Transcript EB-5 - 2015 AREAA Global & Luxury Summit

Overview of Presentation:
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 EB-5: The Basics
 Individuals who might consider EB-5
 Direct vs. Regional Center
 Regional Center Entities
 How to create a Regional Center
EB-5 : The Basics
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 Congress created EB-5 category in 1990
 10,000 green cards available each year in this preference
 Two types of EB-5 cases: Direct and regional centers (RCs)
 90-95% of EB-5 petitions now through RCs
 I-829s: filed 21-24 months after investor gets conditional resident
status
 I-829 procedure generally
 Legislative status of EB-5 program – extended to September 30,
2015 – sunset of pilot program – likely to be signed this week.
November 3, 2011
EB-5 Basic Requirements
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 New commercial enterprise (created after November 29, 1990)
 Must “benefit the U.S. economy”
 Must create at least 10 full-time jobs
 Must invest $1 million, or $500,000 if targeted employment area
(TEA) (rural or high unemployment)
 Procedure: File I-526 (invest/actively in the process of investing),
then I-485/CP for CPR. Within 90 days of 2 yr anniversary, file
I-829.
November 3, 2011
Individuals Who Should Consider EB-5
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 Parent who wants the children to go to school in the U.S.
 Investors from non-treaty countries and E-2 investors who
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don’t qualify for regular EB-5 or age out child.
Retirees
Potential L-1 applicants who are nationals of China or
Russia
Entrepreneurs who want to set up a new business in the
United States that will not create 10 jobs
F-1 student who wants to start a business
November 3, 2011
Individuals Who Should Consider EB-5
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 Spouse of permanent resident
 CEO/manager of a company who is not an L-1A transferee
 Foreign nationals in a multiple-year immigrant quota
waiting list
 Individual owner of a business outside of the United States
who doesn’t qualify for an L-1
 H-1B nearing six year limit
 Potential H-1B shut out by quota
November 3, 2011
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Difference between
Direct EB-5
and
Regional Center EB-5?
Individual EB-5
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Investor buys business or starts new business
Must be 10 direct employees
Few applications
Regional Center EB-5
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 What is a regional center?
 Over 95% of all applications
 Huge increase in past 3 years (over
242 approved)
 Main advantage =
Indirect employment counts
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What are
Regional Center EB-5
Entities?
Regional Center Entity
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 Apply to USCIS for designation approval
 Ongoing administration and compliance
responsibilities
 Markets projects for investors
 Due diligence regarding investors’ source of funds
 Prepares I-526 and I-829 packages
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How to create a regional
center?
Form I-924 Application Considerations and Costs
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Professional fees
Government filing fees for I-924 - $6,230
Regional center recoupment of costs through charges to
investors
Regional center charges to project promoters
MOU for Affiliated Projects Financing costs
Source of Funds review
Banking & Escrow costs
When is money available
to developer?
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Investor must invest 100% (usually $500,000) before
I-526 filed
Money can go
To project immediately – if so TEA designation made at this time
To escrow
Released when investor’s I-526 is approved
How much Capital can be raised?
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Depends on job creation
Economist report projects job creation
Divide by 10 = maximum number of investors
Multiply by $500,000 = maximum capital raise
Investment Must Be “At Risk”
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Guaranteed redemption disallowed
What is allowed?
Third party insurance
How does it work?
Does it violate “at risk” provisions?
EB-5 Securities &
Corporate Legal
Considerations
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ARREA National Conference
Las Vegas – September 25, 2012
P R E S E N T E D B Y:
J O R L AW , E S Q .
Biography - Jor
Homeier & Law, P.C. is a law firm devoted exclusively to corporate and business
transactional law, including securities, for clients ranging from established and publicly
traded companies, to startup businesses and entrepreneurs in a wide range of
industries. The firm’s practice includes finance, secured lending, mergers and
acquisitions, licensing, securities, venture capital, new media, technology, ecommerce, and other general transactions. Homeier & Law, P.C., is a leader in EB-5
related corporate and securities transactions, and represents a number of regional
centers as well as private EB-5 clients.
 Jor Law is a founding shareholder of Homeier & Law, P.C. As part of his regular
corporate and securities practice, Jor routinely advises on EB-5 related
transactions. In that capacity, Jor represents both investors looking to invest through
the EB-5 program as well as businesses seeking capital through the EB-5 program
including through regional centers. Jor frequently presents at EB-5 industry events,
including those held by the American Immigration Lawyers Association, State Bar of
California, and Los Angeles County Bar Association. Jor received his J.D. from
Columbia University and his B.A. from UC Berkeley. Jor is a member of the California
and New York State Bars. In December 2008, Mr. Law was named a "Best Lawyer"
by LegalForce. For three years in a row, in each of 2009, 2010, and 2011, Jor was
recognized by Super Lawyers magazine as one of “Southern California’s Super
Lawyers – Rising Stars,” placing him among the top 2.5 percent of the best up-andcoming attorneys in Southern California who are 40 years old or younger, or who have
been practicing for 10 years or less.

