As the ongoing cycle of expiration/renewal of the EB-5 Regional Center program goes on endlessly, more and more investors ask me:
“Jose, is there ANOTHER way to get my residency through EB-5?”
The answer is “yes”, but with a big caveat: if you think you’ve seen dangerous Regional Center “opportunities”, wait till you look at some of the direct investment scams being peddled out there! Although a lot of EB-5 newcomers are peddling so called “direct EB-5” – where there is no regional center, no economic reports, and no complicated project pre-adjudication by USCIS — as some brilliant new invention they created, nothing could be further from the truth. The fact of the matter is that Direct EB-5 is the original form of EB-5…I was filing such cases even before the Regional Center program had been created in the early 1990’s!
In Direct EB-5, there is no complex calculation of indirect and induced job creation; the ONLY jobs that count are full time, direct jobs created at the EB-5 business, as in “10 full time new jobs per investor”. Direct EB-5 can be individual or a pooled investment, where multiple investors come together to make a bigger collective investment and create at least 10 jobs for each of them. Sounds great, right? Here’s the catch: the mandatory “risk” element required by EB-5 law becomes infinitely more complicated when it involves the creation of a brand new “bricks and mortar” business versus introducing EB-5 capital as part of the capital stack of a well-managed and existing enterprise run by a proven Regional Center with a reputation to protect. Regional Center projects crash and burn, as we all know; poorly structured Direct EB-5 projects can implode overnight.
Since AVS Regional Center was approved by USCIS in 2011, I have steered prospective investors away from Direct EB-5 investments for one simple reason: I’ve never seen one I’d invest in myself. The ones I have seen over the years – and I am not saying I’ve seen everything that’s out there – have ranged from well-intended but extremely shaking startups to outright theivery where EB-5 investors unwittingly cash out the U.S. operator of what is a clearly failing business. No permanent residency, no recovery of investment.
After years of EB-5 skepticism, what is it that drove me to finally file a Regional Center application in 2010? The trust and relationship I had cultivated over the years with the Forbes 400 group for which I would exclusively be raising EB-5 funds. I knew back then what these folks have proven over the years: AVS raises money for the best players in the EB-5 game, and our investors could not be more fully protected. As we wind up the last of our current offerings for the group, however, we face a long waiting time before USCIS approves their next Regional Center project…leaving me with no EB-5 limited partnership slots for AVS’ steady stream of prospective investors. As we wait for project approval — months…years?? — and after much consideration, I am once again turning to Direct EB-5 as a solution for our EB-5 investors, subject to certain rules:
- AVS will only offer pooled direct investment EB-5 opportunities, where a small group of 4-10 investors collectively invests in a job-creating enterprise with high direct job creation. No one-shot franchise deals. (According to the U.S. Small Business Administration, less than 50% of new U.S. business survive their first 5 years of operation.)
- AVS will only offer Direct EB-5 for proven, vetted successful projects which are expanding, no new “concepts”.
- AVS will only introduce investors to Direct EB-5 projects in which I am personally invested and a stakeholder.
After all, if I’m not willing to invest in a business, then why on earth should I entrust the future of an EB-5 investor family to it?
Soon, AVS will be introducing a handful of personally curated, historically-proven Direct EB-5 projects in which we have the same level of trust and confidence that we have enjoyed with our Regional Center projects. Nothing else will do for AVS investors!
Jose
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