capital contributions, maintenance of consistent returns
on investment; and possibly, creation of an upside
opportunity which is better than the originally anticipated
returns.
IMPORTANT ISSUES FOR THE NCE
In a redeployment scenario, the NCE will be in a position
where it must also reframe its priorities, both to reflect
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