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Material Change Challenges                         By Joseph P. Whalen (January 19, 2013)In the context of EB-5, the issue...
Material Change Challenges                       By Joseph P. Whalen (January 19, 2013)   INA § 203(b)(5) [8 USC § 1153(b)...
Material Change Challenges                     By Joseph P. Whalen (January 19, 2013)(c) Requirements of timely petition a...
Material Change Challenges                     By Joseph P. Whalen (January 19, 2013)plan had been followed all the way th...
Material Change Challenges                         By Joseph P. Whalen (January 19, 2013)Due to the wording in the statuto...
Material Change Challenges                     By Joseph P. Whalen (January 19, 2013)The major problem that has existed fo...
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Material Change Challenges

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Material Change Challenges

  1. 1. Material Change Challenges By Joseph P. Whalen (January 19, 2013)In the context of EB-5, the issue of the dreaded “material changeprohibition” has been a point of great contention both inside and outside ofUSCIS. Regardless of whether one is with the government or an externalstakeholder, the views held range the full gamut between polar oppositeviews and include various gradations along the way. • Some feel that it applies across the board to ABSOLUTELY EVERYTHING, without exception. Many “Culture of NO!” bureaucrats feel this way (this is especially true of many older USCIS adjudicators leftover from INS and newer officers who have been brainwashed by them AND anti-immigrationists organizations). • Some feel that “any and all” material change should be allowed no matter what petition or application is involved or what law controls, i.e. context. These would include the overzealous advocates and corrupt officials. • Then there those, like me, that are in the middle of the road. We mid- range folks do a bit more homework and research and trace the origins of the concept within various contexts and delve into the controlling laws. 1Here is my take on this topic. The material change prohibition within EB-5really applies to the I-526 visa petition alone but even this has someleeway. For a time, Legacy INS and USCIS were overreaching in theapplication of this valid concept. First, one must understand that abeneficiary or in the EB-5 context, the self-petitioner, must be “eligible attime of filing” for the benefit requested. What is being requested in an I-526is “classification as an entrepreneur/investor”. That is all. To qualify for thismere classification, one must be able to demonstrate, at a minimum, thatthey have sufficient clean money and a pulse. In reality, even I accept thatthey at least need an idea, i.e. a plan. The statute does not demand adetailed plan. That is by regulation and bolstered by precedent. Let’s look atthe applicable section of the INA (skip them if you know them by heart).Afterwards, I’ll go into a discussion of the validity of the “prohibition” asapplied to the I-526, and where this valid concept came from.1I am referring collectively to the entire hierarchy of laws from the Constitution and commonlaw through precedents, regulations, and all the way down the line to mere policy positions. Page 1 of 6
  2. 2. Material Change Challenges By Joseph P. Whalen (January 19, 2013) INA § 203(b)(5) [8 USC § 1153(b)5)] (A) In general Visas shall be made available, in a number not to exceed 7.1 percent of such worldwide level, to qualified immigrants seeking to enter the United States for the purpose of engaging in a new commercial enterprise (including a limited partnership)— (i) in which such alien has invested (after November 29, 1990) or, is actively in the process of investing, capital in an amount not less than the amount specified in subparagraph (C), and (ii) which will benefit the United States economy and create full-time employment for not fewer than 10 United States citizens or aliens lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United States (other than the immigrant and the immigrants spouse, sons, or daughters). The EB-5 visa statute does not demand that a specific plan must be formally submitted in writing in any particular format. The statute does not say that plans may not change along the way. Instead, the below statute provides that the individual shall be given only a conditional status and shall have to provide further proof at the end of that conditional period that they expended the money and created the jobs. Let’s take a closer look.INA § 216A [8 USC § 1186b] Conditional permanent resident status for certain alien entrepreneurs, spouses, and children (a) In general (1) Conditional basis for status Notwithstanding any other provision of this chapter, an alien entrepreneur (as defined in subsection (f)(1) of this section), alien spouse, and alien child (as defined in subsection (f)(2) of this section) shall be considered, at the time of obtaining the status of an alien lawfully admitted for permanent residence, to have obtained such status on a conditional basis subject to the provisions of this section. * * * * * Page 2 of 6
