On September 22, the U.S. EB-5 investment immigration project—the 520 Bridge Bond Project—was approved, causing a significant stir in the U.S.-China immigration community. U.S. immigration attorneys, EB-5 economists, and other industry professionals have sent messages and calls to Worldway Group to offer their congratulations, celebrating the successful approval of the 520 Bridge Bond Project, for which Worldway Group served as the exclusive lead agent. The approval of the 520 Bridge Bond Project is considered by the industry to be a landmark event in the history of EB-5, ranking alongside the EB-5 visa backlog as one of the two most significant developments in the U.S. investment immigration industry in 2014. Media outlets specifically requested an exclusive interview with Dr. Winner Xing, President of Worldway Group, regarding this matter.
Dr. Winner Xing answers questions from Xinhua News Agency reporters regarding
why the approval of the 520 Bridge Bond Project is so significant and what Worldway Group has done for investors.
Xinhua News Agency Reporter: First of all, congratulations to Worldway Group on the successful approval of the 520 Bridge Project by the USCIS. Why is this project receiving so much attention, and what is the special significance of its approval?
Dr. Winner Xing: In terms of immigration law, the 520 Bridge Bond Project is not actually a special project, but its innovation makes it a landmark in the history of U.S. EB-5 development. When we first promoted this project, we anticipated that such projects would usher in a new era for U.S. investment immigration. This project is the first in history to achieve green cards for an investor's entire family through an EB-5 partnership company purchasing tradable bonds issued by a U.S. state government, which had never been done before. Worldway Group promoted this project nationwide, which sparked significant controversy. The root of the controversy was whether a project with such a high safety factor met the USCIS requirement that investments must be at risk. The successful approval from I-924 to I-526 has proven that the USCIS recognizes this bond investment method, as the essence of this approach complies with the EB-5 Act. A well-known industry commentator once said that this is a landmark event that will set a new direction for EB-5 approvals. The EB-5 investment model has evolved from the initial equity investment model to the widely adopted loan model, and now to the public bond method; these processes have all undergone intense debate. In the early history of EB-5, EB-5 investments had to be equity investments, where shareholders of a project that created jobs could obtain a U.S. green card. After 2003, the renowned U.S. attorney Mr. Ronald Klasko argued that lending to job-creating enterprises also complied with the EB-5 Act, and after intense debate, his opinion was adopted. Since then, over 90% of projects have been invested through loans. The significance of the 520 Bridge Bond Project's approval is that a new form of EB-5 investment has been recognized.
Xinhua News Agency Reporter: During the period of waiting for the 520 Bridge approval amidst doubts, did Worldway Group ever waver? What efforts did Worldway Group make?
Dr. Winner Xing: We never wavered during this process; our greatest frustration came from unfair attacks. Commercial competition is normal, but malicious attacks should not replace competition. Such malicious attacks were prevalent on the internet, causing great confusion for our clients. We believed that although the state government provided a guarantee, the state government was the borrower, and providing a guarantee to investors is a normal business rule. The USCIS should not raise objections simply because the state government provided a guarantee. The state government has an AA credit rating, so compared to AAA, there is still some risk—about a few basis points of risk. Immigration law does not specify the level of risk; as long as there is risk, it complies with the EB-5 Act. Our attorneys prepared 1,000 pages of documentation to explain that this project carried risk, which was ultimately accepted by the USCIS. We also consulted with our attorneys and experiencedly decided not to argue with the USCIS, but instead rewrote the documents to remove commitment language that might be questioned during the I-829 stage. We then resubmitted the new documents to the USCIS. The USCIS granted I-924 pre-approval, and after we explained this to the investors and resubmitted the documents, we obtained approval in just nine months.
Over these three years, we worked with our clients, urging them to trust the attorneys and the USCIS review process. The USCIS review is publicly searchable, and one can track the progress of the review through the file case number. Here, we are very grateful to our investors. Although they were very confused, they stood by us for three years through thick and thin. Therefore, today's victory is also the investors' victory, and I would like to take this opportunity to say thank you to our clients and their families!
Sohu.com reporter interviews Dr. Winner Xing on topics such as how Worldway Group selects projects and why it terminated the subscription for the second phase of the 520 Bridge project.
interviewing Dr. Winner Xing
Sohu.com Reporter: Among the many EB-5 projects, how does Worldway Group select projects? For what reason did you terminate the subscription for the second phase of the 520 Bridge bonds at that time?
