Comments on proposed changes to uscis eb 5 processing may 21, 2011

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Comments on proposed changes to uscis eb 5 processing may 21, 2011

  1. 1. Comments on Proposed Changes to USCIS’s Processing of EB-5 Cases+Proposed Step 1: Accelerated and Premium Processing of “Shovel-Ready” CasesUSCIS proposes to prioritize ―actual‖ I-924 applications to ensure that eligible, shovel-readybusiness projects get underway as quickly as possible.The above statement is an excellent commitment by USCIS towards fulfilling Congressionalintent for the program overall.First, we will offer accelerated target processing times for ―actual‖ Regional Center filings.This appears to be the best and only way for USCIS to give effect to the priority processingprovision found in the statute without having to actually afford processing based on anyjudgment of the merits of any EB-5 project over another. Clear objective criteria based on the―ripeness‖ or ―preparedness‖ of a particular project to be afforded priority over one ―stillworking on‖ the underlying ―hyper-technical requirements‖ of its approach, plans, analyses, orstandardized documentation is fair, equitable and in keeping with the Congressional intent toinfuse needed investment into the U.S. economy as quickly as is feasible. I applaud theinnovation. 8 USC 1153 NOTE: Pilot Immigration Program Pub. L. 102-395, title VI, Sec. 610, Oct. 6, 1992, 106 Stat. 1874, as amended by Pub. L. 105-119, title I, Sec. 116(a), Nov. 26, 1997, 111 Stat. 2467; Pub. L. 106-396, Sec. 402, Oct. 30, 2000, 114 Stat. 1647; Pub. L. 107-273, div. C, title I, Sec. 11037(a), Nov. 2, 2002, 116 Stat.1847; Pub. L. 108-156, Sec. 4, Dec. 3, 2003, 117 Stat. 1945, provided that: ``(d) In processing petitions under section 204(a)(1)(H) of the Immigration and Nationality Act (8 U.S.C. 1154(a)(1)(H)) for classification under section 203(b)(5) of such Act (8 U.S.C. 1153(b)(5)), the Secretary of Homeland Security may give priority to petitions filed by aliens seeking admission under the pilot program described in this section. Notwithstanding section 203(e) of such Act (8 U.S.C. 1153(e)), immigrant visas made available under such section 203(b)(5) may be issued to such aliens in an order that takes into account any priority accorded under the preceding sentence.Second, we will make ―actual‖ I-924 application Regional Center filings eligible for the USCISPremium Processing Service (PPS). (PPS offers 15-day turnaround and enhanced customerservice for an additional fee.)PPS is an excellent way to fund the proposed enhanced EB-5 processing overall. It should alsohelp defray the costs involved in procuring and maintaining the expertise needed for the newSpecialized Intake Teams, Decision Board members and any recording equipment needed.Although the immigration practitioners may understand about excluding weekends, holidays, and 1 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  2. 2. stopping the clock when an RFE is issued in PPS, it may be worth reiterating these basics for thebenefit of the uninitiated.It seems unlikely that every single application and petition that might be eligible to file for PPSwill opt to utilize it in the long-term. However, I would predicate that a vast majority will, atfirst, just out of their own ―over excitement‖ at the prospect even if it is really not money wellspent in the particular case. As USCIS gets the process working smoothly for the non-PPS―shovel ready‖ I-526 petitions, the impetus to file every eligible I-526 will likely taper off intime. I would expect however that every I-924 that is eligible will take advantage of PPS just tospeed up the flow of EB-5 funds into its project.It would seem that if a Regional Center has a specific project that has already been fully vettedand approved by USCIS, with specificity in an Approval Notice, and is ready for I-526’s to startbeing filed, en masse with unaltered documentation that can be advertised as solid prima facieevidence of eligibility (except for individual investor’s financial documents) the value of, or needfor, any type of escrow arrangement will become a thing of the past.Marketing tools are only good for purposes that make sense. Slowing the flow of funds makes nosense in any projects fully vetted by USCIS for EB-5 basic compliance. It is still a possibility thatless well advanced projects may still find a use for escrow arrangements as a marketing tool if adeveloper can find alien investors who expresses a very early interest in a project as a way ofcommitting them. In the alternative, if an alien investor approaches a Regional Center with anidea for the RC to develop, that RC might be the party being pacified by an escrow agreement. Inthe end, any mechanism that results in a faster influx of foreign funds into the U.S. economywould finally fulfill the Congressional intent expressed over two decades ago and repeatedlyever since.One last thought about Congress, I support Senator Leahy’s S. 642 to make the pilot programpermanent. It is short and to the point with no new esoteric requirements.Clear filing guidelines for ―actual‖ vs. ―exemplar‖ I-924 applications and I-526 petitions will beprovided to the public through a revised I-924 application, I-526 petition, and instructions forthese forms. I- 924 applications including a hybrid of ―shovel-ready‖ and ―exemplar‖documentation will be accepted for processing as ―exemplar‖ applications.The above enhancements will be welcome. Clearer instructions and guidance always becomeeasier to write with more experience in a subject. This is borne out by past experience as noted inother contexts such as:Matter of Church Scientology International, 19 I&N Dec. 593, 597 (Comm. 1988) is often citedfor the following words of wisdom and the plethora of citations to back it up. ―The Service, in the absence of any legislative history, regulations, or precedent decisions on the applicability to religious personnel of the "L-1" and Schedule A, Group IV, provisions, has been attempting to set standards and may have inadvertently 2 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  3. 3. rendered some inconsistent decisions. In spite of this, this Service is not required to approve applications or petitions where eligibility has not been demonstrated, merely because of prior approvals which may have been erroneous. Matter of Khan , 14 I&N Dec. 397 (BIA 1973), by extension; Matter of M- , 4 I&N Dec. 532 (BIA 1951; BIA, A.G. 1952); see also Pearson v. Williams , 202 U.S. 281 (1906); Lazarescu v. United States , 199 F.2d 898 (4th Cir. 1952); United States ex rel. Vajta v. Watkins , 179 F.2d 137 (2d Cir. 1950); Mannerfrid v. Brownell , 145 F. Supp. 55 (D.D.C.), affd , 238 F.2d 32 (D.C. Cir. 1956).‖ [Emphases added.]While EB-5 does have a fair amount of legislative history and has regulations (that needupdating—see attached), limited administrative precedents, and a few gems from the District andCircuit Courts, more is still needed and perhaps this renewed effort will make headway quicklyin this regard. I hope so.Third, accelerated target processing times will also apply to the I-526 petitions associated withapproved ―actual‖ I-924 applications, and PPS will be available for those petitions as well.Prioritizing shovel-ready cases will also create a strong incentive for the public to file clear,focused applications and petitions.Again, I say ―hats off‖ to USCIS on this progress. But there is one item listed in the ―chart‖ atthe end of Step1 that I have a question about. The third item up from the bottom is labeled as―I-526 – Regional Center ―Exemplar‖ Project‖. I can ―guess‖ and ―suggest‖ what I would meanby that but I can find no specific explanation in the ―Proposal‖.I can’t imagine what set of circumstances would make this filing ―NOT accelerated‖ and ―NOTeligible for PPS‖ on the contrary, I would think something like that (as I envision) would besuitable and would expect every one of them to be filed as PPS.Here is what I would mean by that:An ―I-526 – Regional Center ―Exemplar‖ Project‖ case filing would be allowed by either a leadalien immigrant investor (a volunteer-guinea pig) or a Regional Center agent, who is acting asthe ―general partner‖ in a RC-affiliated project-specific ―(limited) partnership‖ for the solepurpose of a last minute check of the validity of the standardized prima facie evidence ofeligibility before allowing I-526 investors to file petitions en masse.This would be a less expensive alternative to the filing of an I-924 as an amendment when thesole purpose is a check of executable project-specific documentation for EB-5 compliance.Such a filing would also be useful when a previously-vetted RC ―exemplar‖ project gets utilized(is pulled off-the-shelf of previously-vetted exemplars in the RC library/repertoire/arsenal ofsuch projects) and becomes an ―actual‖ project.If the ―exemplar‖ business plan (BP) and ―proposed‖ economic methodology and an ―exemplar‖economic analysis (EA) had already been presented in an I-924, then a last minute check of the 3 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  4. 