EB5 INVESTORS M AGAZINE
70
I ssues S urrounding S ourcing of
EB-5 A dministrative F ees
Even though the law is vague on source of funds for administrative fees,
it can turn out to be an important credibility issue for some marginal investors.
By Stephen P. Pazan
T
he consultant performing a source of funds
analysis is often asked by the EB-5 investor
exactly what specific documents and proof are
required. Admittedly, some documents are so commonly
provided that they can be considered as required. But law
and policy, even where it does discuss the documents
that the Investor Program Office wants to see appended
to an I-526, is permissive. It talks about the documents
that an investor may or should supply. The expert’s reply,
then, to a foreign investor who asks the question is often
a dissatisfying and ambiguous. “It depends.”
In a recent scenario, a foreig n investor paid his
administrative fee from an LLC account in the United
States after the source of funds report had been
completed. The investor’s lawyer and SOF consultant
had never been told about the LLC. Understandably, the
regional center, which wanted to receive the investment
quickly, was frustrated by this the last minute switch.
A reasonable person would have assumed investor
would have drawn the funds from previously disclosed
accounts. The question posed was, if the I-526 was
submitted without sourcing the administrative fee, what
would the result be?
ADMINISTRATIVE FEES
NEED NOT BE SOURCED
A d m i n i s t r a t i v e fe e s i n c lu d e d i f fe r e nt t h i n g s
depending on the project. Some include attorney
fees, fees for source of funds reports, commissions
to agents and other expenses for which the typical
investor might ot her w ise be responsible. In al l
cases, adm i n ist rat ive fees e x ist ma i n ly for t he
pleasure and profit of the regional center running
the project. In fact, in today’s competitive EB-5
market, some projects “waive” them altogether as
an incentive to investors. Then, they likely recoup
some of what wou ld ot her w i se be col le cted by
charging for services separately.