Articles Posted in EB-5 Financing

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This article was first published by the IIUSA Regional Center Business Journal and is reprinted with permission.

All real estate development projects are subject to risks that the developer or project owner will not complete a project or will not meet operating projections, but the Covid-19 pandemic has substantially increased the number of real estate development projects and operating real estate businesses that are now experiencing severe financial distress.  In particular, many hotels, restaurants and retail operations throughout the United States have been forced to radically reduce their operations since March 2020, or to close completely.  In addition, a number of residential condominium, multifamily rental and mixed use real estate development projects have experienced delays in financing and construction, or delays of sales or rental of residential units in projects that have been completed.  Among the many real estate related businesses affected by these conditions are projects funded with EB-5 financing (referred to here as “EB-5 Projects“).

The issues faced by new commercial enterprises (“NCEs”) with loans to or equity investments in EB-5 Projects that are in default are particularly challenging for two reasons.  First, most NCE loans or equity investments on EB-5 Projects are subordinated to senior creditors, which require an analysis of what legal remedies are available to an NCE under all of the financing documents to which the NCE is a party, including agreements with the owner of the EB-5 Project (the “EB-5 Project Owner”) and agreements with the senior lenders.  Second, an NCE must analyze the effect of any action it may take that might negatively impact the eligibility of its investors (“EB-5 Investors”) for permanent  residence under the EB-5 program.  An NCE confronted with the problem of a defaulting EB-5 Project Owner must determine what remedies are available to the NCE and what the effects on the NCE and the EB-5 Investors will be if a senior lender exercises its remedies against the EB-5 Project Owner.

This article summarizes the types of remedies available to an NCE in the event of a default by an EB-5 Project Owner on a loan or equity investment made by an NCE, the effect of foreclosure actions taken by senior lenders on EB-5 Projects, and the immigration issues that will arise in connection with a potential foreclosure or sale of an EB-5 Project in distress.  Based upon the analysis of those issues, this article suggests a protocol for NCEs to use in analyzing potential remedies and outcomes to preserve as best as possible the visa eligibility and financial investment of its EB-5 Investors.[1]

A.  Legal remedies available to an NCE depending upon type of investment

The remedies available to an NCE upon a default by the EB-5 Project Owner will be primarily determined by the terms of the EB-5 financing documents.  Different remedies will apply depending upon whether the EB-5 investment is: (a) a loan secured by a senior mortgage on the EB-5 Project, (b) a loan secured by a junior mortgage on the EB-5 Project, (c) a loan secured by a pledge of membership interests in the EB-5 Project Owner[2]; (d) an unsecured loan; or (e) an equity investment in the EB-5 Project Owner[3].  The remedies available for each type of EB-5 financing are summarized below: Continue reading →

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Two years after the U.S. Citizenship and Immigration Services (USCIS) adopted Policy Manual changes addressing requirements for the redeployment of capital contributions of EB-5 investors until the end of their two-year period of conditional permanent residency, it has not provided any further guidance on these issues.  EB-5 sponsors have been left to navigate this uncertain terrain using their own best judgement.

EB-5 sponsors and their advisors now seek to establish a method for redeployment of EB-5 capital that will satisfy USCIS guidelines, U.S. securities laws, EB-5 investors, and all of the other parties who collectively have an impact on the investment of EB-5 capital. In some cases, EB-5 investors have threatened — or actually filed — actions against new commercial enterprises (NCEs) as a result of the approval process and/or selection of the reinvestment.

An article I wrote for the NES Financial blog addresses some of the questions that arise when EB-5 sponsors make redeployment decisions, including:

  • Should EB-5 investors be asked to approve a redeployment?
  • Why not have EB-5 investors approve every redeployment decision?
  • What process should be made to make a reinvestment decision that demonstrates protection of the interests of the EB-5 investors?
  • Should EB-5 investors be permitted to receive repayment, rather than their funds reinvested?

I also offer some thoughts on how to address the inherent risks of the redeployment process. Read the article here.

