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US residency viable through investment

Rogelio Caceres, co-founder – LCR Capital, takes us through the EB-5 Visa.

NASTASSIA ARENDSE:  For South Africans who have an eye on working in the United States there is another way of getting a green card. The US government encourages private foreign investors to put up $500 000 in businesses or real-estate projects and rewards them and their immediate families with green cards for doing so. It’s called the EB-5 Visa Programme.

I’m joined on the line by Rogelio Caceres, who is the co-founder of LCR Capital. Rogelio, Thank you so much for your time.

ROGELIO CACERES:  Thank you very much. Appreciated.

NASTASSIA ARENDSE:  For most people who are hearing it for the first time, who had no idea that an EB-5 Visa exists, tell us about it and how it works.

ROGELIO CACERES:  Well, it’s one of the most popular residency programmes in the world, where industrialists from South Africa and many other countries can obtain US green cards and residency by deploying their capital into new American businesses that create ten or more American jobs.

The programme has been around since 1990. Since then hundreds of thousands of industrialists from all over the world have obtained US green cards. Importantly it’s an investment programme where the industrialist contributes $500 000 US dollars into a new business. If that business creates ten or more American jobs the industrialist and his or her spouse and any children up to the age of 21 all obtain green cards on a conditional basis within about 18 months. Those green cards turn into permanent green cards once those jobs have been sustained for at least two years.

My firm, LCR Capital Partners, is a Federally designated investment centre that puts capital together from the international investors into job-creating projects, including Four Seasons hotels and Dunkin’ Donuts.

NASTASSIA ARENDSE:  So those two industries you can invest in, or do you have options in terms of the new businesses?

ROGELIO CACERES:  Yes, it can be any type of business. It can be manufacturing, real estate, restaurant franchising, hospitality, and in particular these [latter] two brands because of their long track record of operating success. Investors in the EB-5 programme look at investor opportunities. They are really evaluating them under three criteria.

One, the likelihood of creating those jobs. They wouldn’t want to risk $500 000 into unproven concepts or projects. So companies like Dunkin’ Donuts and Four Seasons have a long track record of operating success and creating lots of jobs for investment power.

To those  who want to preserve their principal as best as possible, the money must be at risk. It cannot be in any guaranteed form. It can’t go into government bonds or government projects, as in other countries like the UK or Canada. So it must be in a new business.

Now we structure our investors as five-year loans, and so there is a highlight at the end of the five years  of each investor obtaining their money back.

NASTASSIA ARENDSE:  Now, in terms of the lead time from the moment that you plug in the $500 000 till you get the visa, what kind of time frame are we working with?

ROGELIO CACERES:  Well, there are two things that investors like. One, the timelines are pretty well defined, And, more importantly, the key requirements in order to be approved are very clearly defined.

There are five key requirements. It must be a $500 000 investment up front in a new fund or American business. It can’t be less, it can’t be more than that.

There is a standard background check on each investor to ensure they have no criminal ties or affiliations.

Importantly, the capital must be legally resourced and must come from a legal origin. It can be a gift from a relative, it can be finessed through a loan from a bank. In South Africa there are options that many investors are availing themselves of.

And the business plan that we present to the government for approval must have a likelihood of creating those ten American jobs.

Again, I mention the at-risk requirement.

From a time-out perspective, LCR will only accept investors that meet those requirements and bring their petitions to the USCIS for approval. That now takes around 16 months for the I-526 Immigrant Petition, which the green card petition, to be approved. At that point the investor can go to the local consulate or embassy in Johannesburg for a standard interview, and then be issued a green card to enter the US.

Then they’re free to travel, to study, to work, or obtain financing. They have all the benefits of US residency. A green card isn’t quite permanent until we’ve created and sustained those jobs, but holders are free to travel to the country and move permanently…

And by year five, once we’ve created and sustained those jobs, we’ll produce evidence to the government that those jobs have been created. The green card then becomes permanent and the  capital goes back to the investor ideally…for they made good investment decisions.

NASTASSIA ARENDSE:  Rogelio, which countries have taken advantage of this, because it sounds like a pretty good deal? 

