EB-5 Immigrant Investor Program: Three Major Risks of the U.S. EB-5 Investment Immigration (Part 1)
EB-5 Immigrant Investor Program: Three Major Risks of U.S. EB-5 Investment Immigration (Part 1)
Attorneys:Attorney Jeff Zhengquan Xie,Attorney Jiarui Yin,Attorney Qian Zhao,Attorney Haochun Ling, Xiang Xiao
U.S. investment immigration, or immigrating to the U.S. through investment, ideally achieves both investment and immigration goals. It would be best if one can attain both.
In essence, U.S. investment immigration—immigrating to the U.S. via investment—relies on investment as the means to secure immigration status.
The primary purpose of the investment is immigration, not investment itself.
If your sole aim is to invest and profit in the U.S., you should not choose projects designated as EB-5 immigrant investor programs.
Why?
Because U.S. congressional legislators never intended for such projects to be a reliable way to make money.
A core requirement of EB-5 investment immigration projects is that each EB-5 investor’s investment must create 10 full-time jobs in the U.S.
U.S. investment immigration law further specifies that EB-5 investments must be purely "risk capital" .
If any project legal documents prepared by the project sponsor contain language "guaranteeing" returns or principal to EB-5 investors, U.S. Citizenship and Immigration Services (USCIS) will deny the investor’s immigration application.
Investment immigration entails three major risks: investment risk, immigration risk, and personal integrity risk.
Let’s first discuss "investment risk".
As we all know, all investments inherently carry risks. An investment without risk is not a true investment.
For EB-5 investment immigration, the investor contributes $800,000 to a selected investment project, becoming a partner with the project management and other investors, and jointly owning shares in the project (company).
How long must this $800,000 investment be held? Most project sponsors require a minimum holding period of 5 years, meaning foreign investors cannot request a withdrawal within this timeframe .
How much profit can this $800,000 generate in 5 years? Will it depreciate to $300,000? Can the investment project repay at least the full principal after 5 years? These are all difficult questions to answer.
Some people ask: Can you tell me how much money your EB-5 clients have made? Sorry, we cannot disclose that information.
First, we truly do not know—because we do not inquire about such matters with our clients.
Second, even if we did know, we could not share it—as it constitutes client privacy.
In fact, even if some of our EB-5 clients profited from their investments, it does not mean other investment projects will also be profitable. Profits, losses, and varying degrees of returns are all normal outcomes of investing.
Others also ask: Have there been cases where investment immigration projects failed, leading to the denial of green card applications?
We have heard of many such cases, but we have not encountered any firsthand examples.
However, we believe that "in a large forest, there are all kinds of birds"—meaning that with so many projects available, failures and even fraudulent schemes are possible.
Not only can individual projects fail, but entire projects may also be fraudulent.
Therefore, EB-5 investors must exercise extreme caution when selecting an investment project.
To attract investors, some project sponsors claim their projects guarantee the return of principal.
A moment’s thought raises the question: What basis do project sponsors have to "guarantee" the return of investors’ principal?
Investment success is influenced by numerous factors. The "guarantees" from project sponsors should only be taken as references by foreign investors—neither fully distrusted nor fully trusted.
We are not saying that all U.S. EB-5 investment projects are unsafe. We are emphasizing that investment immigration projects carry risks.
Foreign investors should select an EB-5 project based on their own knowledge, interests, determination, capabilities, and judgment.
Once a decision is made to invest in a project, investors should remain steadfast in their commitment. Enjoy the profits if successful, and accept the losses if not.
If you lack this determination, we advise foreign investors to first answer two worst-case scenario questions: Can you accept if your $800,000 investment depreciates significantly to $400,000 after several years?
Can you withstand the blow if the invested project collapses after several years, resulting in the total loss of your $800,000 investment?
If the answer to either of these questions is no, you should not consider this path to U.S. immigration.
Investment immigration is only one pathway to U.S. residency. Send your most up-to-date resume to attorney@xielaw.com to explore other options.
[To be continued]
The above overview is prepared by XIE LAW OFFICES,LLC. to provide legal information to the Chinese community. It is primarily for academic discussion purposes and does not constitute legal advice on specific cases. If you already have legal representation, please consult your own attorney, who is familiar with the details of your case. Clients of Xie & Associates Law Firm, as well as readers who have not yet retained legal counsel, may contact Attorney Xie for specific legal questions. If you wish to reprint this document, please do so in full without any deletions, and clearly indicate the source.
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