The EB-5 Immigrant Investor Visa

EB-5 Dhar Law LLP

An Attorney and Service Provider’s Overview of Requirements for Eligibility and Implications under Different Areas of the Law

By: Wassem Amin, Esq., M.B.A.[1]

[NOTE: The following is a preview of a forthcoming Article on the same topic.] Updated with link below.

Click Here for the Full Article in PDF Format.

In 1990, the United States Congress created the employment-based fifth preference (“EB-5”) immigrant visa category for immigrants who invest in and manage U.S. commercial enterprises that benefit the U.S. economy and create jobs. Allotted 10,000 immigrant visas annually, the EB-5 immigrant visa was designed to attract foreign direct investment into projects that would directly impact the economy (i.e., not merely passive investments).

Immigrant investors can apply for an EB-5 visa through two primary routes. The first route is through a direct investment into a qualifying “new commercial enterprise.” The second is through the Regional Center Pilot Program. Created by Congress in 1992, and recently extended by President Obama in the fall of 2012 an additional three years, the Pilot Program allows the United States Citizenship and Immigration Service (“USCIS”) to designate so-called Regional Centers to function as conduits or administrators of large or medium scale projects funded, at least in part, by EB-5 investors.

However, due to inconsistent administration by USCIS primarily caused by lack of proper training for its adjudicators, the Regional Center Pilot Program—as well as the EB-5 visa overall—was relatively under-utilized by practitioners, investors, and developers. For example, in Fiscal Year 2007, USCIS approved only 11 Regional Centers and issued 473 EB-5 Visas—out of the 10,000 available under the quota. In the following years, however, EB-5 visa issuances and Regional Center approvals exponentially increased in number. In FY 2012, EB-5 visas are projected to reach the visa cap for the first time in the program’s history.[2] Furthermore, Regional Center approvals in the same period spiked to an all-time high of 209. The increased interest in EB-5 investments has been attributed to a combination of factors including: (1) the overhaul of the program by USCIS and the creation of a dedicated EB-5 adjudication department; (2) the decrease in domestic investment capital after the 2008 recession; and (3) the increased political instability in foreign countries leading many high-net worth immigrants to relocate to the United States.

Forecasts for FY 2013 estimate that EB-5 capital will account for over $2 Billion in foreign direct investment. Since 2005, the program has injected over $6 billion in capital to the U.S. economy and added over 95,000 U.S. jobs. There have been many EB-5 and Regional Center success stories.

A particularly notable example is the Vermont EB-5 Regional Center. The Vermont EB-5 Regional Center is the only USCIS-designated Regional Center in the United States that is owned, controlled, and supervised directly by a state government. In fact, as Brent Raymond—who is the Director of the Regional Center as well as International Trade and Foreign Investment for the state—noted, the Vermont Regional Center has had a 100% success rate with immigration filings for affiliated alien investors and with investment returns on individual projects.

Advocacy groups have also had a strong positive impact in promoting the EB-5 Visa. The Association to Invest in the USA (“IIUSA”) is non-profit trade association that lobbies on behalf of Regional Centers nationwide. Led by Director Peter Joseph, it was founded in 2005 and represents over 80 Regional Centers, accounting for approximately 95% of all EB-5 capital.

Unfortunately, due to the growing popularity of the program, unscrupulous individuals and entities in the United States, as well as so-called “visa consultants” abroad, have attempted to use the EB-5 visa to defraud foreign investors. Foreign investors need to be diligent in their research and vetting process of such projects. Not surprisingly, counsel for the foreign investor or a Regional Center usually plays an integral role in this process. Unlike a traditional private offering, however, an attorney advising on an EB-5 visa, whether on behalf of the alien investor or the investment soliciting funds, needs to be well-versed in, not only also immigration law, but also corporate law, securities laws and regulations, tax law, international law, real estate law, and estate-planning—in addition to a fundamental understanding of business and economic forecasting models. It is a unique intersection of several areas of the law–each with their own complex regulatory and statutory regime.