4. ―acceptability‖ of the ―final‖ version of the ―actual‖ BP and/or EA, instead of or, in addition to,the ―standardized documentation last-step vetting for EB-5 compliance‖, right before allowinginvestors to file I-526s, en masse, would be money well spent and promote the Congressionalintent of EB-5. If the I-924 for an ―exemplar‖ is sufficiently vetted, sculpted, and hammered-outduring the longer, more expensive process, i.e. ―put through the wringer-up front‖, then the―follow-up‖ via an I-526 ―exemplar‖ vetting would serve to transform the prior I-924―exemplar‖ into an ―actual‖ at a lower cost that is suitable to the task at hand.Of course, that just my take on the possible meaning of a term that is not explained in theProposal.Proposed Step 2: Specialized Intake Teams for I-924 Applications, with Direct CustomerAccessUSCIS proposes to create Specialized Intake Teams to handle the initial intake and review of I-924 applications. The teams will have expertise in economic development and analysis, as wellas EB-5 Program requirements. Members will include USCIS economists, business analysts, andadjudicators, and each team will be supported by legal counsel.Specialized Intake Teams (plural). How many will there be? Will the membership be static ordynamic? Will there be economic and business analysts who anchor the teams with adjudicatorscycling through? Will a limited number of economic and business specialists float betweengroups of adjudicators instead? So will each Team be composed of three or four fairly steadymembers and a dedicated lawyer on-call? Is that about right?The adjudicators would likely be the experts in matters pertaining to evidence evaluation,document examination, fraud indicators, and using DHS files and databases such as VIBE etc...The adjudicators would also probably be as well versed in the INA as any attorney but woulddefinitely benefit from legal consultation on issues pertaining to contracts and other governmentagency regulations such as SEC, OFAC, EPA and IRS as well as State laws on partnerships,corporations and licensing, or any other compliance requirements. I look forward to seeing moredetails.The intake teams will determine if an I-924 application filed as an ―actual‖ application meets the―actual‖ filing guidelines, and will work to ensure that each ―actual‖ or ―exemplar‖ I-924application package is ready for adjudication.Will applicants and petitioners be advised to submit separate checks in case a PPS request is notaccepted but the underlying application or petition could still be accepted for regular processing?The teams will review the package for all required documentation and evidence andcommunicate directly with the I-924 applicant in writing to address identified questions or needs.It seems that this Intake will be the initial agency review and then the case will go to the newDecision Board who will act for the Center Director much like NQP ―Supervisory Review‖. 4 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  5. 5. Certain NQP concepts such as ―Supervisory Review‖ and standardized sworn statements havebeen extended to AOS already. Is that a fair analogy?It appears that it will be a group effort among as many as six to eight individuals to decide an I-924. That should combat any possibility of even remotely valid allegations of bias whetherfavorable/positive or unfavorable/negative.Proposed Step 3: Enhanced Decision Process for I-924 Applications, with Option for In-Person or Telephonic InterviewUSCIS proposes to have an expert I-924 Decision Board render decisions in I-924 applications.The Board will be composed of a USCIS economist and two USCIS adjudicators, and will besupported by legal counsel.The Specialized Intake Teams include a Business Analyst but that position does not appear in thelist of members of the Decision Board. Was it found to be redundant, overkill, or was it anoversight in this written proposal? What is the reasoning behind the Decision Board’scomposition? For that matter, why create a new I-924 Expert Decision Board? Is it aformalization of something that had evolved at CSC?The Board will receive a case for disposition from the Specialized Intake Team, and the Board’sfirst step in each case will be to approve the I-924, to route the I- 924 back to the intake team fora Request for Evidence (―RFE‖), or to issue the applicant a Notice of Intent to Deny (―NOID‖).If the Board issues a NOID, it will offer the applicant the opportunity to have an in-person or atelephonic interview with the Board to inform its final decision.The Intake Team appears to have the authority to issue an RFE as embodied in the write-upabove in Step 2 as being empowered to ―communicate directly with the I-924 applicant inwriting to address identified questions or needs.‖ So, can there potentially be two rounds ofRFEs or will all RFEs have to pass through the Decision Board? Will the Intake Teams beallowed to communicate through e-mail as well as in hardcopy correspondence? Will all suchcommunications be incorporated in to the record of proceeding?It also says that the Board may:1.) approve or,2.) return (remand) the case back for issuance of an RFE, or3.) issue a NOID and offer an interview.It is unclear to me who writes the RFE in the first place (the Board or the Intake Team).It is also unclear if the Board’s RFE would potentially be a second RFE or if would be reviewingthe Intake Team’s RFE. It is also unclear if the Board will write the NOID and hand it back forissuance or hand the case back for both preparation and issuance of either the NOID or RFE. 5 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  6. 6. Lastly, it is unclear to me if the Intake Team will prepare a written recommendation for theBoard’s review (a Draft Approval, or NOID) or if the Board will perform a de novo examinationon a case that has been presented to it simply as a case ―ready for adjudication‖.If an applicant believes an RFE has been issued unnecessarily and the application is ready foradjudication, the applicant can request the issuance of a NOID for the purpose of obtaining aninterview.In this Step 3, it seems that an applicant is allowed to basically challenge any RFE and ask for aNOID instead just to get a face-to-face interview to plead their case. Will they be able tochallenge an RFE from the Intake Team just to skip ahead to a face-to-face with the Board?If yes, this would be abused.Will an RFE from the Board differ in any way from written communication from the IntakeTeam members? What criteria, if any, will be lain down as a threshold for requesting aninterview? It may quickly become apparent that not every case is actually worthy of aninterview. There are likely to be instances when the underlying premise for an I-924 is clearlyineligible, is based on either outright fraud or, so grossly flawed that it cannot be salvaged.Affording due process is one thing but determining what process is due is quite another. USCISshould exercise caution as to whether or not to create any right to an interview instead of aqualified, potential, optional interview. USCIS should avoid painting itself into a corner andleave itself an escape route on this aspect of processing. For instance, no matter how manyhouses one intends to flip or how worthy that effort may be for a local economic recovery, itdoes not form the basis for a Regional Center application because it will not produce the requiredpermanent full time jobs required by the EB-5 statute. The fostering of small ―mom and pop‖businesses through an incubator model is a noble effort but will not create the required jobseither. Other applications will be so underdeveloped and premature that the applicant would needso much handholding and specific direct guidance to reach an acceptable level of feasibility thatno mere ―interview‖ would suffice.USCIS cannot supply the premise to be developed for the applicant. As much as some applicantsmight beg for that level of help, it is not right for USCIS to give it. Guidance on eligibilityrequirements must be clear and workable but applicants who can’t come up with a workablepremise are barking up the wrong tree and need a firm denial that explains in an instructive waysuch that it could potentially aid a renewed effort in the future.On interview criteria.The regulation used by the AAO would be a fair one to copy or start with if it were applied moreliberally than it has been by the AAO within the appeal context or, there are the more general, aswell as, application-specific regulations that might help inform any policy decision on thisaspect. 