Please note, these FAQ’s (frequently asked questions) are for informational purposes only and they are not meant to be a substitute for professional legal and/or financial advice. Please consult an immigration business attorney and/or qualified financial expert before choosing any EB-5 investment.
Important: All documents included in any offering documents must be translated into English. The investor must sign the English version of all agreements, government forms, and applications. Also, please consult a licensed immigration attorney if you are serious about investing.
1. How is the EB-5 investment structured?
A Limited Partnership is formed as the basis for the new commercial enterprise requirement. The Limited Partnership is managed by the General Partner of the Limited Partnership, which will include CMB Export, LLC or other regional center entity operated by CMB Regional Centers. The General Partner is responsible for initiating and managing the EB-5 investments of the partnership. The General Partner is also responsible for the day to day business operations of the partnership as well as working to ensure that the Regional Center is in compliance with all laws and regulations pertaining to the EB-5 Program. The Limited Partners are the Foreign National EB-5 Investors. The General Partner shares in the profit from the Partnership’s business activities as outlined in the Limited Partnership Agreement.
2. What is a Limited Partnership?
A limited partnership is formed by filing a charter with a state government and consists of a general partner and one or more limited partners. The charter details the rights and powers of the limited and general partners, percentages of ownership, and distributions of profits, as well as compensation. The general partner manages the business. The limited partners have limited duties within the partnership and are liable only for the amount of their investment.
A limited partnership combines corporate limited liability with partnership taxation. The charter and the Limited Partnership Agreement detail the rights and powers of the limited and general partners, percentages of ownership, and distributions of profits due to the general partner. In a limited partnership, income is taxed at the partner level, not at the entity level.
3. What are my risks?
As in any investment there is a risk of total loss. However, CMB works hard at its mission to structure EB-5 investments in a manner that minimizes the risk to the client while still meeting the EB-5 law’s “at risk” requirement as well as the shared goal of achieving an EB-5 visa. CMB requires its borrowers to identify sources of revenue for the repayment of the loan. CMB also requires recourse in the event of default of a loan, such as a larger default interest rate, as well as other obligations of borrower. In some cases we obtain collateral or corporate guarantees in the event of default, we work out Intercreditor Agreements and other obligations of borrower to perfect the repayment of our EB-5 investments. In most cases, the borrowers are to provide each CMB partnership with recent audited financial reports and other references such as a Standard & Poors or a Moody’s rating. For example, the IVDA had reported A – AAA ratings from Standard & Poors. There remain matters much beyond the Regional Center’s control such acts of god, war, financial distress of state and local governments, and market fluctuations in income and or real estate values. All investors are provided the opportunity to visit the EB-5 project sites, meet with management, be provided with documents as needed to enable review of the EB-5 investment, and are provided with references to permit independent verification of the information contained in the EB-5 investment documents. We urge all investors to visit us, check our references and those of our borrowers, and to independently verify the information contained in the PPM (Private Placement Memorandum).
4. Must I invest the full $500,000 before I can apply for my Green Card?
Yes, although the law states in the process of investing. In our EB-5 industry, CMB has seen denials of these types of cases therefore we require the full amount to be deposited according to the investment documents.
5. How safe is my EB-5 investment?
CMB acknowledges no at risk investment can be described as “safe”; however, CMB believes we have tried to structure our EB-5 investment loans a safe as possible given the legal requirement that the EB-5 investments are truly “at-risk.” This is why CMB structures loans to government agencies where there is a pledge of public monies as part of its investment portfolio. CMB also invests with private/public partnerships or private enterprises that have demonstrated the capacity to payback our loans and service the debt. We also require many types of pledges such as corporate pledges, membership interest pledges, collateral, and Intercreditor Agreements and completion guarantees, among other things to secure our loans.
6. Why would a finder be used for this EB-5 program?
CMB uses referral sources, which are commonly called finders, from time to time to assist it in locating prospective EB-5 investors.
7. If I wish to visit the CMB EB-5 investment project sites, is this possible?
Yes, CMB can arrange such visits on a case by case basis provided enough notice is given to schedule a visit.
8. Is the EB-5 Green Card ‘guaranteed’ by participating in this EB-5 investment program?
A Green Card is not “guaranteed”. No one can ever guarantee the outcome of any visa application or petition; it is solely up to USCIS to adjudicate. The key is to have a well prepared petition by competent, legal counsel experienced in EB-5 visa matters, to create the best opportunity for success. CMB’s track record to date is 100% project approvals, 100% final conditional removal of all I-829’s adjudicated. CMB now has its first three EB-5 projects complete the full circle from initial capital investment, I-526 approval, I-829 approval and investor return of original capital and liquidation of the partnership.
