Inductive reasoning in a qualitative analysis for EB-5 purposes
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Inductive Reasoning In A
For EB-5 Purposes
By Joseph P. Whalen (May 23, 2014)
Investopedia explains 'Qualitative Analysis'
While most investors and analysts rely largely on quantitative measures, metrics such as
the debt-to-equity and price-to-equity ratios, supplementing the analysis with
qualitative analysis increases the insight into the company. Using qualitative factors will
often give analysts an edge since key factors, such as management, does not show up in
Tohelp you remember, qualitative = qualities of a company.
* * * * *
Definition of 'Qualitative Analysis'
Securities analysis that uses subjective judgment based on nonquantifiable information,
such as management expertise, industry cycles, strength of research and development,
and labor relations. This type of analysis technique is different than quantitative
analysis, which focuses on numbers. The twotechniques, however, will often be used
together. [Underline Added]
Above from: http://www.investopedia.com/terms/q/qualitativeanalysis.asp
Inductive reasoning (as opposed to deductive reasoning) is reasoning in which the
premises seek to supply strong evidence for (not absolute proof of) the truth of the
conclusion. While the conclusion of a deductive argument is supposed to be certain, the
truth of the conclusion of an inductive argument is supposed to
be probable, based upon the evidence given. [Emphases Added]
Above from: http://en.wikipedia.org/wiki/Inductive_reasoning
The raw conceptsintroduced aboveareessential to crafting a winning
businessplan (BP) and economic impact analysis(EIA) for EB-5 purposes.
Let’s expand uponthese themes and try to hone in on exactlyhow they help
you in your pursuit of USCIS’ I-924 approvaland perhapsdeferenceto a
specific project insubsequent I-526sand ease in achieving I-829 approval.
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Quantitative Analysis in One’s Approach to EB-5
RegionalCenter (RC) “proposals” for initialdesignationcanbebased
on “hypothetical” or “actual” projects. Somewould argue thedistinctionof,
and inclusionof, an “exemplar” projectaswell. I feel that an “actual”
project should only be identified assuch in an initialRC designation
packageand subsequent approvalnotice. I am of the opinionthat an
“actual” projectinan initialI-924 isthe same thing (or should be the same
thing) as an “I-526 exemplar” filed as an I-924 amendment; or the dreaded
“I-526 test case” for a specific project.
Regardlessof the type of project being put forth, an EB-5 applicant or
petitioner, or someone hired for the purpose, must design and produce
required supporting documents. Thisincludesthe BP (applicabletoany
EB-5 case where sufficient jobshave not been created yet), EIA, and the
organizationaland/or transactionaldocumentation, asappropriate for
that filing, i.e. RC-affiliated “actual”or “I-526 exemplar”project. Oncethe
specific project isselected then the assumptionsand variables must be
stated and selected, appropriatelyfor the level necessaryto achievethe
desired outcome. That meansasking and answering some basic question
Are we merely seeking quick RC designation at thistime?
o If yes, then we canassemble an applicationpackageat a
lower level of specificitybased on “hypothetical” projects
that we might develop further in the future.
Thismeans we will be submitting “hypothetical”
BPs and EIAs to demonstrateour knowledge, skills,
and abilities(KSAs) toproducesuch items.
Thisalso meansthat we will be submitting a
generalproposal containing generalpredictions.
Thisadditionallymeansthat USCIS will not review
any organizationalor transactionaldocumentstobe
used with EB-5 investors. Instead they will only look
at such itemsthat show that theentity that applies
Lastly, this meansthat we get ZERO deferenceto
our BP and EIA but should be better positioned
since we have demonstrated basicKSAsand
submitted anaccepted “reasonablemethodology”
for projecting thenumber of jobs to be created.
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o If no, then we have much more work to do and deeper
questionsto ask and answer such as the following.
Are we seeking at least one “actual” project approval in
our initialRC designationrequest?
o If yes, then we must produce at least one Matterof Ho-
Compliant BPand a more detailed EIA.
If the “actual” projectisapproved we canexpect
We mayalso submit additional“hypothetical” BPs
and EIAs to demonstrateour knowledge, skills, and
abilities(KSAs) toproducesuch itemsin areas
(NAICS Codes) beyond that covered by the “actual”
project. Thosedon’t have to be as complex or
The reason for us doing theextra “hypothetical”
projectsisto get more informationintoour RC
DesignationLetter for marketing purposes. We
don’t want to be seen as a “one trickpony”.
