Contact Info: 716-604-4233 (cell) 716-768-6506 (landline) Page 1
Another Direct EB-5 I-526 Deni...
Contact Info: 716-604-4233 (cell) 716-768-6506 (landline) Page 2
Service (IRS), Office of Forei...
Contact Info: 716-604-4233 (cell) 716-768-6506 (landline) Page 3
The above list could grow even...
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Another Direct EB-5 I-526 denied by IPO and appeal dismissed by AAO


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Another Direct EB-5 I-526 denied by IPO and appeal dismissed by AAO

  1. 1. Contact Info: 716-604-4233 (cell) 716-768-6506 (landline) Page 1 Another Direct EB-5 I-526 Denied by IPO and Appeal Dismissed by AAO By Joseph P. Whalen (May 24, 2014) While I tend to write more about Regional Centers1 and affiliated investors, I do recognize that not all EB-52 Cases involve a Regional Center. In grateful appreciation of the real entrepreneurs out there who would seek an opportunity to come to the United States in order to make a real difference in their lives and ours, I offer this critique of a recently posted AAO3 non-precedent dismissal. The decision is dated May 12, 2014, and I found it posted on May 22, 2014. Admittedly, it could have been posted before that date but not by much. The following excerpt sums up the case and its problems that lead to its denial and then dismissal of the appeal. “….. The NCE is located in a targeted employment area for which the required amount of capital invested has been adjusted downward. Thus, the required amount of capital in this case is $500,000. The NCE manufactures automotive parts for enhancing automotive performance. The chief determined that the petitioner had not established that he had invested or was actively in the process of investing the required amount of capital, that he obtained the investment capital through a lawful source and the investment amount is his personal capital, and that the NCE has created or will create the requisite 10 jobs. ….” To start, it appears that this individual was not represented by counsel or anyone else. The AAO decision uses terminology consistent with that circumstance by only addressing the actions of the “petitioner” and makes zero references to “counsel”. EB-5 is a highly complex area of immigration law that mixes in many other factors from outside forces such as: the Securities and Exchange Commission (SEC), the Internal Revenue 1 A Regional Center is a USCIS Designated economic unit or entity that focuses on pooling EB-5 investments into larger scale investment projects in defined economic zones and may count “indirect” jobs estimated through reasonable methodologies used to produce an economically and statistically valid Economic Impact Analysis (EIA) based on a credible Business Plan (BP). 2 EB-5 = Employment-Based, Fifth Preference, which is the classification of a category of immigrant visa that focuses on the intending immigrant’s efforts to invest a minimum required amount of capital and create a minimum number of permanent full-time jobs for legal U.S. workers. 3 AAO = Administrative Appeals Office and IPO = Immigrant Investor Program Office, both are housed within U.S. Citizenship and Immigration Services (USCIS).
  2. 2. Contact Info: 716-604-4233 (cell) 716-768-6506 (landline) Page 2 Service (IRS), Office of Foreign Asset Control (OFAC), and bank regulators just to name a few. It is unwise to enter any EB-5 venture unrepresented. Generally, there should be a cadre of helpers for EB-5 investors. Investors should perform proper due diligence with help from appropriate advisors such as investment analysts, economists, technical writers, legal specialists, and subject matter experts (SMEs)/EB-5 Consultants (such as yours truly). The AAO dismissal primarily addresses three major problems but as anyone who has any experience with EB-5 already knows, it’s just not that simple! The three primary issues could easily be further dissected into more issues. I will point out a few of those additional areas for consideration as we progress through the AAO decision. Ready? Hold on tight because here we go again…… AAO identified the following three issues in its analysis of this case; Investment of Capital, Source of Funds, and Employment Creation. Just to illustrate the point that these three could easily be further subdivided I will do just that with the first “Issue On Appeal”. The Investment of Capital discussion in the AAO dismissal, at the very least, touches on the following key points. Some of these I will express as questions and others just as topics for further discussion and consideration (at your leisure) because that is how my thought process works. Some of these cross-over into the next “Issue On Appeal”, the “Source of Funds” which itself would lead to “Path of Funds”. 1. Was the full $500,000 actually handed over to the business? 2. Was the full $500,000 actually spent? 3. Was the full $500,000 actually “committed”? 4. Was the full $500,000 actually “at risk”? 5. Issue: Unsecured Promissory Note! 6. Has there actually been a real investment? 7. Even if there has been an influx of capital, whose was it? a. Where did it come from? b. How was it originally obtained by the “investor”? c. How is the capital being spent? 8. Issue: A mere intent to invest, or of prospective investment arrangements entailing no present commitment, will not suffice to show that the petitioner is actively in the process of investing.4 4 These themes are NOT new for “immigrant investors”. These and many other core elements have been addressed for decades in the prior incarnations or “predecessor”
  3. 3. Contact Info: 716-604-4233 (cell) 716-768-6506 (landline) Page 3 The above list could grow even further but I will leave it as it now stands. As I have maintained for years in my writings, the ultimate basics of EB-5 revolve around two critical issues. Everything else is secondary but is an extension from the two basic elements. Those two elements are: money and jobs. I will attempt to graphically illustrate how everything grows from those two simple words into a multitude of critical issues. The following does not take into account Regional Center issues. MONEY JOBS Capital is defined. Full-Time Invest is defined. Permanent Source of Funds. No Independent Contractors Path of Funds. Preserved Jobs Personal funds. 140% increased in “Expanded Business” Lawful Funds. Qualifying Employees “At Risk” investment” Investor excluded. Unsecured promissory notes. Investor’s spouse excluded. Retained Earnings. Investor’s sons and daughters excluded regardless of age or marital status. “For Profit” business. Nonimmigrants don’t count. “Doing Business”. Unauthorized workers don’t count. “Troubled Business” Part time employees don’t count. 140% increased in “Expanded Business” Employer-Employee Relationship. That’s my two-cents, for now. Joseph P. Whalen, Independent EB-5 Consultant, Advocate, Trainer & Advisor 1348 Ridge Rd | PMB 36 | Lackawanna, NY 14218 Phone: (716) 604-4233 E-mail: web or DISCLAIMER: Work is performed by a non-attorney independent business consultant. It is the client's responsibility to have any and all non-attorney work products checked by an attorney. I provide highly-individualized training based on consultationwith my clients. I serve Regional Center Principals and their counsel, potential EB-5 investors, and project developers. I am not an attorney myself although I have trained numerous attorneys and INS/USCIS adjudicators in complex issues within immigration and nationality law when I was an adjudicator there for many years. I do not prepare forms, write business plans, or create economic analyses. I do review them for clients prior to submission and suggest corrections and/or modifications to run by your attorney and investment advisor. NAICS Code: 611430 Professional and Management Development Training programs. SEE: investor-visa-1966-2011-june-27-2011-jw