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Frequently Asked Questions - EB-5 Law & Related U.S. Law


FAQs on EB-5 law and related immigration law

See: http://www.dazlaw.com/index.php?option=com_content&view=article&id=117:g...

The above article says:

Yes, if you meet certain requirements. There are two ways to bring your daughter to the United States as a permanent resident after her birth abroad. One way is very quick, while the other way may take a year to complete.

The law bestows U.S. citizenship on all people born within this country’s boundaries. The citizenship of a newborn child’s parents does not matter with births inside the United States. Children born outside the United States can also be considered U.S. citizens at birth depending on the citizenship of the child’s parents. If a child’s parents are only permanent residents when a child is born abroad, the child is not a U.S. citizen at birth. However, the law allows children born overseas to green card holders to obtain permanent residence status in two ways.

The best way to establish permanent residence for a child born overseas is to bring the child back to the United States when you first return here. The immigration laws permit a child born overseas to get a green card upon first entry to the U.S. in two situations. First, if the child is born after an immigrant visa is issued at a consulate, but before the parents arrive in the United States for the first time, the child will be given permanent resident status upon entry. The child’s birth does not have to occur before the visa is issued to the parents. As long as the immigrant visa is still valid when the child is born and the parents bring the child upon their first arrival to the U.S., the child will be given permanent resident status.

The second situation considers when a permanent resident mother has a child overseas while on a short trip outside the United States. The immigration laws also permit a child born overseas during a temporary visit to obtain permanent resident status if the child is brought back with the mother on the mother’s first return to the United States. This scenario has a few additional conditions that must be met. First, the child must be accompanied by the mother upon entry to the United States. In the previous example, either accompanying parent could bring the child, but when the child is born during a temporary trip abroad, the mother must accompany the child. Second, the child must be brought to the United States before his or her second birthday. If the child is already two years old, then this option is not available. Third, the child must be brought to the United States upon the first trip back here by the mother. If the child is left behind when the mother arrives, then the child must obtain permanent residence through another method.

If the first entry method is no longer an option, a parent can still file an immigrant petition to bring the child to the United States. Fortunately, newborn children petitioned this way will not have to wait years and years to arrive. Unlike most other petitions filed by green card holders, petitions filed for children born on temporary trips abroad are exempt from limits and quotas. These petitions are processed immediately, and the child may be able to arrive in the United States in less than one year. Either parent can file the petition, although it is usually easier if the mother files for the child. There is no age limit in the law, but it is presumed that filing at a young age will present a stronger case for approval.

No, you have to marry before you obtain your Immigrant Visa if you and your spouse both want to obtain CPR status.

See below from a recent BIA decision regarding aged-out children under CSPA.

In summary, we conclude that an alien may satisfy the “sought to acquire”
provision of section 203(h)(1)(A) of the Act by properly filing the application
for adjustment of status with the DHS. Additionally, the alien may meet the
requirement by establishing, through persuasive evidence, that an application
he or she submitted to the appropriate agency was rejected for a procedural
or technical reason or that there were other extraordinary circumstances,
particularly those where the failure to timely file was due to circumstances
beyond the alien’s control.

DOS interprets it as a payment of IV Fee bill within one year. See:

http://www.abilblog.com/1/post/2012/01/state-departments-visa-office-tak...

Note this is a separate requirement from the termination of registration requirement for immigrant visa under 9 FAM 42.83 PN1 NO RESPONSE TO THE IMMIGRANT VISA APPOINTMENT PACKAGE OR FOLLOW-UP INSTRUCTION PACKAGE FOR IMMIGRANT VISA APPLICANTS OR REFUSAL UNDER INA 221(G)

http://www.state.gov/documents/organization/87927.pdf

Under 8 CFR 103.2(a)(7), the “receipt date” is the date on which the properly completed petition or application was actually received by USCIS, accompanied by the required filing fee.