Click Here for the Full Article in PDF Format.


[1] Wassem M. Amin, Esq., MBA is an Attorney at Dhar Law, LLP in Boston, MA. Wassem has extensive experience as a business advisor and consultant, domestically and abroad (in the Middle East region), having worked as a consultant for over 9 years. Wassem currently focuses his practice on Corporate Law, Business Immigration Law, and International Business Transactions; where he works with Firm Partners Vilas S. Dhar and Vikas Dhar to advise Regional Centers and individual investors on EB-5 Visa matters. For more information, please visit http://www.dharlawllp.com and email Wassem at wassem@dharlawllp.com.

Disclaimer: These materials have been prepared by Dhar Law, LLP for informational purposes only and do not constitute legal advice. This article is not intended to create, and receipt of it does not constitute, a lawyer-client relationship, and readers should not act upon it without seeking professional counsel. This material may be considered advertising according to the rules of the Supreme Judicial Court in the Commonwealth of Massachusetts. Reproduction or distribution without prior consent of the author is prohibited.

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Landlord-Tenant Law: A Unilateral Landlord Termination Clause in a Lease is Lawful in Massachusetts

Lease provision that allows a lessor to unilaterally terminate the lease and recover the property upheld. Harrison v. Jordan, 194 Mass. 496 (1907); Gunsenhiser v. Binder, 206 Mass. 434 (1910); Binder v. Gunsenhiser, 217 Mass. 518 (1914).

Summary: In Harrison v. Jordan, A lease was made to run for five years. Among the provisions of the lease, the following clause was inserted in the lease:

If the lessor or his assigns shall decide at any time to remove the buildings on the leased premises, he or they may terminate this lease by paying to the lessee the sum of twenty-five hundred dollars.

Court held that such a clause was lawful.

Discussion: Normally, a successor landlord, whether he took possession by purchase or mortgage foreclosure, is in the position of an assignee and has essentially the same duties and rights respect to the lessee as did the original landlord. Therefore a conveyance of real estate subject to a lease does not terminate the lease. In order to sell a real estate free and clear of obligations such as a lease, the above clause should be inserted into the lease.

Later case law allows such a clause even when the lessor simply manifests a good faith desire to simply sell the property, rather than remove buildings from it. In Gunsenhiser v. Binder, the Court enforced the following provision contained in a lease:

If the lessor, at any time after the expiration of the first five years of this lease, desires to sell the land, this lease may be terminated on thirty days’ notice in writing of the lessor’s determination, and the payment by the said lessor to the lessee of the sum of four hundred dollars as liquidated damages for the termination of said lease, and upon such termination the lessee shall remove any building within the said thirty days, and quietly and peaceably yield up the possession of the premises upon said payment of four hundred dollars.

Court held that such a provision was not a mere covenant but a conditional limitation on the lease and therefore the four hundred dollars was not actually liquidated damages for a breach of covenant. As long as the lessor complied with the thirty-days notification and payment requirements, the lease expired upon its own terms.

Implication: The nominal sum paid out to the lessee upon exercising the conditional limitation is most likely the key to inducing a potential lessee to agree to such a provision. The difference in sum between the two cases above suggests that there’s a room for play during negotiation. However, keep in mind that these cases were decided in 1910’s and $400 back then would be equivalent to about $9,200 today.

Consumer Protection: First Circuit Holds that ZIP Codes Are Private Customer Information Protected By Statute

ZIP codes are personal identification information under Mass. General Law c. 93, § 105(a), which prohibits writing such information on credit card transaction forms. Tyler v. Michaels Stores, Inc., 2012 WL 32208 (2012).

