While every EB-5 law practice is different, most attorneys face similar challenges.
Their clients come from abroad and are now dealing not only with a foreign immigration system, but also a foreign investment opportunity in a foreign business climate. Getting a handle on the whole EB-5 visa process, which even Americans will agree is complicated, is easier said than done. These are issues all EB-5 practitioners must confront.
But some attorneys deal with additional challenges. In practices that draw clients from a certain country or countries, for instance, attorneys must understand the particularities of working with clients from a specific part of the world. They may even have to know the language.
In the case of attorney Reza Rahbaran, that country is Iran. While his staff at Rahbaran LLC speaks French and Russian in addition to English, Reza himself speaks fluent Farsi and offers preparation of OFAC applications ? an undertaking required of any Iranian bringing capital from Iran to the United States.
In our interview, Reza talks about his unique position working with clients from Iran. He also discusses some recent challenges and triumphs for attorneys navigating the EB-5 green card program.
Question: What are some of the chief concerns clients have about the EB-5 program??
Answer: One question that immediately comes to mind is this one: Will I get my money back and if not, do I get to keep my green card? It's certainly a fair question. Nobody wishes to part with half a million dollars and, worse yet, end up in removal proceedings because of a "material" change.
Clients are perplexed as to why they should be denied lawful permanent residence if they make a "good faith" investment in an approved regional center project and, through no fault of their own, the investment does not produce adequate jobs due to changes in the economic climate or some failings of the regional center.
Lawful permanent residency through the EB-5 visa program carries both financial and immigration risk. Unfortunately, USCIS does not distinguish between the immigration obligations of the investor and the business obligations of the regional center. It is a marriage, and, in the absence of due diligence and guidance from an experienced EB-5 lawyer, the result may be regrettable.
Despite the financial success that clients have enjoyed in their home country, doing business in a foreign land is difficult even for the most seasoned entrepreneur. Investors face a multitude of problems beyond the difference in culture. Since most regional center documents are printed in English, many details are "lost in translation," and some financial instruments and methods simply do not exist in the investor's home country. Some investors are unable to visit regional centers due to the difficulty in obtaining a visitor visa; this is especially the case for Iranian nationals.
It is paramount that the investors really understand what the inherent financial and immigration risks are. How are those risks mitigated? What safeguards are in place for non-performance of project owners? What has been the performance of the regional center, both from a financial and immigration standpoint? Who are the principals? What are their backgrounds? Is there collateral for the investor? Is the investment equity or debt-based and what is the difference? Successful investors ask questions, or have attorneys who do.
Q: How do you address these issues?
A: Since we deal with many Iranian clients, problems specific to our firm include OFAC issues and transfers of capital out of Iran. Clients are often unaware that they are required to have an OFAC license and are eager to get started with their EB-5 investment. They may not realize that it takes 4 months to get the license.
At Rahbaran LLC, whilst we prepare and file the OFAC application, I find that the 4-month wait is a perfect opportunity for the client to review the process, feel comfortable with his or her investment project, and brush up on English language skills so that the transition to the United States will be smoother. This is especially useful for applicants who require OFAC licensing since this burden adds another 4 months to their entire immigration process. Furthermore, it may improve cash flow for regional centers that utilize escrow accounts.
It also gives investors time to arrange for the imminent transfer of their investment funds to the United States. Like many Middle Eastern and North African countries, Iran has an informal money transfer system called Sarrafi. This system is based on the performance and honor of a network of international money brokers. No promissory instruments are exchanged and the transactions rely entirely on the honor system.
With Iranian state controls on the transfer of capital out of Iran and UN sanctions on many Iranian banks, investors have to rely on these brokers to facilitate the process. It is a delicate process of making sure no OFAC rules are broken and maintaining the money trails for the transfer.
Q: For attorneys, what are the greatest challenges when it comes to making the program work for clients?
A: Having documentation for Source of Funds is one issue I think many attorneys face. Most clients are not from Western-style business cultures where banking and other pertinent documents are available electronically and require little effort to obtain. Some clients have sold assets prior to consulting an experienced EB-5 attorney and may not have collected the necessary documentation; others may not be eager to share their entire financial information largely due to their social environment.
If the sale of an asset is planned ahead of time, it can be successfully documented and proven lawful, but most clients have not been keeping records with the view of one day immigrating to the United States through the EB-5 program. In any case, a thorough explanation as to the reasoning behind the law always helps clients understand the type of evidence required to satisfy USCIS of the lawfulness of their funds and determine the asset(s) that would be most suitable for their investment.
Q: What do you think are the most significant changes the EB-5 program has seen in the past 6 months?
A: Especially useful for job creation models, USCIS has agreed it will count indirect jobs created outside the geographical boundaries of the Regional Center. ??USCIS has also expanded the EB-5 processing team, which in due course may result in faster processing times. ??Especially exciting for me is the proposal of EB-5 premium processing that could cut application-processing times dramatically. This is especially useful for applicants who require OFAC licensing since this burden adds another 4 months to their entire immigration process.
In the June EB-5 Stakeholder Meeting, USCIS also mentioned that it is currently reviewing how it considers TEA designations by individual states. If the agency is determined to review each TEA designation and contest states' TEA designations, some regional centers and investors could experience problems.
At last month's AILA conference in San Diego, I heard that USCIS has suggested TEA designation should fall under its own authority, a change that would render states' designations immaterial. While that may only be a rumor, it is certainly a matter to keep an eye on.
Q: You have mentioned there is a lot of misinformation being broadcast to your audience in Iran. Could you describe what you're referring to and why it's harmful?
A: Due to the fierce competition among EB-5 brokers to obtain clients, some have misinformed clients as to the actual amount of funds required for the EB-5 program. Some have even said the investment threshold is as low as $380,000.
It can be especially harmful to those individuals who do not consult with an experienced EB-5 attorney and may take significant steps to immigrate to the United States only to find out that they do not have the investment funds required.
Q: What do you tell clients when they ask which EB-5 project they should invest in?
A: All clients are different. This will be contingent on their investment objectives and appetite for risk. If making a profit is their priority, I suggest pursuing an individual EB-5 application under the regular program. Otherwise, a thorough review of all application materials until the financial and immigration risks are unearthed is paramount to making the correct choice for each individual investor.
If the client were unable to understand the financial risks, I would recommend retaining the services of a financial consultancy such as USAdvisors.org.
Reza Rahbaran is the Principal Attorney at Rahbaran LLC, an EB-5 law firm in Washington D.C. If you are an EB-5 practitioner interested in being interviewed for EB5info.com, please contact Adam Green: adam [at] usadvisors.org.