I-924 Approval Notices--Do You Understand What You Are Seeing?


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Please read more about "No Deference EB-5 Regional Centers" and how they can be Good, Bad, or Ugly!

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I-924 Approval Notices--Do You Understand What You Are Seeing?

  1. 1. Contact: joseph.whalen774@gmail.com or (716) 604-4233 or (716 768 Page 1 I-924 Approval Notices: Do You Understand What You are Seeing? By Joseph P. Whalen (August 27, 2014) I. Introduction1 The USCIS Form I-924 is an Application used to apply for:2 a) initial EB-5 Regional Center Designation;3 b) an optional amendment to the geographic and/or industry scope(s) of4 an existing EB-5 Regional Center;5 c) a mandatory amendment when seeking to transfer the control of an6 existing EB-5 Regional Center to another principal/sponsor/company;7 d) or an optional amendment by an existing EB-5 Regional Center, or as8 an optional part of an initial RC designation request, in order to have a9 Specific Project reviewed by USCIS in the form of an “Exemplar” or10 “Dummy I-526 Petition” excluding any individual investor’s11 documentation as to the source and path or funds, but including12 information about the deal structure, Organizational and Transactional13 Documents (actual or highly developed drafts) intended to be used in14 the actual EB-5 Project Offering. Such documents might include:15 1) Private Placement Memorandum (PPM), Confidential Offering16 Memorandum, or some similarly titled Offering Document;17 2) Subscription Agreement;18 3) Description of Services Offered to Investors and Fees Charged;19 4) Escrow Agreement and Agent Information (if applicable);20 5) Limited Partnership Formation and Operating information,21 such as Articles of Formation, Charter, Bylaws, or similar items;22 6) Limited Partnership Agreement, etc…23
  2. 2. Contact: joseph.whalen774@gmail.com or (716) 604-4233 or (716 768 Page 2 The form that an application may take is variable, at least, as to its1 intended purpose, evidence required to support it, evidence actually2 submitted, the course of adjudication, and final outcome.3 4 II. Possible Outcome of an I-924 Application5 All Regional Centers have to start with the submission of a Proposal. Prior to6 November 23, 2010, that Proposal was not in support of any INS or USCIS form7 and was adjudicated without the need to submit any filing fee. With the advent of8 the USCIS Form I-924, Application For Regional Center Under the Immigrant9 Investor …. Program, things changed. As of the implementation date, the I-924 has10 been submitted with a rather large fee (the highest in INS or USCIS history). Also11 there were now “official” Form Instructions1 which provided further interpretive12 guidance on the structure of the Regional Center Proposal Package in support of the13 Form I-924. Many I-924’s for Initial Designation will first have to contend with an14 RFE but eventually an actual official decision will be made on the merits (unless15 withdrawn, or rejected as improperly filed, such as the filing fee check bouncing or16 some other technical issue). A merits-based decision will either be a Denial or an17 Approval. A Denial is going to be very fact-specific and the applicant will need to18 decide if they wish to pursue a Motion, an Appeal, go back to the drawing board, or19 give-up. The Designation Letter/ I-924 Approval Notice may come in several20 different forms/outcomes with commensurate varying levels of deference to prior21 decisions in that case, including the following:22 1) Initial Designations which can come in several varieties, such as:23 a) “No Deference Regional Center Status” is Basic USCIS Designation as24 an EB-5 Regional Center based on “general predictions” contained in25 a “general proposal” based on “hypothetical” Business Plans (BPs) that26 1 The Form Instructions are largely based on my “unofficial” “How to Apply for a Regional Center” “instructions”.
