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What is the EB-5 Visa? Learn more in this Interview with EB-5 Expert and EB-5 Attorney
Today you are going to learn exactly what is the eb-5 visa program including: how to immigrate through the eb-5 visa, how to invest in a regional center, what to look for when choosing a regional center, and more. Let’s get started.
What is the EB-5 Visa?
So what is the EB-5 visa? Simply put, the EB-5 visa is a way for immigrant investors to immigrate to the United States through investment.
Below is a transcript of an interview between EB-5 expert and regional center owner, Robert Kraft, and EB-5 attorney, Ili J. Subhan.
The interview was filmed at the Kimpton Journeyman Hotel in Milwaukee, Wisconsin, USA, which was developed using EB-5 funds.
First, you’ll learn about Mr. Kraft and how he got started with the EB-5 visa program.
Next, you’ll learn what the EB-5 visa is and how you can use it to immigrate to the USA.
There are two ways to invest through the EB-5 Visa program. You can either invest directly in an enterprise or you can invest in a regional center.
With either type of investment, you must create 10 full-time U.S. jobs within 2 years of the approval of the I-526, Immigrant Petition by Alien Entrepreneur. However, investment through a regional center has an advantage with counting job creation.
Direct EB-5 Visa Investment Benefits
The benefits of a direct EB-5 visa are the following:
(1) you own and have an interest in the business,
(2) you control day-to-day operations of the business,
(3) you have the option to purchase a franchise, and
(4) you have more control over the business funds.
Regional Center EB-5 Visa Investment Benefits
The benefits of investing in a regional center are the following:
(1) you may only need to invest USD$500,000 versus USD$1,000,000,
(2) you can count indirect employment creation,
(3) no geographical limitation to live and work, and
(4) you do no need any experience operating a business.[Please note the investment amounts in #1 will change on November 21st, 2019, to USD $900,000 versus USD$1,800,000].
EB-5 Visa Interview
Introduction of EB-5 Expert and Regional Center Owner, Robert Kraft, and EB-5 Attorney Ili J. Subhan
[00:00:01] EB-5 Visa Attorney Ili Subhan: Hi everyone. EB-5 attorney, Ili Subhan here and I’m here today at the Kimpton Hotel in Milwaukee, Wisconsin.
I’m here with Robert Kraft, the President, Chairman, and CEO of FirstPathway Partners, and President of the Board of Invest in the USA.
Thanks for being here today, Bob.
[00:00:18] EB-5 Expert Robert Kraft: Thanks Ili, my pleasure and we’re actually in an EB-5 hotel. This hotel was funded with EB-5 money from around the world, so, it is an appropriate place to meet.
[00:00:29] EB-5 Visa Attorney Ili Subhan: Yes indeed, and so today we are going to be talking about the EB-5 immigrant investor visa program. So, for those that don’t know, tell us a little bit about yourself, and how did you get started in the EB-5 space, Bob?
[00:00:42] EB-5 Expert Robert Kraft: Well, the short story is, I’ve been in business my entire career, I’m not an attorney, I wasn’t involved with immigration at all, but I had a software development company, and it was quite successful in Milwaukee. I was very involved with the State of Wisconsin on economic development, and some of the initiatives in the inner city to help people get employment.
I’m chairman of the board of, Word of Hope Ministries, which has a prisoner reentry program for the State of Wisconsin.
A lot of my time was spent helping people get their lives back together after incarceration. Helping them have a little bit of opportunity to get their respect and dignity back, give back to that community, and I’ve done that for the last ten years, and I’m still very active in that.
As I participated at the Chamber of Commerce on the board level for the Milwaukee Metropolitan Area, in the early 1990s, you could see that China was growing significantly in terms of its economic power and I suggested to the board that we figure out how to attract capital to Wisconsin from China.
Like in the ‘80s Japanese rose economically and made significant investments in the United States and if Milwaukee didn’t put its hand up and the State of Wisconsin in some fashion, the money that was flowing, beginning to flow to the United States would bypass us, and go to the coasts. So that was really the beginning of what led me into EB-5.
I made a number of trips to China to promote Wisconsin with the governors, and, that was really through a lot of the work that I’ve done in the inner city just helping people, so relationships were formed, with the city, congressional members, senators, and the governor, because we did good things to help a lot of people and weren’t looking for anything back.
So they accompanied me to China to promote Wisconsin and the State in terms of investment opportunities for those folks, and we couldn’t get any traction.
Problem was, nobody ever heard of Wisconsin in China, so, we kind of went back to the drawing board, and said, “there’s gotta be a reason to draw money into Wisconsin.”
