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Doug Hauer is a Member in the firm's Corporate & Securities Practice and Immigration Practice at the Boston office. On the corporate side, he focuses on private offerings and related securities work. Doug serves as counsel to developers and businesses seeking capital through the EB-5 investor visa program. He also counsels lenders, private equity firms, and EB-5 Regional Centers on all aspects of EB-5 financing. In the immigration law space, Doug represents corporate, institutional, and individual clients in routine and complex immigration matters. He has in-depth experience advising companies on the immigration consequences of corporate restructuring.

Our colleague Rebecca Zeidel just published a terrific blog posting on the U.S. Supreme Court’s recent decision in Kokesh v. SEC, in which the Court imposed a five-year statute of limitations on agency-sought disgorgement in SEC enforcement actions. This decision resolved a Circuit split and definitively categorized disgorgement as a statutory “penalty” under 28 U.S.C. § 2462. That statute applies a five-year limitations period to any “action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise.”

This development is relevant in the EB-5 litigation context, where we see the SEC impose disgorgement in administrative proceedings as one penalty, among others, against issuers or other parties who have engaged in securities fraud or other violations of the securities laws in EB-5 transactions. Continue Reading U.S. Supreme Court Blocks SEC from Imposing Disgorgement beyond Five-Year Statute of Limitations

As we head into the summer, there is no certainty that we will see changes to the EB-5 Program. Lawmakers may simply not act, which may result in EB-5 being included in Continuing Resolutions alongside other immigration programs that are temporary, at least in the near future. We also don’t know the fate of the EB-5 rulemaking process underway at the Department of Homeland Security (DHS). The EB-5 ecosystem is in limbo.

That said, regional centers and developers can’t be ignoring that change to fundamental aspects of EB-5 could happen quickly. In this environment, regional centers and other recipients of EB-5 capital have to gear up for changes to deals that could take effect midstream, while offerings are on the market.

Now is a good time for regional centers and issuers to develop plans for accommodating potential changes to deals that are on the market or being launched this summer. Having a solid plan of action before the law changes is sensible. Continue Reading Getting Ready for Change in the EB-5 Ecosystem

Douglas Hauer, Co-Chair of the EB-5 Financing Practice and a Member of the Corporate and Securities and Immigration Practices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., is speaking at the North American Securities Administrators Association’s (NASAA) 2016 Corporation Finance Training. The event is taking place November 18-19 at the Westin Oaks Hotel in Houston, TX. Continue Reading Mintz Levin Attorney Douglas Hauer to Speak at NASAA 2016 Corporation Finance Training

United States Citizenship and Immigration Services (USCIS) recently announced a new proposed rule for entrepreneurs. If the rule becomes law, qualified entrepreneurs would be considered for parole (temporary permission to be in the United States) to jumpstart and build their businesses in the United States. The rule is a path-breaking proposal because it seeks to use and retrofit an existing immigration benefit called “parole” to meet the needs of entrepreneurs, who may otherwise be unable to secure a nonimmigrant visa such as an H-1B or E-2 visa.

But while this proposal could be a solution for some entrepreneurs, it contains requirements that are out of step with the realities of many emerging companies. Note that we may not see a final rule published until next year (if at all), and any final rule would likely have adjustments. The proposed rule is intended to accelerate innovation that will have a broad impact on the United States but is burdened with job creation and minimum investment requirements that aspiring and potentially IPO-bound entrepreneurs would not be able to satisfy in the initial years of growing a business. If finalized in its current form, the rule would benefit very few founders of emerging companies. Continue Reading Proposed USCIS Rule for Entrepreneurs Would Benefit Very Few if Finalized

This afternoon, a draft of the Continuing Resolution (CR) began circulating in Washington, DC. The CR, which Congress will likely pass early next week, will keep the federal government running through the November election. According to Alexander Hecht, Vice President of Government Relations at ML Strategies, upon enactment, the EB-5 Regional Center Program will be extended through December 9, 2016 – the length of this current CR. “Since EB-5 was contained in last year’s Omnibus appropriations bill, it is automatically extended by a Continuing Resolution for its duration. There was no need for legislators to specifically mention EB-5 in this Continuing Resolution,” stated Hecht. Stakeholders should continue to monitor developments related to the CR, but according to Hecht, “passage in both chambers seems very likely early next week, as legislators on both sides of the political aisle are anxious to get home to focus on campaigning for the November elections.”

The extension of the reauthorization for the EB-5 Investor Visa Program may lapse on September 30, 2016. Whether lawmakers will invest time in EB-5 this coming month is an open question, but it is more probable than not that we will see no movement. Every day, it becomes less likely that EB-5 will be on the agenda of lawmakers. Despite inroads to advance legislation to introduce integrity measures to the Program, there is no indication that lawmakers will act. Anything is possible, and lawmakers could surprise us. But there is little time for reaching any consensus on changes to the Program in the coming weeks. With the presidential election looming in the background, EB-5 won’t be near center stage. For now, the status quo may continue for many months and into 2017. Continue Reading EB-5 Reauthorization Heading into Lame Duck Session of Congress

Several securities lawyers from several firms across the United States with a focus on EB-5 have organized a roundtable to discuss securities law issues.

