EB5 Risk Disclosure

COMMON EB-5 PRIVATE PLACEMENT RISK FACTORS

Private placements are subject to U.S. securities laws and regulations. EB-5 investments structured as private placements are subject to the regulations because they are private placements. Given the extensive risks and speculative nature of private placements and EB-5 investments specifically, it is important that a person who is considering participating in a private placement that has an EB-5 immigration component understand certain of the common risk factors that may be experienced.

Specific risk factors for a private placement will be stated in its private placement memorandum.

Common Financial Risk Factors

  • an investor may lose their entire investment including other costs and fees paid

  • investment capital not guaranteed nor does it have rights of redemption

  • investment returns are not guaranteed

  • investment is not transferrable or has limited transferability

  • investment is in an illiquid security

  • investment is generally in a new business enterprise with limited or no operating history

  • investment may be subordinate to other financing arrangements

  • investment might not be secured against an asset or has only limited security

  • investments might not be repaid on time or at all

  • an issuer of securities may fail to subscribe a required number of investors

  • fraud or misuse of funds may occur

Common Immigration Risk Factors

  • an investor may be denied a visa if they provide false or misleading information to USCIS or USDOS

  • an investor may be denied a visa if they have certain political affiliations

  • an investor may be denied a visa if they have certain medical conditions

  • an investor may be denied a visa if they have committed a crime of moral turpitude or other crimes

  • an investor may not receive a permanent visa if insufficient jobs are created

  • an investor may not receive a permanent visa if their investment is not sustained

  • an investor may not receive a permanent visa if a material change to the business plan has occurred

  • an investor’s derivative child family member may “age out” and become ineligible for a visa under their investor parent application

  • USCIS might revoke the designation of a regional center potentially causing investors to lose immigration benefit

  • USCIS may revise or update existing policy that could cause a petition already submitted to be denied

  • Congress may substantially change immigration laws and retroactively apply them

  • Congress may cancel or allow the EB-5 regional center program to lapse

 

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