Are we already a USCIS Designated RegionalCenter
seeking an advanced vetting ofan “I-526 exemplar”
project?One might alsothink of this as a Provisional
Approval of a Specific Project’s shared
documentation. The worst descriptionofthisscenariothat
has ever been uttered is that a “project” is“pre-approved”!
There ain’t no such animal as a pre-approved anything in EB-5!
The absolutebest you canget is a “preliminarydetermination”.
Even the beloved concept of “deference” comeswith strings
attached. Doyou know why? It is becausein the past people
tried to pull “fast-ones” by using “bait-and-switch”tacticswith
project documentationand don’t forget the old standby, plain
o If yes, which approach shallwe take? Weas the RC, could
file an I-924 Amendment consisting ofan “I-526
exemplar” package ORlet an eager EB-5 investor file a
real I-526 visa petition. What arethedifferences? Is one
way better thanthe other? Let’s consider these options.
An I-924 is an “application”. It is not a “visa
petition” which meansthat it does not involve any
“prioritydate” and thereforeneed not be letter-
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perfect upon filing. It can besupplemented,
corrected, or in other words, “perfected after filing”.
An I-924 Approval addressed tothe Regional Center
comes as a detailed writtendecisionthat states
point blank the nameof the specific project thatwas
reviewed and found acceptablealong with certain
other very specific details. It will also clearly state
preciselywhat will receivedeference in subsequent
adjudicationsand the conditionsnecessarytoget
The I-526 is an actual“visa petition” and assuch it
must be “approvablewhen filed” and demonstrate
“eligibilityat timeoffiling”. It cannot be materially
changed after filing in the way that theI-924 can.
The reason for thisheightened standard isthat the
filing date of an approved preferencevisa petition
transformsintoa “prioritydate” for visa application
or adjustment ofstatusfiling purposes.
The StateDepartmentissuesa month “Visa
Bulletin” that indicatesifa particularvisa category
is current or has a backlog. If the categoryis not
current thenthe abilityto file will be based on the
“prioritydate” for the approved visa petition.
Some categoriescanbebacklogged for decades. EB-
5 has not yet reached its full potentialso therehas
never been a “backlog”, yet. EB-5 investorshad
been lulled into a false sense of securitybut lately, it
has been predicted that EB-5 investors and
entrepreneursmight facea backlog soon.
Additionally, theactualvolunteer EB-5 investor’s
personalized qualificationscould delay approvalof
the “specific project”. Theinvestor must produce
evidence to demonstratethesourceand path of his
or her lawful personal investment funds. Depending
on thesource of funds and the source country, that
canbe a difficult task.
In a worst case scenario, theinvestor’s I-526 is
DENIED due to factorsunrelated tothe specific
investment project and the processwill have to be
started all over again.
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If a REAL I-526 is denied, would you as the RC
Principalforget that approach and simplyfile
Exemplar via an I-924 in order to get rid of the
uncertaintyor baggagethat theindividualinvestor
bringsto the equation?
In addition, ifa REAL I-526 is approved, that
approvalnoticefor the individual’sI-526 is a
generic computer generated form letter without any
specific, pertinent, or useful detailsabout the
project. It also does not even specify the Regional
Center with which the investor is affiliated.
Who is going to be convinced by that generic form
letter lacking in detailsin the wake of all that
horriblefraud not too long ago?
The meager differencein cost between filing an
EXEMPLARI-526 as an I-924 Amendment and a
REAL I-526 is SO SMALL that tothink it could even
be a considerationbogglesmymind. Arewe really
dealing with millionaires? Do these folks really meet
the criteriafor the SEC’s “qualified investor” for
As an EB-5 Investor, I would expect that ifsomeone
is trying to tell me that a specific investment project
has been “pre-approved” or more accurately
“provisionallyapproved”, Iwould expect better
evidence of that fact.
I am, or we are, not affiliated with a Regional Center, how
do these considerationsapplyto me?
o In what has come to known as an “EB-5 Direct
Investment”1 , if the jobs have not yet been created then, a
Matterof Ho-Compliant BPis absolutelyrequired.
