The EB-5 Escrow Account

Generally, when an investor chooses a Regional Center project to invest in, she will wire her funds to the Regional Center's escrow account. The EB-5 regulations require that funds must have been "invested" (or be in the process of investing - though no one wants to take a chance on that anymore) in a U.S. business and over the years, the USCIS has agreed that placing the investment funds in an escrow account will be sufficient to meet the investment requirement. In other words, placing funds in an escrow account is not a USCIS requirement, but a business best-practice that has developed over the years. In other words, escrow terms are business specific and the escrow agreement is one of those documents that the investor must really read. (Well, the investor really should read ALL the documents given to her, but not many do.) Generally, the $500,000 principal will only be released to the project once the investor's I-526 is approved. The subscription fee (which ranges from approximately $40,000 to $50,000) may or may not be released immediately after the investor wires the funds to the escrow account.

Recently, however, I am seeing more Regional Center projects moving away from the traditional escrow model. For example, one well-established Regional Center with a fantastic track record has amended its escrow to say that the investment principal will be released to the project when i) an exemplar I-526 is approved or ii) when the first three I-526s are approved, whichever happens first. With I-526 approvals taking up to 8 or 9 months, it is no surprise that project owners and Regional Centers are trying to develop new ways to speed things up. But it is one thing when a "well-established Regional Center with a fantastic track record" does this. It is another thing when a brand new project for a brand new Regional Center has no escrow account at all. That the project has no escrow account in and of itself does not mean that it is a bad project. But I would think that it would be something that the agent selling the project points out affirmatively. (At least they were in the risk factors of the PPM.)

Autism Conference for Korean Families in New Jersey

This is not EB-5 related, but I'm trying to spread the word through as many channels as possible, so please excuse the digression. Some of you know that I have a special interest in autism in the Korean-American community because one of my children is autistic. So I've been planning an autism conference for the Korean community in New Jersey for quite some time now and it is finally happening on Saturday, June 16. Please visit www.autismkorea.com for more information on this upcoming free seminar. I've been able to gather a group of wonderful experts in the field for the conference. Thank you!

TerraCRG Brooklyn Real Estate Summit

Please come see me speak on the Foreign Investment Panel at the TerraCRG Brooklyn Real Estate Summit which will be held on Thursday, June 14, 2012. My fellow panelists will be: 

Steven Polivy, Chair – Economic Development & Incentives Practice, Akerman Senterfitt 
George Olsen, Managing Principal, New York City Regional Center 
Brian Su, President & CEO, Artisan Business Group 
Paul Travis, Managing Partner, Washington Square Partners

Please click here for more details about the conference.

USCIS announces "Engagement with Director Mayorkas and USCIS Economists"

Readers of this blog know that the new direction that the USCIS has taken regarding how to count tenant created jobs has thrown a monkey wrench into the program as we know it. If you haven't heard about this big EB-5 topic of the first half of 2012, you can read my analysis here. To better understand what these changes mean, the EB-5 community has been asking for a meeting with the USCIS economists for some time now and it is finally happening on Friday, June 22, 2012. Please click here for the USCIS invitation and directions on how to dial-in. I've signed up for one of the 75 in-person slots, but haven't heard back whether I made the cut. In any case, it should be an engaging conversation.