Due Diligence Issues

Due Diligence Issues

The following is a suggested due diligence list:

1: When was the regional center approved by USCIS?

Regional centers that have more recently been approved may have a minimal track record of successful immigrant petitions. Some have been inactive. Some have lost their regional center designations.

2: Has the regional center’s project that the investor is investing in to obtain conditional residence been reviewed and approved by USCIS?

USCIS has recently unveiled a new process where regional center projects can be pre-approved. This pre-approval does provide an added level of security.

3: Is there any AAO decision addressing the regional center’s program?

AAO decisions blessing the regional center’s project or business plan may provide an added level of security.

4: Is the regional center affiliated with any government entity?

If so, an added level of credibility exists.

5: What experience does the general partner or principal in the investment project have in working with immigrant investor programs?

An investor may want to invest in a regional center where the principals have experience in directing regional center projects and in creating jobs.

6: Does the regional center investment include direct job creation, indirect job creation or both?

Although indirect job creation is acceptable for regional centers, projects with at least some significant amount of direct job creation may be safer.

7: How many I-526 and I-829 petitions have been filed by investors in the regional center? How many have been approved? How many have been denied?

A substantial record of I-526 and I-829 approvals is a good indication of a successful regional center.

8: What is the amount required to be paid by the investor?

Regional centers have additional costs besides the $500,000 investment. What are these costs?

9: Is payment made into an escrow account? Is the investment amount refunded if the I-526 is not approved?

The investor may want some assurance that should the I-526 fail, the investor’s $500,000 will be returned.

10: When will the investor be able to redeem his or her investment following condition removal and with what rate of return?

A financial professional should be able to advise the investor regarding security of the investment, when the investor may be able to recover his investment and likelihood and amount of return on the investment.

11: What type of investment is being made with the investor’s funds?

Investments may be made in a wide variety of projects from construction to film production. Certain investments may be better able to withstand economic downturns.

12: What type of reports does the regional center provide to investors and when are these provided?

An investor should be able to monitor a project to determine that progress of the project is in accordance with the business plan for the project.

13: What is the regional center’s plan for demonstrating direct or indirect job creation, and is this plan realistic?

Various econometric models exist for demonstrating job creation. It may be very difficult in some cases to show indirect job creation based upon certain models.

14: Who represents investors in the regional center?

Some regional centers mandate the use of their attorney exclusively. Others permit the investor to have his or her own private counsel, often partnering with the investor’s counsel.

15: Is the success of the regional center project dependent on bank financing, or the ability of the center to raise certain capital?

If so, the center may never get off the ground.