6 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  7. 7. 8 CFR § 103.3 Denials, appeals, and precedent decisions. [This is a good starting point but lacks any definition or guidance as to which factors to consider in granting such a request.] (b) Oral argument regarding appeal before AAU — (1) Request. If the affected party desires oral argument, the affected party must explain in writing specifically why oral argument is necessary. For such a request to be considered, it must be submitted within the time allowed for meeting other requirements.Compare the above to: 8 CFR § 103.2 Applications, petitions, and other documents. [This may be too generic but does embody the concept of allowing an applicant to perfect the application during the process and the acceptability of a material change after filing up to time of final adjudication.] (b) Evidence and processing — (7) Testimony. The USCIS may require the taking of testimony, and may direct any necessary investigation. When a statement is taken from and signed by a person, he or she shall, upon request, be given a copy without fee. Any allegations made subsequent to filing an application or petition which are in addition to, or in substitution for, those originally made, shall be filed in the same manner as the original application, petition, or document, and acknowledged under oath thereon. 8 CFR § 245.6 Interview. [Something to consider.] Each applicant for adjustment of status under this part shall be interviewed by an immigration officer. This interview may be waived in the case of a child under the age of 14; when the applicant is clearly ineligible under section 245(c) of the Act or §245.1 of this chapter; or when it is determined by the Service that an interview is unnecessary. 8 CFR § 335.2 Examination of applicant. [This may be too broad.] (c) Procedure. Prior to the beginning of the examination, the Service officer shall make known to the applicant the official capacity in which the officer is conducting the examination. The applicant shall be questioned, under oath or affirmation, in a setting apart from the public. Whenever necessary, the examining officer shall correct written answers in the application for naturalization to conform to the oral statements made under oath or affirmation. The Service officer shall maintain, for the record, brief notations of the examination for naturalization. At a minimum, the notations shall include a record of the test administered to the applicant on English literacy and basic knowledge of the history and government of the United States. The Service officer may have a stenographic, mechanical, electronic, or videotaped transcript made, or may prepare an affidavit covering the testimony of the applicant. The questions to the applicant shall be repeated in different form and elaborated, if necessary, until the officer conducting the 7 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  8. 8. examination is satisfied that the applicant either fully understands the questions or is unable to understand English. The applicant and the Service shall have the right to present such oral or documentary evidence and to conduct such cross-examination as may be required for a full and true disclosure of the facts. (d) Witnesses. Witnesses, if called, shall be questioned under oath or affirmation to discover their own credibility and competency, as well as the extent of their personal knowledge of the applicant and his or her qualifications to become a naturalized citizen. § 336.2 Hearing before an immigration officer. [This may be instructive on procedure.] (a) The applicant, or his or her authorized representative, may request a hearing on the denial of the applicants application for naturalization by filing a request with the Service within thirty days after the applicant receives the notice of denial under §336.1. (b) Upon receipt of a timely request for a hearing, the Service shall schedule a review hearing before an immigration officer, within a reasonable period of time not to exceed 180 days from the date upon which the appeal is filed. The review shall be with an officer other than the officer who conducted the original examination under section 335 of the Act or who rendered the Service determination upon which the hearing is based, and who is classified at a grade level equal to or higher than the grade of the examining officer. The reviewing officer shall have the authority and discretion to review the application for naturalization, to examine the applicant, and either to affirm the findings and determination of the original examining officer or to redetermine the original decision of the Service in whole or in part. The reviewing officer shall also have the discretion to review any administrative record which was created as part of the examination procedures as well as Service files and reports. He or she may receive new evidence or take such additional testimony as may be deemed relevant to the applicants eligibility for naturalization or which the applicant seeks to provide. Based upon the complexity of the issues to be reviewed or determined, and upon the necessity of conducting further examinations with respect to essential naturalization requirements, such as literacy or civics knowledge, the reviewing immigration officer may, in his or her discretion, conduct a full de novo hearing or may utilize a less formal review procedure, as he or she deems reasonable and in the interest of justice.The Board will audiotape or otherwise memorialize the interviews for the record.Digital audio recording is the latest, hottest thing used by EOIR1 in Immigration Courts. Perhapsthey can provide input on how that technology is working. EOIR and other agencies use videoteleconferencing (VTC) and I know USCIS already has such equipment so that is anotherpossibility for these cases while actually recording these could require a capital investment but itis something to consider. Currently the Administrative Conference of the United States isstudying the use of VTC and video hearings2. “Otherwise memorialize the interviews for the1 http://www.justice.gov/eoir/press/2011/EOIRtestimony05182011.pdf2 http://www.acus.gov/research/the-conference-current-projects/video-hearings/ 8 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  9. 9. record” seems like an odd turn of phrase. Will USCIS utilize standardized sworn statements,hand written notes of all Board members present, affidavits, depositions, Official Memoranda,and/or transcripts? Please explain what is meant by that. Will USCIS generally follow 5 USC §557?The Board will then ultimately approve or deny the I-924. I-924 approval letters will clearlyidentify whether the case was approved as an ―actual‖ or ―exemplar‖ application. Business plans,economic analysis, and I-526 documentation approved in an ―actual‖ I-924 application, ifunchanged, will be given deference in the filing of associated I-526 petitions, and such petitionswill be eligible for accelerated target processing times and for PPS.The new Decision Board seems to be sitting in on behalf of the Service Center Director only. IsUSCIS making any changes in regard to the handling of these cases on appeal before the AAOalso? What appeal rights will the denied applicant be advised of? Will they be advised of thecurrently available rights of appeal as specified in 8 CFR 204.6 (m) (5)? How about what AAOwill advise if it too denies the application? Will AAO advise of rights under 5 USC § 706?Additional comments for USCIS’ consideration:The premise of an investment as asserted in an approved Regional Center application, i.e. thebusiness plan, economic analysis with indirect job creation projections, and the vetted writtendocumentation, are only “recommended for a favorable determination” as supporting