EB-5 Investors and Entrepreneurs ⋆ Borene Law Firm, P.A.

Frequently Asked Questions About Permanent Residence for EB-5 Investors & Entrepreneurs

By George C. Maxwell and Scott Borene*

1. What is the EB-5 Investor & Entrepreneur Program?

The EB-5 Program is an investment-based permanent residence program. The EB-5 Program requires an investment of $1,000,000 (or in some circumstances $500,000) by an individual in a “new” U.S. commercial enterprise that must create fulltime employment for 10 U.S. workers or more. It is a two stage process that involves a first petition for conditional permanent residency, and then approximately two years later, a second petition for full permanent resident status.

2. What are the two EB-5 Programs for making investments?

There are two programs for EB-5 investments programs: The Basic Program, and the Regional Center Program. The Basic Program usually involves an investment in a new enterprise. The Investor in the Basic Program is usually involved in selecting the new enterprise, making the investment, developing the plan for employment creation, and running the investment enterprise. The Regional Center Program is a pilot program under which an investment entity may seek authorization from USCIS to participate as a Regional Center if certain criteria are met, including providing an investment capital structure plan and job creation counting methodology. With Regional Centers, an investor may be able to demonstrate that the required 10 jobs have been created by the investment either directly or indirectly.

3. When would an investment of $500,000.00 be sufficient?

An investment of $500,000 may be possible if the area where the investment is to be made falls into a Targeted Employment Area (TEA), which includes most rural areas and some urban areas of high unemployment.

4. What constitutes a New Enterprise?

The investment must be made in a new enterprise. Entities formed after November 29, 1990, are generally considered to be new. An enterprise formed prior to November 29, 1990 can be considered “new” under some circumstances such as certain restructuring and expansions.

5. What legal requirements must the Investor satisfy to be eligible to file an EB-5 I-526 Immigrant Petition by Alien Entrepreneur –First Stage (Conditional Permanent Residency Petition)?

The Investor must be investing or in the process of investing the $1,000,000 (or $500,000) in the new enterprise or Regional Center. The investment must be demonstrated to be legally and economically at risk, and the invested funds must be from traceable legitimate sources. The Investor must show that the Investor will engage in some day-to-day management or policy making activities and provide a business plan demonstrating how the investment will lead to the creation of 10 full-time jobs for U.S. workers. If the Investor uses the Basic Program, the Investor will need to provide extensive documentation establishing the existence of the new enterprise. If the Investor invests through the Regional Center Program, the Investor will need to provide relevant information concerning the chosen Regional Center. In all EB-5 cases, the Investor must provide extensive personal documentation of the Lawful Source and Path of Funds for the EB-5 investment. The Investor must meet the normal screening criteria for applicants for permanent residence and adjustment of status. If a candidate has a history of immigration violations or serious criminal activities, the permanent residence adjustment or petition may be delayed or denied. Site visits by U.S. government investigators to offshore businesses of EB-5 Investors and to U.S. EB-5 investment-funded worksites are increasingly common.

6. How long does it take to get a ruling on the First Stage EB-5 I-526 Immigrant Petition by Alien Entrepreneur (Conditional Permanent Residency Petition)?

Based on current processing time lines, adjudication of the First Stage I-526 EB-5 Petition can vary from a few months to 2 years or more, depending on multiple factors. (Please see discussion below for citizens of the People’s Republic of China.) However, even after an I-526 is filed, an investor must also file (if in the U.S.) an application to adjust status to permanent residence, or (if outside the United States) an application to consular process an immigrant visa. Additional information on Adjustment of Status and Consular Processing are provided in separate FAQs.

7. When can the Investor with Conditional Permanent Residency file the Second Stage Petition I-829 to obtain full (unconditional) Permanent Residency?

Within 90 days before the 2nd anniversary as a conditional resident, the Investor may petition to remove conditions on his permanent resident status. The Investor is required to file an I-829 Petition to Remove Conditions with extensive supporting documentation. Failure to timely file a properly completed I-829 Petition usually results in the loss of conditional resident status.

