James Oppenhuizen is lead counsel at Oppenhuizen Law Firm, PLC, which specializes in assisting investors applying for an EB-5 visa. We interviewed him via email about the program.
RedLine: Your law practice specializes in providing legal counsel for EB-5 investors. Can you explain what the EB-5 visa program is?
James Oppenhuizen: The EB-5 Investor Visa Program is designed to bring outside money and new jobs to the United States. It also brings strong entrepreneurs and business leaders from other countries to the U.S.
It does so by providing a green card (lawful permanent residency) to an investor who invests $1 million (or $500,000 in designated Targeted Employment Areas) in a new commercial enterprise.
That enterprise must create 10 or more full-time jobs for citizens or others authorized to work in the United States.
Investors have two ways to invest. They can do so directly in a business that they may operate, in which case they must show 10 full-time jobs created within two years of the issuance date. (Jobs for the investor or family members of the investor don’t count towards the total.)
The other way to invest is through a Regional Center. Regional Center investments allow for the pooling of multiple investors’ investments and for counting of direct, indirect, and induced jobs using economic analysis. Most investors prefer the Regional Center method.
EB-5 Visa Holders Mostly Chinese
RedLine: Where do most EB-5 investors come from?
JO: Most EB-5 investors come from China. In fact, over 80% of all EB-5 investor visas are awarded to investors born in mainland China. This has created a long waiting list for Chinese investors. Congress is looking to deal with this difficulty during the reauthorization process, which is going on now.
RedLine: What types of documents are part of a typical EB-5 visa application? Does USCIS have any language requirements for applicants, who by definition are from foreign countries?
JO: Applications and all supporting documentation must be in English. Certified translations of documents are used to trace the source of funds used to invest. These documents include bank statements, mortgage documents, promissory notes, and tax forms, to name a few.
The source of funds is the most rigorous and difficult part of obtaining the EB-5 visa. It’s designed to prevent the use of ill-gotten gains in obtaining a visa or the laundering of those funds in the U.S.
Investors should have translations of many other documents, including the project documents. This is key to ensuring that the investors understand the business in which they’re investing.
EB-5 Visa Fraud
RedLine: Fraud is an issue in every industry. Tell us about the intersection between translation and fraud prevention when it comes to the EB-5 application process.
JO: Fraud has been a hot-button issue in EB-5. But it’s important to note that U.S. regulators such as the SEC have done an excellent job at catching and prosecuting those who perpetrate fraud.
The two biggest facilitators of fraud in this space are 1) cultural differences and 2) language barriers between the investors and professionals here in the U.S.
These issues cannot be legislated away. And while they don’t cause fraud, they make those who would commit fraud view this industry and investors as low-hanging fruit, so to speak.
Translating the project documents and using American lawyers as counselors and for risk mitigation are key to undermining these two facilitators of fraud.
RedLine: Without naming any names, is there a particularly memorable EB-5 project that you worked on that you can describe for us?
JO: I’m about to start a very exciting project. It uses EB-5 capital to create much-needed infrastructure that will make a large industrial park possible. It’s in an area where it would otherwise not be feasible. The project is rural, but some of the biggest and strongest U.S. corporations are participating.
The use of EB-5 for privately funded and operated infrastructure is the cutting edge of what EB-5 can do for the U.S. It adds an element beyond direct, indirect, and induced jobs by providing important infrastructure improvements. Public money, which is very scarce now, has historically funded these improvements (usually bonds paid back by tax increases over long periods of time).
Using EB-5 as a large share of the funding source and coupling that with private operators, municipalities can have top-notch infrastructure to entice new businesses without the massive cost outlays. I’m looking forward to this project and can’t wait to share the particulars with my connections.
Controversy Over the EB-5 Visa Program
RedLine: In February, senators Dianne Feinstein (D-CA) and Chuck Grassley (R-IA) co-sponsored a bill to end the EB-5 immigration program. Explain why the EB-5 program is so controversial.
JO: The bill would have done away with the Regional Center Pilot Program but would have left the direct investment option intact.
The two senators have very different reasons for introducing that particular bill. Senator Feinstein still wants the program terminated. Senator Grassley is poised to reauthorize the program while making substantial changes (for the better) to it.
“Jumping the Line”
Senator Feinstein’s objection to the program is that it lets wealthy investors “jump to the front of the line” as she puts it, just because they are rich. This is a simplistic view that misses the point of the program and amounts to cutting off one’s nose to spite one’s face.
Attracting the best and brightest—as well as attracting money that we otherwise wouldn’t have—to create jobs for the U.S. middle class is about as American as apple pie. That’s what this program does.
Urban vs. Rural
Senator Grassley has a problem with how the money from overseas is allocated. Most successful EB-5 projects are in well-to-do areas of Miami, New York, and Los Angeles. This is the result of piecing together census tracts in order to create an artificial area of high unemployment (gerrymandering).
The program, in his view, was designed to attract investment to areas in which banks do not feel comfortable lending. They see it as too risky, or developers are not interested in development because the markets are too remote or the people do not have sufficient disposable income to support projects.
Senator Grassley used the bill to leverage concessions for reauthorization. He did so effectively, as the industry now has consensus on reforms that should protect large projects in huge global cities while providing an easier path to funding for rural and distressed urban area projects.
I expect that legislators will reauthorize the program on April 28, 2017. They’ll either enhance and extend it for a long time then or by mid- to late September of this year.
RedLine: Where can readers go for more information about the EB-5 visa program?
I recommend looking at my website, especially the News area. I have a couple of blog posts on avoiding fraud in EB-5 as well as other helpful EB-5 information.
Check out our infographic on world languages to see what the most commonly spoken languages in the world are. Then read about what happens when speakers don’t have access to digital content in their language.