EB5 Investors Magazine Volume 5, Issue 2 - Page 21

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.” EB5INVESTORS.COM 20