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Issue identification basics in EB-5


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Issue identification basics in EB-5

  1. 1. Issue Identification Basics in EB-5 Page 1Issue Identification Basics in EB-5By Joseph P. Whalen (May 6, 2013)“The argument of counsel has been noted. The issue in visa petitionproceedings is not one of discretion but of eligibility.” Matter of Polidoro,12 I&N Dec. 353 (BIA 1967)“On appeal, counsel asserts that the petitioner meets at least three of theten regulatory categories of evidence at 8 C.F.R. § 204.5(h)(3) and that hesubmitted comparable evidence of his extraordinary ability pursuant tothe regulation at 8 C.F.R. § 204.5(h)(4). The AAO acknowledges that thestandard of proof is preponderance of the evidence, as noted by counsel onappeal. The "preponderance of the evidence" standard, however, does notrelieve the petitioner from satisfying the basic evidentiary requirementsrequired by the statute and regulations. Therefore, if the statute andregulations require specific evidence, the petitioner is required to submitthat evidence. See section 203(b )(1 ) (A)(i) of the Act, 8 U .S.C. § 1153(b)(1 )(A)(i), and 8 C.F.R. §§ 204.5(h)(2) and (3). In this matter, thedocumentation submitted by the petitioner fails to demonstrate by apreponderance of the evidence that he has achieved sustained national orinternational acclaim.” Apr022012_01B2203.pdf at p. 2 (emphasis added)Far too often Counsel will address pointless issues in applications,petitions, appeals, and motions and then drag the case into thefederal court system. I am going to try to point out the key issues asthey relate to each USCIS application or petition that is or may beinvolved in an EB-5 Immigrant Investor/Entrepreneur case. TheUSCIS Forms involved are: I-924, I-924A, I-526, (possibly) I-485,and finally the I-829. Each will be addressed distinctly below. NOTE:The State Department form DS-230 is similar to the I-485.I-924, Application For Regional Center Under the Immigrant Investor Pilot ProgramThis application is used: to request designation as a Regional Center,to amend the scope of an existing Regional Center, or to submit aspecific project’s business plan, economic analysis, and transactiondocuments which will be used as prima facie evidence of eligibilityfor the EB-5 aliens’ individual I-526s. This Dummy I-526 will only bemissing the individualized evidence pertaining to the source and pathof the individual alien’s investment funds. The approval of a DummyI-526 is NOT “pre-approval” but rather an “advance vetting” of theproject’s potential to succeed (i.e. business plan (BP)), reasonablenessof job creation predictions (i.e. “reasonable methodologies” and
  2. 2. Issue Identification Basics in EB-5 Page 2economic analysis (EA)), and investment structure (i.e. transactiondocuments).In an initial request for Regional Center Designation, there aredifferent approaches available. The applicant entity may choose toseek a general designation without including any identified specificprojects (i.e. hypothetical or archetypal BPs and EAs) based on ageneral proposal. The applicant might choose to put forth realprojects supported by Matter of Ho-compliant BPs and EAs. Lastly,the applicant might choose to mix and match. That is to say, theapplicant may choose to put forth one or more real projects andreserve other possibilities supported by sample projects that don’treally exist at that time.Whichever approach the I-924 applicant chooses needs to besupported by appropriate evidence that supports whatever isrequested. This applicant will define its own scope or “operatingparameters” and must tailor the evidence to support the request. Therequest, whatever it is, must make sense and be fully supported by theevidence.This form is an application which does not secure or need any“priority date” because it does not involve any visa and the only trueprerequisite to filing is that the applicant entity actually exists underthe law (Inc. L.P., Corp., Co., gov’t agency, etc...). Due to the nature ofthe form, it should be wide open to alteration, modification,correction and perfection after filing. It is something which shouldbe open to further development up until time of the final adjudicationdecision and this should include through the administrative appealsprocess. Compare this form to the N-400, Application forNaturalization.The statute pertaining to this application is found at 8 USC § 1153Note: Immigrant Investor Program which codifies § 610 of theAppropriations Act of 1993, as amended, see specifically paragraphs(a) and (c). The main regulations covering this application are foundat 8 CFR § 204.6(m)(3)(i)-(v). If you have not read these yet, pleasedo so immediately and/or prior to attempting to create evidence tosupport an I-924. See also: Matter of Ho, 22 I&N Dec. 206 (AAO1998) as it pertains to the contents of a business plan and the agency’s