We found EB-5, which was established in 1990, and then modified in ’92 when the Regional Center Pilot Program was established, and we thought, “that might be a good way to promote investment in Wisconsin, let’s apply for a Regional Center designation”, which I did in 2007. It was at the time that I had actually sold the software company, and did a year transition to an international company that had management and would take it over.
So I said, “this EB-5 business is very interesting.” I’ve always done international business. I’ve spent a lot of time all over the world and I’ve always found it interesting you know, the cultures, the people, the way they do business in different countries, and their objectives and where they want to go with their lives. So I thought this could be a pretty interesting way to end my career. So we became the 21st Regional Center designated in the United States in the 97 and I began full time and— but originally, it was to drive economic development for the state, and then it became much more than that, and we– since we started, we’ve gone from not being known overseas to one of the premier places for investment because of the good lifestyle, the conservative nature, the diverse economy, the welcomeness of the people here.
And, just the business opportunities in the Midwest. Foxconn is a result of all the seed planting that we did all over the state, that would have never happened if we hadn’t for eight years softened the beach head if you will.
So, we are real proud of what we’ve done for the state and, it’s a great business, and we’ve done a good job for investors also.
What is the EB-5 Immigrant Investor Visa Program?
[00:04:51] EB-5 Visa Attorney Ili Subhan: So for those that don’t know Bob, what is the immigrant– EB5 Immigrant Investor Visa Program?
[00:04:56] EB-5 Expert Robert Kraft: So, the EB5 Program, as I mentioned was established into law in 1990 and then modified in ‘92. It is a law that allows people to immigrate to the United States by investing $500,000, at-risk, it must be at-risk, create ten American jobs. And, then if you can do that and think like an American entrepreneur, then we very much want you to come to this country, Because these people are well- educated, motivated and obviously their successful already. And that’s a way to really take advantage of what is called “Merit-Based Immigration.”
And these people are well-vetted and they’re quality people. They buy homes, they send their child or children to universities, high schools, and they add to our economy and richness of life.
So, EB-5 is monitored by Department of Homeland Security, United States Citizenship and Immigration Services (“USCIS”). The documentation is pretty extensive, but we have a very good group of attorneys that we work with, like you (motions toward EB-5 Attorney Ili Subhan), that are very knowledgeable in the law, and they are able to take the complexity out of it for the investors and gain safe passage to the United States, and hopefully, gain their dream. They wouldn’t be coming here if they didn’t share the American Dream that I share, and you share.
What is a Regional Center?
[00:06:19] EB-5 Visa Attorney Ili Subhan: Right. And, you said that you had created or started a Regional Center and there’s two types of ways that someone can invest in the EB-5 Immigrant Investor Visa, one is through a direct investment, and the other is through a Regional Center, so, can you tell us a little bit about what is a Regional Center?
[00:06:36] EB-5 Expert Robert Kraft: A Regional Center is a designated area that’s approved by USCIS. So you submit as an individual or as a nonprofit or as a group an application to be designated within a geographic region by USCIS, so you’re called a Regional Center. What that does, within that geographic region, within the businesses that you applied under your application, the minimum investment amount goes from a million dollars, which is the direct program, down to five hundred thousand, and we will talk about it later because that’s going to change probably before the end of the year.
[00:007:16] EB-5 Visa Attorney Ili Subhan: Okay.
[00:07:17] EB-5 Expert Robert Kraft: But right now its five hundred thousand dollars and it makes it easier to qualify because under the Regional Center program, you don’t have to have just direct jobs, the government will allow you to account using economic accepted principles, direct, induced, and indirect jobs, so it makes it easier to pool funds to build hotels or invest in manufacturing companies or hospitals or infrastructure projects. So it allowed the program to really take off because a million dollar direct investment limits you to ten direct jobs that you have to qualify them with W2s, you know with payroll stuff and etcetera and you don’t have the benefit to take advantage of the indirect, and induced jobs, so, it’s a bigger hurdle plus its double the amount.
So the program really wasn’t moving very much until the Regional Center Program was introduced, and then in the 2000s it began to really take off, and now we are oversubscribed in some of the countries.
What should an investor look for when investing in a Regional Center?
[00:08:20] EB-5 Visa Attorney Ili Subhan: So, for an investor that is looking to invest in the Regional Center, what are some of the things that they should be looking for?
[00:08:27] EB-5 Expert Robert Kraft: Well, I think they should be– and I say this a lot, I speak around the world, probably the most important thing is the history of the Regional Center.
Have they been in the business for a period of time? Because it is a very complex business. Who does the legal work? The legal base documents are critically important for an application to successfully move through the complexities of the US government system, USCIS.
So, if you have the legal right and attorneys that have also practiced for a while and understand the law and are very good at what they do, and you have a Regional Center that has a track record that you can point to, that they have successfully gained I-526 approval for applicants, I-829 permanent green card, and returned capital, to me, that’s the gold standard.