— Cathy Holmes

Cathy HolmesCatherine DeBono Holmes is the chair of JMBM’s Investment Capital Law Group, and she has practiced law at JMBM for over 30 years.  She has also worked as a senior member of the JMBM Global Hospitality Group and JMBM Chinese Investment Group. Within the Investment Capital Law Group, she helps real estate developers and business owners, brokers, investment advisers and investment managers raise and manage investment capital from U.S. and non-U.S. investors. She has acted as lead counsel on numerous hotel, residential and mixed-use developments and transactions in the U.S., Europe, China, South America and Asia Pacific regions, as well as hotel management and franchise agreements and public-private hotel developments. She has also represented private investment fund managers, registered securities broker-dealers and investment advisers on securities offerings, business transactions and regulatory compliance issues. She is a frequent speaker and author on a range of topics related to capital raising transactions, including EB-5 financing and Opportunity Zone financing. Cathy can be reached at

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LOS ANGELES—Jeffer Mangels Butler & Mitchell LLP (JMBM) is pleased to announce that Catherine DeBono Holmes has been included on EB5 Investors Magazine’s list of “Top 15 Corporate Attorneys” for the second year in 2018.

Chair of the firm’s Investment Capital Law Group and author of the Investment Law Blog, Holmes has practiced law at JMBM for over 30 years, focusing on investment capital and business transactions.

She has extensive experience helping clients from around the world raise, invest and manage capital for real estate projects in the United States and abroad, and has obtained financing for over 200 hotels, multi-family, and mixed-used developments through the EB-5 immigrant investor visa program.

“The EB-5 program is in transition as waiting periods for visas and the issue of redeployment leaves investors and developers with a lot of questions,” said Holmes. “EB5 Investors Magazine offers important guidance, and I’m honored to be included on their Corporate Attorney list again.”

In the hospitality industry, Holmes specializes in resort and urban mixed-use financing and development, hotel management and franchise agreements, resort and hotel purchase and sale transactions, and public-private hotel development. Her finance and investment experience includes handling business formations for entrepreneurs, private securities offerings, structuring and offering of private investment funds, and business and regulatory matters for investment bankers, investment advisers, securities broker-dealers and real estate/mortgage brokers.

About JMBM’s Investment Capital Law Group
JMBM’s Investment Capital Law Group provides legal and business advice to assist our clients with raising capital for investment in U.S. real estate development and business; structuring offerings of investment securities, primarily for private investment; conducting offerings of investment securities in compliance with U.S. federal and state securities laws; and forming and obtaining approval of EB-5 Regional Centers for investment in U.S. business through the EB-5 immigrant investor visa program. We represents real estate developers, EB-5 Regional Centers, private fund managers and registered securities broker-dealers and advisors with respect to capital raising.

About EB5 Investors Magazine
EB5 Investors Magazine serves as a companion to and strives to deliver compelling and comprehensive articles and information for everything EB-5 related. EB5 Investors Magazine provides a platform for skilled EB-5 professionals to discuss pressing matters and keep readers up to date on the constantly changing laws and legislation pertaining to EB-5. Each of the publication’s articles is peer-reviewed and provides high-quality objective analysis to an audience of attorneys, EB-5 regional centers, migration agents, wealth managers, and EB-5 service providers.

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JMBM’s Investment Capital Law Group is pleased to announce that Catherine DeBono Holmes, Chair of the Group, will participate as a panelist during the webinar, “How can EB-5 issuers make the most of the Opportunity Zone program?” sponsored by NES Financial.

Last year’s tax reform created massive incentives for holders of unrealized capital gains to put their money into “Opportunity Zones” (OZs) — economically distressed census tracts across the US. The list of Opportunity Zones was finalized in June 2018, with 8,700 census tracks designated – 11% of the country.

The Opportunity Zone program is likely to grow into a sizeable source of development funding over the coming years. The total available market is estimated around $6 trillion. The question is: How can your business benefit?

The webinar will be of interest to regional center operators, issuers and project managers, immigration and securities attorneys, and economists and business consultants.

Date: Thursday, September 20, 2018
Time: 11:00 AM PT (2:00 PM ET)

No registration fee is required. Register here.

Topics that will be covered include:

  • An introduction to Opportunity Zones
  • Requirements to set up an OZ Fund
  • Overlap of EB-5 Targeted Employment Areas and Opportunity Zones
  • Modifying EB-5 projects to welcome OZ investment
  • Emerging best practices in operation and administration of OZ Funds

We invite you to join us for this free and informative webinar. Register now!

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LOS ANGELES—Jeffer Mangels Butler & Mitchell LLP (JMBM) is pleased to announce that Catherine DeBono Holmes has been named to EB-5 Investors Magazine’s “Top 15 Corporate Attorneys” list for 2017.

