Jul 29 – Attorney Risks

Comment: Attorney Risks 

There are at least three distinct factors that go into the decision to make
an EB-5 investment, and there are three distinct kinds of licensed experts
that can advise investors about them.
 
 
1) Structured Finance:
 
To evaluate an EB-5 investment one needs to be proficient in the field of
Structured Finance. One needs to evaluate the overall financial structure
for the project, and see where the EB-5 portion fits in. For example,
consider the following three aspects of Structured Finance.
 
• Inter-creditor Agreement(s), especially Subordination Clauses: An EB-5
investment has multiple sources of capital: typically banks in a senior
position, EB-5 sharing the mezzanine position with other mezzanine
investments, such as preferred equity, bridge loans etc. Subordination
clauses govern the relative place and priorities of various investments.
These clauses can be very simple or very complicated or something in
between – and are usually part of an “Inter-creditor Agreement” which could
run into dozens of pages.
 
• Underlying Asset in the deal terms/structure: EB-5 investments have a
complex structure. One needs to determine the value of the NCE’s agreement
with the JCE, especially as regards to what assets are pledged toward the
NCE’s loan. Sometimes the loan is secured by a hard asset such as
land/buildings, sometimes the equity of the JCE, which may or may not have
any value in liquidation proceedings and sometimes debt possessed by the
JCE, which could also be of questionable value in a work-out.
 
• Various entities affecting the investor: We understand that large
projects in New York/Los Angeles/etc, have structures which involve more
than a dozen interacting entities, intimately affecting the NCE and JCE,
–and deal structures which require a combination of a mining engineer,
cartographer and a mini-Einstein to grasp.
 
Structured Finance is a distinct area of law that takes many years to
master. Expertise in that field is needed to understand EB-5 investments
qua investments–and that should be left to those who have the expertise to
untangle the agreements, the clauses, the terms, the structures and the
assets and their relationship to an EB-5 investor to be able to suggest an
EB-5 security to an investor.
 
 
2) Financial Evaluation:
 
Professionals giving financial advice are regulated by SEC. They are
trained to evaluate investments on several criteria such as:
 
• Suitability: Evaluating suitability of the investment for an investor is
exactly what a FINRA registered financial advisor is trained and registered
to do. It is a complex skill obligating the advisor to adhere to certain
professional standards, which are set by SEC and FINRA.
 
• Location: Simply looking at a record or reputation of a developer, or the
nature or location of the project is entirely inadequate to evaluate a real
estate investment. A developer with an illustrious record with a great
location and a successful project can still have a lousy investment
opportunity depending on the price.
 
• Real Estate Expertise: Buying and selling homes is not a qualification
for evaluating the real estate value of a hotel in Los Angeles, a
residential tower in Manhattan or an assisted living facility in Florida.
There are distinct sectors and sub-sectors in the real estate market, each
with their own expertise.
 
Giving financial advice without a FINRA license is a violation of SEC
rules, and is not covered by typical legal malpractice insurance that
immigration attorneys carry and leads to personal liability
 
 
3) Immigration Risks:
 
Immigration attorneys can certainly evaluate the job cushions for the
project, calculate how many jobs have been created based on the models used
etc. They can distinguish projects based on whether the job cushion is 400%
or 4% etc.
 
 
Probably the optimal structure is the financial adviser quarterbacking the
advice–bringing in experts in Structured Finance and Immigration law as
needed. By unwittingly usurping all three functions, and making suggestions
to clients on the choice of EB-5 investments, or giving clients a short
list of “good’ or “reputable” projects or Regional Centers, immigration
attorneys risk their law licenses, expensive litigation, and their personal
assets by violating the SEC laws against investment advice. Advising
investors on financial viability of an investment without having a FINRA
license is a violation of SEC laws, and such violations are not covered by
standard malpractice insurance policies most attorneys carry, even EB-5
specific insurance, which is for legal advice and not for financial advice.
Though Chinese investors have not been litigious, that is not the case the
Indian or other nationalities that dominate today’s EB-5 market. Taking
this large a risk for a relatively small legal fee such as $25,000 makes no
economic sense, since the risks are more than 10 times to 30 times larger
than that. Don’t be sorry, be safe.


Please let us know your thoughts by writing to us at <a href=”mailto:editor@ilw.com” target=”_blank”>editor@ilw.com</a>.
<div></div>
<!– END Comment –>

<!– Article; Blogging; News –> <!– <a href=””></a> –>

<a href=”http://discuss.ilw.com/articles/articles/391309-article-indian-h-1b-holders-beware-%E2%80%93-relief-from-congress-is-not-assured-and-time-for-eb-5-as-a-backup-is-short-by-matt-gordon” target=”_blank”>Article: Indian H-1b Holders Beware – Relief from Congress is not assured and time for EB-5 as a backup is short By Matt Gordon</a>

<a href=”http://discuss.ilw.com/articles/articles/391316-july-29-naturalize-now” target=”_blank”>Article: Naturalize Now! By Alan Lee, Esq.</a>

<a href=”http://discuss.ilw.com/articles/articles/391311-article-need-to-plan-ahead-before-sponsoring-a-senior-parent-for-a-green-card-by-cyrus-mehta” target=”_blank”>Article: Need to Plan Ahead Before Sponsoring a Senior Parent for a Green Card By Cyrus Mehta</a>

<a href=”http://discuss.ilw.com/articles/news/391312-news-uscis-closes-the-moscow-field-office-to-public-on-feb-28-2019″ target=”_blank”>News: USCIS Closes the Moscow Field Office to Public on Feb. 28, 2019</a>

<a href=”http://discuss.ilw.com/articles/news/391313-news-asylum-and-internal-relocation-guidance” target=”_blank”>News: Asylum and Internal Relocation Guidance</a>