9. If the I-526 petition for my ‘Green Card’ is denied, do I get my $500,000 back?
In the unlikely event of an I-526 denial, you would be refunded your entire subscription amount and any interest attributed to your capital account that would accrue while the funds were in the investment. This return of capital would occur according to provisions within the partnership documents. If you have an I-526 approval and are denied at the consular interview CMB will seek to find a replacement investor for you. (In most circumstances, finding a replacement investor is fairly easy, as the approval of your I-526 is a strong indication the USCIS agrees the project as structured meets the USCIS requirements.)
10. Does the syndication fee include legal counsel to represent me for my application to USCIS?
No, CMB believes that it is important for you to have independent legal counsel representing your interests. A reason for early failure of the EB-5 Program in the 1990’s was the conflict of interest when lawyers represented both EB-5 investors and Regional Centers. We are able to recommend an experienced EB-5 immigration lawyer who can competently handle EB-5 applications; however, you will ultimately choose the attorney who will represent you.
11. How extensive is the paperwork/application process, will I receive help?
The paperwork is very extensive on the business side of the EB-5 transaction however, that is the responsibility of CMB. EB-5 investors must provide documentation on source of funds and other personal information to their immigration attorney. You will be provided with a detailed schedule of requirements and a list of documents from your immigration attorney. You and your attorney will also be provided the essential business documents required to file both the I-526 and I-829 petitions from CMB and the CMB team will cooperate with your attorney throughout the entire application process.
12. Am I still required to hire an immigration attorney?
Yes, CMB believes it is important for you to have independent legal counsel representing your interests. The EB-5 application process is complicated and many technical requirements must be met. It is in all parties’ best interest if each party has their own advocate and no conflicts of interest. The partnership documents require each CMB investor to be represented by an immigration attorney of their choice.
13. What are the fees in filing for an EB-5 petition, if any?
There are three primary areas with costs/fees associated to them.
CMB requires a syndication fee that is part of the total subscription price. The immigration attorney you employ will also charge fees that vary. Part of your due diligence on any regional center should include costs and what is covered in these costs. Be mindful of conflicts of interest, as the least cost may not be the wisest investment.
14. US Tax Matters and Considerations
All United States Citizens and Permanent Residents alike, are subject to U.S. tax law and this is based upon worldwide income. Foreign Investors should consider the tax law implications and review matters with their financial advisers regarding becoming a United States Permanent Resident before making any EB-5 investment.
15. Pre-immigration Tax Planning
Before you become a resident of the United States you may wish to consider ways in which to reduce or eliminate some of the United States income, gift and estate tax consequences which would be applicable to you once you become a United States taxpayer. These objectives may be accomplished through utilizing some common estate planning techniques such as:
16. Who should invest?
Only those individuals who desire to establish permanent residency in the U.S. for themselves and qualified family members. EB-5 investors include people from all walks of life; professionals, business people, persons wanting to facilitate a child’s education, and retirees. Because the EB-5 visa permits employment in the United States, many EB-5 investors become involved in charity or part time work. Simply put, the EB-5 visa gives you the flexibility to do what you want in and out of the USA. If you don’t want to day to day manage a business to achieve a U.S. visa, you should consider EB-5 through an authorized regional center.
17. How is my limited partner interest protected?
Every Limited Partnership is formed in various states throughout the U.S. Each state has rules the Limited Partnership must abide by. The Certificate of Limited Partnership must be recorded with the state the Limited Partnership is formed in as a public record. The Certificate refers to a Schedule A of the limited partnership agreement, which lists the names and percentage interests of the limited partners. Investors are protected by various states’ Limited Partnership Acts and the Uniform Commercial Code, and other state laws as well as federal and state courts. As in most investments there is a risk of total loss and part of the EB-5 regulations require the investment to be fully at risk. However, CMB works hard at its mission to structure EB-5 investments in a manner that minimizes the risk to the client while still meeting the EB-5 law’s “at risk” requirement as well as the shared goal of achieving an EB-5 Visa. CMB requires borrowers to identify sources of revenue for the repayment of the loan. CMB may also require recourse in default of loans, such as a larger default interest rate. In some cases we obtain collateral or corporate guarantees in default, we work out Intercreditor Agreements and other obligations with the borrower to assure repayment of each investment loan. The borrowers in most cases are to provide our CMB partnerships with recent financial reports and other references such as a Standard & Poors or a Moody’s rating. For example, the IVDA had reported A – AAA ratings from Standard & Poors. There remain matters much beyond the Regional Centers control such acts of god, war, and market fluctuations in income and or real estate values. All investors are provided the opportunity to visit the project sites, meet with management, be provided with documents as needed to enable review of the investment, and are provided with references to permit independent verification of the information contained in the investment documents. Additionally, CMB makes a best effort to provide quarterly updates on its website of project activity.