  3. 3. Material Change Challenges By Joseph P. Whalen (January 19, 2013)(c) Requirements of timely petition and interview for removal of condition (1) In general In order for the conditional basis established under subsection (a) of this section for an alien entrepreneur, alien spouse, or alien child to be removed— (A) the alien entrepreneur must submit to the Attorney General, during the period described in subsection (d)(2) of this section, a petition which requests the removal of such conditional basis and which states, under penalty of perjury, the facts and information described in subsection (d)(1) of this section, and (B) in accordance with subsection (d)(3) of this section, the alien entrepreneur must appear for a personal interview before an officer or employee of the Service respecting the facts and information described in subsection (d)(1) of this section. * * * * *(d) Details of petition and interview(1) Contents of petition Each petition under subsection (c)(1)(A) of this section shall contain facts and information demonstrating that the alien— (A)(i) invested, or is actively in the process of investing, the requisite capital; and (ii) sustained the actions described in clause (i) throughout the period of the aliens residence in the United States; and (B) is otherwise conforming to the requirements of section 203(b)(5) [1153(b)(5)] of this title. In order to get conditions lifted, the alien entrepreneur/investor is merely required that they made and sustained the investment and created the required number of jobs. Although, § 216A(d)(1)(B) cross-references § 203 (b)(5) we must remember that § 203(b)(5) merely requires “engaging in a new commercial enterprise” but does NOT demand that any particular Page 3 of 6
  4. 4. Material Change Challenges By Joseph P. Whalen (January 19, 2013)plan had been followed all the way through. Congress wrote the law todemand particular results but did NOT demand the rigidity that evolvedalong with the EB-5 program. That said, such rigidity evolved to combatrampant fraud that sprang up along the way.Now for a closer look at the basis for the material change prohibition. Backin 1971, an INS Regional Commissioner decided an employment-based visapetition in which the petitioner wished to employ Ms. Fe Corozon Katigbak,from the Philippines, as an accountant. As it turned out, Ms. Katigbak hadnot completed her education as required for entry into the profession of anaccountant, nor did she possess enough work experience to make up thedifference, therefore she was not yet qualified to be considered aprofessional accountant when the petition was originally filed.Subsequent to filing, subsequent to the denial, subsequent the dismissal ofa Motion, subsequent to filing the Appeal, but not until just before oralargument did the beneficiary finally achieve her satisfactory qualificationsfor entry into the profession. The BIA refused to consider this in connectionwith the previously filed and denied petition. The Board wrote, in part: “When a third preference petition is filed, it seeks to establish that the beneficiary is a qualified member of the professions at that time eligible for preference. If the petition is approved, he has established a priority date for visa number assignment as of the date that petition was filed. A petition may not be approved for a profession for which the beneficiary is not qualified at the time of its filing. The beneficiary cannot expect to qualify subsequently by taking additional courses and then still claim a priority date as of the date the petition was filed, a date on which he was not qualified. Section 204 of the Act requires the filing of a visa petition for classification under section 203(a)(3). The latter section states, in pertinent part: "Visas shall next be made available to qualified immigrants who are members of the professions." (Emphasis added.).....” At p. 49.Matter of Katigbak, 14 I&N Dec. 45, 49 (Reg, Comm., 1971). Page 4 of 6