Disclaimer
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This presentation is designed to provide practical
and useful information on the subject matter
covered.
However, it is provided with the
understanding that no legal, tax, accounting, or
other professional services are being rendered or
provided.
If legal advice or other expert
assistance is required, the services of a
competent professional should be sought.
Structuring: Equity or Loan
or Equity & Loan Model?
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Investor
General Partner
(usually the
Regional
Center)
General Partner
(usually RC)
Investor
Investor
Investor
Investor
Investor
Capital Raising
Entity & Project
Company
Capital Raising
Entity
Project
Company
Common EB-5 Documents
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Consents, restrictions, etc.
Due Diligence
LOIs vs Term sheets
Equity vs Loan Agreements
Guarantees & Security Agreements
Subordination
Call/put
Side letters
Leases / Management Agreements, etc.
Consulting Agreements
Joint Venture
Resolutions & Corp Housekeeping
Securities Offering Documents
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Investor Questionnaire
Subscription Agreement
Offering Circular (PPM)
Limited Partnership Agreement -or- LLC
Operating Agreement -or- Articles of
Incorporation & Bylaws & Shareholders
Agreement
Escrow Agreement(s)
How does EB-5
involve securities law?
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It’s just like a domestic money raise:
Financing secured from passive investors
+
Success dependent on management by others
=
A security
Objectives of the Securities Laws
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
Two goals of Securities Laws
adequate disclosure
(tell the truth)
 prevent fraud
(don’t lie)
Means to goal – registration and/or disclosure
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Laws
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Securities Act of 1933 – main (“primary transactions” by issuer)
Exchange Act of 1934 – for “secondary transactions” (resales by
shareholders)
Blue Sky
Foreign
Don’t forget… the 1940 Acts [ ICA… IAA ]
Securities law requirements
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
The offering of a security must be registered or exempt
 Registration – IPO; expensive (time and $)
 Exemption – must fit within, or lost
 Primary FEDERAL exemptions: Reg D and Reg S
 Example requirements:
 Private offering (Reg D)
 Non-U.S. persons (Reg S)
 Don’t forget STATE exemptions
 Don’t forget exemptions for large complex raises
 Investment Company Act: < 100 s/h … “qualified
purchasers”
 Section 12(g) Exchange Act: < 500 s/h [JOBS = now
2,000!]
 * Need to tread carefully – i’s & t’s – CAN be done
Finders
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Broker-dealers –vs- Finders
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Finders do not
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Broker-dealers are usually finders;
Not all finders are broker-dealers
Solicit investors
Participate in securities offering
Regularly introduce investors
Receive compensation based on success
Finder issues – extremely fact specific so case-by-case
Three stages when securities docs are
needed
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Generic doc set – accompany Regional Center
application filing with USCIS
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Offering doc set – used to solicit investors
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Most general, least specific – still needs to address
anticipated project types
Most detailed - disclose all specific terms of actual project
being sold
Exemplar doc set – for USCIS to use as template for
measuring all I-526s
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BIG marketing plus – offering pre-approved
Caution: no material changes after submission to USCIS
or start review anew
The Team
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 “Same old, same old” –
done domestically all the time
 This is a securities offering – SEC compliance required
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Same as typical U.S. domestic equity raise – Reg D (+ Reg S)
 Need a team to prepare all parts of the offering:
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Business plan – plan writer
Job creation report – economist
Securities offering documents – securities counsel
(H&L does)
Transaction documents (debt/equity) – business lawyer (H&L does)
Entity formation(LPs, LLCs) – corporate lawyer
(H&L does)
Financial pro forma projections – reviewed by CPAs
Marketing: foreign broker introductions – U.S.-based EB-5 consultant
 Team worries about details – YOU focus
on Big Picture
Contact
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Michael G. Homeier, Esq. – (818) 450-1551 (direct);
[email protected]
Jor Law, Esq. – (818) 450-1552 (direct); [email protected]
Clem Turner, Esq. - (646) 393-4702 (direct);
[email protected]
Vanessa Au, Esq. – (818) 450-1556 (direct);
[email protected]
Corporate Law -- Securities Law -- Business Transactions – EB-5
What other options exist for raising capital under
the EB-5 program?
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 Having project “adopted” by certified regional
center
 Purchasing already certified regional center –
caution as to geographic scope & industry type
 Pooled investment with individual EB-5 petitions
 Troubled businesses – credit for preserving jobs
How does the developer find investors?
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Where are investors?
Personal contacts?
Brokers overseas?