18. Is my investment guaranteed?
No. The law requires an “at risk” investment without guarantees or redemption rights. CMB goes to great lengths to minimize or mitigate risk but the investment is required to be “at risk”. Prospective EB-5 investors should be extremely cautious of any Regional Center or their representative that indicates the individual investor EB-5 investment is guaranteed, as that is prohibited and is cause to deny the petitioner’s application. In other words, if a regional center offers a “guarantee”, they are violating the rules of the Program. One should ask what else are they saying just to obtain your investment. Please do your own due diligence, not just on the regional center, but the specific project the regional center is sponsoring.
19. What are CMB’s fees once an investor becomes a Limited Partner?
CMB, as the General Partner receives a percentage of the interest of the total interest calculated one of two ways. The interest is paid on a quarterly basis to the General Partner. The amount of interest paid the General Partner may vary as it is the greater of the interest received by the partnership according to the partnership loan to the target investment or the interest calculated based upon the interest rate charged the target investment applied to the investor’s original investment in either case whichever is greater. It should be noted that all routine day to day expenses are covered in the interest that is paid to the General Partner. The General Partner is also entitled to 20% of the profits, if any, derived by the Partnership while 80% of said profits and/or gain are distributed to the Limited Partners on a pro-rata basis after the quarterly interest is paid the General Partner. It must be noted that return on investment in a CMB partnership is not its top priority. We believe we structure investments such that the likelihood of investor EB-5 visa success is very high. We define success for our investors as obtaining three things; permanent residency status, return of original capital and a minor return on investment. The first two above are our priority. The bottom line, each investor receives very little return on the investment with best case an approximate 0.8% per year. If the partnership terminates early the General Partner is still paid interest as if the target loan was to continue for its six year duration. This is an election of the General Partners, as they may elect to stay in the partnership rather than terminate after all investments are completed.
20. What is meant by qualifying investment “capital?”
The regulations define capital as cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien entrepreneur. A debt to fund the investment will qualify as capital only when the alien entrepreneur is primarily and personally liable for the indebtedness, the debt structure is commercially acceptable and the EB-5 investment cannot be pledged in any way to secure the debt. An investor may also acquire the required amount of capital via a gift.
21. When may the investor exit the investment?
The anticipated duration of each CMB limited partnership is dependent upon invested funds. Typically our EB-5 investment loans are 6 (six) years. However, depending on the operations of the Partnership, it could be shorter or longer. The actual partnership agreement is 10 (ten) years with options to terminate early when all investments are complete. CMB investments are loan based versus equity based. By this we mean there is nothing that has to be sold by the Limited Partners in order to exit the partnership. We believe this structure provides a greater assurance when determining the point at which the limited partners should be able to exit the investment. Remember, in an equity based investment all of the EB-5 investors will be exiting the investment at or about the same time. This mass exodus can dramatically affect not only the ability to sell the equity interest be it ownership in a hotel, resort, farm, commercial building etc., but also the value of the equity shares because all of the limited partners will be selling an identical ownership interest at or about the same time. A loan based investment avoids these pitfalls because there is nothing to sell in order to exit the partnership. Once all the EB-5 loan based investments are repaid and the investors vote to liquidate the partnership, the respective capital accounts and shared retained earnings and capital gain will be distributed to each limited partner and the partnership will be terminated.
i. The law requires the investor-petitioner to invest in a new commercial enterprise. The enterprise must be “new,” i.e., established after November 29, 1990, the date the law was enacted.
ii. However, an investor’s contribution of capital to an existing business that was formed prior to November 29, 1990 may be acceptable in three situations.
i. This usually requires a substantial reorganization or restructure of the existing business. The USCIS has stated, however, that the mere change in ownership, cosmetic changes to the decor of the business site and implementation of a new marketing strategy are insufficient changes to constitute establishment of a new commercial enterprise. On the other hand, a complete transformation of the nature of the business is likely to be considered sufficient.
i. An investor may invest and expand an existing business, resulting either in an increase of at least forty percent in the net worth of the business or in the number of employees in the business. The USCIS may require evidence in the form of income tax returns, audited financial statements, and employment tax returns. Any of the above described investments must be in a “commercial” enterprise. Any for-profit entity formed for the ongoing conduct of lawful business may serve as a commercial enterprise. This includes sole proprietorships, partnerships (whether limited or general), holding companies, joint ventures, corporations, business trusts, or other entities publicly or privately owned. This definition includes a holding company and its wholly-owned subsidiaries, if each subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business. However, the term new commercial enterprise does not include noncommercial activity such as owning a personal residence.