primafacie evidence of eligibility for a future I-526 and even further I-829. Is that a fair assessment?A prima facie showing of eligibility, through use of previously vetted plans and documentation,is a good starting point but is not the final word. An individual applicant must still provecomplete eligibility for a favorable determination on the individual petition. The I-924 Approvalwould naturally not cover the individual I-526 petitioner’s financial documentation as to lawfulsource and path of funds. However, a well thought out proposed due diligence plan for the RC tovet its investors’ funds that had itself been vetted by USCIS would certainly aid the RC to helpits investors submit easy and clean cases to USCIS with an expectation of quick turnaround onadjudication decisions. Is that an accurate summation?A material change to any part of that prima facie evidence which had been previously examinedmay derail an entire project and have negative ramifications upon all EB-5 and domesticinvestors. A form I-924 can be used to seek an amendment to the plans, analyses, predictionsand documentation in advance of individual I-526 petitions being filed en masse in order to makesure that any new prima facie evidence is still EB-5 compliant. This same could be said of the I-526 Regional Center ―exemplar‖ project that has been approved. Is that a fair statement?I hope that USCIS will warn the RC that in order to fulfill such a request, the Regional Centersupplied evidence accompanying I-526 petitions would only be given deference later on byrefraining from making material changes to what was previously approved. This is where folkshave gone astray in the past. Will USCIS be putting forth draft templates for comment? 9 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  10. 10. If USCIS desires a mechanism to address small alterations to documents previously vetted andthis is sought to be done before any associated I-526 petitions have been filed it would be inkeeping with USCIS’ improved customer service commitments and Congressional intent toallow some mechanism that would not require paying an additional full fee of $6,230.00. IfUSCIS won’t do it for free, would it allow a much less expensive request similar to a Motion inorder to make a minor technical amendment or, as I explained above as to how I would envision,the ―I-526 Regional Center ―exemplar‖ Project‖ for last minute vetting to be filed?USCIS has broad statutory authority to write regulations for the implementation for EB-5 ingeneral and the Pilot Program and Regional Centers very specifically. Congress did cite to theregulations at 8 CFR 204.6 in subsequent legislations. 8 CFR § 204.6 Petitions for employment creation aliens. (j) Initial evidence to accompany petition. [A Regional Center should be equipped to help their investors achieve success at the I-526 stage and be aided in that effort by USCIS in the I-924 adjudication by the USCIS vetting of: business plans, analyses, methodologies, financial arrangements, methods for “due diligence of funds”, and standard investment documentation.] (4) Job creation — (iii) Immigrant Investor Pilot Program. To show that the new commercial enterprise located within a regional center approved for participation in the Immigrant Investor Pilot Program meets the statutory employment creation requirement, the petition must be accompanied by evidence that the investment will create full-time positions for not fewer than 10 persons either directly or indirectly through revenues generated [from increased exports] [and/or] resulting from the Pilot Program. Such evidence may be demonstrated by reasonable methodologies including those set forth in paragraph (m)(3) of this section. [If the Regional Center has been put through the wringer on this issue, a complete copy of the business plan and economic analysis should NOT be required. A copy of the Regional Center’s “Project Specific” Approval Notice issued pursuant to an approved I-924 “Shovel Ready” “Actual” or Quick Amendment Application or following an approved I-526 Regional Center “ Exemplar” Petition should suffice, absent material changes to the underlying business plan, economic analysis and “ standard investment transaction documentation.” Such individualized “standard transaction documentation” along with proof of lawful funds should be included with each petition package.] [The current I-526 form and instructions do not include any information about the different evidentiary burdens and documentation between a ―stand-alone‖ (non- Regional Center) as opposed to a Regional Center-affiliated investor.] 10 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  11. 11. I see a potential problem:Aside from the four EB-5 Precedent Decisions3 decided by the AAO in 1998, I could only findone actual BIA decision dealing with an older investor classification. That older case was in aslightly different context. Interim Decision # 2581 or Matter of Heidari4, 16 I&N Dec. 203 (BIA1977) [specifically May 4, 1977] dealt with a student who overstayed and began a business andsought to reopen and later to reopen and reconsider a deportation order. After he was alreadyorder deported, he sought to take advantage a new immigration classification which required analien to invest $40,000 and be the principal manager of the business and employ at least oneUSC or LPR employee (excluding self, spouse, and children). In that case, the BIA refused toconsider new evidence that came into being after the fact, long after the filing of the initialpetition and after he was ordered deported. The prohibition against making a ―material change‖and the requirement for ―eligibility at time of filing‖ specifically within the immigrant investorcontext goes back to 1977, long before Izummi in 1998. However, that too was a decisioninvolving a visa petition rather than an I-829 seeking to lift conditions, or for a Regional Centerwhich did not exist yet.I urge USCIS to specifically distinguish the I-924 as an application which does not require anapplicant to be completely ―eligible at time of filing‖ and is not prohibited from making materialchanges post-filing. It seems that USCIS is moving that way but has not stated it in plainlanguage.Transparent Complexity to Achieve Desired Flexibility:I understand also that once an I-526 is approved that an individual alien investor is pretty muchlocked in to a plan that needs follow through. Guidance on the limits to a Regional Center’splans and structure of investments are crucial but limitations need not merely be restrictive,limits can also be expansive and inclusive.The AAO non-precedent Decision of April 23, 20105 (excerpts below) in which a PIDC limitedpartnership initially chose to invest in the expansion of Tommy D’s home improvement supplystore and then switched to a restaurant, Butcher & Singer, has some points to be considered forfurther development. This decision relates to an I-829 but does discuss Regional Center issues aswell.3 In 1998, the AAO (attributed to The Associate Commissioner, Examinations) through the BIA, issued four EB-5Precedent Decisions, but they are for the Immigrant Investors’ I-526s, not Regional Centers (I-924s), and not I-829s.Matter of Ho http://www.justice.gov/eoir/vll/intdec/vol22/3362.pdfMatter of Hsuing http://www.justice.gov/eoir/vll/intdec/vol22/3361.pdfMatter of Izummi http://www.justice.gov/eoir/vll/intdec/vol22/3360.pdf For the I-924, the most pertinent part of the13 part holding is number―(9) The Service does not pre-adjudicate immigrant-investor petitions; each petition must be adjudicated on its ownmerits.‖ However, the AAO inappropriately applies number ―(3) A petitioner may not make material changes to hispetition in an effort to make a deficient petition conform to Service requirements.‖Matter of Soffici http://www.justice.gov/eoir/vll/intdec/vol22/3359.pdf4 http://www.justice.gov/eoir/vll/intdec/vol16/2581.pdf5 http://www.uscis.gov/err/B7%20-%20Form%20I-526%20and%20I-829/Decisions_Issued_in_2010/Apr232010_01B7203.pdf 11 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  12. 12. ―The business plan stated that the objective of the partnership would be to operate as an ongoing series of investments that serve the best interests of the limited partners and in a manner that furthers the economic development of Philadelphia. The plan references a PlDC advisory agreement with the Partnership that requires PIDC to recommend investments to the Partnership...