will ultimately be approved: Brazilian I-526 filings were
rejected at a slightly higher rate than the global average
in fiscal 2016, with just under three quarters of applicants
granted visas. That might be because until recently many
Brazilians had undeclared assets, says Bruna Canto, a
senior adviser in LCR Capital Partners’ Sao Paolo office.
“Brazilians historically haven’t been able to document
their source of funds well,” she says. Still, an amnesty
last year allowed Brazilians to regularize their situations,
and Canto anticipates that EB-5 applicants will have an
"Around 8,000
millionaires
left Brazil in
2016, the third-
highest outflow
worldwide..."
easier time moving forwards. Another problem might
be harder to solve: Brazilians are highly relationship-
focused, and often rely on family lawyers or friends of
friends instead of seeking expert assistance. That can
mean investors may receive bad advice, even as they grow
more sophisticated in other ways, says Edward Beshara, a
managing partner at Beshara Global Migration Law Firm
in Orlando.
“They’re either getting bad lawyers, or ones who say they
do EB-5 but don’t know what they’re doing,” Beshara
warns. “They don’t have all the information they need to
make the right decisions.” In general, though, Brazilians
are now much more savvy about the EB-5 process, Canto
says. “Usually the people that contact us today already
have an understanding of the program,” Canto says.
“They’ve already done a lot of research, they’re not as
uninformed as they used to be.”
The flip-side of Brazilians’ reliance on personal
relationships is that they share information, and pay
close attention to how other EB-5 investors are faring,
adds Castro, the Pompano Beach lawyer. In the early
2010s, Castro says, most Brazilians wanted to run their
own projects, and were wary about ceding control to
developers. “When I started going to Brazil, we got a lot of
pushback because of the lack of control,” Castro says.
But over time, Brazilians have seen that going solo can
backfire. “Brazilians have learned, from the mistakes of
their peers, that developing a business in the US with 10
or more jobs is very hard,” Castro says. Now, Brazilians
are more open to working with regional centers, although
some remain wary after seen friends stung by poorly
managed projects. “The biggest obstacle that an EB-5
regional center has in Brazil is breaking the barrier of
developing trust with the investor,” Castro says. Because
of that wariness, many Brazilians favor relatively small,
bricks-and-mortar projects, where they can more easily
keep tabs on things. About 80 percent of LCR Capital’s
Brazilian investors opt for real-estate development
projects, like the Surf Club investment favored by the
Stupiello family, LCR Capital’s Canto says.
Other EB-5 developers are looking to build credibility
by working with brands that are well-known in Brazil.
Florida EB-5 Regional Center CEO Dennis Slater, who
is helping to fund the US expansion of Brazilian fast-
casual restaurant chain Spotelo, says about a quarter of
his investors now come from Brazil. Even with Spotelo’s
brand recognition, though, Slater has to work hard to
convince Brazilians that his project is legitimate and
worth backing.
At one point, Slater even added a webcam to his
company’s website, so that potential investors could
watch a live stream of each day’s lunch service in Spotelo’s
flagship store in Orlando’s Florida Mall. That kind of
attention to detail is necessary, Slater says, because
Brazilian EB-5 investors thoroughly investigate the projects
they fund, typically spending about six months doing
due diligence before making a commitment. “They’re
very prudent investors, and they’ll make sure they’re
comfortable with the investment before they move
forwards,” he says. The maturation of Brazil’s EB-5
sector is well-timed, says Castro: the country’s current
president, Michel Temer, remains mired in a corruption
scandal, and former President Luiz Inácio Lula da
Silva — himself facing a prison sentence on corruption
charges — is the frontrunner in the race to replace him.
That suggests further political chaos lies ahead, which
could drive more wealthy Brazilians to explore the EB-5
program. “I think we haven’t even seen the tip of the
iceberg. We’re going to see a mass exodus coming out
of Brazil,” Castro says.
“We need to stay tuned, as an EB-5 service-provider
community, and make adjustments to service this
community.” For now, Stupiello says she and her
husband are happy to remain in their relatively peaceful
corner of Brazil, and let their son Bruno reap the rewards
of their EB-5 investment. Still, Stupiello says, she’s
paying close attention to Brazil’s economic and political
problems, and will be relieved to have the option of
coming to America in the future. “We feel lucky,” she
says. “We know that we’ll have a choice. If we want, in
our retirement, we’ll have a chance to go to a quieter
place, and be close to our son.”
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