I. The investor may invest in a troubled business this is an existing business and the business must have lost 20% of its net worth in the last 12 or 24 months of operation.
Troubled Business/Saving Jobs
Special rules govern investments in a “troubled” business. A troubled business is one that has been in existence for at least two years, has incurred a net equity loss of 20% for accounting purposes during the twelve or twenty four month period before the petition was filed, and the loss for such period is at least equal to twenty percent of the business’s net worth before the loss. If the petition is based on investment in a troubled business, the investor is not required to create ten new jobs. Instead, the petition may be based on proof that the business will save American jobs thus the proof required will be that the target investment will maintain or increase the number of existing employees during the conditional status period.
The above discusses what will be approved as a new commercial enterprise, however all the other requirements such as TEA determination, ten new jobs created and all the other requirements under the EB-5 program must be met.
23. What are the obligations of the investor to participate in the investment?
Under the regulations, the investor must be “active” in the management of the EB-5 investment. The investor must engage in the management of the new commercial enterprise, either through day-to-day managerial control or through policy formulation. However, the regulations do specifically allow that an investor will qualify as “active” as a “limited partner” as defined in the Revised Uniform Limited Partnership Act. As a limited partner, the limited partner will be required to vote on certain options, such as liquidation of the partnership. The CMB Investment Visa Program meets all the regulatory requirements by enrolling the investor in the investment as a limited partner. This role allows the investor to engage in his or her own business with limited participation in the EB-5 limited partnership activities. Additionally, this structure allows the investor to live where he or she pleases, and gives him or her the option to enter and exit the United States without any obligation to actively manage the EB-5 investment. Most importantly, the limited partner, like the corporate shareholder is only liable to the enterprise to the extent of the agreed-upon investment. This business structure protects the investor allows limited participation and is accepted by the USCIS.
24. What is meant by “net assets”?
An investor’s net assets, or net worth, can be determined from a simple calculation: the combined value of all things owned, minus the combined value of all liabilities (debts). The assets may be from any legal source, anywhere in the world:
(Naturally, funds that come from such sources as smuggling, the sale of illegal drugs or any illegal activity are not allowable.)
Verification of assets and the sources of those assets will be required. It will not be necessary to document or reveal all assets, but only enough to meet the requirements of the USCIS and the Program.
25. Once I put my money in a CMB EB-5 investment partnership what do I receive for my investment?
Each investor who is admitted to the CMB Limited Partnership is provided with a certificate of Limited Partnership. They become a limited partner with all the rights granted by the Limited Partnership Agreement and are protected by the various State and Federal Laws. The investor is a percentage owner of the partnership and a capital account is established for each investor. The investor is entitled to a percentage of the profits of the Limited Partnership as discussed in the Limited Partnership Agreement. Additionally, each Limited Partner is granted access to the secure portion of CMB’s website where they can monitor the activities of the partnership and their own individual capital account. Each CMB investor receives the hard work, experience and dedication of the entire CMB team. Remember we are only a phone call or an email away for any questions you may have.
26. Will CMB help me with filing my immigration petition?
CMB Regional Centers do not file any immigration petitions; however, CMB will work hand in hand with your immigration attorney. CMB requires all investors to secure their own independent legal counsel to file the immigration paperwork and complete the applications for an EB-5 investor visa. CMB is the business side of this complex process. CMB will provide documents in support of the investor’s I-526 and I-829 petitions to the attorney of the investor’s choice. CMB will assist your counsel in providing information on the EB-5 investment and the regional center. CMB will provide supporting documentation for all of the business side of the EB-5 process and will assist the investors’ legal counsel.
EB-5 Frequently Asked Questions Continued:
27. How does CMB compare to other Regional Centers?
CMB has three clearly established goals that are designed around the needs of the EB-5 investor. Most equity investments tend to involve a project that the General Partner has an ownership interest in. In those cases the prospective investor should recognize a very grave conflict of interest may be occurring. Each prospective EB-5 investor has to look very closely at the equity portion of the investment, the internal costs or fees, the exit strategy, as well as how the investment is structured to meet the return of original capital, return on investment and the immigration needs of the investor. In CMB, our three primary goals are:
Each one of the above goals is discussed throughout our website and in other frequently asked questions. It is critical that the EB-5 investor understand how the goals of the general partner are, or are not, aligned with the goals of the investor. CMB believes our loan based investment approach is aligned with the goals of the EB-5 investor. We believe each EB-5 “investor’s” main objective is the permanent visa, therefore job creation is the very center of our attention. For without job creation, there is no visa obtained. In addition the following strengths are a part of every CMB investment.
Most of our competition is dependent on a particular investment project, be it rehabilitation of warehouses, growing almond trees and grapes, the operation of dairy farms, loans to a particular business, etc. Potential investors have to ask: what if that business fails? What are the methodologies for proving that new jobs will be created? Are jobs that are moved into existing businesses considered new? Are the workers harvesting grapes and other agricultural products going to be able to meet the strict requirements for proof of direct job creation? Will the company actually employ the direct employees they claim? Will the company have the required documents for every claimed direct employee?
CMB invests into multiple projects with a primary focus on infrastructure or construction improvements. These infrastructure/construction improvements have always been proven to produce jobs in the past by the using economic methodologies such as RIMS II, REDYN and IMPLAN. In summary, CMB has simple proven methods to prove job creation. By utilizing a spending model and knowing what the budgets are, we are able to calculate qualified expenditures. With this information there is no job counting at the I-829. We only have to prove the money was spent, as jobs are created when money is spent using the above economic models. CMB Limited Partnerships fund infrastructure improvements in a variety of individual projects. Additionally, CMB funds tend to be no more that 25% to 45% of the overall investment. This means that each investor has at least two to three outside dollars that are working to create new jobs for every dollar they are investing. CMB investors are afforded “peace of mind” as this approach is already proven over 1,600 times in past CMB Regional Center investments. There is no worry in a CMB project when job creation will be created considering the job creation was formulated at the I-526 and outlined when it will take place. CMB investments have relied solely upon indirect job creation and CMB investment show exactly how and when the jobs will be created as a part of each investor’s I-526 petition. Investments that rely upon direct jobs subject each investor to wondering when and if those direct jobs will be created. Additionally, there is substantial documentation required for every direct job being claimed. Some of the most noted EB-5 immigration attorneys have described direct jobs as “messy” and something to be avoided.
28. What are the risks associated with the business investment regarding the removal of the conditions from the conditional visa (the I-829 Petition)?
The risks associated with the business investment and the removal of conditions is dependent upon the individual investment a potential EB-5 investor chooses. Each Regional Center is different and they structure their investments differently. The prospective investor needs to see how well the investment they are considering meets the requirements for job creation long before they ever make the decision to invest in any regional center. If an investor joins a regional center and waits until the I-829 is filed, it is too late.
The I-829 is primarily an anti-fraud measure. The USCIS has two primary concerns when they consider approving the I-829 petition of an investor. (1. Have the ten new American jobs been created per investor in the project? 2. Is the investor still active in the investment and did the investor invest the required amount of capital and maintain that amount throughout the period of conditional residency?) The following (LINK) is directly to the USCIS where they discuss approval of for I-829 by the District Director. You will see that “A-C” deal with being fully invested and maintaining the investment during the conditional residency period and “D” addresses job creation. Simply put, the investor must be able to show that the full amount of their capital contribution was at risk and the required ten new jobs were created. The ability to prove up these requirements will vary from Regional Center to Regional Center. CMB is able to show how jobs are created at the time the I-526 is being adjudicated. Any Regional Center that uses Direct Jobs as a portion of the jobs being claimed will not be able to show that the jobs were created until each actual I-829 petition is being adjudicated. CMB investors know that as soon as monies are spent, jobs are created. This eliminates the uncertainty that goes along with using direct job creation.
CMB investments have relied upon Indirect Job creation only and CMB requires significant outside dollars for each CMB dollar that is being invested. Every prospective investor needs to consider a “worst case scenario” of every investment they are considering. Every Regional Center should have an answer to this hard hitting question. The attached list is a series of questions that should be asked of every Regional Center, under consideration and the potential investor should make each Regional Center prove what they say.
29. What is the likelihood of the investor getting the basic return of his/her original investment?
CMB investments are made with government entities, master base developers, public private partnerships or with development arms of well-known companies whereby each entity has identified a number of sources of revenue as ways to repay our investments. EB-5 investments are required to be “at risk” investments. No Regional Center is allowed to guarantee the return of investors’ funds. The USCIS has been very clear on this issue; the funds must be at risk. On the other hand there is no requirement that the funds be invested foolishly. CMB structures investments that are compliant with the rules and guidelines of the USCIS that also afford the investor high likelihood of a full return of their capital contribution. CMB investments are loan based infrastructure investments that have a multitude of revenue and/or collateral pledges. In a loan based investment the Limited Partners have nothing that needs to be sold. Equity investments have to worry about market trends and how certain segments of the economy can impact the “Fair Market Value” of their ownership interest.
We cannot guarantee that investors’ funds are 100% safe but we can tell you that we believe that the CMB investment structure has a low risk profile and the very good likelihood of achieving the investor’s Green Card, preserving the original capital contribution and achieving some sort of a rate of return to the investor. Also see Question #3 (What are my risks?)
30. What is the likelihood of the investor realizing a profit in this investment?
The day to day expenses of our investments are capped such that the interest rates charged to the investment targets are at least one percentage point higher than the cap on day to day expenses thus, the projected rate of return is 1% per year to the partnership. – Also see Question #5 (How safe is my investment?)
31. What if the investment is lost? Will the investor also lose his/her visa?
This is one of many questions that should be asked of all Regional Centers any prospective investor is considering. Every Regional Center should be able to respond to this question because this is something they should have considered already. What is a “worst case scenario” and what will happen to the investment and the hopes of the immigration pursuit of its limited partners if a “worst case scenario” becomes a reality.
There are two concerns being discussed here, investment and immigration. Most if not all other Regional Center investments are structured differently from CMB investments. To answer the questions we are going to look at the absolute worst case where the investment no longer exists and neither does the Regional Center.
Non-CMB equity based (EB-5 investment return of capital): If the target investment no longer exists and the Regional Center no longer exists before I-829 adjudication it is highly unlikely there is any chance the investor is going to be able to recover any of the monies they have invested. If the target investment ceases to operate there will probably be no sources of income to look to for repayment. The target investment may have some fixed assets to look to for repayment but it will have to be determined where the EB-5 investors stand in line among all of the other creditors when or if there are any monies that can be divided.
Non-CMB equity based (immigration likelihood of visa): Job creation methodologies are vitally important. There are direct and indirect jobs that are being claimed in the various Regional Center investments. If direct jobs are being claimed and the failure occurs before I-829 adjudication, all jobs are probably all lost in a worst case scenario. If the target investment and the Regional Center no longer exist where would the investor find proof of jobs whether they are direct or indirect. The direct jobs would be lost as well as any indirect projected jobs based upon the direct job creation. In this worst case the investor stands to lose all their money and their hope of the eventual permanent green card.
CMB loan based (investment return of capital): CMB infrastructure investments are made with government entities master base developers, public/private partnerships, and private entities where in all cases CMB has outlined pledges of various sources for repayment of the loan even in the event of default. In the scenario being presented, CMB no longer exists and the target investment no longer exists. First we will consider the government entity. I am not sure how the government entity would cease to exist but if it were to do so another entity would step in to serve that region. The county or the state would step in because individual home owners and businesses would still be required to pay taxes on their property. These streams of revenue would not cease. Additionally the assets of the government entity would still exist including any leased property that provides a source of income. The loan agreements in place with our borrowers identify a variety of sources of repayment beyond just fixed assets so our investors have a number of directions to look for repayment. Units of local government are not able to discharge debt. In bankruptcy however they can restructure debt. This will allow for repayment however it may take longer than anticipated. Individuals and businesses can discharge debt in bankruptcy but cities, counties and joint powers authorities cannot.
In the case of private entities CMB builds into their documents several safeguards. Their first is many of our construction projects will be required to have a completion guarantee; the completion guarantee or completion bond will allow the project to be built and the money will be spent. We also have pledges of collateral, corporate guarantees, intercreditor agreements and other pledges. In the end we will own something however it will vary from project to project.
In order to make things fair, even though CMB investments are structured differently than other Regional Center investments we are aware of; let’s say all the money is lost. Now we have to look at the immigration benefit (green card). In the case of a master base developer, CMB investments fund infrastructure improvements including improvements to public roadways and right of ways. In California, public funds can be pledged for improvements by a private entity in a Communities Facilities District. In our first three investments with McClellan Park there is a pledge of Mello-Roos bonds as a source of repayment. This pledge of repayment comes from the County level which would be Sacramento County.