Dr. Winner Xing: When the U.S. formulated the EB-5 Act in 1990, it clearly stipulated that all investments must be at risk. Therefore, there is a saying in our industry that "the lack of risk is perhaps the greatest risk." However, the EB-5 Act does not specify the magnitude of the risk, meaning that as long as there is risk, your project is legal. Therefore, what we do is choose projects with the lowest possible risk. In early 2009, Worldway Group was the first in China to advertise that EB-5 investments carry risk and that the focus should be on project selection. Since then, we have introduced the concept of "Selected Projects" into the EB-5 investment immigration business.
How do we select projects? We believe there are several steps. First, there must be a professional team of analysts. Worldway Group was the first immigration agency in China to establish an analyst team. What is the purpose of these professional analysts? It is to carefully analyze the EB-5 documents provided by U.S. project developers.
Second, the risk stipulated by the EB-5 Act refers to the investment being at risk after I-526 approval. Before approval, the law allows the investor's investment to be safe. Here, our method is to set up an escrow account, which stipulates that investment funds can only be released after I-526 approval. Once the investor's application is approved, their funds can then be at risk. The two most important risks here are investment risk and employment risk; all risk research must be tightly focused on these two aspects.
Third, conduct due diligence. For example, everyone knows that the Chicago event exposed last year has become a scandal within the EB-5 industry. This project was promoted in 2011, and at the time, Worldway Group was authorized as the national lead agent. However, after our analysis team studied the project, they discovered two major red flags: one was that the land valuation of $173 million was on the high side. Second, we were also skeptical about the 55% funding support from the government. Based on our timely due diligence and the project developer's inability to provide proof of government funding support, we proactively summoned the project developer three weeks later to announce the termination of our cooperation and refused to promote the project. Therefore, not a single Worldway Group investor invested in that project.
Regarding the second phase of the 520 Bridge, in fact, investors did not submit applications to the USCIS for this project, so how could there be a so-called failure of the 520 Bridge second phase? During the second phase, we also actively promoted it and quickly recruited 238 investors within two months, and all investors' funds had already entered the escrow bank. When the state government released the project announcement, we discovered that about 16% of the bond repayment terms were 3 to 4 years. This could potentially affect the investors' I-829 removal of conditions because the investment term was too short. At the same time, in the second phase, the state government was not very willing to sell bonds to investors, hindering investors from choosing bonds with longer investment terms. Under these circumstances, the attorneys sought our opinion, and Worldway Group made a decision to abandon the subscription for the 520 Bridge second-phase bonds and transferred all investors to five other high-quality projects. This decision by Worldway Group received the support of the investors, and U.S. immigration attorneys also gave us high praise. The attorneys wrote in a letter that Worldway Group chose to be responsible to its clients rather than choosing to make quick money. Facts have proven that Worldway Group's choice was correct.
Subsequently, Dr. Winner Xing recommended the newly launched Pennsylvania Turnpike project to the reporters.
Dr. Winner Xing: In the last year or two, the U.S. government, especially state governments, has also begun to engage in EB-5 financing. Recently, we promoted a project called the Pennsylvania Turnpike project. This is the first time in U.S. history that the U.S. Turnpike Commission has borrowed money from Chinese investors, promising repayment in 5 years and granting green cards to the entire family. When I visited Miami in July this year, I met with a U.S. Congressman who said that the U.S. Congress supports state governments using EB-5 financing for municipal construction. Therefore, this will be a trend in the future, which is a good thing for EB-5 investors because it can greatly reduce the risk for investors. Everyone will ask, does the USCIS allow it? Therefore, we only promoted it in China after the U.S. USCIS granted pre-approval for this project.
On November 8 and 9, U.S. Congressmen and the Chairman of the Pennsylvania Turnpike Commission will personally visit Beijing and Shanghai to provide on-site explanations regarding this Pennsylvania Turnpike EB-5 project. We welcome all investors to contact our Beijing Worldway and Shanghai Worldway offices to attend this rare meeting. This is the first time in history that U.S. Congressmen have personally come to promote an EB-5 project.