(i) General. An application or petition received in a USCIS office shall be stamped to show the time and date of actual receipt and, unless otherwise specified in part 204 or part 245 or part 245a of this chapter, shall be regarded as properly filed when so stamped, if it is signed and executed and the required filing fee is attached or a waiver of the filing fee is granted. An application or petition which is not properly signed or is submitted with the wrong filing fee shall be rejected as improperly filed. Rejected applications and petitions, and ones in which the check or other financial instrument used to pay the filing fee is subsequently returned as non-payable will not retain a filing date. An application or petition taken to a local USCIS office for the completion of biometric information prior to filing at a service center shall be considered received when physically received at a service center. (Amended effective 6/18/07; 72 FR 19100 ) (Amended 6/1/01; 66 FR 29961)

[Q] Assume my family and I obtain CPR status through an EB-5 case, but we have an approved I-130 or I-140 whose priority date is not yet current. If the priority date becomes current, can we adjust at that time and obtain LPR status even though we are in CPR status?

Yes, because obtaining CPR status through an EB-5 case does not make the rights associated with an approved I-130 or I-140 immigrant petition disappear. You might have to submit a form giving up your CPR status though before you can be accorded LPR status via I-485 or IV consular processing based on an approved I-130 or I-140 immigrant petition.

USCIS is saying that their newly-hired economists and examiners want more explanations and justifications from the regional center operators and/or petitioners on why tenants' employees should be counted, and that this request for additional explanations or justifications is not a change in USCIS policy but just a request for more details.

In our opinion, USCIS should just come out and say this request for additional explanations and justifications reflects USCIS' belief that this is a more "reasonable" way of applying input/output methodologies, but the problem is that some of USCIS' requests go beyond normal information supplied in job-creating projects pursued even by the government, and this request for the "excess demand" or request for proof that the subject EB-5 project is not displacing jobs from competitors in the geographic region is frankly a very unrealistic and unachievable requirement. If it's clarity that USCIS wants, it should just clearly say that they will no longer accept tenants' employees as new jobs period because they feel there is not enough nexus. This way, at least there will be no more confusion. Now, no one knows what USCIS wants. Or allow an open communication between USCIS economists and private economists so that they can run by their studies in advance to arrive at a conservative job numbers acceptable to both USCIS and regional centers.

Yes, there have been some regional centers who intentionally or mistakenly misapplied the IO methodologies, but to be honest, both USCIS and regional centers had to go through the process of learning. The EB-5 community is disappointed because USCIS gave no advance warning or explanations on what they expect and then suddenly unleashing RFEs. There seems to be no real communication between USCIS and the EB-5 community.

USCIS has its own info at its official website:

www.uscis.gov/eb-5centers

In our opinion, USCIS should and could do a better job posting more helpful info on EB-5 area, including a FAQ on various issues regarding EB-5.

Yes, as the applicant is deemed to be in nonimmigrant status during the 60 days grace period.

Go to: http://eb-5center.com/overview for an overview. You should always read this section before getting into more detailed info.

Yes, but I rather go with a LP (per Uniform LP Act) as it is specifically mentioned in the reg. Why try to be a hero?

The concept of "material change" always existed in a factual context where immigrant petitions, including I-526s, were pending and not yet adjudicated. In essence, the "material change" concept prohibited an immigration petition which did not comply with the requirements for approval of the immigrant petition from being approved through a fix of the deficiency while the immigrant petition was filed, pending and not yet adjudicated. For example, in context of a U.S. citizen filing I-130 immigrant petition for his alien spouse, if the U.S. citizen petitioner was still married to another woman at the time of filing I-130, then legally, the I-130 cannot be approved. And if the U.S. citizen obtains a divorce during pendency so that the I-130 would now be approvable, the pending I-130 would have to be withdrawn and refiled because there had been a "material change" regarding the specific requirements for the approval of I-130. This concept is very simple and based on common sense; and is represented by Katigbak and Matter of Izumii case.

However, USCIS has -- in our opinion, unlawfully and mistakenly -- morphed this simple concept of "material change" to govern a totally different factual scenario where an I-526 petition has already been approved. Katigbak and Izummi simply do not govern or apply to an I-829 scenario where the I-526 has already been approved. If I-526 has already been approved without misrepresentation, the specific I-829 requirements must control and decide the I-829 conditions removal petition. Otherwise, why have the specific I-829 requirements at all? Now, if anyone disagrees with me up to this point, then there is no possibility that we will agree on further logical conclusions to be drawn.