8. What legal requirements must the Investor satisfy to be eligible to file I-829 Petition to Remove Conditions by Entrepreneur?

Generally, the Investor must demonstrate that the investment was made, that the money continues to be invested and legally at risk, and that the 10 jobs have been created or can reasonably be expected to be created within a reasonable time before conditions on residency can be removed.

9. How long does it take to get a ruling on an I-829 Petition to Remove Conditions by Entrepreneur?

Based on recent processing time lines, adjudication of the I-829 Petition to Remove Conditions by Entrepreneur can vary from a few months to a year or more. (For citizens of China, please see discussion below.)

10. Are there special concerns for EB-5 Investors from China?

Yes. Citizens of the People’s Republic of China who use the EB-5 program can expect significantly longer quota and processing delays because the high volume of Chinese EB-5 investors has created a multi-year quota backlog and attracted additional compliance attention from members of Congress and the immigration authorities regarding the accuracy and completeness of EB-5 documents submitted by EB-5 Investors and regarding the role of Chinese migration agents and others involved in Chinese EB-5 applications. Also, USCIS has growing concerns with the transparency of financial transactions showing the source of the investment. Recent years have seen greatly increased U.S. government scrutiny of financial and personal documentation from EB-5 Investors, especially regarding the lawful source and path of funds evidence from EB-5 Investors.

11. What government agencies are involved?

The USCIS is responsible for examining I-526 EB-5 Entrepreneur petitions and I-829 Entrepreneur Petitions to Remove Conditions on Permanent Residency. If the candidate is outside the United States, the U.S. Department of State will also be involved in the process.

12. What is the role of the Investor in the process?

The Investor must provide extensive required information about the planned investment, investment capital, the enterprise, job creation plans, source of funds and other supporting documents necessary to demonstrate that program requirements have been met. The Investor also chooses which Regional Center or Business Investment to use for the attempted EB-5 Petition.

13. What is the role of the immigration lawyer in the process?

The personal immigration lawyer representing the Investor typically leads the EB-5 processing efforts and assists the Investor with compliance with the complex U.S. immigration laws. First, the lawyer will review the key facts to estimate the viability of the EB-5 petition and estimate an initial time frame for preparation and processing. An experienced immigration lawyer can help identify additional strategy options and assist the employer in choosing a good strategy; gather and analyze evidence for suitability; draft forms and supporting letters to increase the probability of approval and reduce the risk of delay or denial, and evaluate possible processing complications. The immigration lawyer also will consult with the client as needed to coordinate visa application and travel plans, explain legal requirements and procedural matters. The lawyer will submit the case on the client’s behalf, and follow up with the government as needed until the file is closed.

14. Who usually pays the filing fees?

Generally, the Investor pays the fees.

15. Who usually pays the legal expenses?

Generally, the Investor pays the legal expenses.

16. Can the EB-5 Investor’s spouse and children also obtain permanent residence?

Yes. The Investor’s immediate family members also may obtain permanent residence as dependents of the EB-5 Principal Applicant. A separate adjustment of status application for the spouse and unmarried children less than 21 years of age is customary.

17. Are there also U.S. income tax compliance and annual worldwide bank account reporting requirements for Investors who use the EB-5 program to obtain U.S. permanent residence?

Yes. All successful EB-5 Investors as permanent residents will be required to report, file and pay U.S. Federal (and possibly State) taxes based on their worldwide income and capital gains. Also, there are additional U.S. requirements to report ownership of bank accounts in banks outside the U.S.

All high net worth individuals considering pursuing long term status working or investing in the U.S. are well advised to seek tax counsel from a qualified U.S. Certified Public Accountant on U.S. tax compliance.

Also known as EB5.

