Sam Silverman:
Hi everyone. This is Sam Silverman, managing partner of EB5AN. Thank you for taking time today to join us. Today’s webinar is going to be discussing what steps can be taken to invest at the $500,000 investment level before the upcoming June 30th deadline. And we’ll spend a few minutes chatting about different types of escrow structures to look for in projects to minimize capital at risk and maximize optionality for the benefit of our EB-5 investor clients. And today we’re joined thankfully by Rohit Kapuria, a well-renowned expert in the EB-5 immigration space, and he is going to be sharing his opinions and thoughts on recent events that have unfolded over the last couple of days. We’re going to hold all questions until the end. So if you do have a question, use the chat box, send it in, and we’ll try and cover as many questions as we can.

Some questions we might have to follow up with an email but just put your question in the chat box and we will get back to you, or you can reach out to any of us using these emails on the screen here as well. Okay. Important investment information. Quick 30 seconds on EB5AN. We’re a national EB-5 regional center fund manager across all our regional centers. We’ve got more than 1,800 investors from more than 60 countries. We’ve been in this space since 2013. Today, as I mentioned, we’re joined by Rohit Kapuria. Rohit, do you want to give a 30-second soundbite about yourself and your experience?

Rohit Kapuria:
Thanks for having me, Sam. It is certainly crazy times. My name is Rohit Kapuria. I’m out of the Chicago office for the law firm of Saul Ewing Arnstein & Lehr. We are a 400+ attorney firm with 17 different offices around the country and significantly with respect to EB-5, we have worked on well over 485 transactions in excess of $8 billion. And our team essentially works with a large number of investors from primarily Latin America and South Asia, as well as a large number of regional centers and fund issuers around the country. Glad to be here.

Sam:
Great. Perfect. Thank you, Rohit. So a quick overview about the principles of EB5AN. As I mentioned earlier, I’m Sam Silverman managing partner on the left side, with a background in management consulting and real estate investing, along with my partner, Mike Schoenfeld. This is a quick overview map of where some of our investors to date have come from. We have a pretty global footprint. Most importantly, investors from a wide variety of backgrounds around the world have consistently found value in our investment approach to safeguarding EB-5 capital and minimizing investor financial and immigration risks. So breaking news—within the last couple of hours on the U.S. Senate floor, the bill to extend the EB-5 Program past June 30th has failed to pass.

So we now have definitive knowledge that the program, the regional center program specifically, will not be extended past June 30th as this bill has failed. And so what that essentially means is if and when the regional center program does come back into effect, it will be after some gap period of time. It could be weeks, it could be days, or it could be months. In the past it’s been a couple of months. No one can predict that for certain. And almost certainly when it does come back into effect, the investment amount will almost certainly be the $900,000. There’s been some recent legal activity. The $500,000 to $900,000 rule has been invalidated. But that rule can be put back into effect after the required comment period. And so the bottom line is that $500,000 is almost certainly going to be a one-week, one-time event. And so if you are interested in investing and pursuing a green card, filing within the next week is going to be your best option to lock in the reduced $500,000 amount. And we’ll chat about some of the different ways to think about preserving optionality and minimizing capital, but that’s kind of the most important thing to be aware of because it’s very time-sensitive being that we’re just six days away from the end of the month. I’ll let Rohit jump in and share some of his thoughts as well.

Rohit:
Yeah, this is a big game changer. We were all aware of, certainly when the ruling happened, that those in Congress who have been pushing to make integrity changes, particularly Senator Grassley, would not be happy with the outcome of the lawsuit. We were also aware the Department of Homeland Security would be pursuing all avenues to try and amend and put in place a stay order and two, on the vacation of the actual ruling which has essentially taken the regulations back to 2019, regulations pre-November, 2019. The fact that this impacts the Senate, though, it sets up a bit of a showdown. So either A—on the congressional side, we have some movement to attach to the EB-5 program to continue resolution, which absent what just happened today and absent any direct effect by some other senators outside of Senator Grassley seems highly unlikely and almost close to nil, or B—the fact that it doesn’t pass and there’ll be some legislative action, particularly by Senator Grassley from all accounts, which would try and amend the proposed legislation that’s currently on the table to return this back to $900,000. So as Sam is saying, it seems as of now, we are looking at a shutdown of the program and any aspect of $500,000 to live would be short term. Now, if we are able to attach in some formula and we are able to resurrect the program after a temporary lapse, and there is no increase in the investment amount, and there is no stay order, both of which seem highly unlikely, then maybe we have a short-term fight for $500,000, but it seems like the only certainty we have as of right now is up until June 30th at $500,000.

