A push back to basics for immigrant investors and EB-5 regional centers
Contact: email@example.com (716) 604-4233 or (716) 768-6506 Page 1 of 6
@ PUSH B@CK TO B@SICS FOR IMMIGR@NT INVESTORS
@ND EB-5 REGION@L CENTERS
By Joseph P. Whalen (Friday, May 15, 2015)
As I wrote in my last article, it looks like AAO has been reasserting
some basic concepts lately. Perhaps it is a gentle reminder for practitioners,
or for the unrepresented petitioners out there, or maybe it is a backlash to a
rash of badly prepared filings? I do not know and I doubt that AAO will ever
tell. Regardless of motive or if it is a mere coincidence, I do not care but I like
what I see.
Thus far in 2015, however, only two EB-5 AAO non-precedential case
decisions have been posted to their website. Both of those cases were on I-
526 petitions. I do not like this extreme lack of opportunity to gain insight.
All is not lost, however, Secretary Jeh Johnson sent a letter, dated April 27,
2015, to the Senate Committee on the Judiciary regarding EB-5. In this
correspondence, the Secretary specifically emphasizes the critical
importance of the Regional Centers through which the vast, overwhelming
majority of investments flow. Among the interesting bits and pieces of
information found in that letter is an answer to the tiny number of EB-5
related postings so far this year, from AAO.
The reason for the recent paucity of EB-5 related information flowing
from USCIS, IPO, and AAO may, in part, be due to impending EB-5
procedural changes. Remember that the letter is dated April 27, 2015, and
contains the following clues. New impending initiatives in case processing
may have placed many cases on hold awaiting further instructions. Maybe?
Contact: firstname.lastname@example.org (716) 604-4233 or (716) 768-6506 Page 2 of 6
The following excerpts from that letter lend support to my current
“As an aside, last month I directed the Department's General Counsel to review the case
adjudication process and recommend a new protocol to ensure that the entire EB-5 Program
is free from even the perception of improper outside influence. That new protocol, which
I have adopted, is also outlined below. …” at p. 1.
“In addition, USCIS has invested in the specialties needed to manage the complex EB-5
caseload by hiring staff with expertise in economics, law, business, finance, securities, and
banking to review cases and to enhance consistency, timeliness, and integrity within the
program. …” at p. 2.
“In addition to important changes that Congress can help us make, I am also doing what
I can within my own authority to improve the manner in which EB-5 Program applications
and cases are adjudicated. Yesterday I approved a new protocol to regulate the receipts of
communications from outside individuals about specific EB-5 cases, and to govern the
circumstances under which a senior leader should become involved in individual cases.
The protocol reiterates that EB-5 Program processing must be consistent with existing
ethics rules and with the principles of transparency, consistency, and avoidance of even the
appearance of impropriety. …” at p. 4.
Taken in order:
General Counsel always takes its sweet old time to do anything;
New staff require indoctrination especially when new disciplines
are introduced because these folks have to blaze the trail; and
New protocols have to be disseminated through formal training.
APR012015_01B7203.pdf was remanded to the IPO to review in
accordance with the settlement agreement between the government and
other parties, V Real Estate Group v. USCIS, No. 2:14-cv.01096-RCJ-CWH.
While some of the documents in this case were available in PACER, the
settlement agreement was not.1 Unlike the investors involved in this
al-dnevada-10-152014-eb5-preliminary-injunction-denied ; http://www.slideshare.net/BigJoe5/v-real-estate-group-
Contact: email@example.com (716) 604-4233 or (716) 768-6506 Page 3 of 6
particular investment, I am not a fan of franchise businesses for EB-5, most
especially for direct investments. I especially dislike “promoters” who try to
pass off so-so ideas or worse, when they try to act like Regional Centers!
“… The petitioner purchased franchise rights from the franchisor [
]. According to the initial brief, the NCE and a number of similar franchises will engage "in the
development and establishment of one realty firm, with the ultimate intent of opening multiple . . .
franchise realty locations within [the franchisor's] franchised territorial area."”
* * * * *
“Recently, U.S. Citizenship and Immigration Services (USCIS) reached a settlement with parties related
to the petitioner. We will remand the matter for the chief to review the denial in light of that settlement.
In reviewing the petition, the chief may also wish to consider whether the petitioner has shown the lawful
source of the funds he wired into the escrow account ending in [ ]. Specifically, the loan
agreement for the funds that the petitioner transferred to the United States provides that "This Loan is
specifically for the Lender's [ ] purpose including but not limited to purchase of
property, investment, education." The chief may wish to request evidence that the petitioner's personal
investment in the NCE falls within "the Lender's purpose." In addition, the chief may wish to consider
whether the unaudited financial statements establish how [ ] accumulated sufficient funds
to loan the petitioner $500,000 as well as its other commitments, including loans to any other investors
in [ ] franchises.
Finally, the chief should consider whether the petitioner's funds remain at risk and committed to the NCE.