And there’re only a handful of Regional Centers that can make that claim, not that they are not necessarily good, but some of them are newer, so they haven’t gotten to the capital return part yet, or project refinance, but I would look real hard at the background of the Regional Center principals and what they’ve achieved, and how many projects have they done. Have they been successful and have they had any issues? You know, normal due diligence. But, I think it’s really important that you take the time to dig in deep.
What changes is Congress proposing to the EB-5 Visa Program?
[00:09:54] EB-5 Visa Attorney Ili Subhan: The US Congress has approved the EB5 Immigrant Investor Visa Program through September 30, 2019, and what do you see as any changes that might be on the table?
[00:10:09] EB-5 Expert Robert Kraft: Well, for the first time in probably five years, I can say with great confidence and optimism that we are going to extend the program for a significant period of time.
Up until now, the industry has been at odds with respect to what the legislation should look for, it’s been like a food fight in the family, and the parents don’t want to make a decision.
[00:10:36] EB-5 Visa Attorney Ili Subhan: (laughs) Right.
[00:10:37] EB-5 Expert Robert Kraft: So we keep receiving extensions because Congress likes the program, both Republicans and Democrats like it because it’s driven significant economic growth in The United States.
It’s created 365,000 jobs in the last few years, just with EB-5, and everybody in the United States would like to see more EB-5 capital flow into their cities and towns, so, that’s not an issue. But, the issue has been a battle between different factions in the industry, some in metropolitan big city areas, rural areas; they couldn’t agree on a new platform to balance out and make the program more fair and not leaning towards certain areas of the country.
Last year, we have brought the industry together, I became President of IIUSA, two and half years ago, just asked to serve for a third year, which I was pleased to do, and we spent a lot of time trying to bring those groups together, which we did successfully a year ago. So, the industry is now on the same platform with respect to legislation, which is significant, very significant with Congress, because they’ve told us–, and I spent a lot of time at capital, more than I thought I ever would, and more time in Washington DC than I ever thought I would, and more time with the politicians than I thought I would-
[00:12:06] EB-5 Visa Attorney Ili Subhan: (laughs)
[00:12:07] EB-5 Expert Robert Kraft: But, its good work, so we are trying to drive forward permanent, meaningful legislation. Now the whole industry agrees to– and we’ve been told by our representatives and senators, “that’s fantastic because until you guys all got your act together and were on the same page there’s no way we were going to be able to legislate, so we kept punting down the road”. So, that is a huge change in the industry, which I’m very proud of and a lot of people in the various factions worked hard to get to that point.
We’re hopeful, that in September, the Regional Center Program expires on the 30th, that by the 30th and we are working at draft legislation right now, we will get a six-year authorization, we will have an interpretation of derivatives, which has been a big issue for the backlog and retrogression, that would be adjusted because the original intent of the law was 10,000 investment units, not family members.
[00:13:12] EB-5 Visa Attorney Ili Subhan: Right.
[00:13:13] EB-5 Expert Robert Kraft: And that’s, cut the program by 66 percent, if you assume there’s three members in a family, on average. So that’s really limited our growth. So if they made that simple change, then retrogression would go away, and we’d have a big runway, and everybody’s in agreement on that, including Congress, because it was a misinterpretation of the original legislation over a period of time and the program wasn’t fully utilized. It just happened, it wasn’t intentional, just started counting family members, and that was not the original intent of the law.
[00:13:48] EB-5 Visa Attorney Ili Subhan: Sure.
[00:13:49] EB-5 Expert Robert Kraft: So, we looking to get that fixed. We’re also looking at the minimum investment amount, it would probably go to $800,000 from $500,000, and it will go to $900,000 and for the direct area.[UPDATE: USCIS published a new policy on July 24th, 2019, which becomes effective on November 21st, 2019, which will raise the investment amounts for direct EB-5 to USD$1,800,000 and raise investment amounts in a regional center to USD$900,000.]
[00:14:01] EB-5 Visa Attorney Ili Subhan: Okay.
[00:14:02] EB-5 Expert Robert Kraft: So it will be a differential of a hundred thousand plus there’s some fees in there, but those are the major changes. Getting 6 years (i.e. legislation passed) will give some surety and certainty to the program and eliminate some of the well is it going to get extended, is it going to get extended, we keep going on these continuing resolutions, so, we’re hopeful.
There’s a faction within the industry that feels like Congress probably won’t be able to act on September 30th, and it will get extended to the end of the year as-is, but then, it will definitely get passed toward the end of the year [crosstalk]
[00:14:38] EB-5 Visa Attorney Ili Subhan: Then we’re looking at some kind of comprehensive legislation- [crosstalk]
[00:14:39] EB-5 Expert Robert Kraft: Yeah, yeah.
