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Know Your EB-5 Intermediary Abroad: Avoid FCPA Traps in Marketing Your EB-5 Deal Outside the United States [VIDEO]

With the proliferation of market makers and brokers abroad in the EB-5 space, U.S. issuers need to pay close attention to the Foreign Corrupt Practices Act (FCPA).

The FCPA penalizes specific U.S. persons and businesses that make payments to foreign government officials to assist in obtaining or retaining business. The FCPA also contains anti-bribery provisions that carry stiff penalties.  The U.S. government takes FCPA violations seriously, and we know all too well from enforcement patterns that minor violations are prosecuted.  Regional centers and EB-5 project sponsors should get policies into place now to ensure compliance with the FCPA. 

As a regional center or EB-5 project sponsor, you need to ensure you know not only your customer, but also your marketing team abroad.

Common mistakes that U.S. based businesses can make that implicate the FCPA are:

  • Providing compensation to government officials or their family members to promote deals, including paying for airline tickets and travel expenses
  • Engaging an EB-5 broker or market maker that is partially or wholly owned or controlled by a government, a government official, or an immediate family member of a government official
  • Paying fees to government officials to source EB-5 investors or to endorse investments

If you market your EB-5 deal abroad, know the party you are doing business with and take the time you need to ensure you don't run up against the FCPA. Also verify with qualified counsel that your marketing and sales activities are in line with the laws of the country where you wish to sell your deal.

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Douglas Hauer is a Mintz attorney and noted authority on the EB-5 investor visa program, which gives developers a path for securing capital for real estate, hospitality, and infrastructure projects. He's an essential resource for companies looking for financing from offshore sources.