Role of immigration counsel
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Advising developers of options
Putting together team of professionals
Reviewing documents for immigration compliance
Filing regional center application
Preparing and filing application for project
preapproval
Filing EB-5 petitions for investors
EB-5 Funding &
Due Diligence SERVICES
Proposal Prepared Exclusively For:
2012 AREAA National Convention in Las Vegas, Nevada
September 25, 2012
Serious Resources.
Serious commitment.
Member, FINRA/SIPC
A FINRA Registered Broker-Dealer
Our resources and commitment have earned us a role as a market leader
in providing investment banking and corporate advisory services to both
leading and emerging financial institutions and businesses.
Our professionals possess significant experience in nearly all
facets of business transactions including debt & equity capital
placements, mergers and acquisitions (over 90 M & A transactions
over the past 20 years), recapitalizations and accounting and due
diligence analysis.
Clients in our Creditor Advisory practice include most of the
nation’s top financial institutions and we have performed in excess
of 2,700 engagements on their behalf.
During 2011:
LCG performed over 550 engagements for more than 55 different
financial institutions.
LCG and its affiliates assisted 45 businesses in successfully
navigating the current economic environment, including financings,
mergers and acquisitions, and restructurings.
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Lender’s Consulting Group
Lender’s Consulting Group provides independent due diligence and
transaction support services to the financial services industry. Our
professionals have extensive experience in credit underwriting, auditing,
public accounting, workout management, business operations and account
management. Our specialized experience provides lenders and investors
with additional insight into transaction risks that cannot be provided by most
other accounting and audit firms.
Field Examinations
• Survey Exams
• Recurring Exams
Lender Due Diligence
• Credit and Operations Reviews
• Bank Acquisition Due Diligence
Valuation Services
• Portfolio Valuation
• Business Valuation
Quality of Earnings
• Analysis of Historical Revenue Trends and Sustainability
• Analysis of Recurring vs. Non-recurring Expenses
• Analysis of Cash Flow Projections
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Bridging the Abyss between Lenders and Borrowers
A sampling of our institutional clients:
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LCG Capital Advisors
LCG Capital provides a broad range of investment banking and advisory
services for its clients. A FINRA registered broker-dealer and SIPC member
firm, which provides advisory services related to corporate mergers,
acquisitions and divestitures, recapitalizations, equity placements and
certain other advisory and investment banking services..
Debt and Equity Placement
• Debt Offerings and Refinancing
• Equity Offerings
• Capital Structure Strategies
M&A Advisory
• Sell Side and Buy Side
• Management Buyouts
Debtor Advisory
• Restructuring and Planning
• Working Capital Management
• Pre-Bankruptcy Planning
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Our Team
Mike Xenick - Managing Partner
Years of Experience: 22
Expertise: EB5 Advisory, Private Equity, Mergers & Acquisitions
Previous Employers: Atlantic American Capital Advisors,
Communications Equity Associates, Ernst & Young
Education: Masters and Bachelors in Accounting - University of Florida
Brian Smith - Managing Partner
Years of Experience: 18
Expertise: Corporate Finance, Commercial Credit, Structured Finance
Previous Employers: Textron Financial Corp, Health Capital
Education: Bachelors in Finance and Economics - University of Tampa
Paul Epstein - Managing Partner
Years of Experience: 18
Expertise: Commercial Credit, Underwriting, Due Diligence
Previous Employers: CitiFactors Financial, Healthcare Financial
Services
Education: Bachelors in Finance - University of Tampa
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Our Team
Christopher Pizzo - Managing Director
Years of Experience: 21
Expertise: Corporate Finance, Mergers & Acquisitions,
Restructuring & Turnaround
Previous Employers: Ernst & Young, The Knot, Vested Capital
Partners
Education: MBA in Finance - NYU, Bachelors in Accounting SUNY Albany
MaryJane Wermuth – Associate
Years of Experience: 5
Expertise: Corporate Finance, Mergers & Acquisitions,
Restructuring & Turnaround
Previous Employers: Merrill Lynch, Gulfcoast Business Finance,
Inc.
Education: MBA in Finance – University of Tampa
Jessica Lister – Analyst & Project Manager
Years of Experience: 2
Expertise: EB-5 Advisory
Previous Employers: American Land Lease
Education: Bachelors in Finance – University of South Florida
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EB-5 Funding Advisory Services Practice
 LCG provides a broad range of advisory and support services to
companies and individuals involved in U.S. immigrant investor programs,
including the Immigrant Investor Pilot Program (“EB-5 Program”). Our
clients include:
• USCIS-approved EB-5 Regional Centers
• Regional Center applicants, affiliated project developers
• Registered foreign and U.S. securities representatives
 We are trusted advisors to the principals and senior executives of these
entities in their efforts to access U.S. and international capital markets
to successfully and safely fund their project offerings.