  3. 3. Issue Identification Basics in EB-5 Page 3expectations for a BP. The final reference to read in advance is theform instructions which are incorporated into the regulations.I-924A, Supplement to Form I-9248 CFR § 204.6(m)(6) requires annual reporting by each RegionalCenter of its activities for the prior fiscal year. This form is used forthe annual reporting. In completing this form, many mistakes mightbe made. The wrong NAICS codes might be selected, especially forthose Regional Centers that pre-date the form I-924 when NAICScodes were not required. Aside from that issue, another commonmistake is to report something which does not need to be reported yetbecause it is too early in the process such as when no actual fundshave been committed to the project or even placed in escrow yet.Also, there is the situation where aliens may have signed on to theproject, placed money in escrow but have not yet filed theirimmigrant petitions (I-526s). Read those form instructions carefullyand see: Addressing USCIS I-924A Form Instructions.I-526, Immigrant Petition by Alien EntrepreneurThis form is a visa petition and it needs to be supported by evidencethat the self-petitioner alien investor/entrepreneur is/was “eligible attime of filing”. This is so because the filing date of an approved I-526with be transformed into a “priority date” for visa issuance oradjustment of status purposes. It is for this reason that the materialchange prohibition should apply. It would be unfair to those whoactually waited until they got their evidence in good order beforefiling to allow substandard petitions to be materially altered in orderto make them meet the basic requirements.The self-petitioner may submit either: a) proof of jobs alreadycreated; or b) a comprehensive, detailed, and credible business plan;along with proof of sufficient lawful funds. In the Regional Centercontext, there is the additional item of evidence as to “reasonablemethodologies” for predicting/estimating indirect jobs, if indirectjobs are being claimed.If certain pieces of evidence (BP and EA) are not viable, then denial isappropriate. The self-petitioner may not make material changes tothe primary pieces of evidence in an effort to make them conform to
  4. 4. Issue Identification Basics in EB-5 Page 4requirements. Minor updates to certain items (i.e. permits, letters ofintent, etc...) might be permissible if they became stale due to longUSCIS processing delays. Also, supplementation with items thatalready existed but were omitted should be permissible.Approval of this form is merely acknowledgement that the individualmet the basic eligibility criteria for classification under INA §203(b)(5) as an intending employment creation alieninvestor/entrepreneur. It does not consider or address admissibilityissues or approval for a greencard.I-485, Application to Register Permanent Residence or Adjust StatusThis form is an application filed by someone who has an approvedvisa petition and an immigrant visa is currently available to them andwho is lawfully in the U.S. (If abroad, the DS-230 is filed at aconsulate or embassy). This is an application for initial greencardapproval and issuance. The issues involved here are to do withadmissibility. Merely because the I-526 was approved does notautomatically assure greencard approval. The I-526 merely showedthat the individual fit into a certain category and was so classified.There are many grounds for inadmissibility listed in INA § 212(a) [8USC § 1182(a)]. There are ten broad categories as follows:1 Health-Related Grounds;2 Criminal Grounds;3 Security and Related Grounds (Espionage, Terrorism, etc...);4 Public Charge Grounds [Unlikely];5 Labor Certification and Qualifications [Inapplicable to EB-5];6 Illegal Entrants and Immigration Violator;7 Documentation Requirements; [A CBP issue at the port ofentry];8 Ineligible for Citizenship;9 Aliens Previously Removed [Includes Unlawful Presence Bars];10 Miscellaneous [Includes: Int’l Child Abductors, Polygamists,Helpless Aliens and their Guardians, Unlawful Voters, andFormer Citizens/Tax Evaders.]Regardless of whether this individual plunked down One MillionDollars in an effort to create jobs for authorized U.S. workers or not;
  5. 5. Issue Identification Basics in EB-5 Page 5if they fit one of these categories, they are inadmissible. However, afew of the grounds of inadmissibility have waivers available.Unfortunately, most waivers require the intending immigrant to havea qualifying U.S. citizen relative who would suffer hardship if theimmigrant were barred entry. If the alien investor actually had aqualifying USC relative then they would be an Immediate Relative ofa USC and would not be pursuing EB-5.I-829, Petition by Entrepreneur to Remove ConditionsThis is where the fruits of the investor’s labor (investment) pay off orfail [sink or swim]. At this point, even if there has been some materialchange that which matters most are the end results. Has the EB-5alien:1 Made the full investment?2 Sustained the Investment?a Was it “at risk” andb in the “correct amount” for the area?3 Created enough jobs?a For qualified employees?b Met Conditions Precedent to support “indirect jobs”?As for 3.b, above, those “conditions precedent” need someexplanation. Here goes.Many indirect job creation projections are based on statedassumptions. Assumptions in this context may later morph into conditionsprecedent that are