In some sense, USCIS was forced to come up with this unlawful and mistaken reinterpretation of the concept of "material change" because of another wrong analysis USCIS reached regarding the holding of the 9th Circuit Chang case. The Chang case held that in context of I-829 petition, the petitioner has the right to rely that the I-829 petition will be approved if the terms of I-526 have been followed through. Basically, the Chang court held that USCIS could not apply the changed EB-5 law (the change occurring after I-526 approval but before I-829 adjudication) to the pending I-829. In other words, USCIS could not retroactively apply the changed EB-5 law to deny I-829 when I-526 had already been approved and the terms of I-526 have been complied with substantially.

Now, in support of its holding, the Chang court said that I-829 cannot be decoupled from I-526. However, it should be noted that the Chang court did not hold that if there has been certain change to the terms of I-526 business plan AFTER I-526 approval, the I-829 petition must necessarily be denied. The Chang court said, if I-526 petition terms have been followed through, the petitioner has the right to expect that I-829 will be approved. But this did not mean that if some aspects of the terms of I-526 petition were altered, I-829 should be necessarily denied. It could be denied, or it could be approved -- depending on whether specific I-829 requirements were still met, despite the change. Otherwise, any minor, small change occurring after I-526 approval, would necessarily doom I-829 petition. And the Chang case certainly never meant to support this absurd result. Therefore, USCIS came up with a proposition that only where there is "material change" after I-526 approval, will I-829 be denied. But this means whether a change is "material" or not depends specifically on whether such change makes it not feasible for the petitioner to meet the specific I-829 requirements. If the I-829 requirements have been met despite the change, how can such change be deemed "material"? This is what I am getting at.

Now, all this must lead to a single question: What is the "material change", as opposed to "immaterial change"? The logic dictates that any change is "material" if such change would lead to the petitioner not being able to meet one or more of the very specific I-829 requirements. By definition, if despite the change, all specific I-829 requirements are met, that change can not be deemed "material".

But that's not USCIS' position on this matter. To date, we have not heard USCIS provide a clear rationale on this issue. We sincerely hope that someone at USCIS will see that their position is not supported by the logic or common sense, and that the "material change" concept has no place in a scenario where I-526 has already been approved, because in deciding whether an I-829 petition should be approved or denied, only the specific I-829 requirements should govern and control. Otherwise, there will be no end to the list of what change is material and immaterial.

You have to distinguish between "out of status" and unlawfully present. When you become "out of status" or fail to "maintain your status", you may or may not be deemed to be accruing "unlawful presence". Basically, you have to avoid acquiring unlawfully presence period of 180 days or more, and avoid 3 year and 10 year bars from obtaining any immigrant or nonimmigrant status.

If you cannot maintain your status all the way until you obtain conditional green card, you better talk to an experienced immigration attorney regarding your case because this has serious legal and practical consequences to your future ability to obtain any kind of visa or status (both nonimmigrant and immigrant status).

This is one of the reasons we do not advise any potential EB-5 investors residing abroad to come into US as tourists and then try to start and complete their EB-5 cases.

Relevant regulations state:

(ii) In the case of a high unemployment area:

(A) Evidence that the metropolitan statistical area, the specific county within a metropolitan statistical area, or the county in which a city or town with a population of 20,000 or more is located, in which the new commercial enterprise is principally doing business has experienced an average unemployment rate of 150 percent of the national average rate; or

B) A letter from an authorized body of the government of the state in which the new commercial enterprise is located which certifies that the geographic or political subdivision of the metropolitan statistical area or of the city or town with a population of 20,000 or more in which the enterprise is principally doing business has been designated a high unemployment area. The letter must meet the requirements of 8 CFR 204.6(i).

8 CFR § 204.6 Petitions for employment creation aliens.

(i) State designation of a high unemployment area. The state government of any state of the United States may designate a particular geographic or political subdivision located within a metropolitan statistical area or within a city or town having a population of 20,000 or more within such state as an area of high unemployment (at least 150 percent of the national average rate). Evidence of such designation, including a description of the boundaries of the geographic or political subdivision and the method or methods by which the unemployment statistics were obtained, may be provided to a prospective alien entrepreneur for submission with Form I–526. Before any such designation is made, an official of the state must notify the Associate Commissioner for Examinations of the agency, board, or other appropriate governmental body of the state which shall be delegated the authority to certify that the geographic or political subdivision is a high unemployment area.