Holmes is the Chair of JMBM’s Investment Capital Law Group and the author of the Investment Law Blog. She helps clients worldwide to raise, invest and manage capital from U.S. and non-U.S. investors.

Holmes has represented more than 100 real estate developers in obtaining financing through the EB-5 immigrant investor visa program for the development of hotels, multi-family, and mixed-use developments through the U.S., and has represented numerous Chinese investors in the purchase of hotels and businesses in the U.S.

“The EB-5 Immigrant Investor Visa Program has successfully provided funds to developers and businesses that create employment for Americans, as well as a pathway to legal immigration to the U.S. for foreign investors.  As the program continues to undergo scrutiny and change, EB5 Investors plays an important role by collecting and disseminating critical information to professionals in the EB5 community,” said Holmes.  “I am honored to be recognized by EB5 Investors as a top attorney.” Continue reading →

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Now that the USCIS has issued guidance requiring redeployment of capital proceeds received by a new commercial enterprise (“NCE”) from repayment of its initial investment in a job-creating entity (“JCE”) for EB-5 investors who have not completed their “sustainment period,” every General Partner or Manager of an NCE will need to consider their fiduciary duties to the NCE’s EB-5 investors in making a reinvestment decision on behalf of the NCE. Each NCE will have its own particular facts and circumstances that will need to be analyzed to determine which reinvestment option is most appropriate, but there are general principles of fiduciary duty that will apply to every General Partner or Manager of an NCE. The purpose of this article is to highlight some of the most important issues that will arise in making a reinvestment decision, and to describe how the General Partner’s or Manager’s fiduciary duties should influence their decision-making.

The basic duty of a General Partner or Manager of an NCE is to make investment decisions that are in the best interests of the EB-5 investors in the NCE. EB-5 investors have two primary goals in making an EB-5 investment: (1) to obtain a permanent visa and (2) to obtain repayment of their investment, to the extent possible, after they become eligible to receive a return of their capital under USCIS policies. Therefore, the General Partner or Manager must determine whether these two goals will be met with respect to every reinvestment decision made on behalf of the NCE. In particular, we suggest that the following issues must be considered in making any reinvestment decision: Continue reading →

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The white paper below was updated on July 24, 2017. It first appeared in the Investment Law Blog on February 21, 2017.

Now that the USCIS has released amendments to its Policy Manual regarding the required “sustainment period” for EB-5 investors to retain their investments “at risk”, the authors of this updated White Paper have revised our original standards and guidelines for redeployment of EB-5 investment capital issued in February 2017 to reflect the new policies adopted by the USCIS on redeployment.  We believe that the guidelines provided in this updated White Paper should meet the “sustainment” requirements established by USCIS in its amended Policy Manual, and should also meet the requirements of federal securities laws and the fiduciary duties of the general partner or manager of each new commercial enterprise when making a decision to redeploy their investment capital in a new investment.

— Catherine DeBono Holmes


A White Paper prepared by:

Klasko Immigration Law Partners, LLP
Arnstein & Lehr LLP
Jeffer Mangels Butler & Mitchell LLP

This White Paper sets forth a legal framework for establishing the standards and guidelines for redeployment of investment funds by a “new commercial enterprise” (“NCE”) received from investors (“EB-5 Investors”) seeking to qualify for visas pursuant to the EB-5 Immigrant Investor Program under Section 203(b)(5) of the Immigration and Nationality Act (“INA”), (8 U.S.C. § 1153(b)(5)) (the “EB-5 Program”). This White Paper assumes that the initial investment was made by the NCE in a “job creating entity” (“JCE”), the investment funds have been utilized by the JCE in accordance with a business plan approved by United States Citizenship and Immigration Services (“USCIS”) and then repaid by the JCE to the NCE after the requisite 10 jobs per EB-5 Investor have been created.  Here we conclude that a redeployment by the NCE that meets the guidelines described in this White Paper would reflect industry best practices for compliance with USCIS policy, securities laws and fiduciary duties of the general partner or manager of the NCE.