‖ (At p.5)There would appear to be a certain amount of flexibility built in to the referenced ―AdvisoryAgreement‖. USCIS should not move away from that flexibility but rather define itappropriately. That same decision goes on to state: ―The full amount of the requisite investment must be made available to the business most closely responsible for creating the employment upon which the petition is based. Matter of Izummi, 22 I&N Dec. 169, 179 (Commr. 1998). While counsel notes on certification that the job creating enterprise and the new commercial enterprise are not always the same and notes that Matter of Izummi does not preclude prospective investments, nothing in that decision suggests that the alien is free to move his investment from the prospective project presented to USCIS in support of the Form 1-526 to a project that USCIS has never reviewed in any respect.‖ (At p.11) [Emphases added.]Working from that position, the value in the use of ―exemplars‖ is made quite clear. In order topreserve the desired flexibility to shift to a different project or supplement an investmentportfolio with an additional previously only ―prospective investments‖ requires sufficientadvanced planning. The Regional Center desiring such flexibility needs to have an inventory of―prospective projects‖ in the form of sufficiently ―USCIS-vetted exemplars‖ on-the-shelf fromwhich to choose. Planning ahead for a variety of contingencies is a wise move for any RegionalCenter.It would also be incumbent upon the Regional Center to invest the needed resources in creating asufficiently variegated business plan that is well supported with exemplar projects and economicanalyses with reliable and credible job projections.This last point is where a broad, credible, comprehensive business plan that is wide-ranging inscope and breadth submitted at the Regional Center (RC) Proposal (I-924) stage is critical. If aRC asserts a flexible investment approach and builds such flexibility into its written supportingdocumentation with a certain amount of specificity sufficient to put USCIS on notice, thenshifting from one vetted ―actual‖ project to another project based on a ―previously vettedexemplar‖ project remains a possibility. Preserving such flexibility is not a simple task.The RC applicant must invest great effort into the planning in order to retain such flexibility forits prospective investors. The “general proposal” based on “general predictions” allowed bythe statute [8 USC 1153 Note] must be presented with sufficiently detailed information“concerning the kinds of commercial enterprises that will receive capital from aliens” asallowed and envisioned all in that same statute. Congress also directed the agency to writeregulations and to establish ―reasonable methodologies‖. Well, those mechanisms are there in theregulations at 8 CFR § 204.6(m)(3). It is up to the RC applicant to comply with thoserequirements from the very beginning. 12 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  13. 13. While USCIS must set certain limits to such flexibility it would be to the detriment of thesuccess and survival of the EB-5 Immigrant Investor Program to cut off any possibility offlexibility. I urge USCIS to address this concept in the anticipated revised I-924 and I-526 forminstructions and any planned regulatory update. Transparent Complexity “Up Front” Is Key To Reasonable Reliance On The Prospect Of Enjoying Future Deference Within EB-5 Based on Regional Center AffiliationFlexibility can be built into a complex Regional Center Proposal supporting the I-924 if it fullyembraces each and every aspect of the implementing regulations and statute.If one reads 8 CFR § 204.6(m)(3)(i-v) like this and thinks outside the box, then the successfulTransparent, Complex, and Flexible Proposal will be one that: “Clearly describes how the regional center focuses on a geographical region of the UnitedStates,” It is essential to choose a realistic statistical universe to work within (geographicallyspeaking), amendments can be made later that refine and/or replicate what has thus far provensuccessful. This part establishes a workable basis for the econometric model and dictates theappropriate inputs for the variables needed for use in the chosen methodology (RIMS II,IMPLAN, REMI, REDYNE, other) when creating the actual or exemplar ―economic analysis‖.“...and how it will promote economic growth through.....improved regional productivity,job creation, and increased domestic capital investment;” This part underlies the necessarycomprehensive and credible business plan or plans. These should focus on the particular ―kindsof commercial enterprises that will receive capital‖ as dictated by the statute to be identified upfront. This is where one must chose their types of projects and flesh out their desired commercialenterprises that are expected to create the required jobs. This is where one looks to the NAICS 6codes.Once again, it is critical to be specific enough to get appropriate inputs for the economic modelyet try to leave some wiggle room by choosing the right category at a wide enough level to retainsufficient flexibility. Be specific enough to satisfy USCIS up front with an exemplar project butbuild in enough flexibility to be able to tailor the previously vetted and approved economicmodel to an actual project based on a previously USCIS-vetted exemplar project plan withoutgetting too far away from where you started. This is for each ―kind of commercial enterprise‖identified. There is no limit to the different kinds of projects the RC can plan ahead for.If an actual project falls into a category of investment that was previously vetted as an exemplarthen submitting an I-924 amendment or even an ―I-526 Regional Center ―exemplar‖ Project‖should be a straight-forward exercise of that flexibility to ensure a quick response to theamendment application or exemplar petition request, with the proviso that the actual alieninvestors’ supporting financial documentation is always separate and apart from the RC filedapplication or petition.6 http://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2007 13 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  14. 14. This would be a safe way of ensuring that a strong prima facie case could be presented with eachinvestor’s I-526 petition, en masse. It is not yet an absolute requirement that any final projectchosen that is based on a previously vetted exemplar must be submitted as an amendment (orexemplar petition) but it would be a wise move when possible. If the flexibility has beenpresented up front through the use of transparent complexity then additional previously only―prospective investments‖ that had been planned for as contingencies and/or possibilities canbecome realities. These can be added into an evolving and/or revolving investment structure orpossibly even substituted in place of a failing project. It is key that a substitute or addition hasalready been vetted by USCIS as an ―exemplar‖ that is similar enough to the ―actual‖ project thatit is not interpreted and branded as “a project that USCIS has never reviewed in any respect.‖Having a sufficient variety of possible project types is a key component for any Regional Center.Some developer may approach a Regional Center at any time and if the RC already has apreviously vetted and approved exemplar similar enough on hand, then the ―actual‖ project canget underway quicker. If an I-924 amendment is needed to cover some kind of commercialenterprise never previously vetted in any respect it will slow things down. Consider thepreparation time before submission as well as the adjudication time after filing. An amendmentof a new project that is a ―close match‖ to a previously vetted ―exemplar‖ should speed theprocess and turnaround time for both the RC and USCIS.In the April 23, 2010, PIDC case, Tommy D’s as a ―discount seller of close-out or discountedbuilding materials used for home improvement‖ might have fit into one or more of the followingNAICS codes. 44 Retail Trade444 Building Material and Garden Equipment and Supplies Dealers4441 Building Material and Supplies Dealers44411 Home Centers444110 Home Centers44412 Paint and Wallpaper Stores444120 Paint and Wallpaper Stores44413 Hardware Stores444130 Hardware Stores44419 Other Building Material Dealers444190 Other Building Material DealersButcher & Singer as an ―upscale supper club‖ would have fit into one or more of these NAICScodes:72 Accommodation and Food Services722 Food Services and Drinking Places7221 Full-Service Restaurants72211 Full-Service Restaurants722110 Full-Service Restaurants 14 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  15. 