Sam:
Thank you, Rohit. Said differently—don’t hold your breath. It’s unlikely to happen. Let’s move on. So one thing Rohit touched on earlier was the actual federal court ruling that just happened a few days ago. Rohit, do you want to give a one-minute summary of the process and how that came to pass just a few days ago?

Rohit:
There were actually two distinct actions in two separate courts. One in the DC circuit court and one in the Northern district of California. In the Northern district of California, the regional center that had actually filed a case had made an argument that the regulations that were passed in November of 2019 were invalid because the Department of Homeland Security Secretary, at the point in time when they were passed, was illegally or incorrectly appointed to his position. So by virtue of that illegal and invalid appointment, any rule and regulation that was passed during his tenure would effectively be null and void. There are lots of reasons why the government countered that and said, look, the current Secretary of Homeland Security, Alejandro Mayorkas, was properly appointed. He did ratify. There were a lot of other questions about the applicability. We’ve been with this for almost two years now. And so to try and invalidate the regulations would obviously cause irreparable harm to the industry and to those investors that invested and a host of other arguments. The judge, however, in those instances did not seem to be buying those arguments. The judge essentially countered and said under precedent, there is no legal way that she could accept the government’s arguments. And so she did in fact invalidate the regulations and remanded them back to the Department of Homeland Security. So legally speaking, we are the regime of $500,000. Now the problem is, even though we have a legal ruling, how the government’s reacting, how USCIS is reacting, what the interpretation of this action is, and this ruling is all subject to interpretation.

So there are various attorneys with different modules and different thought processes, various regional centers with different thought processes. And it’s a very political issue with lots and lots of different opinions and fights. But what is clear, however, on the basis of the ruling, is up until June 30th, unless there is a stay, we are effectively at $500,000 by any which way we look at it. Whether or not the government accepts that, whether or not the government will actually accept any filing at $500,000, that’s a separate issue. But an investor can rely on the statute which is still applicable. And an investor can rely on the fact that there is a program up until June 30th and investors can rely on the fact that they can correctly file at $500,000. Of course, there are lots of nuances as to how that applies, but that’s the current state of affairs as of 1:40 PM central time today.

Sam:
Yes. Thank you, Rohit. And most importantly, although the rules are set to expire on the 30th, the petitions for the $500,000 must arrive at USCIS’s physical office on the 29th. They cannot arrive on the 30th. That’s when they lapse. So that really means you have to file on Monday to overnight a physical package of documents to arrive on the 29th. So, you really have between now and Monday at the FedEx cutoff time of 5:00, 6:00 or 8:00 PM depending on where you live to actually get this application submitted. So there really is not a lot of time. It’s important to realize that you are under an exploding deadline.

Okay. So now we’re going to get a little bit technical here. One of the major concerns and Rohit had talked about it a little bit earlier, is putting in $900,000 or $500,000 and how that can be addressed to reduce the investor’s risk. Let’s say the government still comes back and says, no, it should still be $900,000 even though the federal court has invalidated it. We still think it should be $900,000. There’s two different ways that we think can be used to address that situation. Right? So the first one is an investor puts in $900,000. Today, $500,000 actually goes into the project, $400,000 remains in escrow. And then when there is clarity in a month, six months, or a year, when that happens, the additional $400,000 either gets released into the project or if it is confirmed that it is $500,000, then that money just comes back to the investor.

