Those hoping for a revival of the main part of the EB-5 program (i.e., pooled investments through middleman "regional centers") have a new pitch: Make a direct EB-5 investment now at $500,000 or face a higher price (maybe a minimum of $750,00), which would come as part of any re-authorization likely to be passed by Congress.
This prognosis was delivered during a webinar sponsored by major law firm WR Immigration on February 3. Head lawyer Bernie Wolfsdorf indicated that he had seen a draft of a re-authorization bill for EB-5 that included higher minimum investments.
For more than 30 years, the EB-5 program had a minimum investment of $500,000 in a depressed area. For this, the investor, the investor’s spouse, and their kids under 21 all got green cards. Both the Obama and Trump administrations called for a minimum of $900,000 for this type of investment.
Then in the middle of last year, two things happened: 1) a federal magistrate judge destroyed the Trump and Obama regulations, returning the level to $500,000; and 2) The Senate refused to extend the life of the pooled-investment program beyond June 30, 2021.
This left the EB-5 program substantially reduced, as the direct-investment part of the program had never been very large. The rules for it are tougher than for the pooled investment program and there is not much of a sales organization for it, as compared to the ones run by the regional centers for the pooled program. In December only 15 EB-5 visas were issued for the direct program in the five nations producing the most visas, when 10,000 a year are available under law.
Wolfsdorf, a beguiling presenter, had other cheerful news for alien investors. In the E-2 program for Treaty Investors, the spouse of the arriving alien no longer has to file to get work authorization; it has now become automatic. Further, the children of E-2 investors under 21 qualify for in-state tuition, which is much less expensive than the out-of-state tuition levels charged for most F-1 students. This creates major savings for the E-2 parents.
The E-2 program gives non-immigrant visas to investors and their families for investing in, usually, corporations run by the immigrants, such as a restaurant or a dry-cleaning establishment. It does not lead to green cards.
Getting back to the EB-5 direct investment program, one of Wolfsdorf’s colleagues on the webinar hinted at a problem encountered in the direct investment program, particularly “in South Florida”.
“Too many of the direct investment proposals fail to meet the 10 full-time workers requirement because the current employers are paying cash to their workers, and do not provide them with W-2s,” he said, thus exposing another chink in the armor of the EB-5 program, which is supposed to provide 10 jobs to non-family members for each investment.
Wolfsdorf, to his credit, urged full compliance with the E-Verify program in EB-5; it seeks to make sure that all workers are legally entitled to work in the U.S. A flaccid Congress created the program but has not imposed it on all employers, as it should have done years ago.