The Department of Homeland Security just put out a notice to remove the International Entrepreneur Rule. So they are moving ahead to dismantle this rule.
Please see our earlier post on the subject here.
The notice in part reads:
“DHS is now proposing to eliminate the IE Final Rule because the department believes that it represents an overly broad interpretation of parole authority, lacks sufficient protections for U.S. workers and investors, and is not the appropriate vehicle for attracting and retaining international entrepreneurs.”
It’s unfortunate because the current administration just wants to dismantle this temporary workaround for the lack of a true “start-up” visa from the last administration.
The full notice from USCIS can be read below:
Our office has gotten some calls about the “EB-6” visa that was announced last year and has been implemented at the start of 2018. I put “EB-6” in quotes, because that’s not the official designation and it’s not permanent residence visa (i.e., green card).
The official designation is the International Entrepreneur Rule. Essentially, if an entrepreneur qualifies, he or she qualifies for “parole” which is to grant a period of authorized stay. The period of authorized stay allows you to stay in the United States but it is not green card or even a nonimmigrant visa.
The details of the International Entrepreneur Rule (the putative EB-6) can be accessed below:
Essentially, one can apply as an entrepreneur by fulfilling the following requirements:
- The applicant possesses a substantial ownership interest in a start-up entity created within the past five years in the United States that has substantial potential for rapid growth and job creation.
- The applicant has a central and active role in the start-up entity such that the applicant is well-positioned to substantially assist with the growth and success of the business.
- The applicant can prove that his or her stay will provide a significant public benefit to the United States based on the applicant’s role as an entrepreneur of the start-up entity by:
- Showing that the start-up entity has received a significant investment of capital from certain qualified U.S. investors with established records of successful investments;
- Showing that the start-up entity has received significant awards or grants for economic development, research and development, or job creation (or other types of grants or awards typically given to start-up entities) from federal, state or local government entities that regularly provide such awards or grants to start-up entities; or
- Showing that they partially meet either or both of the previous two requirements and providing additional reliable and compelling evidence of the start-up entity’s substantial potential for rapid growth and job creation.
While the International Entrepreneur Rule may be useful for those who can’t qualify for an E-2 or an EB-5 or need some time to grow their company until they can qualify for another category, there is a huge caveat.
In one of the government’s press releases concerning the International Entrepreneur Rule (referred to as the IER, they specifically state (emphasis all mine):
“While DHS implements the IER, DHS will also proceed with issuing a notice of proposed rulemaking (NPRM) seeking to remove the Jan. 17, 2017, IER. DHS is in the final stages of drafting the NPRM.”
You can actually read the release here in its entirety.
So there you go. While they are announcing that the IER is going to be available, they are telling us that they intend to kill it as soon as they can.
It’s disheartening and disingenuous at its best. It’s a trap for those whose options are limited at its worst.
The Los Angeles Times rehashes the EB-5 Immigrant Investor program in today’s article.
Of note is the reference at the end of the article which indicates that there will be increases in the minimum investment amounts in the EB-5 program. The figures they cite may not be accurate – they may actually be higher when fully implemented. But the investment threshold will increase.
First things first, the EB-5 Regional Center program has been extended until September 30, 2017 as part of a larger federal budget extension. And as we’ve pointed out previously (but bears repeating), the extension affects the Regional Center program. The “regular” EB-5 program involving individuals who invest does _not_ need to be extended like the Regional Center program (which started as a “Pilot Program” and never escaped that designation). However, portions of the regular/direct EB-5 program will be affected by provisions that overlap with the Regional Center program – see this (link to previous article about EB-5 changes that impending).
Secondly, the EB-5 program has gotten its biggest boost in publicity due to President Trump’s in-laws (the Kushners) being linked to an EB-5 Regional Center that was pitching mainland Chinese investors. There has been a title wave of articles on this subject and the EB-5. The previous stories of fraud and criminality in previous EB-5 Regional Center projects has not garnered this much publicity. The tie in to Trump and his family is fueling this and rightfully so.
