The following is the first installment in a 4-part series about a speciality insurance policy being sold to EB-5 investors in the Idaho State Regional Center. The policy has raised a number of questions among EB-5 practitioners and other EB-5 visa experts ? questions this series seeks to address.
The EB-5 playing field gets more crowded every day. With so many regional centers competing for so few investors, it almost goes without saying that new players in the market will snag every opportunity to distinguish themselves from their peers.
But regional center operators know that all EB-5 investors are subject to the same requirements: $500,000 to $1 million from a single investor must be put at risk and create ten new jobs within two years. While healthy competition among regional centers is a good thing, is providing "creative" incentives to invest really in the best interest of the investor?
That depends on the incentives ? and on who you ask.
On several occasions this past month, sources in the industry have approached EB5info.com with concerns about an insurance product being offered to a select group of EB-5 investors by a small, Missouri-based company called Sidecars Insurance.
|Excerpt from the Project Performance Investment Reimbursement policy. To read it all, click here.|
According to the company's policy description for its "Project Performance Investment Reimbursement" insurance, it will pay up to $500,000 toward "the deficiency amount difference between insured's original investment and amount paid to insured" by Blackhawk Gold, LLC ? the company handling the gold mine project promoted by the Idaho State Regional Center. Investors simply provide a premium payment of $35,000 and the insurance is theirs.
A sales presentation presumably being shown to prospective Chinese EB-5 investors ? the presentation is in both English and Chinese ? makes clear that those who invest in Idaho's Blackhawk Gold project are the only EB-5 investors eligible to purchase this insurance policy.
In other words, if an EB-5 investor in the gold mine project ? and only the gold mine project ? purchases this policy from Sidecars Insurance, he or she is guaranteed a return of principal. Given that the law requires all EB-5 investments to remain "at risk," is a reimbursement insurance scheme even legal?
Continue reading Part 2 of our series on investment reimbursment insurance for EB-5 investors.