While the element of risk is required in the EB-5 program — and investment must be sustained “at risk” for two years — risk mitigation for both immigration and financial success is an essential practice for any project and and investor.
Projects must ensure they have a comprehensive and compliant business plan with credible documentation and job-creation projections. This can be achieved with by working with experienced EB-5 economists and lawyers.
Investors should evaluate EB-5 investment-project options for both the likelihood of immigration and financial risk.
An experienced immigration lawyer can help an investor prepare a compliant I-526 or I-526E petition and properly document the source of funds, the reason behind many petition denials.
While immigration lawyers may be qualified to assess and EB-5 project in terms of the likelihood of immigration success, unless they have the appropriate financial accreditations, they should not be advising on the likelihood of financial success.
To do so, unless and investors has significant EB-5 and financial experience, third-party due diligence is recommended to evaluate and investment project’s strengths and risks.
Due diligence should include an assessment of the capital structure, project viability, exit strategy and job-creation potential. It should also evaluate risk-mitigation strategies used by the Manager or General Partner to protect investors. Such strategies included fund administrator for the oversight of transfers of EB-5 capital, and construction monitoring to ensure progress is on track.
Due diligence should also identify any conflicts of interest, especially between the fund manager and the developer. Also background checks should be conducted on all persons with access to investor capital.
The evaluation of immigration and financial risks is an ongoing process and should identify any material changes to the investment project.
