De-mystifying a move to the USA

*This content is brought to you by PathwayUSA

By Bruce W. Stewart

The increase in inquiries for immigration information to the United States has reached a fever pitch in South Africa. Many reasons exist for this phenomenon, but include amongst other things a deteriorating R/$ rate, struggling economy and other difficult conditions in the SA social fabric.

Bruce W. Stewart, Pathway USA
Bruce W. Stewart

As a result of this, there is a plethora of misinformation and frankly, falsehoods, being shared by unscrupulous individuals and organisations, which are using this environment to scare people into making unwise decisions.

A quick Google search will reveal that US immigration is a minefield of catastrophes and failures because people do not know the correct questions to ask, have not educated themselves about how the system works and how to conduct proper due diligence on everyone who they come into contact with, and often naively trust these ‘advisors’ unwittingly, at their peril.

The bottom line is that there is no easy way to get to the USA, without doing your homework very carefully and knowing exactly what you are letting yourself in for, no matter what the route you decide to take.

PathwayUSA has been operating in South Africa since 2006 and we have heard it all, are aware of the many failures and know who all the sheisters are. Pathway USA prides itself on being an independent and critical resource for those wanting the honest bottom line. Our advice is unbiased, non-partisan and impartial.

Here are some of the myths and red-flags we have heard from clients over the last few months that have been told complete nonsense regarding a move to the US:

  • Know the difference between an Immigrant Visa and a Non-Immigrant visa and understand the implications of both.
  • Beware of non-immigrant visa’s that sound too good to be true. Most non-immigrant visas do not automatically open the door to a green card. Many have learned this to their extreme cost in the last few years.
  • Perform extreme checking on the attorney’s you want to work with. Ask for personal references, how long they have been in business, how much success they have had and what their clients actually say about them.
  • Don’t believe everything you read on the Internet. Most of the information is misleading or at best an 80% representation of the truth.
  • Immigrant visas are an option but are often far more difficult to get and are given extreme scrutiny. Know exactly what the requirements are before filing one of these visa petitions.
  • Do not think that you can do this on your own. A wise man asks many questions, a foolish one thinks he knows it all.
  • Planning is an integral part to a successful relocation. Getting the key to the door is an important part but how to establish yourself in the US is possibly even more important, and sound advice in this area is highly recommended, so that you don’t make very expensive mistakes from the beginning.
  • If your company is petitioning on your behalf, establish exactly what that visa entitles you to and how long it’s valid for. Does it lead to a green card or will you have to return to your home country? Be sure to have all these questions answered.
  • If you are considering the EB-5 program be aware that the program is set to expire on September 30th, 2019, and at this time there MAY be a legislative change to the recently published rule by the US CIS increasing the investment amount to $900,000 in a TEA and $1.8m in a Non-TEA. While this increase could happen, the industry would not support these amounts and differentials. Moreover, it appears as though there will be a short term extension of the Appropriations Bill until late November 2019 or early December 2019. If that occurs, no new legislation would be enacted until then. If the US Congress gets their act together and acts by the US fiscal year-end on September 30, 2019 and passes new legislation regarding the EB-5 amounts, it could be increased to $800,000 in a TEA and $1.05m in a non-TEA. This is already a prepared piece of legislation on the desk of Senate Judiciary Chairman Senator Lindsay Graham (SC). There is, in our opinion a 50/50 chance of this occurring. So if you want to be prudent, you would invest before September 30, 2019, to make sure you are not subject to the proposed legislative increase to $800,000 or the definite regulatory increase to $900,000 posted by the US CIS effective November 21, 2019.  MYTH: “Guaranteeing your money will be safe and returned to you when an I-829 is filed after 2 years of having your provisional green card (I-526).” This is called a “guaranteed redemption” and is illegal as it is against the rules of the EB-5. While it is possible to be paid back at the time of filing your I-829 and having complied with the 2 (two) year residency requirement, please remember that the project has to pay back the Regional Centre you invested in. Therefore, you must look to the merits of the project. MYTH: “Assuring people that they only have to spend a minimum time in the US after they receive their green card.” Only being required to spend 180 days in the US has been mentioned and then you can return to SA. This is completely incorrect. The US CIS wants to see that it is your INTENT to be a permanent resident in the US and if you spend the majority of your time out of the US during your 5-year green card status, at worst you run the real risk of losing it completely as you could be deemed to have abandoned your residency. Thus, you must be very careful. There are strategies to manage this but they must be well thought out. Moreover, when you file for your citizenship you must spend at least half of your time in the US and long absences can jeopardise the application.

