Generally, in immigration law, attorneys more commonly
tor—but not both. While some attorneys may disagree
Therefore, given the government’s extra measure of con-
engage in dual representation of clients than in other prac-
with our opinion based on their specific waiver language,
sumer protection required for security offerings, we believe
tice areas; this is due to the common fact that, in business
which tends to narrowly define the scope and limits of at-
that an attorney who engages in dual representation may
law and family law contexts, the interests of both clients
torney representation, we believe dual representation in
face a difficult situation if certain prejudicial information
are usually closely aligned. Immigration representation is
the EB-5 context is fraught with risk and that waivers are
about a regional center arises, as fiduciary duties to both
unique when compared to other areas of the law, as it is
insufficient. In addition to the ethical issue of a conflict of
clients will be in conflict. Although a waiver may contain
typically not an adversarial process, and as all parties typi-
interest between two clients, an EB-5 attorney runs the risk
language explaining that the EB-5 investor has assumed
cally have the same desired objectives . Further, as a prac-
of SEC scrutiny and potential enforcement as EB-5 offer-
the risk and will seek new counsel in the event a conflict
tical matter, using separate counsel in a business or family
ings are securities offerings.
arises, certain SEC anti-fraud rules cannot be waived. If the
2
immigration context results in inefficiencies and higher
costs for both parties.
SEC Anti-Fraud Provisions
conflict of interest cannot be resolved through a waiver,
• A serious conflict may arise in a dual representation con-
then the attorney would have to withdraw from a difficult
text when an individual investor asks an immigration attor-
Generally speaking, a gap in power and financial knowledge
situation that could have been altogether mitigated by not
ney to perform immigration due diligence on a regional
While most other types of business immigration cases al-
often exists between a large corporation that is issuing the
representing both clients in the first place.
center’s project prior to subscription. It’s very common in the
low a client to consent to dual representation with a prop-
security and an individual investor of the security. Congress
er waiver, we believe the EB-5 context presents unique
enacted the Securities Act of 1933 to protect investors from
Unlike a typical securities offering, the power and knowledge
challenges when a waiver is unlikely to stand. The interests
fraud in the offer or sale of securities along with the Secu-
gap may be even greater in the EB-5 context where
of the regional center and the individual investor are ar-
rities and Exchange Act of 1934 to govern the secondary
EB-5 investors are often foreign nationals who
guably not aligned at the very outset of the EB-5 relation-
trading of securities. Under these Acts and corresponding
may have limited English proficiency; have
ship, since the regional center’s main objective is to obtain
SEC regulations, violations for issuers of security occur when
limited understanding of complex U.S.
financial funding for its projects while the investor’s main
there is either negligent misrepresentation or actual knowl-
immigration and securities laws; and
market. In this instance, a conflict may
interest is to obtain immigration benefits. Given these dif-
edge of making an untrue statement of material fact or any
are often working through third par-
arise between the competing duties
fering interests, we believe that as a matter of best prac-
omission to state a material fact, which cannot be waived.
ties that include migration agents. As
of loyalty to the regional center and
tice, an immigration attorney should only represent one
Although most EB-5 offerings are not registered securities
such, there is a greater likelihood that
the individual investor. The immigra-
party—either the regional center or the individual inves-
offerings, these anti-fraud provisions still apply.
the EB-5 investor may be unaware of
tion attorney must accurately reflect
the risks that he is assuming when he
the regional center project’s particular
industry for individual investors to seek guidance from their
signs a dual representation waiver. Based
on these unique factors, we believe there is
a greater likelihood that an EB-5 investor may
hastily sign a waiver without truly understanding the
immigration attorney on factors that may affect the likelihood of success for a particular EB-5 project, such as
the capital stack, job cushion and job allocation procedures, in order to compare them
against other popular projects on the
weaknesses to the individual investor, as
it is in the investor’s best interest to select
the project with the highest likelihood of success. This results in a violation of the duty of loyalty
extent of his consent to dual representation if it is not prop-
to the regional center, as the regional center may lose the
erly explained to him by independent counsel.
investor and their funding.
Therefore, even if a regional center and an investor may
• Regional centers and individual investors also usually have
agree to a waiver, we do not recommend that the immigra-
competing interests when it comes to the timing of the re-
tion attorney represent both clients.
lease of EB-5 funds into the actual project. As the regional
Divergent Interests and Conflicts in the
EB-5 Context
center’s primary goal is to secure funding, it is in the interest of the regional center to receive funds from escrow as
soon as they are deposited by the individual investor, so
“Given these differing
It is also difficult for an immigration attorney to represent
that money can be immediately deployed into the busin