In conclusion, it is possible to have a default in a CMB structured investment, however highly unlikely a loss of all capital would occur.
CMB (immigration likelihood of visa): CMB investments rely only upon indirect jobs and indirect jobs are proven through reasonable methodologies unlike direct jobs that require government forms W-2’s, I-9’s and citizenship papers for every investor. Additionally CMB investments are able to show at the time of an investor’s I-526 petition adjudication that the indirect jobs are created when the monies are spent. This way if the target investment no longer exists and CMB no longer exists, the investor and their attorney has the report detail how and when indirect jobs are created. The corporation completion guarantees will insure monies are spent. Additionally, government, no matter who they are, would have public records indicating when monies are spent and what they were spent on. The indirect jobs needed by CMB investors can be proven in the very worst of a “worst case scenario”
The conclusion here is even in a worst case scenario of total loss of the investment if the money is spent the project completed yet bankrupt the investor will be entitled to the permanent visa as jobs are created when money is spent.
32. Are any countries excluded from eligibility for the EB-5 Visa program?
Residents of only a few countries are excluded (e.g., North Korea and others.) In most cases, however, if the applicant is able to leave the excluded country and has the necessary capital to qualify under the program, legal counsel will be able to help the applicant qualify for visa approval. Consult your immigration attorney to determine if your home country is precluded from this visa program.
33. What can disqualify a potential EB-5 investor from participating?
There are very few disqualifying or exclusionary events under the law. A criminal record involving crimes of moral turpitude is disqualifying, unless it can be proven that the crime was political in nature or occurred over twenty years prior to the application. A few major medical problems might also exclude an applicant, but for the most part this can be avoided if it can be proven that the applicant will be supported by others and therefore avoid being a recipient of government medical assistance. Applicants should seek advice of their immigration legal counsel to determine what waivers may be available for eligibility.
34. Can I apply if I am currently out-of-status (i.e., I live in the United States, but do not have a current visa)?
Out-of-status nationals are no longer permitted to apply for permanent residency from within the United States. “Out-of-status” means the individual stayed in the United States longer than their authorized period of stay. Your Visa should be valid at the time of entry to the United States but the Form I-94 should be extended if the individuals need to stay more than the I-94 period. However, if they have filed any petitions or applications that lead to Green Cards, such as immigration petitions (through employment or family) or labor certifications during 245(i) benefit period by January 17, 1998 or April 30, 2001, they may file their applications to adjust status in the United States with the penalty of $1,000, which applies to applicants over 17 years old.
If the out-of status nationals do not have 245(i) cases, they must return to their country of origin and apply through the United States Embassy there. However, depending on the out-of-status period, they may be banned to obtain United States visa and entry to the United States for certain periods of time from the departure date. Applicants should seek advice of their immigration legal counsel.
35. What information and documentation are required for an EB-5 investment?
A potential EB-5 visa applicant must prepare complete biographical information for the principal and each eligible member of the family. The principal applicant must prove the source of the investment funds. A resume with copies of college diplomas and other educational certificates, if applicable, should be included. Business licenses, brochures about the business and other information about the applicant’s business are also beneficial. Any memberships in professional organizations should be documented. Unless the investor inherited the funds, the investor should be presented as a successful professional or businessperson with a business, financial or family history that explains the accumulation of financial net worth that is presented in the financial information. Provide as much documentation as possible that pertains to the career and achievements of the principal Investor. Source of Funds: Funds for the investment must come from a lawful source. Lawful sources of funds include: profits from the sales of a property, stocks or bonds, profits from business, business transactions, gifts, and inheritances. To prove the source of investment funds, USCIS typically requires five years of tax returns, five years of bank records, proof of ownership in any businesses, financial statements for each business and business licenses. The idea is to present a track record of an honest course of dealing. If the principal applicant’s EB-5 investment capital came from a specific transaction, such as sale of a house, inheritance or gift, you must prove the transaction occurred, by providing an official document, such as a closing statement or contract or other official documents. This is not a comprehensive list. Other documents may be required and vary on a case-by-case basis.
36. What precautions are taken to monitor job creation by the regional center?
Each regional center is different; however, this is a very important question to ask. CMB investments involve indirect job creation only and we have proven in each investment that has been reviewed by the USCIS, (over 1600 times) that indirect jobs are created at the time the monies are spent. Each individual project in an investment has a time frame for completion. The time frames fall within the period of time for job creation required by the USCIS. Some of our projects have fund control agreements whereby funds are controlled and released as specific bills are requested to be paid. Additionally, we make periodic trips to each investment site and we get regular reports from each borrower, the reports are posted in the investor section of our website. CMB builds in the loan agreement failure to produce documents of spending is a default under the loan agreement.