  3. 3. Contact: joseph.whalen774@gmail.com or (716) 604-4233 or (716 768 Page 3 are “…consistent with the purpose of concentrating pooled investment1 in defined economic zones….” see §610(a) and “mock up” Economic2 Impact Analyses” (EIAs) that demonstrate “reasonable methodologies3 for determining the number of jobs created ……, including such jobs4 which are estimated to have been created indirectly…” see §610 (c).5 See 8 USC § 1153 Note: Immigration Program (codifying Pub. L.6 102–395, title VI, §610, Oct. 6, 1992, 106 Stat. 1874, as amended…).7 b) “Actual Project Deference” might be included along with Initial RC8 Designation or Amendment Approval if it is supported by a Matter of9 Ho compliant BP and accompanying EIA that contains “verifiable10 detail”. See 22 I&N Dec.206 (AAO 1998) and 8 CFR §11 204.6(m)(3)(ii). This variety of deference accepts the BP and EIA but12 does not usually go much further. USCIS might simply indicate the13 most basic information about the number of EB-5 investors to be14 sought, the total number of jobs predicted, a very basic and general15 description of the project, which will be explained in much more detail16 and complexity in the actual offering and transactional documents to17 be supplied to the investors later. However, USCIS will not have18 reviewed and accepted any of the documents not specifically listed in19 the Official Approval Notice for the Named Project. This is a20 Provisional Approval of the Specifically Named Project’s seeming21 soundness, or suitability for EB-5, as well as compliance with EB-522 technical requirements but nothing more, i.e., SEC, OFAC, etc….23 c) “I-526 Exemplar Deference” is the highest level of deference. This is a24 Provisional Approval of the Specifically Named Project’s seeming25 soundness, or suitability for EB-5, as well as compliance with EB-526
  4. 4. Contact: joseph.whalen774@gmail.com or (716) 604-4233 or (716 768 Page 4 requirements. This one includes more named Organizational and1 Transactional Documents that have been reviewed and accepted.2 2) Amendment Decisions also come in the same varieties as listed above, plus a3 few more possibilities to consider:4 a) Expanded Geographic Scope: USCIS will have accepted that the5 additional areas make economic and common sense as appropriately6 still connected to the original designated area. This should at least be7 supported by a “hypothetical” project or a feasibility study.8 b) Expanded Industry Scope: USCIS will have accepted that the9 additional NAICS Industries have been appropriately described as10 within the Knowledge, Skills, and Abilities (KSAs) or “competencies”11 of the people involved in the Regional Center and any Sponsored12 Projects, including consultants, project developers, and partners. This13 should at least be supported by a “hypothetical” project but would14 usually arise when there is at least an “actual” project. More often than15 not, this situation will be covered in an “I-526 Exemplar” I-924 filing.16 c) Combined Expansions in Scope: As with the first two varieties, these17 “expansions in scope” are usually submitted with, and supported by,18 either an “actual” project or more likely with an I-526 Exemplar.19 d) Significant Administrative Changes: This variety of amendment is a20 mandatory filing when there are totally new people, agencies, and/or21 businesses taking control of an existing Regional Center. Remember22 that USCIS is the only entity that the Secretary of Homeland Security23 has conferred delegated authority upon in this matter. The Principal24 or Sponsor, whether as individuals, or companies, or agencies, in25 control of a Regional Center has ZERO LEGAL AUTHORITY to26 transfer USCIS Designation from him-, her-, or it-self to any other27
  5. 5. Contact: joseph.whalen774@gmail.com or (716) 604-4233 or (716 768 Page 5 person or “entity”. This is not to say that a mere change of employees1 within a company or government agency as persons assigned to2 running the business end of “day-to-day operations” of the Regional3 Center would require an I-924 Amendment filing. Normally, that does4 not require an amendment; just an e-mail to USCIS should be enough5 when points-of-contact change. In that second, “lesser change”6 scenario, i.e., new or re-assigned employees; it is not really a big deal7 for USCIS purposes, however, IF the RC offers securities (and most8 do) THEN SEC-defined “bad actors” should be screened out.9 10 III. No Deference Regional Centers11 Much of what is to follow is speculation on my part but there are some recent12 cases that support at least part of it. I have been considering the concept of the “No13 Deference RC” and have come up with some potential scenarios on this topic. I14 believe that some of these No Def RCs might be very good. Some of them will15 require very much help to get everything in order while some will be beyond16 salvaging and fail in short order regardless of any “lawsuit” from anyone.17 1) There could be a subset of high quality, well-prepared, and fully qualified RCs18 out there. I envision a successful RC operator who has shown all the19 required KSAs seeking to replicate a successful model in distant locations.20 Rather than go to huge expense to make a probably useless attempt to enlarge21 a RC needlessly and contrary to common sense, they might become a serial22 RC operator. They will attempt to locate project sites that could actually use23 their “whatever” and ask USCIS for permission to set up shop there as well.24 The quickest way would be to have a rather “general” proposal with “general”25 predictions loosely tailored to the new area which can be developed more26 deeply later. These might actually be well-suited to the use of the “guinea pig”27