15. “Provides in verifiable detail how jobs will be created indirectly...;” This part speaks to thelevel of detail required for the project plan and the economic analysis based on that plan. It alsospeaks to the quality of data used as inputs in the economic analysis and job predictionprojections gleaned from it. Of course, when speaking of quality of data used as inputs one mustensure that reasonable and reliable data is chosen and that it is appropriate to the particulareconometric model or methodology being used. Once again this all harkens back to the businessplan. Is that plan realistic and based on current accurate data?“Provides a detailed statement regarding the amount and source of capital which has beencommitted to the regional center, as well as a description of the promotional efforts takenand planned by the sponsors of the regional center;” This part is specific to the operation ofthe entity that applied for Regional Center designation. How will these folks funds and advertisethe RC? How will they recruit? Will they be charging alien investors for services, whichservices? This may be addressed in a business plan specific to the operation of the RC alone ormay be less formal correspondence which often includes a budget. This information may becontained in an Operating Agreement, Subscription Agreement, Partnership Agreement, Bylaws,Articles of Incorporation, an Organizational Agreement, or a Charter as examples.“Contains a detailed prediction regarding the manner in which the regional center willhave a positive impact on the regional or national economy in general...” This part alsoharkens back to the prior requirement and the first under (m)(3). This is an overall statement asto the good to potentially come from the establishment of the Regional Center in a particulargeographic area as well as the various alien investor projects it will help get started.“...as reflected by such factors as increased household earnings, greater demand forbusiness services, utilities, maintenance and repair, and construction both within andwithout the regional center;” This part gives a laundry list of specifics for the economist toaddress in the economic analysis. Amazingly, these are often overlooked because the economistsare not provided with the actual regulations that their work product (the economic analysis) issupposed to support. The economists would produce better analyses if they knew what theiranalyses were supposed to specifically include. Many economic analyses blather on aboutpoverty levels, taxes, user fees, property values and socio-economic stratification based oneducational levels of the demographic composition of the population. Interesting if you areaddressing Congress for funding a project in a community but irrelevant to EB-5. EB-5economists need to stick to the direct, indirect and induced job creation and general economicbenefits of the actual project or exemplar project type proposed as the new commercial enterpriseto receive EB-5 funds.“Is supported by economically or statistically valid forecasting tools, including, but notlimited to, feasibility studies, analyses of markets for....the goods or services....., and/ormultiplier tables.” This part reiterates and emphasizes that the credible, comprehensive businessplan and the economic analysis as well as the job creation projections must be sound and basedin reality. ―Economically and statistically valid‖ is crucial for the inputs being used as well as theeconomic model and/or methodology being used as a forecasting tool. The economic modelsmay employ ―multipliers‖ and the selection of the appropriate multiplier is crucial. Thepreparation of, or reliance on, ―feasibility studies‖ and ―analyses of markets‖ are paramount to 15 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  16. 16. the foundation of the business plans/proposals for the various ―goods and services‖ to be offeredthrough the ―new‖ ―commercial enterprises‖.In the April 14, 2011, AAO non-precedent Decision7 pertaining to a South Dakota failed DairyFarm Regional Center affiliated I-829 case provides some analysis invoking the reasoning of theNinth Circuit in the Chang case as to the inability of USCIS to go back and re-adjudicate an I-526 at the I-829 stage. ―The Ninth Circuit, in Chang v. United States of America, 327 F. 3d 911 (9th Cir. 2003), held that, during the adjudication of a Form 1-829, USCIS could not review whether the initial plan submitted with the Form 1-526 was qualifying, only whether the alien sustained that plan. Specifically, the court stated that the Form 1-526 approval may not be "decoupled from [Form] 1-829 approval." Id. The court further stated that Form 1-829 approval is predicted by Form 1-526 approval and "successful execution of the approved plan." Id. As noted by the court in Chang, 327 F. 3d at 927, far more evidence is required in support of the Form 1-526 petition. In fact, as stated above, the regulation at 8 C.F.R. § 204.6(j)(4)(iii) expressly requires the submission of reasonable methodologies for determining indirect job creation at the Form 1-526 stage. At the Form 1-829 stage, the petitioner is not required to submit such evidence, although the petitioner must use the methodologies approved at the Form 1-526 stage to demonstrate that his investment has created the requisite employment. Under the reasoning of Chang, the director erred in revisiting the appropriateness of the multiplier. The director approved the Form 1-526, which disclosed that the petitioner would be using the 2.66 multiplier for the location of the dairy. The petitioner did not materially change the location of the proposed employment creation and the director does not identify information that was misrepresented or not disclosed at the Form 1-526 stage that would warrant a new evaluation of the multipliers used. Thus, the petitioner should be able to rely on the 2.66 multiplier as an acceptable means of demonstrating total job creation, including indirect jobs. The AAO withdraws the directors concern that the 2.66 multiplier is not appropriate.‖ (At p.15)A Regional Center that starts with too narrow a scope has already painted itself into a cornerfrom which there is nowhere to go and is likely doomed to fail. Based on that same reasoningfrom Chang, upon which the Ninth Circuit blocked INS from re-adjudicating an I-526, and uponwhich AAO blocked CSC from re-adjudicating an I-526, the act of a petitioner’s full, honest,and accurate disclosure in the I-526 is paramount to success at the at the I-829 stage if coupledwith successful execution of the plan or a showing that one is on the cusp of achieving the goals.Therefore, through the well thought out and skillfully crafted Plan(s) put forth up front i.e.,presentation of a plan constructed with transparent complexity, one can build in any amount offlexibility it chooses to expend the effort to produce through solid business plans and economicanalyses with a verifiable and detailed basis.7 http://www.uscis.gov/err/B7%20-%20Form%20I-526%20and%20I-829/Decisions_Issued_in_2011/Apr142011_01B7203.pdf 16 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  17. 17. 8 CFR § 204.6 Petitions for employment creation aliens. (e) Definitions. As used in this section: Commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to, a sole proprietorship, partnership (whether limited or general), holding company, joint venture, corporation, business trust, or other entity which may be publicly or privately owned. This definition includes a commercial enterprise consisting of a holding company and its wholly-owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business. This definition shall not include a noncommercial activity such as owning and operating a personal residence. New means established after November 29, 1990.The law changed after the regulations were written and have done away with certain restrictiverequirements. The investor need not ―establish‖ a truly ―new‖ business. The investor may join inafter a business has already begun. The alien investor can contribute towards and grow therelatively new business and be considered as having had a part in its establishment. The alienmay buy a business and restructure it into something considered ―new‖. The alien may invest ina business to expand it significantly to 140% or more of what it was when (s)he joined it in termsof net worth and employment (it is unclear but I think the net increase in employment should be10 new jobs per EB-5 investor with the proviso that the RC investor can include new indirectjobs). An alien investor can help save a troubled business and preserve at least 10 jobs (each)without losing any jobs. Some of these last few points above may still be open to a challenge. 