deemed necessary for the fulfillment of obligations andsupportive of a finding that due to the completion of one stated objectiveor the meeting of a benchmark or deadline for completion of someidentified condition that another stated result is reasonably also deemedtrue and/or accomplished. If X is proven true, then Y is accepted as true.Say what? Let me give an example.Suppose the BP says that the project will entail building a factory. Thisfactory will have three assembly lines. The BP says that upon completionof line two, line one will be up and running while construction commenceson line three. The EA states that there will be X number of peopleemployed at the factory. In the EA they were used as input described forEA purposes only as direct employees of the factory, not the aliens who are
  6. 6. Issue Identification Basics in EB-5 Page 6just supplying financing. For EB-5 purposes, the factory workers areindirect in relation to the aliens who provided financing only.Based on the new employment at the factory, Y number of indirect andinduced jobs will be created as a result. The EA breaks down thisadditional peripheral but dependent job creation into two categories(indirect and induced) but for EB-5 purposes, all three job categories inthe EA will be utilized as indirect jobs. The various crucial and pivotalactivities were predicted to begin and end within stated temporalparameters (construction schedules). In this simple example, thecompletion of line two signals various things. Completion of line two was acondition precedent to line one being up and running and fully staffed. Itis therefore indicative of job creation for the workers on line one. Let’s justaccept the fact that the workers could NOT start reporting to work on lineone until the construction activities on line two ended. However, if itmakes you feel better, let’s say it was due to worker safety concernscoupled with workers having to attend and complete mandatory newemployee orientation training which included safety issues such asemergency procedures, hazardous materials handling precautions,disaster drills, and first aid, including Red Cross CPR Certification Classes.OK?Fulfillment of certain stated assumptions permits presumptions to befound readily acceptable. In this example, the job creation projectionswere presumed to be valid upon the fulfillment of the condition precedentof the completion of the construction of line two. This presumption wassomething that the parties agreed to accept as true unless provenotherwise. USCIS approved it, now you merely need to follow through withit; and then prove that you did via the documentation!Reasonable Methodologies consist of a wide variety of possibilities. Inorder to be deemed “reasonable” the “methods” used for EB-5 RegionalCenter Program purposes must contain plausible explanations. In general,those will be based upon various widely accepted Econometric orEconomic Models. Economists working with these models will generallyutilize the data categories found in or inspired by the “comprehensive,detailed and credible” Business Plan to guide selection of data for inputinto the model. Sometimes the specific details and actual figures found inthe BP might also be used as input in the model. The result of all thatmodeling will be an EA that the applicant hopes will be accepted by USCISas reasonable, plausible, probable, and credible.The information discussed in the assembly line example representedinformation from a BP used to produce an EA. In that EA, assumptionswere stated that supported predictions. As those assumptions came true,the presumptions as to indirect jobs became probable. They would have
  7. 7. Issue Identification Basics in EB-5 Page 7been accepted as true upon corroboration of fulfillment of the conditionsprecedent as stated up-front. The question then remains; “What willconstitute the corroborating evidence of fulfillment of the conditionsprecedent”? On this point, remember that you are dealing with agovernment bureaucracy so the simple answer is “paperwork”. The harderpart of the equation and process is figuring out which papers to submit.In order to determine which papers to present, you must identify theprecise facts you need to prove to support fulfillment of thespecific condition precedent. How would you prove that theconstruction of assembly line two has been completed? I don’t knowbecause I have never built a factory that contained assembly lines.However, I do know that many factories with multiple assembly lines havebeen built. That tells me that someone somewhere must know the answer.How about you start with the very construction company that built it foryou? They likely know what paperwork they produce that could serve asevidence. Perhaps they have to answer to local, state, or federal agenciesabout their activities? That is sure to produce paperwork! How was thisconstruction activity paid for? Monetary transactions usually leave a papertrail. The bigger the expenditures, the bigger that trail becomes. There isno need to reinvent the wheel over these matters. You just have to do yourlegwork and homework on the subject matter in order to find theanswers.”Above from: