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Comments on Recent AAO EB5 Decisions
By Joseph P. Whalen (April 28, 2014)(Revised April 30, 2014)
I’ve been keeping my mouth shut lately BUT upon reading through, and digesting
key points made in, some recently released AAO EB-5 decisions I felt that I had
something worth contributing. If you have read some of my prior articles and
posts you know I don’t hold back. I just polished off four of AAO’s I-526
and one Regional Center (RC) Proposal Appeal
Dismissal. Obviously that last one will also apply to I-924 decisions too. I suspect
that all who have read even only a smattering of various recent AAO I-526
remands might have latched on to only a few big points, for example, the proper
application of EB-5 deference policy, and may have only skimmed over other
points (maybe absorbing some additional key points through some sort of osmosis
without really trying or thinking about them very much). I am choosing to spell
out some of those easy to miss points that struck me as important but might have
been unintentionally only skimmed or glossed over by those who were in search of
the juiciest bits and pieces as well as the sexiest highlights. Well, here I go again.
You are welcome to come along for this ride along the ―scenic route‖ if you like
but, hold on tight!
Opportunity to Make a Meaningful Appeal
I believe that I am seeing indications that AAO is taking proactive steps to fend off
potential due process challenges. In other words, trying to keep cases from going
to District or Circuit Courts where the Judges might at least belittle or blast the
agency or even worse, legislate from the bench---yuck! AAO has been remanding
cases (even some clearly deniable at least on technical grounds) for a new detailed
decision. Such new decision must make specific findings of fact and law; contain
proper analysis citing specific examples and critical details gleaned from the
evidence in the record of proceeding (ROP); and result in a narrative that clearly
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spells out well supported and logically reasoned conclusions supporting the
decision at hand. All of this is to ensure that I-526 petitioners and counsel can
make meaningful appeals. This concept should be universal across the board!
Improving Initial Decisions
Why all the hub-bub concerning the quality of initial decisions? I have my
suspicions. Want to hear them? OK, here goes. Beyond creating the opportunity to
make a meaningful appeal or motion, as the case may be, EB-5 is a multi-billion
dollar per year industry. EB-5 involves numerous domestic developments and
domestic investors in addition to EB-5 investors. Some domestic investors need
the assurance of a future influx of foreign funding on the back end while the EB-5
investors want to back projects that also attract domestic investors up front. After
all, if it’s a worthy project then Americans should be willing to sign on as well.
Rather than viewing this as a ―catch 22‖, how about we view it as a two-way street
or as assurances via mutual, bilateral votes of confidence in a particular specific
project. Naturally AAO is dealing primarily with initial denials (or dismissed
Motions (MTRs)) but all of this hub-bub has implications for Approval Notices as
well. Read on for more on that aspect.
Let us not forget the U.S. workers. Regardless of whether they are directly
involved in any specific EB-5 affiliated project or indirectly in the supply chain as
well as collaterally in the surrounding areas (―induced‖ jobs in economic analyses
but ―indirect‖ jobs for EB-5 adjudication and eligibility purposes). U.S. workers
can be EB-5 stakeholder too. The harder that those few overzealous and narrow-
minded adjudicators attempt to second guess RC Project Approval Decisions or
prior I-526 Project Approvals involving the same huge projects, the more harm that
they will inflict upon the U.S. investors, U.S. economy, and U.S. workers hired for,
or worse, laid-off from, those huge projects!
Material Changes in EB-5 Plans
AAO found that some RC-affiliated form I-526 adjudications were ignoring the
associated previously accepted business plans (BPs) and their accompanying
previously accepted economic impact analyses (EIAs) which were fully supported
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by methodologies already deemed reasonable. Adjudicators on some sort of
crusade to prolong the outdated Legacy INS ―Culture of NO!‖ were attacking the
underlying BPs, EIAs, and methodologies which were approved in the RC
Proposal or I-924 adjudication process. They were issuing a succession of requests
for evidence (RFEs), obtaining (or perhaps demanding) brand new or at least
updated/modified EIAs and/or BPs then turning around and denying based on
changed plans and analyses. Nobody can get away with such outright asinine and
vindictive adjudication tactics. Talk about a ―Catch 22‖! Damn! I for one am
grateful for the more level-headed Appeals Officers at AAO who caught this and
nipped it in the bud.
