The EB-5 Reform and Integrity Act of 2022 (“RIA”) notes that “[a]n alien seeking to pool his or her investment with 1 or more additional aliens seeking classification under section 203(b)(5) shall file for such classification in accordance with section 203(b)(5)(E), or before the date of the enactment of the EB–5 Reform and Integrity Act of 2022, in accordance with section 203(b)(5).” This was an easy to miss statement made in the RIA and not one that many are focused on post the advent of the RIA.
Notwithstanding the foregoing, there is an interesting question. We all fully understand that when structuring a new stand-alone project offering, only a single EB-5 investor is allowed to invest therein. This knocks out friends and family members wishing to pool funds together to operate a business without use of a regional center. But what if a single investor wishes to subscribe to an NCE that already has one or more pre-RIA EB-5 investors? Would the single sentence that was stuck into the RIA preclude such a scenario? The language says “1 or more additional aliens” and so would there be a difference if the new, post-RIA EB-5 investor invests pursuant to a new offering (in the same NCE/JCE, since an NCE must wholly own a JCE to be classified as a stand-alone project) and in a different class of securities (e.g. first set of EB-5 investors would be deemed Class A members and the new post-RIA EB-5 investor would be a Class B member, etc.)? One would properly argue that the intent of the RIA was to apply the phrase “1 or more additional aliens” to only apply to new, standalone EB-5 offerings structured post-RIA and not, otherwise, a situation where a single post-RIA EB-5 investor wishes to join a pool of pre-RIA direct EB-5 investors.
The only guidance we have received from USCIS came from the last USCIS EB-5 National Stakeholder Engagement dated October 19, 2022. In USCIS’s subsequent publication of its notes, Mr. Kevin Muck, Division Chief of IPO Division 2, I-526, indicated that “All EB-5 investors seeking to pool their investments with other EB-5 investors must do so under the Regional Center Program.” Another short statement that still does not address our specific, nuanced question raised herein. We have submitted this question to the agency and hope to get a response regarding same.
Another question that also remains unanswered relates to job allocation. Traditionally, and even now, job allocation within the NCE is based on a first-in, first-out basis whereby jobs are allocated on the basis of I-526 petition filing date (meaning, the earlier you are in the filing food chain, the safer the EB-5 investors is with job allocation). However, as a result of retrogression or related delays with the National Visa Center or other (un)related considerations, this method might not be the best for EB-5 investors.
Of course, where there is an abundance of job creation, the job allocation is not an issue. Nevertheless, what might happen, moving forward, is that various NCEs will structure job allocation to be based on a first-in, first-out basis that is tied to the I-829 filing. EB-5 investors may not, of course, like this since it would not necessarily favor those who were early in time to subscribe to the NCE. There is no assurance, we will receive response of same.