8 CFR § 204.6 Petitions for employment creation aliens. (e) Definitions. As used in this section: Troubled business means a business that has been in existence for at least two years, has incurred a net loss for accounting purposes (determined on the basis of generally accepted accounting principles) during the twelve- or twenty-four month period prior to the priority date on the alien entrepreneurs Form I–526, and the loss for such period is at least equal to twenty percent of the troubled businesss net worth prior to such loss. For purposes of determining whether or not the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded. (j) Initial evidence to accompany petition...... (4) Job creation...... (ii) Troubled business. To show that a new commercial enterprise which has been established through a capital investment in a troubled business meets the statutory employment creation requirement, the petition must be accompanied by evidence that the number of existing employees is being or will be maintained at no less than the pre- investment level for a period of at least two years. Photocopies of tax records, Forms I–9, 17 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  18. 18. or other relevant documents for the qualifying employees and a comprehensive business plan shall be submitted in support of the petition.Having fun with funds:Just how much transparent flexibility can one work into the financial arrangements? We’ve allheard the terms ―creative bookkeeping‖ and ―cooking the books‖. That is a dangerous game toplay, just ask Al Capone and Bernie Madoff. However, when full disclosure is made ofcomplicated arrangements in terms that an actual human being can understand then complexity isnot only acceptable but can be one’s salvation. It is once again critical to be transparent in thathigh level of complexity needed to ensure flexibility.Can you use EB-5 money to pay off a loan? The answer to that question is a qualified ―yes‖.However, a quick reading of the CFR definition of the word ―invest‖ might make you say ―no‖and stop your inquiry. That would be a bad move, read the CFR more slowly and then read thestatute. A former co-worker of mine used to say (about practically everything): ―It’s just not thatsimple.‖ 8 CFR § 204.6 Petitions for employment creation aliens. (e) Definitions. As used in this section: Invest means to contribute capital. A contribution of capital in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the alien entrepreneur and the new commercial enterprise does not constitute a contribution of capital for the purposes of this part.One has to take a step back and consider the actual prohibition. There can no simple assumptionof debt between the alien entrepreneur and the new commercial enterprise. Nor can one alieninvestor simply buy-out another alien investor and have BOTH count the same jobs. Domesticinvestors and bridge loans that created unallocated new jobs are another matter.Now for a harder question: ―How do you use EB-5 money to pay off a loan?‖ The way to make itpossible is to use a mix of domestic and foreign investments and to make it even easier, structurea project in phases. Alien investors can enter and exit projects at different times so timing theinfusion of certain alien investors’ funds is a key component to success. You cannot doublecount jobs or allocate the same jobs to more than one EB-5 investor. If the jobs will come intoexistence in a piecemeal fashion then so should the infusion of alien investor funds.The earlier alien investors can get the few jobs that get created up front. Suppose that a newfactory will be built. There is a construction phase required before the first part of the factorywill become operational. The early construction jobs cannot be counted in this particular projector at least not immediately, they require more proof of longevity to overcome the expectation thatmost construction jobs are temporary, seasonal, intermittent or transient in nature. The EB-5funds have, at this early stage, created indirect jobs (which are labeled as the indirect andinduced jobs in the economic analysis) that are based on the initial construction only phase ofthe project and can be safely allocated to the early investors. 18 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  19. 19. Now, bring in more EB-5 investors as the factory starts building the widgets8. Now that thefactory is open, there are factory workers, assemblers, delivery truck drivers, warehouse andoffice staff etc.., and the indirect/induced jobs based on them to be allocated. There are nowmore and different jobs to allocate to the EB-5 investors.Now suppose that there are some domestic investors also involved and bridge loans that havebuilt up. As long as there are enough new direct or indirect jobs to be allocated in sufficientnumbers, then new alien investors can buy into the project and displace or join with domesticinvestors or pay down some bridge loans. This is especially OK if the bridge loans from lendersor short-term domestic investors were obtained because of EB-5 money known to be in escrow oron the way due to aggressive Regional Center marketing efforts known to the domestic investorsand/or bridge loan sources. But wait, that’s not all, if, as had originally been predicted, a certainnumber of certain types of the construction jobs have in fact lasted long enough to count for EB-5, then they too can be allocated for EB-5 investors. The originally predicted construction jobsshould be held in reserve until they have lasted long enough to count but should be identified upfront and attributed as quickly as possible once they are deemed sufficient and substantialenough to count. 8 CFR § 204.6 Petitions for employment creation aliens. (g) Multiple investors — (1) General. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur by more than one investor, provided each petitioning investor has invested or is actively in the process of investing the required amount for the area in which the new commercial enterprise is principally doing business, and provided each individual investment results in the creation of at least ten full-time positions for qualifying employees. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur even though there are several owners of the enterprise, including persons who are not seeking classification under section 203(b)(5) of the Act and non-natural persons, both foreign and domestic, provided that the source(s) of all capital invested is identified and all invested capital has been derived by lawful means. (2) Employment creation allocation. The total number of full-time positions created for qualifying employees shall be allocated solely to those alien entrepreneurs who have used the establishment of the new commercial enterprise as the basis of a petition on Form I–526. No allocation need be made among persons not seeking classification under section 203(b)(5) of the Act or among non-natural persons, either foreign or domestic. The Service shall recognize any reasonable agreement made among the alien entrepreneurs in regard to the identification and allocation of such qualifying positions.8 In many economic models, something considered typical or representative, as of a manufacturers products: thewidgets coming off the assembly line. 19 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  20. 