Objective v. Subjective
AAO appears to be standing firm in applying the more liberal approaches
embodied by, and espoused in, the May 30, 2013 Memo. This is another issue
worthy of your attention in the recently posted AAO I-526 Remands. For instance,
this is seen in a case where an I-526 adjudicator surreptitiously attempted to re-
adjudicate the I-924 Approval by attacking the BP and EIA that was previously
approved based upon methodologies previously reviewed and accepted as
reasonable. In such a instances the adjudicator is now being told by AAO to write-
up a new detailed decision and address whether a perceived change involves an
objective mistake of law or fact rather than merely a subjective difference of
opinion regarding the credibility of plans and reasonableness of methodologies. IF
the adjudicator cannot succeed in such an analysis THEN that will be the end of
that line of inquiry in that case and likely result in approval or abandonment of any
Nexus and Bridge Financing
One zealot went to great lengths to try to deny an I-526 case involving bridge
financing on the basis that that the BP and EIA lacked a sufficient nexus between
the late stage infusion of EB-5 capital and the jobs created. The adjudicator asked
for updated information and got it then used it to support a denial all the while
ignoring what had come before that particular write-up which had laid out the
history of the project. AAO obtained the ROP and reviewed it. In other words,
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AAO obtained the RC File(s) and examined the evidence of record and found that
the intention to use EB-5 funds in this particular way pre-dated groundbreaking of
that specific project! The EB-5 money was used to pay off bridge loans taken
specifically with the intent to replace the original funding with EB-5 money. The
EB-5 Adjudications Memo specifically allows this as well accepting a replacement
of ―short-term financing‖ even if EB-5 was never previously considered. The AAO
has given us some good guidance on defeating that kind of collateral attack. AAO
has also gone a long way towards ―teaching them a lesson‖ on this topic. [Please
forgive my use of that last double entendre, but it works so well there.]
The concept of nullifying an earlier Decision in the EB-5 process has been wrought
with trouble at every hazardous step. And may I add that the concept can go in
more than one way and come into play at different stages in the process. I am sure
that USCIS doesn’t want you to realize it and that AAO probably never dreamed
that someone would characterize it this way but that’s just too darn bad. Here goes
my best shot, straight from the hip!
An AAO I-526 Remand Decision dated September 20, 2013, discusses this concept
in great detail and cites the May 30, 2013, Memo. The case involves a RC-
affiliated EB-5 investor who was NOT the ―guinea pig‖ or first investor in the
project. There had already been at least one prior I-526 approved for the project
and this petition had also been approved. The instant case before AAO was
actually a challenge to a Revocation! AAO withdrew that Revocation and
remanded for a new detailed decision, yadda, yadda, yadda.
AAO also retained jurisdiction by instructing any adverse decision be certified
back to AAO. While AAO did reverse serious and significant adverse findings
which it deemed to be unfounded and unsupported by the evidence in the record, it
did not go so far as to actually approve the underlying petition. As for the concept
of ―legally deficient‖ cropping up at different stages in the adjudication process,
well, it seems that the remands that I read involved underlying initial decisions that
were all quite ―legally deficient‖.
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Regional Center Appeal Dismissal
The February 21, 2014, RC Appeal Dismissal I read harkens back to the very first
AAO RC Appeal dismissal back in 2008 (also non-precedential and not cited). In
2008, AAO bluntly stated that in order to apply for any benefit, the applicant had
to actually (and legally) exist. In 2008, a fictitious business name was given as the
name of the applicant. Here is what AAO said about on that issue:
―……For the reasons discussed below, the proposal appears, at best, to have been filed
prematurely, before the entity to be designated a regional center even existed and
before specific investment projects had been developed in cooperation with the entities
that would utilize the invested fund. …..‖ (Emphasis added) Nov182008_01K1610.pdf
at p. 2
* * * * *
―The regulation at 8 C.F.R. § 204.6(j) notes that additional evidence other than that
specified in the regulations may be required. Clearly, only an entity that exists can be
designated as a regional center. Thus, it is reasonable to require evidence of the
proposed regional center's existence. We concur with the appellant, however, that the
absence of organizational documentation is the type of issue that can, under certain
circumstances, be easily resolved with a request for additional evidence. The evidence
submitted on appeal, however, reveals that the appellant is not capable of resolving this
issue as of the date the proposal was filed. As the nonexistence of the regional center at
the time the proposal was filed is not a flaw that can be remedied for the reasons
discussed below, remanding this matter to the director for further action would be
repetitive and unreasonably delay final action in this matter. See generally Deering
Milliken, Inc. v. Johnston, 295 F.2d 856, 867 (4th Cir. 1961) (finding that a second
remand by the National Labor Relations Board would cause unreasonable delays).‖
(Emphasis added) Id at p. 5
In 2014, a similar situation cropped. It is not exactly the same but close enough
such that these two AAO RC case decisions should be read together. The more
recent case involved an applicant business that stated it was an LLC in good
standing but when AAO checked with the state’s Secretary of State website, AAO
found out that what was stated in the application was (at its most generous)
―incorrect information‖. AAO has been checking with state websites for years in a
wide variety of business and employment based applications and petitions. Also,
USCIS as a whole has VIBE.
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The misinformation was not only a clear case of ineptitude but lead AAO to
present a deep discussion of consequences of presenting misleading, incorrect, or
fabricated information. AAO went on and on with numerous case citations about
unsupported, uncorroborated, false, contradictory, and unverifiable ―assertions‖ by
counsel (or an applicant). Please read all about it in AAO’s own words. The
bottom line to all of this is the ―diminished evidentiary weight‖ then given to ALL
testimony (oral or written); briefs (if any); or narratives presented by the ―liar‖
caught with his or her ―pants on fire‖!
Anyway, back in 2008, AAO discussed an ―entity‖ not existing when it filed and
basically created the only real filing prerequisite for a RC Proposal (now an I-924
application). The form instructions (which are then incorporated into and made
part of the controlling regulation as per 8 CFR § 103.2(a) (1)) specifically ask for
the RC entity’s documentation of its structure such as articles of incorporation,
or legal creation as partnership or LLC, etc… In 2014, AAO zeroed in on the
term ―economic unit‖ found in the definition of ―regional center‖ as per 8 CFR §
204.6(e). Additionally, in an I-526 remand, AAO instructed the adjudicator (either
at CSC or IPO2
) to look into whether or not a project’s sponsoring entity’s status
which had lapsed as per the state’s website; continued to meet the definition of a
―commercial enterprise‖. In that the regulatory definition contains the element of
―ongoing conduct of lawful business‖ the question of the lapse in status needed
further consideration. The state may have a retroactive remedy available. Heck,
the EB-5 ―Pilot Program‖ lapsed in the past and Congress reauthorized in
retroactively. The concept of a remedy at the state level is not out of the question.
The RC Dismissal fell short of addressing a key point brought up in the underlying
denial. In other words, AAO chickened out of determining the potential Form I-
924 evidentiary requirements for the RC’s administration, oversight, management,
and recordkeeping, etc… All of that would be expected due to the need for annual
reporting via form I-924A as per 8 CFR § 204.6(m)(6) and it just makes sense to
IPO = Investor Program Office.
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ensure that the RC as a whole possesses the required knowledge, skills, and
abilities[KSAs] to properly and competently function as a Regional Center.
In addition, AAO would do well to consider the concept of Designation as a
Regional Center by USCISas being a form of licensure which allows the RC to
market itself and its projects (all in accorance with any applicable other laws, i.e.
SEC or state administered laws and regulations) and associated services to
intending EB-5 immigrants. AAO has considered the concept of USCIS approval
as licensure of a service provider in another form type. That other form is the I-
905,Application for Authorization to Issue Certification for Health Care
Such licensure allows the Regional Center to market projects specifically designed
to meet the EB-5 criteria required of the EB-5 investors when they file their I-526
VISA PETITIONS and later when they seek to LIFT CONDITIONS via form I-
829. Please keep the distinct roles in their proper perspectives. You’ll sleep better
if you do!
While there are no Regional Center AAO Precedents yet and only a few non-
precedent and thereby, non-binding, EB-5 Administrative Decisions, the following
excerpt is from none of them. It is from a completely different application.
However, the excerpt below says something to which it would be wise for you to
pay close attention. In this non-precedent AAO decision involving a form I-905
AAO recognized the application for what it was—an application for a ―license‖.
The I-905 is the one form type that USCIS and AAO have experience with which
shares certain critical basic elements with the I-924, Application For Regional
Center Under the Immigrant Investor Pilot Program.
Both are applications by an ―entity‖ seeking to lend its expertise to aliens seeking
Both involve applicants who profess to have very specific expertise which will be
utilized by individual aliens seeking help in obtaining highly specialized visas.
Both ―expert organizations‖ will provide specific support services to their alien
clients for a fee.
USCIS is giving them permission to do so and MUST make sure that these
applicants seeking such licenses have the ability to follow through and not cheat
their alien clients.
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Here is that important excerpt from that I-905 AAO Appeal Dismisal from 2006. I
hope that you find it as enlightening as I did. If you don’t then heaven help
the suckers investors who invest in one of your projects!
―In the space on the Form I-905 application labeled "Occupations for which you are
seeking authorization" the applicant entered,‖[REDACTED] is one of the partner and
member [sic] of evaluation team. We need approval of all medical profession." The
applicant did not otherwise state the medical positions it is seeking licensure to
certify and did not demonstrate that its evaluators are competent to certify the
educational credentials of those medical professionals seeking such certifications.
As to the process pursuant to which it would issue certificates3
the applicant stated
on the application that it would check documents presented for authenticity and interview
the person seeking certification. In an addendum the applicant stated that foreign
documents are critically examined to determine the number of years of study, the content
of the courses and institutions, the "medium of study," and the educations and degrees of
the faculty at which degrees were earned.
Another section of the Form I-905 requests that the applicant "Explain [its] expertise,
knowledge, and experience in the health care occupations for which [it seeks]
authorization." In answer to that question the applicant stated that it does "all kinds of
credential evaluation including medical profession," [sic] and that "The expert opinion of
[REDACTED] is always taken if there is any need, any other expert opinion in the
similar field is obtained before a final issuance of the certification and its proper records
are maintained." The applicant did not otherwise explain its expertise, knowledge,
and experience pertinent to health care occupations. [Vague does not suffice.]4
In answer to the request that it explain how it meets the standards described in the
instructions sheet FN2
the applicant referred to an addendum. In the addendum the
applicant asserted that it is a legal incorporated entity, that it is independent of hospitals
and other health care providers, that it is impartial, that its fees are not contingent, and
that the applicant is able to obtain outside expert advice. The applicant did not provide
evidence in support of any of those assertions.‖ Nov092006_01M4212.pdf At p. 7
Final Agency Action
AAO has gone out of its way to remind petitioners, applicants, and counsel that a
―certified decision‖ is NOT a ―final agency action‖ as defined in statute which
I equate this with the EVIDENCE to be handed to the EB-5 Investors in support of their
forms I-526 and the later I-829.
