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Please Study the ACTUAL Material Change Issue from            Matter of Izummi, 22 I&N Dec. 169 (AAO 1998)                ...
EB-5 compliant documents approved by INS then did not use them. They gotcaught later and attempted to “conform” (i.e., wea...
documents. INS basically said, “Screw you!” That particular Regional Center hada multitude of things wrong with it. This o...
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Please study the actual material change issue from Izummi

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Please study the actual material change issue from Izummi

  1. 1. Please Study the ACTUAL Material Change Issue from Matter of Izummi, 22 I&N Dec. 169 (AAO 1998) By Joseph P. Whalen (March 2, 2012)Izummi involved several issues of importance. The one issue that was taken toheart and expanded beyond its proper scope and usefulness was the “materialchange” prohibition. If you actually re-read that decision, it is narrower than youmight have been lead to believe. The issue is explained in the following excerpt. “CERTAIN REVISIONS TO THE PARTNERSHIP AGREEMENT CANNOT BE ACCEPTED Subsequent to the issuance of the director’s decision, counsel has submitted numerous revisions to AELP’s limited partnership agreement. He explains that the revisions are in the form of Stage I and Stage II amendments. The original partnership agreement had been prepared and executed in March of 1996, prior to the creation of an initial payment option of $120,000. When the $120,000 option was added to AELP’s program in the fall of 1996, AELP neglected to amend the partnership agreement. As a result, many provisions within the documents signed by this petitioner contradict provisions within the official partnership agreement. The Stage I amendments are intended to correct these inconsistencies. In addition, after the attorneys for AELP obtained a copy of a memorandum issued in December of 1997 by the Service’s Office of General Counsel (“OGC”), “the Limited Partnership Agreement of AELP was further amended to restructure, amend or eliminate some or all of [the] ‘objected-to’ provisions.” These Stage II amendments, counsel continues, should render the instant petition approvable. 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.[The above is a veiled accusation of “bait and switch” tactics having beenemployed by unscrupulous Regional Centers promoters. They had standardized Page 1 of 3
  2. 2. EB-5 compliant documents approved by INS then did not use them. They gotcaught later and attempted to “conform” (i.e., weasel their way out of trouble.)] “Counsel states that petitions have previously been amended to reflect program changes and to cure defects in the original documents. He refers to a 1995 case in which the center director had correctly found that the business at issue did not constitute a troubled business. At oral argument in that case, counsel presented a completely different business plan that abandoned the troubled-business claim and substituted a plan to create a new business instead. This new business plan formed the basis of an approval. The case referenced by counsel, however, resulted in an unpublished decision that did not have any precedential value, procedural or otherwise. Furthermore, the AAU1 acknowledges that acceptance of the new business plan at such a late date was improper and erroneous. In the case at hand, the AAU will recognize the Stage I amendments to the extent that they cause the partnership agreement to conform to the other agreements that this petitioner had originally executed and submitted with his Form I-526. The AAU will make no determination as to the adequacy or inadequacy of the Stage II amendments, as they are irrelevant in this proceeding; the Service cannot consider facts that come into being only subsequent to the filing of a petition. See Matter of Bardouille, 18 I&N Dec. 114 (BIA 1981). If counsel had wished to test the validity of the newest plan, which is materially different from the original plan, he should have withdrawn the instant petition and advised the petitioner to file a new Form I-526. The case shall be analyzed only on the basis of the original documents and the revisions that correct the original inconsistencies.” At pp. 175-176In Izummi it was principally the standard transaction documents relating tothe MONEY that were the problem. These financial transaction documentswere the heart of the thing that could not be materially changed because it was amatter of getting caught in the act of committing a large scale financial fraud. TheRegional Center was playing fast and loose with the MONEY.The aliens’ MONEY was NOT being spent on EB-5’s primary purpose of jobcreation. It was being siphoned off by the Regional Center “sponsors” into theirown pockets. When the Regional Center got caught it tried to “conform” its1 It is a little embarrassing that in 1998, AAO referred to itself as AAU. The name of that officewas changed in January 1994. Page 2 of 3
  3. 3. documents. INS basically said, “Screw you!” That particular Regional Center hada multitude of things wrong with it. This one issue was not dispositive. They alsotried investing at the lower TEA rate outside of TEAs. They “invested” the moneyoutside of the Regional Center’s approved geographic area. They deductedimproper expenses from the aliens’ minimum investment amounts. (One guy waspaying himself $200,000.00 as an economic consultant. And the list goes on.)A more recent noteworthy case is that of the Victorville Regional Center whichfollowed on the heels of El Monte. Both of those Regional Centers wereterminated and it was at least in part (for El Monte ESPECIALLY) about theMONEY being misdirected. Can anyone say “Indictment”?Victorville on the other hand, merely planned poorly. IF they had had moreforesight and planned for contingencies, OR if they had “committed to the project”earlier, things might have worked out better. Another case involved CARc at theWatergate where money was not spent according to its own plan. Again, foresightmight have saved it however, a partner in the project had other problems so,perhaps nothing could have helped.Some projects do fail simply because of BUSINESS REASONS that do not, andshould not, reflect negatively upon EB-5 in any way, shape, or form. Theoccasional failure proves that USCIS is NOT SELLING GREENCARDS! If thejobs do not get created, conditions do not get lifted based on THAT investment.Lastly, PIDC tried to save its investors from a failing project by shifting to anotherproject that was “within its approved scope”. The problem was with the actualexecution of the shift. It went from inside a TEA to outside a TEA without uppingthe minimum investment amount. But for that critical error, the PIDC maneuverhad the best chance of success in all of these cases.The best lessons I can glean from these cases are: 1.) Plan for Contingencies, 2.) Pay Attention to Details, especially where the money is a primary issue, & 3.) The MONEY is always a primary issue! Page 3 of 3

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