Crouching Tiger, Hidden Clauses: The Devil’s in the Details

CHENGDU-  A passing observation: as my friendship continues to develop with the amazing group of folks with whom Sharon has been working here in China, the comfort level settles in mutually.  One of the sidebars to our efforts to present Lake Point EcoVentures Phase I to prospective EB-5 investors seeking a secure route to U.S. Permanent Residency is the agents' increasing interest in understanding the nuances of OTHER EB-5 projects which have been aggressively marketed to them and their clients.

It remains true that if you have nothing good to say about someone/something, best to say nothing at all; at the same time, when a specific legal question is asked, one is ethically bound to answer it truthfully.  In reviewing but a handful of the latest EB-5 offerings stuck in front of me by imploring Chinese EB-5 agents trying to decipher PPM minutiae, I have found:

  • OFAC registration instructions specifically required for Chinese investors (OFAC does NOT apply to Chinese nationals)
  • Limited Partnership agreements bearing the name of other unrelated projects, which were apparently missed in the document editing
  • Regional Centers claiming that they were approved when they are NOT USCIS approved but pending
  • Gross exagerrations on the valuation of property used as "security" for EB-5 investors, e.g., land currently listed at $2M cited as having a $15M valuation in 6 years
  • My favorite: a developer taking a letter from a city official who is "supporting the effort" for their megaproject and extrapolating that language into the "pledging" of public properties…properties which cannot be legally conveyed or obligated!

Nice, huh?  ABSOLUTELY SHAMELESS stuff.  Sharon and I now have a firm policy with the agents with whom we are working: ask, and ye shall receive the TRUTH.  The upside of having U.S. EB-5 attorneys on your team, I suppose.