That’s approach number one. The second approach is the investor just puts in $500,000 today, right? The money gets released into the project and then either the investor just gets approved, and the government honors the federal court ruling and no problem, or the government comes back and says, wait a minute, you’re short $400,000. And then at that moment, the investor can either fund the additional $400,000 to meet the $900,000 requirement, or if the investor chooses not to do that, either because they changed their mind or they don’t have the other $400,000 to do it, then assuming the project has this feature, they can rely on an approval refund guarantee, which basically means that if the investor is denied for any reason, including failure to put in additional capital required, they would just get the $500,000 back immediately at that time. So those are the two major structures that we see in the market today.

Obviously, there are others, but these are probably the two most common ways that most regional centers are dealing with the $500,000 and $900,000 issue. So in the second option, you’re putting less money out currently and preserving optionality. If you have to put in more money later, you do it. If you don’t, you don’t. The first option is a little bit more conservative, but it does require more capital to be committed today. That’s a really important thing that we’re seeing in how projects are looking to bring in investment capital today. Now Rohit, I’ll let you jump in and share your thoughts.

Rohit:
Sure. The other important aspect from the project perspective is what the documents say and what the escrow agreement would allow for. So in certain instances, the escrow agreement is hard and fast at $900,000. The disbursement trigger, rather the release trigger talks about $900,000, but is not really contemplated at $500,000 or some other amount. And so those types of documents do need to be amended. Secondarily, the subscription agreements to the offering packages also contemplate $900,000 in most circumstances. And so in order to file it at a $500,000 baseline, the subscription agreement would need to be amended. The operating agreement of a limited partnership agreement for those funds would also need to contemplate how to deal with the specific scenario, even if we’re dealing, even if we’re arguing that the investors of pari passu, which basically means treated the same, we would need to account for how we have two different classes of investors.

So on the project side in our law firm, we’ve been essentially tinkering with this for the last three and a half weeks because we were sort of seeing that this was going to come. And so we have a lot of the clients who we’ve been working with say: hey look, if this possibly happens, let’s work on supplements to the packages; let’s work on amending the various documentation. So you can immediately take in investors during that short window. Outside of that, the escrow amendments also are relatively, I wouldn’t say easy, but it’s something that does need to be done. Now, one additional feature to what Sam’s mentioning, that I’ve been not advising, but I’ve been suggesting to clients and I’m a little delayed in saying this during the conference, but I want to make sure that it’s clear; none of us are offering legal advice on this particular webinar. So we’re simply sharing our thoughts and strategies. Certainly the person that should be making the recommendation to you is your immigration attorney. So under no circumstances should you rely on anything we’re saying within the context of this webinar and take that as actual legal opinion.

But one thing that I am suggesting to some clients to consider is if you’re able to invest at the $900,000 which is the first option that Sam mentioned: file two applications. We would file two I-526s, one at $900,000 and one at $500,000. That way we cover the ground on both particular modules and what that would mean is two separate I-526 petitions and two separate USCIS filing fees. Then we see what the government does and if the government does not reject the $500,000 application and actually issues a receipt notice, then we have some level of comfort that, okay, well they’ve accepted the filing. Then we can go back to the fund and in the case of what Sam is mentioning, if they’ve got the refund guarantee and all the bells and whistles that EB5AN projects currently do, then you can work out with them how that $400,000 balance gets refunded within that circumstance. The other element of what he mentioned on part two of sending with the $500,000 and the technical issue that we do need to consider is when you put $500,000 into the form, well, does the $500,000 trigger a rejection because the mailroom clerk doesn’t recognize what $500,000 is? Do you need to consider the possibility of attaching a promissory note? Do you need to write $900,000 on the actual form and then in the addendum to the form, you explain that pursuant to this ruling, which you attach a copy of too, it’s supposed to be $500,000 and that’s what you’re asking for. So these are all legal questions that most attorneys are grappling with, which is why, as I mentioned 45 seconds ago, you want to rely on what your attorney would be advising, but certainly short window—take the action, do what your attorney suggests. And if you’re able to get into a project that has all the solid factors in the case, history, and backup that Sam’s groups do, then you are in good shape.