When selecting an investment project for the purposes of an EB-5 petition it is of paramount importance that you understand and ask the following questions:

  • Is the Capital Stack fully funded? If it isn’t and the project is relying on a large chunk of EB-5 investors to complete, then that is a red flag. Ask for proof in writing if they say it is. Most projects are NOT fully funded.
  • Is there at least 25% cash equity in the project? Get proof thereof. While there may be good reasons why not, it is critical to understand and see an explanation.
  • Ascertain whether they NEED your investment or if they would LIKE your money. This is critical to establishing if this is a risky project or not. Projects that appear desperate to get their hands on your money are to be avoided. Projects that would like your money because it’s cheaper money than loaning it from banks, are the ones to seriously consider.
  • Claiming that the project is underwritten or insured by the US government is a negative rather than a positive, as those are usually very risky projects.
  • Is the Regional Centre acting as a fiduciary for the investor or are they ACTUALLY the developer/construction company in disguise? Don’t invest in a project where the Fox is in charge of the Hen-house. Or at a minimum, beware. Who is protecting your interests?
  • Do they have a real recent track record of success and credibility?
  • Is the project in an area that needs the type of construction being built? Or is there an over supply of low-income residential housing in the area, or a real need for a hotel or condominium development in a city that is desperate for hotel beds in a popular tourist or convention destination? Is the project in a major regional development area or providing logistics warehousing and commercial space in a developing economic area?
  • What plans does the developer have in place to repay the investors, bearing in mind that a bank loan takes first precedent in just about every situation, before the EB-5 investors? What does the contract say in this regard?
  • Who is behind the development? Always good to Google all the investors and people behind the project and the more well-known the better. Be very careful of fly-by-night unknowns who sell a good story with pretty marketing materials, but have no…..!
  • Get agreements and documents from the construction company or developer, if possible. Check that the loans have been approved as stated.
  • Check out who they are associated with, and what leading attorneys who have filed thousands of EB-5 cases, think of them! Be wary of attorneys who have little or no experience in this regard! Very few are experts in this field.
  • Ascertain what the TEA / Non-TEA status of the project will be after the change in investment amount. This could negatively affect project completion if the project is reassigned into a non-TEA area.
  • Projects that have an Exemplar approval are preferable. Ask to see the original US CIS documents and verify if possible.
  • I-526 Insurance is a marketing gimmick. If it were useful, everyone would use it. Rather check to see what provisions have been made in the contract for when the money will be returned.
  • If the Administrative Fee is being waived to lure you into investing, BEWARE. Why would someone who has to prepare thousands of pages of immigration and financial documentation for a period of 5-7 years, and judiciously manage your money for that amount of time, be willing to do it for a reduced fee, unless they are desperate for your money? That is not to say that you cannot sometimes negotiate this fee with a Regional Centre, if you are committed to going with their project. While negotiating the price of goods is okay (the item remains the same), negotiating the price of a service could mean a reduction in the quality of that service.
  • If they are willing to pay for your legal fees, how can you be sure that you are getting the best counsel? And who does the attorney really represent!? As we say in SA: “Goedkoop is duurkoop!” (Penny-wise, pound-foolish)

Bruce Stewart, VP at PathwayUSA will be presenting 1-on-1 personalised workshop appointments all over South Africa during September 2019. For more information and bookings register here at www.pathwayusa.co.za.

*Source information in this article provided by leading US immigration attorneys and Regional Centre experts.