 As a broker-dealer registered with the SEC and FINRA, LCG’s process
ensures the entire transaction is completed in compliance with U.S.
securities laws and guidelines, especially transaction solicitation and
payment of agent referral fees.
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EB-5 Program Advisory Services Practice
FINRA Compliant Placement Agent
• Compliance with U.S. Securities Laws
-Solicitation
-Investor Suitability
-Payment of referral fees
• Review, Analysis & Preparation of Project Transaction and Subscription
Documents
• Access to LCG’s secure virtual data room
• Investor Intake and Related Compliance
-“Know your customer”
-Suitability/Accredited Investor forms
-Coordinate flow of investor capital
• Payment of agent referral fees
Regional Center Advisory & Support
• Detailed Analysis of Prospective Projects
• Due Diligence and Market Research
• Capital Markets Assessments
• Risk Assessment and Mitigation
• Certified Business Valuations & Appraisals
• Quarterly Analysis of RC Project Portfolio
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EB-5 Funding Process
The Initial
Evaluation
Closing the
Transaction
The LCG &
USAdvisors EB-5
Program Process
Private Placement
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Preparation for
the Proposed
Transaction
Marketing the
Transaction
EB-5 Funding Process
EVALUATION
PREPARATION
MARKETING
• Access to project
information
• Evaluate and
analyze business
plan, pro forma
financials,
business case
• Assess
management
team/project
owners
• Agree on process
• Develop process
timeline
•
•
•
• Other detailed due
diligence – project
•
and EB-5 Program
in conjunction with
USAdvisors
• Move forward with
•
accepted projects
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PLACEMENT
• Listing of project on
EB5Info.com
•
• Contact referral
Assist with prep or network
review of PPM
• Distribute 1-page
Assist with or
project description to •
review marketing
interested parties
materials
• Evaluate suitability of
Set up initial data
interested investors
room
• Disseminate PPM and•
Initial investor
other marketing
target list through
information to suitable
proprietary referral investors
network
• Disseminate support •
Prepare & coach
information and
project
answer questions
management on
process
CLOSING
Assemble
remaining due
diligence data
room
Facilitate
completion and
submission of
subscription docs
Facilitate transfer
of Admin Fee and
investment into
escrow
Assist investor
counsel with I-526
prep
• Communicate
project
progress and
updates to
investors
during I-526
approval
process
• Closing
LCG’s EB-5 Funding Advisory Services Practice
We offer safety, security and risk mitigation to the project
owner/developer and Regional Center
EB-5 Private Equity Placements
• Solicitation and Funding of Private Equity & Debt Capital
• Access to Foreign EB-5 Investors via LCG’s Proprietary Global Referral
Network
U.S. Debt and Equity Placements
• Structuring of Entire Capital Stack
• Access to U.S. Debt & Equity Capital via LCG’s Proprietary U.S. Lender
Database
• Underwriting Services/Collateral Analysis
Registered U.S. Securities Representatives (“Agents”)
• Assist with Initial & Ongoing Securities Registrations and Compliance
• Access to High Quality Projects for Placement
• We work with U.S. based real estate agents (AREAA members) to add to our
network as registered reps, providing new commission opportunities
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Contact Information
Tampa Headquarters
Fifth Third Center
201 E. Kennedy Blvd
Suite 325
Tampa, FL 33602
Phone:
(813) 226-2800
Email:
Mike Xenick, [email protected]
Jessica Lister, [email protected]
Web: http://www.lcgadvisors.com/services/eb-5-capital.aspx
New York • Chicago • Houston • Dallas • Boston • Atlanta • Miami • Indianapolis • Los Angeles
LCG is a trade name for LCG Capital Holdings, LLC and its subsidiaries and affiliates which include: LCG Capital Group, LLC, a Florida limited liability company, which
provides debt placement, commercial real estate financing, loan portfolio divestitures, and certain other financial advisory services; LCG Advisory Services, Inc., a Florida
corporation, which provides strategic advisory, light turnaround and distressed consulting, restructuring advisory, accounting support, interim CFO/controller services, and
other corporate consulting services; and LCG Capital Advisors, LLC, a Florida limited liability company and a FINRA registered broker-dealer and SIPC member firm, which
provides investment banking, private placement and merger, acquisition and divestiture advisory services.
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Serious Resources.
Serious commitment.
Question and Answer Session
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© 2012 Wolfsdorf Immigration Law Group (all rights reserved) . The contents of this document are proprietary and should not be duplicated or shared without
the express permission from Wolfsdorf Immigration Law Group.
This presentation does not constitute direct legal advice and is for informational purposes only. The information provided should never
replace informed counsel when specific immigration-related guidance is needed.
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September 25, 2012