Crowdfunding in EB-5; Verifying Accredited Investors Under 506(c)

Kurt: Under Regulation D, 506(c) reasonable steps must be taken to verify that investors are accredited. An accredited investor is any individual who, alone or jointly with a spouse, has a net worth at least  $1 million, not including their primary residence, or any individual with adjusted gross income of $200,000, or with their spouse $300,000, over the past two years. Generally, in EB-5 visa process this is not an issue, but it's something that has to be verified.

Jor, you've built a tool that helps verify accredited investors. Can you talk a little bit about that?

Jor: I co-founded a company called VerifyInvestor.com. The idea behind it is that there are investors going through the verification process who need a safe way to get verified. On the other hand, there are also companies that are verifying them and need a legally compliant manner that is affordable. I felt that there wasn't a trustworthy marketplace provider of that, so I created it. 

The 506(c) market is still very fragmented, but among the dedicated providers that do this, we probably have something like an 80% to 90% market share. Within the EB-5 visa space, we're probably the only one that has any share. As you said, it's a standalone service for verifying investors and it's purely a 506(c) compliance tool.

The cost for the service varies depending on the volume, but the highest price that anybody ever pays is $69 for a verification. If they're doing bulk, the price drops and can drop quite dramatically. It’s very inexpensive considering that what you get from it when finished is an attorney's letter certifying that the review has been completed and complies with the safe harbor in Rule 506(c).

Kurt: It might be important to point out that you can do this for international investors, too. If somebody is conducting an EB5 offering using 506(c) instead of Reg S, then you can do this for offshore investors, as well, correct?

Jor: Certainly. We're one of the only platforms, if not the only, that can handle every type of accredited EB5 investor, including international investors. It’s probably due to the fact that our management team has so much international experience but I'd say a good chunk of our verifications are already international.

Find related discussion at [00:18:03] on our webinar Crowdfunding in EB-5