Summary: As a matter of first impression, the First Circuit completed its construction of G.L. c. 93, § 105(a), which prohibits any entity from causing personal identification information to be written on a credit card transaction form when such information is not required by the credit card issuer and is not required for shipping, delivery, or installation. The Plaintiff in the case was asked for her ZIP code by a sales employee at Michaels Arts & Crafts when she made a purchase. Michaels used this information in conjunction with a commercial database to locate customers’ full address and send them unsolicited marketing materials. The Court held that Michaels’ action constituted a violation of § 105(a), but also held that the Plaintiff failed to sufficiently allege a causal connection between Michaels’ violation of the statute and any cognizable injury necessary for recovery under G.L. c. 93A, § 9(1). The Court also held that the Plaintiff failed to sufficiently allege a claim for unjust enrichment.

Discussion: The Court held that a ZIP code can constitute a personal identification information under Section 105(a) because it may be necessary to the credit card issuer to identify the card holder in order to complete a transaction, meaning that a ZIP code can potentially be used to assume the identity of the individual for fraudulent purposes. The Court also held that a retailer’s electronic card terminal at the point-of-purchase may contain a credit card transactional form within the meaning of Section 105(a), regardless of whether such form is electronic or paper.

However, the First Circuit held that the Plaintiff failed to allege a cognizable injury because there was no allegation that Michaels’ deceptive act caused her unreasonable risk of fraud, put her in a worse and untenable position, or diminished her creditworthiness. The Court further held that receiving unwanted commercial advertising in the mail was the not a cognizable injury under 93A, since Section 105(a) was enacted to prevent fraud, not harassment.

Unjust enrichment typically implies a circumstance in which reasonable people would expect payment by the defendant to the plaintiff for some benefit conferred by the plaintiff on the defendant. Court rejected the Plaintiff’s unjust enrichment claim because she did not sufficiently argue that a reasonable person would expect compensation for providing a ZIP code to a merchant, or that had she been fully informed, she would have requested payment for divulging her ZIP code.

Implication: To prove a violation of § 105(a) – credit cards; checks; personal identification information – the Plaintiff had to show that the Defendant (1) wrote or caused to be written, (2) personal identification information, (3) on a credit card transaction form, (4) which information is not required by the credit card issuer.

105(d) provides that “any violation of the provision of [105(a)] shall be deemed to be an unfair and deceptive trade practice as defined in section 2 of chapter 93A.

Under 93A, a successful claim requires a showing of (1) a deceptive act or practice on the part of the defendant; (2) an injury or loss suffered by the consumer; and (3) a causal connection between the defendant’s deceptive act or practice and the consumer’s injury.

To succeed in a claim for unjust enrichment, a plaintiff must show (1) a benefit conferred upon the defendant by the plaintiff; (2) an appreciation or knowledge by the defendant of the benefit; and (3) acceptance or retention by the defendant of the benefit under circumstances inequitable without payment for its value.

Consumer Protection Laws: Actual or Impending, Not Hypothetical Future, Injury Required to Bring Claim under Statute, Says First Circuit

Standing to Bring Claim for Violation of Consumer Protection Laws, Katz v. Perishing, LLC, 2012 WL 612793 (1st Cir. Feb. 28, 2012).

Summary: Plaintiff, brokerage accountholder, brought a putative class action claiming that the defendant, clearing broker, failed to protect sensitive nonpublic information. Plaintiff asserted that the defendant charged fees that were passed on to accountholders for protecting account-holders’ electronically stored non-public personal information, when in fact account-holders’ information was vulnerable to unauthorized access, and plaintiff asserted claims for violations of Massachusetts Unfair and Deceptive Trade Practices Act, breach of contract, and breach of implied contract. The First Circuit affirmed the judgment of dismissal because Plaintiff’s contract claim was barred by her lack of third-party beneficiary standing and the Plaintiff did not have constitutional standing to assert a violation of the applicable consumer protection law.

