EB-5 Investment Report: Is Technology The Answer To Transparency In The EB-5 Program

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Recently, Reid Thomas, Executive Vice President of NES Financial, a company that provides centralized financial administration services, spoke with EB-5 Investment Report during one of their dialogue programs about importance of offering increased security, transparency and compliance to EB-5 transactions.

If you’re promising to refund somebody’s money—in the event of a denial—escrow is a logical thing. I think it protects both the investor and the issuer or regional center.

Recently, Reid Thomas, Executive Vice President of NES Financial, a company that provides centralized financial administration services, spoke with EB-5 Investment Report during one of their dialogue programs about importance of offering increased security, transparency and compliance to EB-5 transactions.

Thomas describes how their client’s services people manage and operate the technology on behalf of their clients. He says, "Every transaction that we do, a client’s services rep gets assigned to work with that specific client and gives the client access to that technology….we adjust the dial between technology, services and expertise to build the solution for our customers."

NES Financial was founded in 2005 with the goal of building technology based services for their clients to help them track their financial transactions. Today, NES Financial is one provider of these services, having bought a portion of JP Morgan Chase and representing Fortune 500 companies in both the auto leasing and real estate industries. They became involved with EB-5 because it shares the same characteristics of the specialized financial transactions they dealt with. Thomas explains, "We came across the opportunity about 3 ½ years ago and realized it has similar characteristics and if we could develop specific technology again that would drive the transparency and security necessary, that we could really offer value to regional centers, investors and really have a positive impact on the market."

The technology platform Thomas refers to is web-based and tracks the flow of funds so that investors, regional centers and/or any stakeholders can see where their money is at any given time during the escrow process. In addition to tracking funds, NES Financials "Suite of Solutions" also tracks the flow of documents, complying with SEC regulations. Via a "sub-account," the technology allows regional centers to share files with investors like photos, for instance, to update them on their projects.

Thomas describes how their client’s services people manage and operate the technology on behalf of their clients. He says, "Every transaction that we do, a client’s services rep gets assigned to work with that specific client and gives the client access to that technology….we adjust the dial between technology, services and expertise to build the perfect solution for our customers."

Although escrow is not required by USCIS for EB-5, Thomas says it is a "best practice." He cites the infamous Chicago convention center project as an example of escrow protecting investor’s money. All the inventors on that failed project got 100 percent of their subscription money back. Thomas says, "If you’re promising to refund somebody’s money—in the event of a denial—escrow is a logical thing. I think it protects both the investor and the issuer or regional center."

The best advice Thomas can offer investors and regional centers is to make sure their project lends itself to the realities of what EB-5 is, understanding that although it is a low cost of capital, the process is slow so you want to make sure your project can withstand that reality. He also suggests setting up the escrow early on. He says, "We not experts on being able to assess whether a hotel project in St. Louis would be successful or not, we don’t know. But we’re in a very good position to assess whether the capital structure of the project and the way the money is going to work, provides the necessary security, transparency and compliance for all the stakeholders involved, that’s where we focus."

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Dwight Cromie
@EB5investreport
since: 07/2012
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