Since 1990, the EB-5 visa program has been a tool for converting international capital flows into local economic development and employment, creating jobs in targeted areas and offering foreign investors visas for doing so. Funds from foreign investors are often channeled into capital for commercial development projects and a cottage industry around the process has arisen in the years since it first came online. Commercial brokers and developers across the country have participated in projects funded in part by EB-5 investors, and the interest level is on a steady rise.
Since the time when I published a large list of EB-5 Regional Centers, we’ve seen the program in the news, backing interesting and sometimes even exciting projects all over the U.S.
With Finance Sometimes Comes Allegations Of Fraud
Along with this spike in interest and EB-5 participation has come charges of fraud and abuse from the SEC, such as the recent case of two commercial property developments that allegedly weren’t, both in Seattle. Using private placement memos and subscriptions that, according to prosecutors, did not accurately reflect the project to investors, has landed one developer in hot water. While non-EB-5 proposals are just as susceptible to fraud as those under the program, other cases abound, and concerns about lack of transparency as to the program’s effectiveness have been raised.
Report Cites Successes, Challenges, Provides Perspective
A recent Report by the Brookings Institution cites EB-5’s increased utilization despite a “dearth of reliable and publicly available data [on] the economic impacts of regional center investments.
An hour spent with the Brookings report will very well serve the reader interested in understanding the broad shape of the EB-5 program. It’s invaluable for parsing out the network of intermediaries in the program, understanding compliance requirements and learning the history of successful partnerships between regional centers, investors and the communities they serve.