1 I have long used the term “stand-alone” investment for real entrepreneurs going it alone or
have written about “Non-RC-Affiliated EB-5 Groups”. EB-5 Direct encompasses both of my
subsets. However, Non-RC-Affiliated Groups sometimes get tricked or are too naïve to realize
their limitations and try to act like a Regional Center and think they can count “indirect jobs”
and just make “loans” to developers. I really would prefer that folks distinguished these vast
differences better. Stupid facilitators screw alien investors and sometimes investors screw
themselves. SEE: http://www.slideshare.net/BigJoe5/commentary-on-a-failed-eb5-direct-i526-
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o The stated premisesand assumptionsmust beof the
highest qualitytomeet these heightenedthreshold
o There is no place for an EIA in the I-526 filing because
ZERO indirect jobscount.
o Loan models are unacceptablebecausetheEB-5 investor
or entrepreneur canonly count direct employeesand
MUST have an ownership/equityinterestinthe job-
creating enterprise(JCE). Theeasiest path isfor the new
commercialenterprise(NCE) and theJCE to be one and
the same. The EB-5 investor can be a junior or limited
partner inthe business and still meet the “involvement”
element of EB-5.
o There arelimited possibilitieswheretheNCE and JCE are
not one and the same3. The NCE could be a holding
companyor perhapssimply a much bigger entity that
wholly owns theJCE as a subsidiary.
Unlike some other visa categoriesthespecific
relationship betweenthesetwo (NCE and JCE) is
Don’t get confused with some irrelevant legal
definition4 that hasnothing to do with this visa
Inductive Reasoning As Applied to EB-5
As the reader likely alreadyknows, EB-5 demandsa minimum
investment amount; and minimum job creationlevels. As you also know, if
the jobshave not been yet created asEB-5 direct jobs; or if EB-5 indirect
jobs arebeing claimed (when allowed), then an EB-5 Matterof Ho-BP is
required. WhenEB-5 indirect jobsarea factor thena highly detailed EIA is
also needed. Theaforementioned BP is thesource of informationtobeused
to build the EIA. If theBP is solid enough it will yield actualnumberstobe
used as input intoan econometric modelto producethe EIA. If the BP is
not up to that challengethen it will at least provide valid premisesand
assumptionsand steer the economist in the right direct toselect
appropriatedata categoriesfor modeling purposes.
2 SEE: http://www.slideshare.net/BigJoe5/aao-nonrc-i526-dismissal-may122014-01b7203
See this L-1A AAO Appeal Dismissal for a bunch of EB-5 non-qualifying business
relationships and know that virtually 99% does NOT work for EB-5. MAY082014_06D7101.pdf
SEE: MAR212014_01B3203.pdf regarding inappropriate out of context definitions.
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In cases like those just described, meaning that the jobs and other
economic impacts have not yet been realized and are still only theorized, the
success or failure of the EB-5 case in its dealings with USCIS will hinge upon
skillful utilization of available information through inductive reasoning. As I
described this in may last article5, I am talking about the art of manipulation!
Finally, please, think back to the definitions at the beginning of this
article. Get ready to synthesize the distinct points made in the preceding
pages. In short, you will need to skillfully utilize all credible information
available, including those derived from a basic quantitative analysis of the
[hopefully Matter of Ho-Compliant] BP. Additionally, you will need to use
subjective judgment based on nonquantifiable information while discussing
qualitative factors such as management, i.e. KSAs, in order to show that the
truth of your conclusions via your inductive argument is probable, based upon
the evidence given. In using the additional nonquantifiable factors to round
out yourEIA, you have bolstered youroverall credibility and hopefully
satisfied the USCIS economists, lawyers, business analysts, and especially the
adjudicator who must sort through and collate all of those expert opinions and
make the official adjudication decision.
That’s my two-cents, for now.
Joseph P. Whalen, Independent EB-5 Consultant,
Advocate, Trainer & Advisor
1348 Ridge Rd | PMB 36 | Lackawanna, NY 14218
Phone: (716) 604-4233
web http://www.slideshare.net/BigJoe5 or
DISCLAIMER: Work is performed by a non-attorney independent business consultant. It is
the client's responsibility to have any and all non-attorney work products checked by an
attorney. I provide highly-individualized training based on 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 whenI was
an adjudicator there for many years. I do not prepare forms, write business plans, or create
economic analyses. I do review them for clients prior to submission and suggest
corrections and/or modifications to run by your attorney and investment advisor.
NAICS Code: 611430 Professional and Management Development Training
5 SEE: http://www.slideshare.net/BigJoe5/required-mindset-for-performing-qualitative-along-
with-or-rather-than-quantitative-analysis or http://discuss.ilw.com/content.php?3143-Article-