  5. 5. Material Change Challenges By Joseph P. Whalen (January 19, 2013)Due to the wording in the statutory definition of the preference categorybeing in the present tense, one must be qualified at the time of filing thevisa petition. If one examines the wording of the EB-5 categoricaldefinition, it too is written in the present tense as are all of the preferencecategories. EB-5 is defined by statue that “Visas shall be made available,.....,to qualified immigrants seeking to enter the United States forthe purpose of engaging in a new commercial enterprise(including a limited partnership)”, supra.We then must discern the minimum qualifications. As summed up above,the statutory definition, goes on to demand that a minimum amount ofcapital will be invested and that the new commercial enterprise is expectedto benefit the United States economy and create a minimum of ten (10)jobs. For very practical reasons the regulations spell out the minimumevidence that will support an I-526 visa petition. Those regulatory pieces ofevidence have been further clarified through no less than 34 precedents inthe “entrepreneur/investor” context over the years beginning in 1967,concerning the earlier incarnation a “labor certification exemption” contextand stretching through 1998, when four (4) EB-5 precedents came alongwith additional cases outside of the “entrepreneur/investor” contextcovering broad concepts such as Katigbak. One of the 1998, precedentsdrew upon, adopted and invoked the above concept from Katigbak aspresented below.Matter of Izummi, 22 I&N Dec. 169 (BIA2 1998) holds, in pertinentpart: (3) A petitioner may not make material changes to his petition in an effort to make a deficient petition conform to Service requirements.That same decision goes on to further explain the underlying requirement,thus: “A petitioner must establish eligibility at the time of filing; a petition cannot be approved at a future date after the petitioner becomes eligible under a new set of facts. See Matter of Katigbak, 14 I&N Dec. 45, 49 (Comm. 1971), Therefore, a petitioner may not make material changes to a petition that has already been filed in an effort to make an apparently deficient petition conform to Service requirements.” [emphasis added]2Until recently the decision as noted on the EOIR website listed this as a BIA precedent and theactual I&N Decision credits it to what was then INS, Regional Commissioner, it was actuallyrendered by the AAO which incorrectly called itself AAU, of what was INS (now AAO of USCIS).AAU was renamed AAO in 1994, under Janet Reno. I got EOIR to fix this error online. Page 5 of 6
  6. 6. Material Change Challenges By Joseph P. Whalen (January 19, 2013)The major problem that has existed for some time is that USCIS and AAOhave extended these concepts, which are applicable to the I-526 visa petitiona bit too far. The appropriateness factor of a “priority date” is missing in the I-829 and I-924 (the other forms used within EB-5). The form I-829 is filed torequest the lifting of conditions from status. At that point, the alien must showthat the money was spent thus resulting in the creation of the required jobs.While the I-924 is the application for designation as a Regional Center. Notonly is that form an “application” rather than a “petition”, it is filed by a U.S.entity not seeking any visa at all but rather a license to assist the EB-5 aliens intheir quests for visas.So, to wrap things up, I will explain the title of this essay. When I refer tochallenges, I refer the many challenges that face both USCIS and the EB-5stakeholder community. USCIS might have to face more court challenges ofits incorrect application a valid concept to incorrect contexts. I find that therehas been far too much unacceptable inappropriate rigidity in the adjudicationof many I-924s.In the Regional Center context, the application need not be perfect upon filing.The I-924 may be perfected after filing in order to make it approvable. That isnot so simple and can have varying results. If an I-924 is approved with only abroad concept (as opposed to a vague concept), then the Specific Projectswill need a lot of work. The Dummy I-526 (filed and an I-924 amendment) isavailable to allow the Regional Center to submit shared documents: thebusiness plan, economic analysis, and standardized transactional documentsfor a Specific Project to USCIS for an advance vetting for EB-5 compliance. If aDummy I-526 is not approvable when filed it may be perfected after filing. Ifthe concept of the project cannot be made approvable even after being givenan opportunity to perfect it then a disaster will have been averted. If, on theother hand, the Dummy I-526 is eventually approved then the RegionalCenter will have a USCIS-vetted packet of prima facie evidence of eligibilityand a Provisional Approval, exclusive of the individual aliens’ evidence of thepath and source of lawful funds. That is a marketable commodity. If theRegional Center skips the Dummy filing then their EB-5 investors are in amore precarious position. A REAL I-526 may not be perfected after filing if itwould take too much work and demand sweeping material changes. These arethe challenges faced by the Regional Center and its EB-5 Investors!That’s my two-cents, for now! Page 6 of 6

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