RCBJ Perspectives: “And the Compliance Beat Goes On”

Originally published in the Fall 2021 Regional Center Business Journal

by Reid Thomas, Chief Revenue Officer, and Managing Director, JTC Americas

One could broadly simplify the business of a Regional Center into two main elements: 1) capital aggregation and deployment and 2) fund management. While it is true this is an oversimplification, it helps to narrow our focus.

At the time of this writing, the EB-5 Regional Center Program, originally known as the Immigrant Investor Pilot Program when it was established by Congress in 1992, has expired. As of June 30th, 2021, the program has officially lapsed and USCIS will not accept any new investors or process any further conditional green card applications related to this program. For all intents and purposes, until the EB-5 Regional Center program is re-instated, the capital aggregation element of the business for Regional Centers is over (or at least on hiatus). Sure, a Regional Center operator could switch their business model to do direct deals. However, because of the nature of direct deal requirements, the amount of capital that could be raised for a project would be significantly less than in a regional center offering.

While Regional Centers are no longer function as capital aggregators,  the fund management element of the business continues. As noted by USCIS on July 1, 2021, the program expiration does not affect those EB-5 investors that have already received conditional residency. Those investors can still file I-829 petitions and continue on their journey to permanent (unconditional) residency and then citizenship should they desire. It is estimated that there are currently more than 20,000 investors at the conditional residency status. Within the next 24 months, each of these investors will be eligible to have their I-829 petitions adjudicated. The successful I-829 petition has always been the primary motivation for investors and its success depends on significant support from the sponsoring Regional Center. So, despite the program lapse, there remains a lot of very important work to do.

While most believe that the program will eventually be reinstated, current compliance regulations remain in effect, and it is likely that the reinstated program will include expanded and more rigorous compliance regulations. Therefore, Regional Centers would be wise to use the time and capacity available during the program shutdown to focus on the key areas of compliance.

Immigration Compliance for Existing Investors

For Regional Centers with investors currently in their period of conditional residency, now is a great time to ensure documents to support investors’ I-829 petitions are organized and readily available for filing. In general, there are four main categories of evidence that each investor will need to include as part of his or her I-829 petition. These categories are as follows:

  • Is the NCE properly established, and is it in good standing?
  • Was the full (and proper) investment amount made into the NCE and subsequently into the job-creating activity?
  • Was the full investment amount maintained at risk during the conditional residency period?
  • Were the required 10 or more permanent jobs created?

For each one of the above categories, there are multiple pieces of supporting documentation that can be used as evidence. Different immigration attorneys may request different information in order to best position their investor clients for immigration success. Therefore, as a best practice, Regional Centers should be prepared to provide a range of documentation that immigration attorneys might want. Far too often, pulling together the required documents is left to the last minute, resulting in an expensive effort and a less robust I-829 submission.

If unsure as to what supporting documentation might be required, or if the information is not currently organized in the most effective manner, Regional Centers can turn to service providers within the EB-5 ecosystem that can help perform an initial audit and provide services to identify, assemble, organize and store information in the most effective way…

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