37. What steps are taken if the requisite job creation has not occurred?
If a regional center cannot prove the requisite jobs, the EB-5 investors are put in removal proceedings. In CMB, under the RIMS II economic model, CMB investments need only show that the monies are spent and therefore the indirect jobs are created. CMB gathers all spending records on a project and commissions a new job report based on actual spending. This is empirical evidence the jobs were created. As stated in Question 4 we monitor all projects and obtain documentation of completed projects.
38. Does the Regional Center investment include direct job creation, indirect job creation, or both?
In other parts of the website we discuss the dangers of utilizing direct jobs. Investors are taking great risk utilizing direct jobs, as it can be effected many ways. CMB investments create direct and indirect jobs; however we only claim the indirect jobs that result from the large investment of combined capital primarily using the approved RIMS II economic measuring tool. This is a key feature of every CMB investment. However, we reserve the right in many of our business plans to claim any direct job on any operational phase jobs as well as revenue created jobs to insure we have a multitude of “extra” jobs as security for our investors.
39. What happens if my I-526 petition is approved by the USCIS and later denied at the Consulate interview?
We include in every partnership agreement a solution for this issue. CMB has a clause that is called a replacement investor. What we are allowed to do in the event of a denial is replace that person with the next person that would enter the partnership. This method is acceptable to the USCIS and we have language in our partnership agreement that addresses this very situation. The important thing to remember here is that any denial at this point would be a denial of the individual and not the investment. The investment is reviewed and approved at the I-526. Finding a replacement investor in an already approved project should prove to be very simple. However, if the applicant delays filing the I-526 and prolongs the interview process too long it may be impossible to find a replacement investor.
40. Who are the attorneys who regularly represent the CMB Regional Centers?
CMB has four attorneys on staff and utilize outside counsel who help create partnership documents. This group of advisors are business attorneys and not immigration attorneys. CMB requires that each investor secure his or her own immigration attorney. This way the investor can rest assured that their attorney is looking out for the investor. An immigration attorney that represents the client and the Regional Center has a conflict of interest. NOTE: If a Regional Center offers the services of their attorney to file an immigration petition with the USCIS for a foreign national investor in that particular Regional Center this is a huge conflict and could end badly for the investor. This practice was at the center of the shut down of the EB-5 Program in the late 1990’s. The question is, which client does the attorney represent – EB-5 investor or the regional center?
41. Does the CMB Regional Center contact the foreign national directly, or can the referring attorney maintain all contact with the foreign national?
Foreign nationals may contact CMB directly and we will provide as much information as we can; however, CMB insists each investor retains their own immigration attorney. We work hand in hand with your immigration attorney. However, once an investor chooses CMB and becomes a limited partner CMB will have and encourages contact. CMB has worked with attorneys from all regions of the world.
42. What has been the rate of return to investors historically?
In CMB’s opinion, this is not really an investment program, it is a jobs creation program. The primary question of each EB-5 “investor” should not be how much money will I make, rather will there be enough jobs to qualify me for my permanent visa. In CMB, the average rate of return is 1% per year to the partnership. CMB EB-5 investments focus on helping the investor achieve the Green Card and preserving the investor’s original capital investment to provide for return of capital upon the completion of the EB-5 investments. We also provide a minor return to the investor but the first two goals are our primary focus.
43. What if I want to manage my own business?
If you want to manage your own business, consider an L-1 Visa (Non-Immigrant Intra-company Transferee), E-2 Visa (Non-Immigrant Treaty Investor), or EB-5 Alien Entrepreneur Investment by investing $1,000,000 into your own business which you control, and are responsible for creating the necessary ten new direct jobs within a new enterprise. If your goal is to have a Green Card and not to actively manage a business, it is more often cheaper and/or more convenient and possibly with much less risk to utilize a structured investment program in the Regional Center EB-5 category rather than to start and maintain your own business. Additionally, the EB-5 becomes permanent whereas L-1, E2 and others are not and children may have to leave at age 21.
44. Where can I find a copy of the relevant EB-5 law and regulations to review?
Please go to the Bureau of Citizenship and Immigrations Services web site. A link to immigrant investment visa information is available at this address www.uscis.gov. You will see a link to “Laws” near the top center of the USCIS home page.