We recently read about a situation where investors’ funds were allegedly misused by their EB-5 Regional Center. This story demonstrates the need for greater security and transparency during the EB-5 capital raise process. Placing funds in escrow is the first step to protecting funds and is good for Regional Centers and investors alike.

Read the full complaint regarding the alleged misuse of EB-5 investors’ funds.

For investors, security of funds is vital. As mentioned in Jill Jones’ 4 reasons to use an EB-5 escrow account, an escrow structure increases funds security, which not only puts Regional Centers at ease, but it also increases the investors’ confidence in the project. EB-5 Regional Centers that place funds in escrow accounts are sending a strong and positive message to their investors. The motivation to invest in EB-5 projects is primarily to obtain a permanent green card, and less so for the investment returns. By using an escrow during the I-526 approval process, Regional Centers demonstrate that they understand and care about the investors’ priorities first and foremost.

An escrow arrangement ensures that each investor’s funds are held in a secure, segregated account while awaiting I-526 petition approval. In the unlikely event that an investor’s I-526 petition is denied, the escrow account helps to ensure that the funds are readily available for refund to the investor. Funds are disbursed only under the agreed upon terms of the escrow agreement, which remain fully transparent to the Regional Centers and their investors. This provides their investors with an extra layer of security and peace of mind.

NES Financial is dedicated to providing the utmost security to the EB-5 industry. Our industry-leading escrow administration solution offers a streamlined approach to administering investors’ deposits which provides the highest levels of security and transparency to investors.

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Read about our EB-5 Best Practices.