Sam:
The other thing that we didn’t mention, Rohit, is about a partial investment filing. So given that this event happened with very short notice, just eight days in total, a lot of investors don’t have the full liquidity of $500,000 to just wire into the project immediately. Some loans need to be taken, assets need to be sold, etc. So what our company allows for is a partial filing. If you’re an investor and you have $100,000 in cash today, assets worth more than $400,000 and just need time to create liquidity to create the cash to invest in, you can do a partial filing. You can put in $100,000 and sign a promissory note for the balance. File your application and then within six months fund the additional delta, the $400,000, and that is going to be acceptable, right? So that’s what we’re seeing a lot of right now because a lot of investors just don’t have that kind of liquidity on a short-term basis.

At the end of the day, the most important thing is the borrower who is actually borrowing the money. You want to be with a company that has a history of repaying loans on time, keeping their word, and developing projects on budget. The Kolter Group is a fine example with that kind of track record over the last 30 years. And we’ve been very lucky to have had the opportunity to partner with them as their exclusive EB-5 lender over the last eight years. In fact, in the first three projects that we did with The Kolter Group, we worked closely with Rohit years ago when he was with Klasko. And so we have worked together over many years and we’re very excited to be able to offer projects on very short notice to help accommodate investors who want to come in at the $500,000 but just can’t get to $900,000. But they can put in some amount of money in the next few days and make the balance up in the next six months or so.

I know Rohit has another call in two minutes, but I’ll let him jump in quickly here again and just share any final thoughts before he has to run.

Rohit:
Thanks, Sam. I mean again, it’s a crazy time. The one thing I’d mentioned, folks, as you’re going through and moving forward. Not too many regional centers are offering the optionality for the $500,000. It’s rare to see a group that’s actually done all the documents and jumped through all the hoops and have something ready to go and also have the track history. That’s all very attractive and things that you should be considering as you’re looking at this process. Certainly as your immigration attorneys are going to be filing, the one thing I would say is don’t file very, very bare bones packages. The application should be done in good faith because you don’t want to risk a rejection notice. You want them to at least honor your filing fee. You don’t have all the documents; you don’t have every single bank statement. But do it in a perspective that you can actually backstop any RFPs as they come. So make sure your capital is sourced and ready to go and possible. That’s sort of what I would advise any client and I’m sure your attorneys would advise the same.

Sam:
Great. Perfect. Thank you, Rohit. And as we discussed earlier Rohit—do you have additional capacity to take on clients before the upcoming deadline?

Rohit:
Yes, with a level of trepidation. So as with all attorneys, we’ve been getting inundated with various calls. But we would be more than happy to assist any clients assuming that we are able to and they’re able to move quickly and have documentation and we are able to make a good faith filing. We certainly don’t want to file a case that is going to get rejected or a case that is simply too difficult to win on any RFE down the line. So we welcome investor inquiries and we will do our best.

Sam:
Great. Thank you, Rohit. So we’re not going to have time, unfortunately, to go through questions on today’s webinar. But please, if you’re interested in getting more information about projects or learning about the source of funds requirements, what documents would be needed, anything related to immigration, support in filing your application in the next few days, please reach out to Rohit. His email is on the screen or shoot him a text message or call them at that number. Please email us at info@EB5AN.com and I’d be happy to jump on a quick phone call later today or tomorrow to help personally answer any questions and walk you through the documents to make sure that everything is clear. So with that, we’ve got to break so Rohit can get back to an afternoon of conference calls and same for me. Thank you again for taking some time to join us today. And again, the best way to reach us is probably email for both of us, because things are just really hectic right now and it’s just easy to keep everything organized if it’s all written in one place. So we look forward to helping you and hopefully things work out over the next week.

Rohit:
Thanks, Sam. Thanks everyone.