  6. 6. Contact: joseph.whalen774@gmail.com or (716) 604-4233 or (716 768 Page 6 I-526 approach but would likely need to, at the very least, start out with I-5261 Exemplars in order to get the higher amount of detail and deference such an2 Approval Notice will bring with it.3 2) There could be a subset of RCs with worthy but under-developed projects that4 can succeed IF in possession of the necessary competencies or KSAs. I think5 that there may be a large number of such “No Deference Regional Centers”6 in need of the specialist expertise in the form of consultant and project7 partners who can add what is lacking in their core cadre of employees and8 partners. I’d give these folks high marks IF they did seek help but extremely9 low marks if they did not seek the help needed and just tried to “wing it”. The10 more competent folks in this category are more likely to use their initial RC11 Designation to start soliciting investors, which can be a lengthy process, and12 simultaneously prepare to file an I-526 Exemplar as an I-924 Amendment13 when their project plans become more highly developed. It is the growing14 number of RCs in this category that could be a motivating factor for USCIS to15 implement Premium Processing for I-526 Exemplar I-924s.16 Please express your opinion on that to USCIS at:17 uscis.immigrantinvestorprogram@uscis.dhs.gov18 public.engagement@uscis.dhs.gov.19 3) There could be a subset of ill-prepared or “incompetent” RC operators who20 lack the foresight to seek the help they need or who do seek help but fail to21 heed the advice that they receive. These are the ones that will likely fail and22 fail quickly.23 4) Lastly, it is unfortunate that people in any field of endeavor will include some24 “bad actors” or “bad apples”. Please don’t let the few “bad apples” spoil the25 whole bunch. Fraudsters or crooks of any kind have got to get exposed and26 booted out of EB-5. Let’s call this group: Crooked RC operators.27
  7. 7. Contact: joseph.whalen774@gmail.com or (716) 604-4233 or (716 768 Page 7 IV. Conclusion1 As they say, and I think it is true, hindsight is always 20/20 and time will tell2 how things will work out in the future. To recap, please remember to read and3 understand the actual meaning of the Regional Center Designation Letter/I-9244 Approval Notice in front of you. Please always look at the Initial Designation Letter5 and ALL Subsequent Amendment Decisions (approvals and denials, if available)6 relating to that Regional Center before becoming an investor, whether for EB-5 or as7 a domestic or institutional investor. Also, don’t sign on as a project partner until8 reviewing all these things PLUS completing your own normal Due Diligence9 Process. As an example of what NOT to do when it comes to Due Diligence please10 read about the folks who offered the Mamtek Sucralose2 Manufacturing Plant deal in11 MO a few years ago. See the Missouri Secretary of State’s “Mamtek” Order to Cease12 and Desist…, dated April 4, 2013.13 I have already selected my next topic for an EB-5 article. It will include, in14 part, a look at a very stubborn self-petitioner who sought to use a “Hotel” (or15 Motel?) as an EB-5 investment. The I-526 was denied, the Appeal was dismissed,16 and the four subsequent motions of varying types were dismissed. It is also a case17 where the self-petitioner claimed Ineffective Assistance of Counsel (IAC). The18 upcoming article will have much greater detail, please keep an eye out for it!19 That’s My Two-Cents, For Now! 2 Sucralose is an artificial sweeter.
  8. 8. Contact: joseph.whalen774@gmail.com or (716) 604-4233 or (716 768 Page 8 About the Author Joseph P. Whalen, Independent EB-5 Consultant, Advocate, Trainer & Advisor 238 Ontario Street | No. 6 | Buffalo, NY 14207 Phone: (716) 604-4233 (cell) or (716) 768-6506 (home) E-mail: joseph.whalen774@gmail.com web http://www.slideshare.net/BigJoe5 or http://eb5info.com/eb5-advisors/34-silver-surfer DISCLAIMER: Work is performed by a non-attorney independent business consultant and de facto paralegal. 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, immigration attorneys, 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. NOTE: I have over a decade of experience as an adjudicator for INS and USCIS and direct EB-5 Regional Center Adjudications experience having been instrumental in reviving, greatly enhancing, and expanding the EB-5 Regional Center Program for USCIS. NAICS Code: 611430 Professional and Management Development Training 2012 NAICS Definition 611430 Professional and Management Development Training This industry comprises establishments primarily engaged in offering an array of short duration courses and seminars for management and professional development. Training for career development may be provided directly to individuals or through employers' training programs; and courses may be customized or modified to meet the special needs of customers. Instruction may be provided in diverse settings, such as the establishment's or client's training facilities, educational institutions, the workplace, or the home, and through diverse means, such as correspondence, television, the Internet, or other electronic and distance-learning methods. The training provided by these establishments may include the use of simulators and simulation methods.