Mona Shah & Associates Attends EB-5 Investors Conference In Los Angeles: Mona Shah Part of Exclusive Roundtable With Chairman Goodlatte
By Omar Hakim, Esq.
MSA was a part of the EB-5 Investors conference in Los Angeles this Monday that was heavily attended and included several key players that will be play a large part in determining the future of the EB-5 industry. With the Regional Center program up for renewal on September 30th, there is the potential for significant changes to the EB-5 program in the coming months and this was a very important conference to attend in order to learn more about what the future of EB-5 may hold.
Chairman of the House Judiciary Committee, Bob Goodlatte, gave the keynote speech of the event and held an exclusive roundtable, of which Mona Shah was a part, for a small number of leading members of the EB-5 industry. Goodlatte will play a crucial role in determining the future of the EB-5 industry as the Judiciary Committee that he chairs in the United States House of Representatives has jurisdiction over the Regional Center reauthorization bill.
Mona Shah was also a member of a panel that educated conference attendees on the use of EB-5 capital for hotel financing.
The conference featured a number of other panels that comprised of industry experts. Of particular note, there was a panel held in Chinese (and translated to English) that featured several major migration agencies from China. These prominent migration agents provided their unique perspective on the current state of the EB-5 market in China.
Below are some of the key takeaways we had from the panels at the conference and our conversations with EB-5 industry leaders in attendance:
- Renewal of Regional Center Program – The Regional Center program will almost certainly be renewed. There is broad bipartisan support for the EB-5 program by both Republicans and Democrats, including from key members such as Chairman Goodlatte who expressed his strong support for the program at the conference. Despite the contentious nature of the US Congress these days, it is widely expected that members of Congress will make EB-5 renewal approval a priority and find a way to make it happen.
- Changes to the Regional Center Program – It is not expected that there will be wide sweeping changes to the program upon renewal on September 30th. With Congress in recess until early September, there is simply not enough time to achieve broad consensus on a major overhaul to the EB-5 program. The expectation is that there will be a short-term extension of perhaps a year that will include a few uncontroversial changes to the program. These uncontroversial changes include raising the minimum investment amount and implementing integrity measures regarding who will be allowed to run regional centers and the procedures they must follow. Changes regarding more controversial issues, such as TEA designation and job creation methodology will likely be addressed in a more comprehensive bill at a later date.
- Source of Funds – USCIS is increasingly focused on the source of funds and has made several suggestions regarding the source of funds in proposed legislation. Regardless of whether these changes make their way into any final legislation, they reflect a priority of USCIS that EB-5 practitioners would be wise to take note of. In particular, USCIS would like to limit the gift of funds used in an EB-5 investments to immediate family members, which would include parents, children, siblings and grandparents. Notably gifts from aunts and uncles would not be allowed! This is unnecessarily restrictive and does not seem to have a reasonable basis. There was consensus at the conference that this reflects a shift in attitude by USCIS and is politically motivated, as it is concerned about who is funding the investments used to obtain green cards through the EB-5 program.
- Perspective of Migration Agents – The migration agents in China have become increasingly sophisticated and the analysis of major migration agencies these days resembles that of a major investment bank. One migration agent noted that his agency had an investment committee that thoroughly reviewed each potential project, and expected each team member to give their single strongest reason not to invest in each project as part of their analysis. As expected, migration agents agreed that their biggest objective in selecting a project was to minimize uncertainty.
- Securities – On the securities front, there were several interesting observations. The panel noted that it is imperative to have a strong PPM. If a project fails, for whatever reason, plaintiffs’ attorneys will thoroughly analyze the PPM for any potential reason to bring a lawsuit. And they will have the benefit of 3-5 years of hindsight! In addition, what happens in China does not stay in China (or in any other country)! The SEC has been contacting EB-5 investors to learn about any inappropriate oral or written statements made to them in the marketing of EB-5 investment opportunities. The SEC has also worked with financial regulators in China and Hong Kong as part of their investigations. The panel noted that just because something is being done regularly by competitors, that does not make it okay. In fact, the one thing that the SEC cannot tolerate is an industry operating outside the scope of the law and they will look for someone to make an example of if they think this is happening. As the EB-5 industry becomes more mainstream, it should be expected that it will come under increased scrutiny.
As is clear from the above, the panels at the conference covered a wide variety of topics and were very interesting. The annual conference also had a record number of attendees, reflecting the continued growth of the EB-5 industry. We would advise anyone that is interested in becoming involved in the EB-5 industry to make attending EB-5 Investors conferences a priority.
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About the Author:
Omar Hakim, Esq. is an attorney at Mona Shah & Associates in New York City. The firm is an established source for EB-5, assisting numerous Regional Centers/EB-5 Projects and Investors in navigating this complex, nuanced and constantly changing area of immigration law. Omar offers clients years of experience in corporate finance, the financial regulatory system, securities matters and in general corporate governance matters. Additionally, he is able to draw on his experiences at major federal regulatory agencies and bodies, which includes work at the SEC, the United States House of Representatives Committee on Financial Services, and the CFTC. He earned his J.D. at the University of Virginia; his Master of Laws in Securities and Financial Regulation at the Georgetown University Law Center; and his B.A. in Economics at Georgetown University.