See the articles below.
Jared Kushner’s sister puts EB-5 visas back in the spotlight.
Kushner Family Stands to Gain From Visa Rules in Trump’s First Major Law
The biggest issue is that the promoters of the program essentially made a direct link between one of the Kushners to Donald Trump. It was a blunt *wink**wink* to the potential customers that this project is guaranteed to do well – because it is expressly _forbidden_ to make guarantees of any sort on an EB-5 project. The funds have to be “at risk” in the target business.
We are not big fans of the Regional Center program – while useful and a boost to the US economy when used correctly, the amassing of such capital can create numerous opportunities for abuse. We prefer clients go the direct route of the EB-5 visa – where one invests into a business and oversees it to create the 10 direct jobs. However, we understand that with certain investors, they would prefer a more hands off vehicle – which is where the Regional Centers are handy.
The entire affair will inject more urgency to the reform/abolish debate to the EB-5 program as it the sunset date for the temporary extension nears in September of this year.
However, portions of the regular/direct EB-5 program will be affected by provisions that overlap with the Regional Center program – see this
Given all the turmoil with the new executive orders from the new administration in 2017 — along with the rumors of unsigned executive orders and proposed bills floating around — we’ve been trying to wait for some of the dust to settle before commenting on any of the substantive changes.
There is however, a proposed rule, which will change some aspects of the EB-5 Investment Immigrant Visa, some significantly.
Entitled, “EB-5 Immigrant Investor Program Modernization” — the main points are:
- The minimum investment amount in a Targeted Employment Area will increase from $500,000 USD to $1.35 million USD.
- All other areas will increase the investment amount from $1 million USD to $1.8 million USD.
- The ability to designate Targeted Employment Areas will be taken away from the individual state and be given to the Department of Homeland Security.
The proposals are significant, raising the capital amount to 80%. This will affect the EB-5 market in the United States.
These are proposed rule changes, so unlike other rumors of unsigned executive orders and proposed legislation that have little chance of passing (the proposed bill to abolish the EB-5 visa altogether), so they will most likely go into effect.
The comment period for the proposed rules above ends April 11, 2017. At which point, USCIS can propose amended rules OR publish the final rule at any point afterwards. Then the rules go into effect in 30 days. So the earliest the changes can take place are May 11, 2017, although realistically speaking it will be sometime afterward.
Keep in mind that this separate from the EB-5 Regional Center program expiration which is set for April 28, 2017. A lot of things happening in April — it is the cruelest month.
For those who are interested, the full body of the proposed rule changes are on the official government website, the Federal Register.
News of these changes have hit the mainstream financial press:
We essentially focus on US based immigration. People who want to come into the United States to invest and set up businesses primarily.
It’s interesting to see what other countries are doing in this regard. The US is unique because it has its focus on job creating enterprises with no US guarantees. Other countries (such as Canada) allow direct investment into the government and the government guarantees the investment. Other places require investment into properties (the US specifically forbids “passive” investments, which covers a lot of real estate transactions).
NPR did a segment on the sale of passports that was interesting to say the least.
Check it out: Passports for Sale
In the past few years there have been a quite a number of EB-5 Regional Center related cases. They are pretty well documented in the press — just google “Eb-5 Fraud” and one can get a good sense of the range of scams and fraud causes that can erupt from EB-5 cases. In our opinion, the best way to minimize the risks involved in an EB-5 investor case (in terms of fraud) is to manage one’s own business enterprise.
In most of the uncovered fraud cases, there has been major litigation and government prosecution involved. In many cases the investors were able to recover the funds.
Well it looks as if there is a new area where the the litigation is going and it’s towards the banks that are holders of the escrow accounts. These banks are supposed to hold the EB-5 investment funds in an escrow account until a few agreed upon actions happen, such as approval of the investor’s EB-5 investment petition. It looks as if in the allegations here, that did not happen.
Click on the link below for the article.