Los Angeles, CA (PRWEB) January 03, 2014
The EB-5 program is ever evolving, but one thing that remains a constant is the importance of due diligence and transparency, which are vital to any investor’s decision making process. Over the past few years we’ve seen project failures where investors and their agents did not perform their due diligence and issues were not disclosed to them which may have affected their decision on investing in the project in the first place. Due diligence requires doing background checks of those involved with the offering and asking many questions including how much the broker is making from the deal. With the New Year upon us, perhaps one the biggest issues now facing EB-5, is the disclosure of broker compensation. Would an investor have second thoughts regarding a project if they knew how much their broker was making? How important to investors is a return on their investment?
EB-5 Investment Report recently spoke with professionals in the EB-5 industry to get their take on these pressing issues.
According to Jason Li founder of Cansine, a large migration company in China and Director of the US China Immigration Investment Association, it is up to the regional center to tell the investors about broker fees and other issues in the Private Placement Memorandum or PPM. He says, the normal broker rate is between $40,000 to 45,000 and that some investors are not concerned about the fees, they just want their green card and a return on their money. He says, “ Everybody knows what the fees [are that] everybody charges in the industry, so everybody agrees that they should pay the fees in order for them to receive the green card. Some don’t really care about that, they only care if they receive their green card or if they receive their money back. If [investors] ask the question, I like to tell them everything.”
Securities attorney Michael Homeier says most investors are sophisticated and care both about getting their green card and receiving a return. He says, “Most of these investors are sophisticated people…People care about these issues. There are people who are so eager to come here, they’ll pay any price [but] most investors are not and most agents, their representatives are not and of course the government is not. The government cares very mush that the investors are not taken advantage of.”
Immigration attorney Bernard Wolfsdorf says that initially investors just want their green card, but later on down the line, they are looking for a return on their investment, however, how much of a return is not that important. He says, “At the start, it is ‘how quickly can I get my green card?’ And then further down the road it’s ‘where’s my money back?’ It’s not the primary consideration. The thing that is not a big deal is, what’s the return? They’re not looking for a good return.”
In the coming year, the EB-5 program is sure to continue to evolve and perhaps government agencies will make the disclosure of dealer broker fees mandatory to aid investors with their due diligence and the projects they choose.