EB5 Investors Magazine Volume 7, Issue 1 - Page 14

EB5 INVESTORS M AGAZINE 12 REDEPLOYMENT by USCIS. In addition, each EB-5 investor who notifies the EB-5 fund that he or she has withdrawn or desires to withdraw his or her I-526 petition should be required to provide evidence of withdrawal in order to receive the refund. Providing EB-5 investors who have withdrawn or desire to withdraw their visa petitions an opportunity to receive repayment prior to reinvestment is one of the most important ways for EB-5 sponsors to avoid potential litigation with EB-5 investors. REVIEW THE EB-5 FUND DISTRIBUTION PROVISIONS AND MODIFY, IF NECESSARY, TO ALLOW FOR STAGGERED PAYMENTS TO EB-5 INVESTORS Because of the long waiting periods that may be experienced by some EB-5 investors, it has become necessary to restructure EB-5 funds to allow for distributions of capital to be made to individual EB-5 investors at different times, rather than to all EB-5 investors at once. However, if the EB-5 fund partnership or operating agreement does not allow for that method of distribution, the EB-5 fund manager could be subject to litigation for making distributions that are not in accordance with the fund’s governing agreement. Therefore, as part of the reinvestment process, the EB-5 fund manager should consider whether an amendment should be made to the fund’s governing agreement to allow for repayment of capital to each EB-5 investor who is eligible for repayment from the proceeds of repayment of each investment and reinvestment, as well as whether investor consent is required in connection with same. FOLLOWING BEST PRACTICES FOR REDEPLOYMENT SHOULD PROTECT EB-5 INVESTORS & REDUCE LITIGATION RISKS FOR EB-5 SPONSORS The EB-5 reinvestment requirement imposed by USCIS has resulted in EB-5 investors having reasonable concerns about the manner in which their capital i s b e i ng re i nve ste d. EB-5 f u nd sp on s or s mu st appropriately address these concerns to fulfill their duties to the EB-5 investors, thereby mitigating the potential risks of litigation. C atherine D e B ono H olmes is the chair of JMBM’s investment capital law group. She has practiced law at JMBM for over 35 years. Holmes helps real estate developers and business owners, brokers, investment advisers and investment managers raise and manage investment capital from investors. In the last 10 years, she has represented over 100 real estate developers obtain financing through the EB-5 program. She also advises Opportunity Zone investments. For the last two years, she was named one of the top 25 securities lawyers in the country by EB5 Investors Magazine. R onald R. F ieldstone currently practices primarily in the areas of corporate/securities, real estate and taxation law. Since 2009, Fieldstone has served as counsel for multifaceted industries involving EB-5 program offerings, including more than 350 EB-5 projects with a combined projected capital raise in excess of $8 billion. Fieldstone frequently lectures and publishes in the EB-5 industry. He is also a professional advisor in the Opportunity Zone industry. Fieldstone received his undergraduate degree, MBA and J.D. from the University of Pennsylvania.