Continued from page 29
Step Up Your EB-5 Legal Representation
Immigration • Project Finance • Securities / Corporate • Fund Formation • Real Estate • Tax • Securities Litigation / Defense
For more information please contact :
John D . Tishler 858.720.8943 | direct jtishler @ sheppardmullin . com
With offices across the U . S ., Europe and Asia . www . eb-5opportunities . com www . sheppardmullin . com
While it can be difficult for regional center clients to accept the impossibility of predicting actual outcomes of the future , the reality is that the practitioner community will remain largely paralyzed in performing immigration due diligence unless and until USCIS adopts a regime of policy and regulatory stability , and returns to processing EB-5 matters expeditiously and consistently .
“ Advising clients on non-immigration issues in the context of EB-5 representation is the most problematic area for the EB-5 practitioner .”
Advising on non-immigration issues
Advising clients on non-immigration issues in the context of EB-5 representation is the most problematic area for the EB-5 practitioner . Unlike EB-5 investors , most regional centers will have a team to prepare and conduct the necessary research and studies to propose a development project . The individual EB-5 investor , on the other hand , will likely turn to the immigration practitioner for guidance on all aspects related to securities , tax and finance .
The challenge for many EB-5 investors is that they are unfamiliar with even the basics of conducting due diligence on the soundness of a regional center ’ s business plan . Absent licensure and training in securities , tax and finance , the immigration practitioner will find herself in a precarious situation when advising an EB-5 investor on whether a particular regional center project will ultimately produce the 10 jobs necessary and be able to generate enough revenue to return their initial capital investment . The conflict of interest in this scenario is obvious . Can the immigration practitioner , who also represents the regional center , competently advise the EB-5 investor on the risks of investing in that particular regional center ?
Moreover , unless the practitioner possesses the proper securities licenses , providing socalled investment advice on the particulars of an EB-5 project is not only challenging , but poses many professional liability risks since the EB-5 practitioner may not possess the full knowledge of corporate and securities law or modern finance and tax laws .
Mitigating this risk requires the practitioner to ally with qualified professionals to support their EB-5 practice . The savvy EB-5 practitioner may consider hiring an in-house “ business and tax specialist ” for the purpose of scrutinizing the business aspects of an EB-5 deal , for example . However , any in-house specialist providing investment or tax advice to EB-5 investors without the proper licensure should limit their advice to what questions the EB-5 investor should ask project developers in clarifying the terms and conditions of their deal . This would provide a value-added service to help EB-5 investors independently conduct non-immigration due diligence on a regional center project .
Multiple parties in EB-5 process : can clients waive the conflict ?
EB-5 projects frequently include many parties : investor , new commercial enterprise ( and occasionally outside principals ), regional center ( and its principals ), project developer ( and its principals ), non-EB-5 investors , escrow agents , banks , migration agents , and so on . All would benefit from legal guidance , but there are limits on how many of these can be adequately represented concurrently by the same attorney . In many ways , the goals of all parties are aligned in that they all benefit if the project moves forward smoothly and successfully . Beyond that , however , some interests are in direct conflict .
Practitioners must carefully analyze whether the potential conflict of interest is actually waivable , because some are not . Of course , any such waiver should be explicitly spelled out and agreed to in writing by both parties . Even if the potential conflict might be waivable , immigration practitioners should carefully weigh the risks against the benefits . In many cases , a practitioner might actually end up better off by referring one party to other competent counsel , who may in the future refer similar work back .
30 EB5 Investors Magazine