Comment added for this article, it was not in the AAO decision.
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means the case is not ammenable to judicial challenges and revies yet. AAO cited
to the Administrative Procedures Act (APA) 5 U.S.C. § 704.
This section of the law reads:
§704. Actions reviewable
Agency action made reviewable by statute and final agency action for which
there is no other adequate remedy in a court are subject to judicial review. A
preliminary, procedural, or intermediate agency action or ruling not directly
reviewable is subject to review on the review of the final agency action. Except
as otherwise expressly required by statute, agency action otherwise final is final
for the purposes of this section whether or not there has been presented or
determined an application for a declaratory order, for any form of
reconsideration, or, unless the agency otherwise requires by rule and
provides that the action meanwhile is inoperative, for an appeal to
superior agency authority.
(Pub. L. 89–554, Sept. 6, 1966, 80 Stat. 392.) [Emphasis added.]
RC applications and associated I-526 petitions as well as stand-alone ventures and
non-RC group investments, otherwise labeled as ―Direct Investment‖ I-526
petitions are now being scrutinized by a cadre of professionals. Those teams may
include economists, business analysts, entrepreneurs, and attorneys. However, it is
the USCIS adjudicator who must synthesize the entire expert, specialized input and
evaluate the application as a whole. The adjudicator must make findings of fact
and apply them to the applicable rules (statues, regulations, precedents) and
agency policy in a well reasoned and fully supported analysis. Such analysis will
lead to specific conclusions that must then support the final adjudication decision.
This approach is applicable across-the-board and throughout the entire process.
Specificity is a critical element sorely lacking in many underlying decisions that
rely too heavily upon canned language found in templates. While templates are
useful tools as a starting point they do ask for analysis to be inserted as the rules
are applied to the evidence presented with the specific case under consideration.
IF, petitions associated with RC projects that have been fully reviewed, assessed,
and above all found to be not only possible, plausible, and probable, but above
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allcredible, THEN, deference is due for the materially unaltered plans, analyses,
and any associated transactional and/or organizational documentation. The
specificity in a Regional Center Approval Notice whether for Initial Designation or
an Amendment will be used to gauge the amount of deference that is due. When
an Approval Notice states certain findings then future deference must be accorded
where there have been no substantial, substantive, or material changes.
Denials or Revocation Decisions, on the other hand, must be fully supported and
well documented for other reasons. Petitioners, applicants, and their counsel must
be given sufficient notice of the grounds for denial. Painstaking assessments of all
of the evidence within the record of proceeding5
must be spelled out blandly and
bluntly so as to afford the petitioner, applicant, and counsel an opportunity to make
a meaningful appeal.
I have written a heck of a lot of articles and posted many items of interest at:
http://www.slideshare.net/BigJoe5 or http://eb5info.com/eb5-advisors/34-
Here are some documents that you may wish to review. I will be posting some on
USCIS’ Ideascale website concerning EB-5 Regulatory Review and Updates.
regional-center-regulations-march-2012 This one is dated and was written before the May 30,
2013, Memo. References to Service Center Officers might now apply instead to IPO Officers.
Other portions might have been rendered moot or obsolete by the Memo as well. This revision
came a year after it was first written and submitted to USCIS.
Note that the evidence of record can and in many cases will be ―built up‖ during the overall
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immigrant-investors-or-entrepreneurs From September 2013.
http://www.slideshare.net/BigJoe5/proposed-regional-center-appeal-regulations From March
From March 2011.
to-aao From February 2011.
http://www.slideshare.net/BigJoe5/proper-consideration-of-form-i-924 From February 2011.
From March 2011.
From September 2012.
Joseph P. Whalen, Independent EB-5 Consultant,
Advocate, Trainer & Advisor
1348 Ridge Rd | PMB 36 | Lackawanna, NY 14218
Phone: (716) 604-4233
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 consultation with 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.
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