Discussion: Defendant offers a service called NetExchange Pro which gives subscribing financial organizations an interface for obtaining research and managing brokerage accounts via the Internet, allowing employees of the organization (end-users) to access remotely information about market dynamics and customer accounts including nonpublic personal information. Plaintiff maintains a brokerage account at National Planning Corporation (NPC), one of the organizations that uses NetExchange Pro, and plaintiff received a disclosure statement from the defendant alerting her to the provisions of the clearing agreement.

The First Circuit found that, plaintiff does not qualify as a third-party beneficiary because the Agreement contains an explicit statement that it is not intended to confer any benefits on third parties including, but not limited to, customers of NPC. Regarding the consumer protections claim, the First Circuit found that (1) because plaintiff did not alleged that her nonpublic personal information actually has been accessed by any unauthorized person, and her cause of action rested entirely on the possibility that at some point an unauthorized, as-yet unidentified, third party might access her data and then attempt to appropriate her identity and (2) the plaintiff alleged only that there is an increased risk that someone might access her data and therefore an increased risk of identity theft and other inauspicious consequences, that plaintiff did not satisfy the U.S. Constitution Article III’s requirement of actual or impending injury.

ImplicationsThe First Circuit underscored that in order to have standing under a consumer protection law, the plaintiff must allege that he has been or will in fact be perceptibly harmed, not that there are circumstances in which the plaintiff could possibly be affected. The First Circuit also noted that this case illuminates how innovations and problems of the electronic age have created new challenges for courts, but the plaintiff still must plead the minimum requirements of Article III standing.

Real Estate Trust Beneficiaries are Not Protected Under the Homestead Act–Holds the SJC

The 2004 Homestead Act Does Not Protect a Real Estate Trust Beneficiary Occupying Her Home as a Tenant At Will: Boyle v. Weiss (Slip Op., SJC-10933)(Feb. 16, 2012)

Summary: In a case of first impression, the debtor, who was also the primary occupant of the residence,  claimed an exemption for her “[b]eneficial interest in The Westview Realty Trust, which holds title to real property used as the [d]ebtor’s [r]esidence.” The bankruptcy trustee objected to the debtor’s claim of the exemption, arguing that under Massachusetts law a trust beneficiary residing in property owned by the trust may not acquire a homestead estate.  The Homestead Declaration was filed by the debtor before the 2010 revisions to the Homestead Act, therefore the Court applied the 2004 version of the statute.

The issue here, as framed by a certified question from Bankruptcy Court to the SJC, was whether “the holder of a beneficial interest in a trust which holds title to real estate and attendant dwelling in which such beneficiary resides acquire[s] an estate of homestead in said land and building under G.L. c. 188 §1 (the Homestead Act).”  The Court held that it did not, and that the 2004 version of the statute did not give the debtor, who at the time was also occupying the property as a tenant at will, the privilege of claiming a homestead exemption.  Specifically, she was not an “owner” as defined by the Homestead Act.

The debtor further argued that the 2010 revision of the Homestead Act clarified the 2004 Act by expressly extending protection to a trust beneficiary.  The 2010 act authorizes the ‘owner’ of a home to file a homestead declaration and, critically, defines owner as “a natural person who is the sole owner, joint tenant, tenant by the entirety, tenant in common, life estate holder or holder of a beneficial interest in a trust.” See G.L. c. 188 §3, as appearing in St. 2010, c. 395, §1 (emphasis added).

However, the SJC rejected that argument, and held that the 2010 revisions substantively expanded the class of persons eligible to benefit under the statute, which further indicated that the 2004 version did not protect the debtor under her status as a trust beneficiary.  Under the 2004 version, the debtor was found to have only a personal property interest in the trust.

Implications:  The 2010 revisions to the Homestead Act went into effect on March 16, 2011.  Homesteads declared before that will be subject to interpretation under the 2004 version—and there are certain classes of persons that will not be protected.  Specifically, the 2010 version extended protection to two new classes: “holders of life estates and holders of beneficial interests.”  Although you can re-file a declaration of homestead that was filed before March 2011, any judgments or claims that may have arose before the re-filing will not be subject to homestead protection.