What are the Benefits to the U.S. economy from the EB-5 visa program?
[00:14:40] EB-5 Visa Attorney Ili Subhan: Legislation coming into effect. Okay, and you have talked a little bit about the economic development and growth of the EB-5 program, can you tell us a little bit about what other benefits the EB-5 program has for the US economy?
[00:14:56] EB-5 Expert Robert Kraft: Well, during that same period where 365,000 jobs were created, there was about 35 billion dollars that came in direct to the United States and in addition to that, that probably drives another 70 billion. So it’s a big number, it’s a really big number.
[00:15:15] EB-5 Visa Attorney Ili Subhan: It’s huge.
[00:15:16] EB-5 Expert Robert Kraft: Yeah, so, and it’s been very well-utilized. Clearly, hotels have been very popular, but hospitals have been built in Cleveland, and in Buffalo, New York, and in other cities, schools have been built, charter schools, infrastructure, a turnpike in Pennsylvania was built, infrastructure in New York City. I mean it kind of runs the full gamut, and it’s been very creatively used in a lot of cities, and rural areas. So, there’s some wind farms out in the Dakotas, solar farms, I mean there’s some very very interesting green kind of things.
So, it kind of runs the full gamut and it’s been very good from a job creation standpoint, obviously. But, the investors that come in, the other number that is not really counted is the money they invest in their families, buying homes, going to school, they pay taxes, you know, they become part of the whole American dream, and expand our country’s fabric with their talents and their various cultures.
It’s a good thing, you know, its America. So, it’s a really good program and I’m very proud to be associated with it.
How did EB-5 affect the construction of the Kimpton hotel in Milwaukee, WI?
[00:16:25] EB-5 Visa Attorney Ili Subhan: So, we’re here at the Kimpton Hotel in Milwaukee, Wisconsin, and this hotel was built with some EB-5 monies, can you tell us about how did EB-5 affect the construction of this hotel?
[00:16:40] EB-5 Expert Robert Kraft: Well, this hotel wouldn’t have been built if not for EB-5 money, and it was a significant number, all the applicants have received their I-526s, and I-829s. The hotel just opened two plus years ago, so its early in its stage but its stabilized, it’s performing very well. There will be a refinancing effort on it in a couple of years per our contract with the investors, and it’s been a great addition to the Third Ward in Milwaukee.
[00:17:12] EB-5 Visa Attorney Ili Subhan: Absolutely.
[00:17:13] EB-5 Expert Robert Kraft: So, in addition to this, we’ve been involved with the Marriott Hotel downtown, the Aloft Hotel downtown, the West Allis Hampton Hotel, all doing very, very well, the Global Water Center.
We’ve done thirteen projects, so FPP has been involved with, just about 2 billion dollars worth of total economic development in Wisconsin and we also have authority in Southern California and in Chicago.
So, we’re looking at projects around the country now, because our reputation has kind of taken us to other areas saying “why don’t you guys consider, Florida or Texas?”, so we’re looking at other areas of the country.
Can an immigrant investor invest in a project in one state and live in another?
[00:17:51] EB-5 Visa Attorney Ili Subhan: One of the questions I get asked by immigrant investors sometimes too, is if a project is say, here in Milwaukee, Wisconsin, but the immigrant investor wants to live somewhere else, they can- they can do that right, Bob?
[00:18:02] EB-5 Expert Robert Kraft: Yeah, yeah, and that’s a great question cause that’s misunderstood by a lot of people, but they can live– regardless of where they invest, they can live anywhere in the United States.
How can an immigrant investor get a hold of you?
[00:18:12] EB-5 Visa Attorney Ili Subhan: So, if immigrant investors out there are looking to get involved with a Regional Center, how can they get a hold of you? [Gestures towards Bob]
[00:18:20] Bob: Well, our website www.firstpathway.com and if you Google “FirstPathway Partners”, you’ll come right to us, of course, and we’re here, and we have a staff that’s pretty much intact since we started eleven years ago, which I am very proud of, and they’ve kind of grown in the business and helped to build this company and our affiliates and partners like you [points at Ili], that are all over the world and we have relationships for a long time.
It goes to the quality of the work and people in the company that we do on behalf of the investors and our legal partners, the accountants that we work with, the builders, the construction companies, the developers, everybody, you know it’s a very complex business with a lot of moving parts to do it right, and we’re proud of the fact that we have a great relationships with the government as well.
[00:19:15] EB-5 Visa Attorney Ili Subhan: Well, thanks for your time today. It’s been a pleasure, Bob. Thanks for meeting with us.
[00:19:19] EB-5 Expert Robert Kraft: Thank you very much.
[00:19:20] [END OF VIDEO] EB-5 Visa Attorney Ili Subhan