ROGELIO CACERES:  One of the real benefits that LCR has seen as we developed our market presence, starting in Brazil back in 2014 and entering India at the beginning part of 2016, as well as South Africa last year, is that it’s predominantly exposed to the Chinese market. In fact, over 90% or so of investors have certainly taken advantage of this programme coming from China. There are some structural reasons for that, but there is definitely no preference for any one country.

I think it’s just a matter of creating awareness so firms like ours, who have a local representation, and who are spending their time and energy to educate the marketplace, will be heading out there for a full roadshow next week. We’re eager to avail South Africans of this excellent opportunity to earn US residency in a short period through an investment that has a high degree of likelihood to be successful.

NASTASSIA ARENDSE:  Before we get into where people can find you once you come into the country for the seminar, a lot of people have been talking about Donald Trump and the administration and the executive orders for a ban on certain countries. I’m assuming that the Trump administration is in full support of this EB-5 programme.

ROGELIO CACERES:  Well, Trump has expressed some pretty controversial views on immigration, some that we support, some that we have issues with. He’s already expressed an intent to reduce or curtail the H1B employer-sponsored visa, which is another avenue to obtain residency by having a US company sponsor one. And employees who now are up for serious discussion and scrutiny perhaps will be curtailed in the near future.

There are bills in the US Congress to curtail family-sponsored immigration. So if you have an uncle, an aunt, or a brother in the United States, you are able to obtain residency through that programme. That also has been curtailed.

There are rumours on bills in fact in the US Congress to eliminate the green card lottery, so that’s another avenue that has less than a 1% likelihood of success and is also under serious review.

But, on the contrary, the EB-5 investment programme is broadly supported by both Republicans and Democrats. In fact, the Trump organisation in the past has raised EB-5 capital for their projects. It’s a programme that creates more than ten American jobs per investor, that attracts at least half a million dollars of capital into the US for new business creation and expansion. It brings some of the brightest and best entrepreneurs and investors and students from all over the world into the United States legally. So it costs nothing to the taxpayer and it has been a source of tremendous capital taxes last year. Over 14 000 investors from many different countries came into the US legally in this programme.

NASTASSIA ARENDSE:  I just want to go back to the criteria that you mentioned. You mentioned the top five criteria that you have to meet. Obviously one of them is the $500 000 up front. What happens in instances where I meet all three, maybe all five, including the $500 000, however I do have a criminal record. Do I get my $500 000 back or do you first check the more serious background information before requesting the $500 000?

ROGELIO CACERES:  Well, we are continually aligned with the interests of our investors in this decision. We are not interested in getting anybody’s hopes up or submitting anyone that we are not 100% and fully confident will be approved. And so we run an independent background check to ensure that there is no evidence of convictions around any type of criminal activity. Why? Because, number one, we want to welcome aboard if you will, beneficial investors into the programme.

But to the USCIS, the US Department of Homeland & Security that reviews this petitions, it is also to whom we focus on ensuring compliance. So does it help our investors, does it help our LCR, does it help the US to let anyone into our funds who doesn’t meet our requirements? So no, we will be quite diligent in the up-front scrutiny to ensure that every investor that qualifies has a productive experience as he also obtains the green card in a relatively short time frame.

SIKI MGABADELI:  Now you mentioned that you are coming to South African next week. Where can people find you? I know you are going to be in Johannesburg and Cape Town.

ROGELIO CACERES:  Yes, we were thrilled to be back in your country. We’ll be hosting two seminars – one at the Grant Thornton offices in Joburg on Tuesday March 7 in the morning, 9am, and in Cape Town at Grant Thornton’s offices as well.

We’ve partnered up with Fragomen, the world’s largest business immigration firm that has local representation in South Africa, as well as Grant Thornton for pre-immigration tax planning. So after an hour-and-a-half any interested South African investor can walk away with a very good understanding of the programme, about LCR, on questions answered from the immigration front, on the tax-planning front, and be able to take advantage of the programme before it is scheduled to expire at the end of April.

So we are quite busy and quite interested in speaking with folks…

NASTASSIA ARENDSE:  Rogelio, I wish you all the best. I’m sure its going to be really interesting to have people come through and then ask important  questions and get involved. Thank you so much for your time.

ROGELIO CACERES:  Thank you very much. I appreciate it.

NASTASSIA ARENDSE:  That was Rogelio Caceres. He is the co-founder of LCR Capital.



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