*George C. Maxwell is an Attorney with Borene Law Firm, P. A. The immigration lawyers now with Borene Law Firm have more than 70 years of combined professional experience helping clients with U.S. and global visa and immigration projects. Mr. Maxwell concentrates his immigration practice primarily on employment-related and business immigration matters. He is a past Chair of the Minnesota State Bar Association Immigration Section. He is currently Chair of the International Business Law Section of the Minnesota State Bar Association and Vice Chair of the American Immigration Lawyers Association (AILA) Minnesota/Dakotas Chapter. Mr. Maxwell speaks and writes frequently on immigration law topics. He authored Tips and Traps: Managing I-94 Complications, Bench and Bar, 2015, published by the Minnesota State Bar Association. In 2009, he was co-presenter at the Hennepin County Bar Association – Employment Law Section meeting on “Immigration Law for Employment Lawyers.” Also, in 2009, he was the author of Looking for World Class Talent? 20,000 U.S. Work Visas Remain for Newly-Hired Professionals, published in Bench and Bar. Prior to joining the firm, Mr. Maxwell worked first as an attorney for ExxonMobil Corporation at Exxon’s corporate headquarters in Houston, Texas, and then for the Willkie Farr & Gallagher law firm in Washington, D.C. and for the Dorsey & Whitney law firm in Minneapolis. In addition to his extensive experience in immigration law, he has significant experience in international human rights litigation, business litigation, corporate internal investigations, and white collar enforcement and compliance. His prior legal work has taken him to Russia, Central Asia, Latin America, and Southeast Asia. Mr. Maxwell graduated with High Distinction from the University of Iowa Law School. He was a Note and Comment Editor for the Iowa Law School’s Transnational and Contemporary Problems Journal. He also holds a Bachelor of Arts degree from the University of Northern Iowa, and upon graduation received the Purple and Old Gold Award for Meritorious Scholarship in Russian. He speaks both English and Russian. Mr. Maxwell is authorized by federal law and regulation to represent clients before all U.S. immigration courts and offices worldwide. He is admitted to practice before the Minnesota Supreme Court and the United States District Court for the District of Minnesota. He is also admitted to the Bar of the District of Columbia, in Washington, DC. He can be reached at gmaxwell@borene.com.

Scott M. Borene is the Founder and Managing Attorney of Borene Law Firm, P. A. The immigration lawyers now with Borene Law Firm have more than 70 years of combined professional experience helping clients with U.S. and global visa and immigration projects. Scott Borene was selected by other lawyers as 2018 Lawyer of the Year in Immigration Law as noted by The Best Lawyers in America and Minnesota Monthly magazine. He has been repeatedly recognized as one of the Top 20 Lawyers in the World “most highly regarded by other lawyers” in corporate immigration law. He is listed in the Best Lawyers in America and acknowledged as an Immigration Law Super Lawyer. He is often called upon to act as an “expert’s expert” to advise other experienced immigration lawyers on complex immigration matters. Scott Borene is a past Director and a past Member of the Board of Governors of the American Immigration Lawyers Association (AILA), the world’s largest professional organization of immigration lawyers. In 2002, he was the founder and Conference Chair of AILA’s Global Immigration Summit in New York City, the world’s largest conference of global immigration lawyers. He has written many articles on immigration law and is a frequently invited expert speaker on immigration topics at AILA National Conferences and other major national and international legal conferences. He is the Editor-in-Chief of many leading professional reference books for immigration lawyers including The Global Immigration Guide: A Country-by-Country Survey and The Global Immigration Guide: Crossing Borders for Business, AILA’s most comprehensive books on Global Immigration. He served as Editor-in-Chief of Immigration Options for Academics and Researchers (2005), AILA’s leading Expert Occupational Handbook on immigration issues in higher education. He is the author of Dr. Yes – Some Practical Strategies for the Diagnosis and Treatment of Immigrant Visa Cases of Health Care Professionals. Scott Borene attended Harvard University in Cambridge, Massachusetts as a National Merit Scholar. After graduation from Harvard, he attended William Mitchell Law School in Minnesota. Scott Borene has more than 30 years of experience helping employers obtain work visas for key international talent. Scott Borene can be reached at sborene@borene.com.