The EB5 Securities Roundtable is an informal, independent group of EB-5 securities attorneys organized to facilitate best practices in the offerings of EB-5 securities. The EB5 Securities Roundtable is not affiliated with any EB-5 industry organization, regional center, offeror of EB-5 securities or job-creating recipient of EB-5 funds, and it receives no outside financial contributions, according to its website. Mintz Levin is one of the law firm participants.

Check out what’s new in the EB-5 world, where a team of securities lawyers are at work offering to help lawmakers understand complex legal provisions of proposed EB-5 integrity legislation. The group is called the EB-5 Securities Roundtable (the “Roundtable”) and is made up of securities attorneys (the author of this blog posting included) who represent a broad range of stakeholders in EB-5 deals such as regional centers, recipients of EB-5 funds and lenders.

Anticipating more action from lawmakers on the EB-5 integrity front, the Roundtable has proposed technical language solutions to securities law provisions that may come into any final version of an EB-5 integrity bill. The group is aiming not to lobby but to serve as a resource to help lawmakers line EB-5 reform efforts up with existing securities laws, regulations and policies. Securities law is a very complicated area with its own universe of terminology. We think the Roundtable’s resource will be welcome by lawmakers, industry groups and others who have a stake in EB-5 reform. 

One of the goals of the Roundtable, which Mintz Levin co-founded with several firms across the country, is to regularize EB-5 securities law practice. This is an important goal. EB-5 needs to be a more normative form of financing in the toolkit of lawyers. This starts with the securities lawyers in the field — gatekeepers of EB-5 in every sense of the word — giving sound advice to clients and promoting best practices.

Right now the EB-5 Program is still on the margins of the securities industry despite the fact that EB-5 financing benefits emerging businesses seeking capital across sectors, particularly in industries where construction and hard development costs are high. The Roundtable can have an impact as the EB-5 Program develops and becomes more institutionalized.

What is the future of EB-5?

We hope the EB-5 Program becomes established, permanent and normative. But Congress needs to act soon. We are about a month away from the Program lapsing.

Lawmakers are right on to insist on integrity reforms with any extension of the Program. The EB-5 Program has been plagued by bad actors, fraud and loose practices since it became more popularized in 2008. But lawmakers don’t need to reinvent a whole new legal structure to fix this.

Added integrity provisions are a sensible move by Congress. This is in step with current law. But changes to the law should be aligned with our existing securities laws, which are effective. Specifically, the United States has a very strong anti-fraud legal infrastructure in place when it comes to the purchase and sale of securities, including Section 10(b) of the Securities and Exchange Act of 1934, and Rule 10b-5, codified at 17 C.F.R. 240.10b-5, which is one of the most important rules targeting securities fraud promulgated by the U.S. Securities and Exchange Commission. These laws work. Congress does not need to re-write our securities laws in an effort to make EB-5 more sound and secure. The core integrity provisions for EB-5 are for the most part already in place. The technical guidance from the Roundtable can help lawmakers ensure that integrity provisions do not inadvertently create confusion, or conflict with existing obligations of issuers of EB-5 securities.

The Securities Law Roundtable has offered lawmakers a technical resource in the EB-5 reform process

Hopefully lawmakers will consider comments of the Roundtable when finalizing a draft of any legislation.

We’d like to continue to have EB-5 financing as an option in our toolkit to help clients. Many of our firm’s clients have been the recipients of EB-5 financing for projects ranging from the creation of a small media business to large-scale hotels, resorts and mixed-use real estate development. Congress making strategic moves to bring an increased level of integrity to the Program will benefit all. The Roundtable’s contribution to this broader effort is an important step forward, and will ensure that securities provisions in any new law are informed and workable. 

Recently, the North American Securities Administrators Association (NASAA), which is the oldest international organization devoted to investor protection, published an investor advisory for potential investors in EB-5 projects. In the United States, NASAA is the voice of state securities agencies responsible for efficient capital formation and grass-roots investor protection. Their fundamental mission is protecting consumers who purchase securities or investment advice, and their jurisdiction extends to a wide variety of issuers and intermediaries who offer and sell securities to the public.

EB-5 is now becoming more relevant to NASAA.

The investor alert makes several strong points about red flags that should cause investors to look carefully at a deal before making an investment. One of the classic warning signs in EB-5 deals or really any investment is a promoter minimizing or understating risk. The alert also raises the importance of investors conducting due diligence of a project and its sponsors before committing funds. Continue Reading NASAA Publishes Fraud Alert for EB-5 Investors