Reasons Why Redeployment of EB-5 Investment Funds Has Become Necessary

The EB-5 industry has dramatically changed over the past few years, due to the substantial increase in EB-5 Investors applying for EB-5 immigrant visas, particularly from the Peoples Republic of China.  The EB-5 Program limits the number of visas that are issued each fiscal year to alien investors and their spouse and qualifying children to a maximum of approximately 10,000.  In the event that the number of applicants exceeds the maximum available visas, the Visa Control and Reporting Division (“Visa Control Division”) of the U.S. Department of State will limit the number of applicants from each country to an aggregate maximum of 7% of the total number of EB-5 immigrant visas available each fiscal year (the “Visa Cap”). Until fiscal year 2015, the annual worldwide quota was not reached.  Continue reading →

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This article is co-authored by Daniel B. Lundy, Esq., of Klasko Immigration Law Partners, LLP. His Firm’s blog is available here.


By: Catherine DeBono Holmes, Esq., Daniel B Lundy, Esq. and Jeffrey E. Brandlin, CPA, CIRA, CFF

Managers and Investors in EB-5 Investment Funds should regularly monitor their investments in EB-5 Projects and be ready to take protective actions if their EB-5 Projects show signs of trouble.

It is vitally important for managers and investors in EB-5 investment funds[1] to stay informed of the status of their EB-5 projects[2], because EB-5 investors must demonstrate that the projects in which they invested were completed and, in some cases, that those projects are operating in accordance with projections, in order to qualify for approval of their I-829 petitions to remove conditions to their residence.  If the manager or EB-5 investors in an EB-5 investment fund discover signs that their EB-5 project may be experiencing financial distress or other difficulties that could prevent the project from being completed or operated in accordance with the original business plan for the project, the manager, the investors or their representatives need to evaluate whether there are any actions that could be taken to save the project, so that the EB-5 investors will ultimately qualify for approval of their I-829 petitions.  The manager or investors are in a far better position to take protective actions before the problems with their EB-5 project result in litigation, foreclosure, or SEC enforcement action, although it is still possible to take protective actions after one of these events occurs.  This article is the first of a series of articles that will describe how managers or investors can monitor their EB-5 projects to discover potential problems before they become a crisis, and the protective actions that may be taken to protect EB-5 investors if their EB-5 projects are in trouble.

Both managers and investors in EB-5 investment funds should continuously monitor and evaluate the progress of their EB-5 projects, and collect documentation of transfers of EB-5 funds, payments of project expenditures, and other financial records that will be required as part of the I-829 petitions.  An unwillingness to provide such documentation, which is mostly generated in the normal course of business, can be a red flag indicating that something is wrong.  The manager of each EB-5 investment fund is the primary party responsible for monitoring the EB-5 fund’s investment in the EB-5 project.  However, in cases in which the manager is affiliated with the EB-5 project developer, or the manager is not fulfilling its obligation to properly supervise and monitor the EB-5 project, the EB-5 investors should have their own independent representatives monitor the EB-5 project and evaluate if and when protective actions are necessary to protect the E-5 investors.  The manager of an EB-5 investment fund, or third party service provider where the manager is affiliated with the developer, should provide regular reports (preferably on a quarterly basis) to the EB-5 investors in the fund regarding the status of construction and financing of the project, payments made to the EB-5 investment fund and whether or not the EB-5 project is in compliance with the terms of the investment made by the EB-5 investment fund in the project.  EB-5 investors should insist that the manager of their EB-5 investment fund make these periodic reports if the manager is not already doing so.  If EB-5 investors do not receive these reports, they should engage an independent representative to meet with the manager, review the EB-5 project and advise the EB-5 investors directly regarding the status of the project and any problems that are discovered as a result of the review.  In the paragraphs below, we provide further information regarding how that may be done. Continue reading →

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This article is co-authored by Daniel B. Lundy, Esq., of Klasko Immigration Law Partners, LLP. His Firm’s blog is available here.

The USCIS stated in a stakeholder call on July 28, 2016 that minors can be primary applicants on I-526 petitions for visas under the EB-5 Program, but bear the burden of proving by a preponderance of the evidence that they have entered into a valid investment contract that is not voidable.

This acknowledgement by USCIS provides an opportunity for EB-5 sponsors to adopt a policy of accepting minor investors in EB-5 investment funds in a manner that can be proven to create a valid investment contract that is not voidable by the investor. The General Principles of the Civil Law of the Peoples Republic of China (“PRC“) provide one potential means of entering into a valid contract under PRC law. However, some EB-5 sponsors are reluctant to rely upon laws of the PRC as the basis for admission of minor investors, in part because of the uncertainty of what evidence would be necessary to prove that a contract is valid under the laws of the PRC to the satisfaction of the USCIS. For EB-5 sponsors seeking to rely on laws of the United States, the Uniform Transfers to Minors Act (“UTMA“) may provide the best means of establishing the validity of an investment contract with a minor investor.

