According to overseas Chinese newspapers, twenty or thirty Chinese investors participating in the Hudson Yards EB-5 investment immigration program held a protest at Hudson Yards on the morning of the 4th (Thursday), demanding that the developer, Related Companies, fulfill the agreement to return investors' funds and pay interest.
The protesters came from Los Angeles, San Francisco, Seattle, Washington, and Boston.
The Hudson Yards project is the largest EB5 investment project in the United States in the past few years, attracting more than 2,000 Chinese EB5 investors and raising more than $1 billion for the project.
Usually, the EB5 investment project will help the investor apply for an EB5 green card while using the investor's funds, and the investor's investment will be gradually returned after the project is completed. However, under immigration law, these projects do not guarantee that investors will not suffer losses from normal business risks.
Mr. Zhang, one of the organizers of the protests on the 4th, said, "Hudson Yards EB5 investment immigration program has two phases, the first phase of which has more than 1,200 Chinese participants, and each person has an investment amount of 500,000 US dollars. At present, there are more than 300 people who have gathered together to fight for refunds, and they have not received any or very little refunds and interest in the past 10 years of investment. In addition, a small number of people have not yet received their green cards, so they do not dare to participate in the protest. ”
Mr. Zhang joined UBP's investment immigration programme in Shanghai in 2014 and participated in the investment through a partner agent of the project's exclusive agent in China, Wailian Group. He finally got his green card about two years ago, but the $500,000 investment only received $7,000 in interest in 2018 and has not been seen since.
Other protesters said they had invested in the project, the country's largest immigration company, Wailian, which had told them that they would be guaranteed repayment, but that had not been the case. In the past two years, they have contacted UBP several times, but to no avail, and the other party basically ignored or replied.
They also approached a lawyer who had unsuccessfully won the case against UBP, who told them that the contract drawn up by UBP was legal and flawless. But the protesters argued that there was a "bully clause" — an agreement that said that repayment was left to the developer's discretion on a case-by-case basis, which undoubtedly deprived them of their right as shareholders to be repaid on time.
On the other hand, according to UBP's response to the media at the beginning of the pandemic, due to the impact of the new crown epidemic, there are projects that have suffered losses and caused delays in funding, so the payment of loan principal and interest will be suspended. Thirty investors then asked to inspect UBP's financial records on site, but UBP refused, with a spokesperson saying that under the original investment agreement, investors did not have the right to inspect the financial records.
Attorneys representing investors have told The Real Deal that most EB-5 projects are structured similarly to loans, with investors putting money into a fund that provides loans to developers, and the money is repaid to investors when the loan matures.
But Hudson Yards uses a less commonly used preferred equity model, which puts developers in a higher priority position. And USCIS also prohibits the existence of a clear repayment schedule in the EB5 agreement, otherwise it violates the risky nature of the investment. In such a case, the lawyer said, the recovery of the investor's funds is far away and faces expensive arbitration costs.
Mr. Zhang, who participated in Thursday's protest, said that despite the agreement, if UBP could produce financial records to prove that they really suffered operating losses, then investors would have nothing to say, but now everyone can see that the Hudson Yards project is a success, and if developers continue to ignore EB5 investors, even treating them worse than ordinary equity investors, "then we will definitely continue to protest until there is a result." When we pursue the American dream, we must pay attention to fairness and justice, and there must always be a place for reason!"