20. Who can count which jobs?The option to pool investments is NOT restricted to Regional Centers only. A group of aliens canjoin forces independent of a Regional Center however, non-Regional Center-affiliated alieninvestor groups cannot take advantage of ―indirect jobs‖ as predicted by an ―economic analysis‖based on any forecasting tools such as economic models and multipliers etc.... ALL of their jobsMUST be direct employees on-the-books, full-time, and permanent. These employees MUST allbe ―qualifying employees‖. The alien investors, spouses, sons and daughters are NOT includedin the total. No illegal aliens count in the total. Part-time positions do not count. A ―job-sharingarrangement‖ does count but is a rare thing in general. Job-sharing means that two (or more)people share one full-time job. That means that they are NOT co-workers working side-by-side.They share one 35 to 40 hour per week job. They both (or all) only equal one full-timePOSITION when added together. The non-Regional Center-affiliated alien cannot add up twoor more part-time jobs and call it one full-time POSITION*. Any job that is temporary,seasonal, intermittent, or transient in nature does NOT count.When non-Regional Center investors pool their funds, they EACH have to have ten (10) full-time permanent employees, on-the-books and present EVIDENCE to USCIS. However, for theRC investor an Economic Analysis is needed. It must be based on a sound Econometric Modelthat uses the information provided in, or inspired by, the credible comprehensive Business Plan.Numerous Models are in existence and recognized for their validity, there is no mandate to useany particular Model. Popular choices have been from among: IMPLAN, RIMS II, REDYNE,and REMI, but others may exist or come into fashion. RC investors rely on the EconomicAnalysis supported by the Business Plan. The non-RC investors will only rely on the BusinessPlans. In either case, evidence is evidence but that evidence usually varies greatly. RegionalCenters and their investors have to prove fewer, if any, actual ―direct‖ on-the-books, permanent,full-time jobs for ―qualifying employees‖.The jobs that are predicated for RC investors through the for-profit business activities of the newcommercial enterprise must eventually be backed up with verifiable evidence. When dealingwith the evidence to be produced to back up and prove the predictions about job creation,consider the nature of the investment scheme and the ease or difficulty of producing the requiredevidence. If the one predicts ―indirect jobs‖ (which in the lingo of economic models will belabeled as both indirect and induced but for EB-5 these are ―indirect jobs‖) based on ―directjobs‖, consider whether these are also ―indirect jobs‖ in relation to the alien investor. If theyare then that MUST be explained up front in the Regional Center plans and the EconomicAnalysis. These might be labeled as hypothetical or base levels in relation to the EB-5 RCinvestors.One might build a retail store and lease it out but that person won’t be hiring the store cashiers,stock clerks, delivery drivers, secretaries, bookkeepers, personnel specialists, buyers,accountants, and janitors. The developer of the mall won’t be signing the paychecks for the guyselling pizza and milkshakes in the food court, selling movie tickets, or plowing the snow orpainting the lines in that parking lot. All of those folks will be ―indirect‖ in relation to the alieninvestor. 20 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  21. 21. Is it even a possibility for five non-RC affiliated aliens each investing one million dollars tocreate a business that would require fifty full time employees in the U.S. today? I don’t think fivemillion would go far enough to get the required results. Perhaps one one-million dollar investorcould achieve 10 jobs by the end of the conditional residence period but I am skeptical that eventwo such alien investors could get the required jobs.A further thought about evidence:Whatever the final decision is as to the econometric model/methodology used for determining abasis to calculate indirect jobs, and in whichever frame of reference, RC or stand-aloneinvestment (stand-alone not being based on any ―model‖), one should take into account, up front,the evidentiary requirements that will be needed to prove job creation at the I-829 stage.For the RC investors, will the Analysis demand that the alien investor will have to come up withproof of actual ―direct employees‖? In any case, then the alien, through the Regional Center, in agroup, or alone, will have to come up with W-2s, quarterly wage and tax reports, and/or I-9s, allof which must be verifiable as true. DHS runs what is likely the premier forensics documentlaboratory in all of the U.S. and probably the entire world and they can check with State taxagencies as well as IRS investigators and don’t forget that USCIS itself runs E-Verify.Application of multipliers at the back end of the immigration processing:In the same April 14, 2011, AAO non-precedent Decision, in determining first that even ifindirect jobs could have counted as a base for applying a previously approved multiplier to arriveat a total number of indirect jobs, there simply were not enough. AAO went on to state that itconcurred with the Service Center Director that it would not be permissible to allow thatapproach as it is in clear contradiction to Congressional intent. AAO acknowledged that thelifting of two previous investors’ conditions was a mistake and USCIS is not bound by pasterrors, in general, and AAO is not bound by past mistake of the Service Center Director,specifically, in that it is the appellate authority with the power to overrule a decision below. ―The petitioners evidence regarding its direct qualifying employees is not relevant, probative or credible. Doubt cast on any aspect of the petitioners proof may, of course, lead to a reevaluation of the reliability and sufficiency of the remaining evidence offered in support of the visa petition. Matter of Ho, 19 I&N Dec. at 591. The submitted evidence in this matter is so flawed, that there is no established number of direct jobs that can be used for the multiplier. Even if we were to consider the claims in a light most favorable to the petitioner, and apply the 2.66 multiplier to the non-qualifying direct jobs, the resulting number would not satisfy the statutory minimum. The petitioner has not submitted consistent, probative, and credible evidence that Mr. and Mrs.[redacted] worked as direct employees; therefore, the petitioner has only established 14 direct jobs. Applying the multiplier to 14 direct jobs results in 37.24 jobs. As the multiplier represents total job creation (direct and indirect), we must subtract the 13 direct jobs filled by non-qualifying employees for a total of 24.24 jobs. As noted by the director, two alien investors already removed conditions based on 21 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011
  22. 22. these indirect jobs; therefore, we must subtract the 20 jobs that have been allocated to them. Thus, we could not allocate more than four of the indirect jobs to the petitioner. See 8 C.F.R. § 204.6(g)(2). With respect to the other two alien investors who have removed conditions, the AAO is not required to approve applications or petitions where eligibility has not been demonstrated, merely because of prior approvals that may have been erroneous. See, e.g., Matter of Church Scientology International, 19 I&N Dec. 593, 597 (Comm. 1988). It would be absurd to suggest that USCIS or any agency must treat acknowledged errors as binding precedent. Sussex Engg. Ltd. v. Montgomery, 825 F.2d 1084, 1090 (6th Cir. 1987), cert. denied, 485 U.S. 1008 (1988).‖ (At p.16) ***** ―Finally, there are serious legal concerns about allowing an enterprise to calculate indirect job creation based on the actual employment of unauthorized aliens. In the certified decision, the director stated that "allowing this practice may be contrary to the spirit of the law as the statute is designed to encourage job creation for qualifying employees." The AAO concurs that allowing the application of a multiplier to non- qualifying jobs would likely result in eligibility for petitioning aliens who are unable to document the creation of any jobs for qualifying employees. This outcome is inconsistent with Congressional intent to create jobs for qualifying employees. See 136 Cong. Rec. S17106-01,17107,1990 WL 165401‖ (At p.17)One final thought on the meaning of “a Job” or “POSITION” (see page 18, above):*Economic Models that predict indirect jobs do not distinguish between multiple part-time jobsand full-time jobs. They deal in Full Time Equivalents (FTEs), i.e., one full-time POSITION.USCIS had difficulty wrapping its head around that concept at first but seems to have come torealize that that is OK after all because of the leeway provided by Congress in the statutescreating and amending the Regional Centers in the Immigrant Investor Program and theCongressional intent made clear in examining the Congressional records when passing them. 22 Comments on Proposed EB-5 Processing Changes by Joseph P. Whalen 5/21/2011

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