<a href=”http://discuss.ilw.com/articles/news/391314-news-h-2b-petitioners-must-include-temporary-labor-certification-final-determination-with-form-i-129″ target=”_blank”>News: H-2B Petitioners Must Include Temporary Labor Certification Final Determination with Form I-129</a>

<!– END Article; Blogging; News –>

<!– Focus –>

Focus: New Reg India EB5 Events

India Events
<img src=”http://ilw.com/immigrationdaily/1.png”>

<table border=”1″ cellspacing=”0″ cellpadding=”0″ width=”712″>
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12 & 13 -Aug

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Hyderabad

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ONE Seat Available

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Southern India

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14 & 16-Aug

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Bangalore

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17 & 18 -Aug

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Chennai

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19 & 20 -Aug

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Thiruvananthapuram

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25 & 26 -Aug

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Delhi

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Seats Available

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Northern India

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27 & 28 -Aug

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Chandigarh

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29 & 30 -Aug

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Ludhiana

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31-Aug & 1-Sept

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Amritsar

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6 & 7 -Sept

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Mumbai

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Seats Available

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Western India

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8 & 9 -Sept

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Surat

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10 & 11 -Sept

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Baroda

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12 & 13 -Sept

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Ahmedabad

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</table>

About ILW India Expos

<ul type=”disc”>
<li>
India is the #1 EB5 Country, larger than the rest of the world
combined, including China
</li>
<li>
India is currently the world’s fastest growing major economy, it is
growing faster than China, the number of new millionaires created each
year in India is more than China
</li>
<li>
We will quickly put you in front of investors and agents to present
your project to. Our expos will flood you with many prospects in a
short time
</li>
</ul>

Format

<ul type=”disc”>
<li>
Expo featuring seminar and exhibition; Mini meetings with investors and
agents
</li>
<li>
Please bring brochures, PowerPoint presentation, table displays and
business cards
</li>
<li>
Special Note for Attorneys: The only way an immigration attorney can
participate and speak at this event is if they are nominated by the
issuer exhibiting at the custom expo. (there is no fee charged to
immigration attorneys).
</li>
</ul>

Price:
EB-5 Issuers – Discounts still available if you act now


For more information, please call 212-545-0818 or email webmaster@ilw.com
or <a href=”http://ilw.com/corporate/information-request-form.shtm”>click here</a>.

<!– END Focus –>

<!– Headlines –>
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Headline: U.S. and Guatemala Sign Controversial Immigration Deal Despite Widespread Opposition
<a href=”https://www.democracynow.org/2019/7/29/headlines/us_and_guatemala_sign_controversial_immigration_deal_despite_widespread_opposition/” target=”_blank”>Click here</a>

Headline: US migrant detention centres are overcrowded and families are still being separated
<a href=”https://www.abc.net.au/news/2019-07-28/inside-a-temporary-us-detention-centre-for-children/11337008″ target=”_blank”> Click here</a>

Headline: Mexico to help create 20,000 jobs in Honduras to curb migration
<a href=”https://www.reuters.com/article/us-usa-immigration-mexico-honduras/mexico-to-help-create-20000-jobs-in-honduras-to-curb-migration-idUSKCN1UN00J” target=”_blank”>Click here</a>

Headline: The Immigration Hotline in OITNB Is Real — and So Is the Trouble Surrounding It
<a href=”https://www.yahoo.com/lifestyle/immigration-hotline-oitnb-real-trouble-150000114.html” target=”_blank”> Click here</a>

Headline: Trump’s latest immigration outrage would turn the U.S. into a ‘papers, please’ nation
<a href=”https://www.decaturdaily.com/opinion/editorials/los-angeles-times-trump-s-latest-immigration-outrage-would-turn/article_3a0cb7d1-68f5-50ac-9c1f-497be612565f.html” target=”_blank”> Click here</a>

<!– END Headlines –>

<!– Service Provider –>
Kaufman & Kahn, LLP

Real Estate Practice: Landlord/Tenant and Real Estate Litigation;
Cooperative and Condominium Disputes; Collection Actions; Enforcement of
Judgments; Arbitration; Residential Real Estate Transactions; Commercial
Real Estate Transactions; Business and Commercial Litigation in State and
Federal Court; Business Transactions (Contracts, Promissory Notes,
Mortgages, Security Agreements, Operating Agreements, Shareholder
Agreements, Partnerships, License Agreements); and Commercial Leasing and
Lending.
Intellectual Property Practice: Copyright Law and Trademark Law: filing and
prosecuting applications in the Copyright Register, the USPTO and TTAB;
litigating to enforce registrations against infringers (and defending
against alleged infringers) in federal courts; defending against Americans
with Disability Act (ADA) claims; Intra-Corporate Business Litigation
(“Business Divorces”); Drafting and Negotiating Transactions: Licensing
Agreements and other Intellectual Property Contracts.
Contact:Robert L. Kahn, Esq.; Kaufman & Kahn, LLP – 10 Grand Central, 155 East 44th Street, 19th, Floor, NY, NY 10017, (212) 293-5556, <a href=”mailto:kahn@kaufmankahn.com”>kahn@kaufmankahn.com</a>

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<!– Letters to the Editor –>
<a href=”http://discuss.ilw.com/blogs/idblog/391315-letters-of-the-week-july-29-august-2″ target=”blank”>Letters of the Week</a>
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<!– ComingsNGoings –>
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ComingsNGoings: Immigration Event 
Wednesday-Friday, November 20-22, 2019
Grand Hyatt Washington
1000 H St NW
Washington, DC 20001. Register <a href=”https://www.idga.org/events-homelandsecurityweek”>Here</a>.

<!– END ComingsNGoings –>

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