Specifically, the director may wish to verify that the petitioner's funds remain in the [ ]
escrow account ending in [ ], as stipulated in both escrow agreements. According to evidence in the
record, the escrow agent transferred the funds out of the account ending in [ ] into a [ ]
account ending in [ ] identified as an [ ] account. Neither escrow agreement mentions an
[ ] account ending in [ ], nor does the record establish that the [ ] account is
under the control of the escrow agent and subject to the requirement that the agent will distribute the
funds to the NCE upon the approval of the petition.”
APR032015_01B7203.pdf was dismissed by AAO, which also entered
a separate administrative finding of material misrepresentation. This
investor proposed buying and selling a handful of antique watches. Upon
minimal investigation consisting of fact-checking, AAO found serious
discrepancies which led it to issue a Notice Of Intent to Dismiss (NOID)
which included derogatory information as to the NCE being in default status
with the state authorities. The director apparently had merely found the
business plan to be seriously flawed and not credible. The petitioner did not
respond to the notice. Therefore, AAO could have dismissed the petitioner's
appeal without further discussion per 8 C.F.R. § 103.2(b)(14), but did not do
Contact: firstname.lastname@example.org (716) 604-4233 or (716) 768-6506 Page 4 of 6
so. Instead, they provided several more pages of analysis and discussion. It
is worth reading for yourself.
Now, I want to return to the primary topic of this article and talk about
some EB-5 basics. I suppose that the most basic, fundamental, and therefore
critical issue is the need for a viable concept for the entrepreneurial venture.
If you do not have a good idea for your business, then you will be sunk before
setting sail. If, on the other hand, you do have a good “business” idea, then
you need to assess it against the few but harsh and stringent EB-5 factors in
The following list is comprised of EB-5 requirements that I consider to be
essential and quite basic considerations that are too often not given the
proper respect that they deserve. It is simply ridiculous to believe that you
can “bluff” (or bullshit) your way through these matters. Lastly, I do not want
anyone to be mistaken or incorrectly believe that this list is meant to be all-
inclusive or non-exhaustive. It is not.
It is necessary that the business will require the minimum capital
investment amount to get started (or be rescued, if a troubled
business) as demanded by EB-5 law for the geographic area in which
you will establish the NCE (or simply infuse if an existing business).
USCIS will not turn a blind-eye if you attempt to overcapitalize the
NCE with way too much “cash reserves” or “working capital”.
Does your planned business actually need ten full-time employees?
Is your desired business one which is normally staffed by part-time
workers, or contract employees?
Contact: email@example.com (716) 604-4233 or (716) 768-6506 Page 5 of 6
If upon filing the I-526, the jobs have not yet been created then you had
better invest the necessary, time, effort, and money to produce (or hire
someone to produce) a Matter of Ho Compliant Business Plan.
If it is a Direct Investment, then no Economic Impact Analysis is
needed because no “indirect/induced” (EB-5 indirect) jobs will count.
No part-time jobs count in a Direct Investment.
No seasonal jobs count in a Direct Investment.
The money has to be “committed” to the business venture and “at risk”.
The money has to be “clean”, that is, the source and path of the
investment funds must meet all legal requirements for EB-5
acceptance. That means it is NOT from an illegal or prohibited source.
I-526 approval is NOT a promise of a visa; a greencard; or
“admission” or “adjustment’.
An I-526 Exemplar filed by a Regional Center via Form I-924 can only
result in either, Denial or a Provisional Approval---there is no such
thing “pre-approval”. See Matter of Izummi, 22 I&N Dec. 169 (AAO
1998), which held in pertinent part, “(9) The Service [now USCIS] does
not pre-adjudicate immigrant-investor petitions; each petition must be
adjudicated on its own merits.”
DEFERENCE attaches commensurate to the level of: detail; rational
and reasonable assumptions; and projections found in supporting and
corroborating documentary evidence presented in prior proceedings.
Adjudication specific regulations trump generalized regulations.
The I-526 is a Visa Petition and the filing date of an approved petition
is transformed into a “Priority Date” for visa allocation and issuance
purposes. This means that you cannot make drastic and material
changes to the petition and supporting documents after filing.
Contact: firstname.lastname@example.org (716) 604-4233 or (716) 768-6506 Page 6 of 6
A visa petition involving a “priority date”, with only a few obscure
exception that do not apply to EB-5, is not amenable to change after
filing. It has to be like Mary Poppins—practically perfect in every way.
The I-924 is an Application and has no priority date issue connected to
An application and supporting documents are amenable to changes or
“perfection of the application” after filing. With an application the
critical time for proving full eligibility is at time of final adjudication
and within certain limits, this would include through time of any
One critical aspect that is too often overlooked is the tracking of data
and especially collection of evidence to support the investors’ I-829s.
Once again, I do not want anyone to be mistaken or incorrectly believe
that this list is meant to be all-inclusive or non-exhaustive. It is not. If you
can add to this list of basics, please do so!
Dated this 15th day of May, 2015.
/s/ Joseph P. Whalen
That’s my two-cents, for now!
Digitally signed by Joseph P. Whalen
DN: cn=Joseph P. Whalen, o, ou, email@example.com, c=US
Date: 2015.05.15 12:19:17 -04'00'