UTMA has been adopted by nearly every state, and establishes a legal method to make a gift to a minor by using the required designation of ownership.

UTMA was drafted by the National Conference of Commissioners on Uniform State Laws in 1986, as an expansion and replacement for the Uniform Gifts to Minors Act (“UGMA“). UTMA has subsequently been adopted by every state except South Carolina, which still follows the Uniform Gifts to Minors Act. UTMA has also been adopted by the District of Columbia and U.S. Virgin Islands, but not by Puerto Rico. Under UTMA, any form of property, including securities, may be indefeasibly transferred to a minor by any transferor, simply by using the following designation of ownership: “_______________ [name of custodian], as custodian for ____________________ (name of minor) under the [name of Enacting State] Uniform Transfers to Minors Act.” Continue reading →

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The EB-5 Securities Law Roundtable, a group of securities lawyers from several different law firms around the United States, has been working jointly to provide comments to legislation that we expect will be proposed by Congress to improve the integrity of the EB-5 program. The focus of the Roundtable has been to recommend changes that we believe will conform the proposed legislation to existing securities laws, and will clearly define the roles and responsibilities of EB-5 regional centers, sponsors and issuers.

The Roundtable supports efforts by Congress to strengthen the integrity of the EB-5 program by establishing procedures that will assist in detecting and preventing potential fraud in offerings made under the EB-5 program. Lawmakers could do a great service to the many U.S. employees, businesses and investors who benefit from the EB-5 program by aligning the integrity requirements of the EB-5 program with existing U.S. securities law.

The Roundtable issued a press release on August 29, 2016 announcing its analysis and comments on the proposed legislation, a copy of which may be obtained, along with the comments of the Roundtable on the legislation, at the following website:

The comments of the Roundtable do not address immigration policy and eligibility aspects of proposed EB-5 legislation, such as the minimum investment amount, defining targeted employment areas, visa availability, effective dates or length of program authorization. This is because the goal of the Roundtable is to focus on those aspects of the legislation that concern the application of securities laws to the EB-5 program, and the role of each industry participant to assure compliance with those laws.

About the EB-5 Securities Roundtable
The EB-5 Securities Law Roundtable is an informal, independent group of leading EB-5 Securities Attorneys from law firms including Arnstein & Lehr; Baker, Donelson, Bearman, Caldwell & Berkowitz; Homeier Law PC; Jeffer Mangels Butler & Mitchell; Kutak Rock; Phillips Lytle; Sheppard Mullin Richter & Hampton; and Torres Law, organized to facilitate best practices in the offerings of EB-5 securities. The Roundtable is not affiliated with any EB-5 industry organization, regional center, offeror of EB-5 securities or job-creating recipient of EB-5 funds, and it receives no outside financial contributions. The comments of the Roundtable represent consensus views of the individual participants and do not necessarily represent the views of any individual participant, their respective law firms or clients of their law firms. The comments of the Roundtable do not represent legal advice.

Catherine DeBono Holmes, a partner of Jeffer Mangels Butler & Mitchell LLP and chair of its Investment Capital Law Group, is a member of the EB-5 Securities Law Roundtable and a contributor to the comments developed by the Roundtable on the legislation. She regularly represents EB-5 regional centers, issuers of EB-5 securities and developers of projects who receive EB-5 financing. She has written more than 30 articles on topics relating to the EB-5 program, and is designated one of EB5 Investors magazine’s Top 25 Securities Attorneys.

Cathy HolmesCatherine DeBono Holmes is the chair of JMBM’s Investment Capital Law Group, and has practiced law at JMBM for over 30 years. She specializes in EB-5 immigrant investment offerings and hotel and real estate transactions made by Chinese investors in the U.S. Within the Investment Capital Law Group, Cathy focuses on business formations for entrepreneurs, private securities offerings, structuring and offering of private investment funds, and business and regulatory matters for investment bankers, investment advisers, securities broker-dealers and real estate/mortgage brokers. Contact Cathy at or 310.201.3553.