[Q] I have a question about the EB5 scheme which I hope you can help with. I do not have $500k cash. However, I do have $500k cash sitting in my personal pension fund for which I can prove that I am the beneficial owner and it has been lawfully gathered. Can I use this cash, via the trustees of the pension fund, to invest in the EB5 scheme to gain a green card in my name?

Although USCIS has not given a definitive guidance on this issue, the answer is probably not, because the pension under the control of the trustee is considered to be another entity, and the investment money has to come directly from you, individually.

Many foreign EB-5 investors want to be able to wire directly from the pension account to an escrow account to avoid tax consequences, but the EB-5 regulations say the investment must be from the investor. You could argue that the pension money belongs to investors, but legally speaking, although the investor has beneficial interest, the trustee has control, so I think USCIS is right about this one.

USCIS has stated:

The Security Exchange Commission (SEC) is the appropriate source to provide guidance regarding whether an entity and/or particular capital investment instrument is subject to SEC regulations. USCIS does not oversee EB-5 Regional Center compliance with SEC regulations. It is important to note that many other federal government agencies are involved in the oversight of business entities and capital investment instruments that are utilized for investments within the United States, to include the SEC. Unlike the Executive Order 12959 requirements regarding USCIS’s assistance with OFAC regulations, USCIS typically has no role in regulating aspects of EB-5 capital investment unrelated to immigration.

USCIS has stated:

Answer: Every EB-5 investor must create at least 10 jobs as a result of his or her capital investment. However, meeting the job creation requirements through job maintenance in a “troubled business” also involves demonstrating that the number of existing employees were maintained at no less than the pre-investment level during the EB-5 investor’s two year period of conditional permanent residence. [See 8 CFR 204.6(j)(4)(ii) & 8 CFR 216.6(c)(1)(iv).]

8 CFR 204.6(j)(4)(ii) reads:

(ii) Troubled business. To show that a new commercial enterprise which has been established through a capital investment in a troubled business meets the statutory employment creation requirement, the petition must be accompanied by evidence that the number of existing employees is being or will be maintained at no less than the pre-investment level for a period of at least two years. Photocopies of tax records, Forms I-9, or other relevant documents for the qualifying employees and a comprehensive business p lan shall be submitted in support of the petition.

And 8 CFR 216.6(c)(1)(iv) reads:

(iv) The alien created or can be expected to create within a reasonable period of time ten full-time jobs to qualifying employees. In the case of a "troubled business" as defined in 8 CFR 204.6(j)(4)(ii) , the alien maintained the number of existing employees at no less than the pre-investment level for the previous two years.

The above regulations show that the number of existing employees to be maintained must be "no less than the pre-investment level for the previous two years", but this is problematic because it is unclear whether the number of employees cannot dip below the pre-investment level. And it is for this reason, I would not advise anyone to pursue a troubled business EB-5 case.

Not really. This is why sometimes you will see USCIS or CSC disavow any answers provided at these EB-5 stakeholders meetings. If you look at any presentations prepared by USCIS or CSC, it reads:

This presentation is intended to provide a guide for discussion at the stakeholders’ meeting and to explain current USCIS policy and practice. It is not intended to be an official statement of USCIS policy, and does not supersede any existing statutes, regulations, or policy memoranda. It is not intended to, does not, and may not be relied upon to create any right or benefit, substantive or procedural, enforceable at law or by any individual or other party in any way.

Basically, the presentation and answers provided at EB-5 stakeholders meetings is supposed to explain how USCIS stands on certain issues, but the problem is, as expressed by many EB-5 practitioners and regional centers, often, the expressed positions stated in these EB-5 stakeholders meetings are not reflected in CSC examiners' decisions or RFEs. This is why many EB-5 practitioners feel that actual CSC examiners who decide EB-5 cases should be present and express their interpretations.

[Q] If 2 investors (me and my friend) invest 1 million dollars each to set up a new restaurant, do we have to create 20 employees (10 employees each) or can we create 10 employees only?

The answer depends on whether all investors in a new commercial enterprise are EB-5 investors. If only you are investing and applying for an EB-5 case, whereas others are investing and not pursuing EB-5 cases, then all jobs created from the new business project can be allocated to you, who are pursuing an EB-5 case.

As an example, if the new business will create 25 full-time jobs from the investment from you and your U.S. citizen or green card holder partners, then you can get credit for all 25 jobs.

See what USCIS said on this issue.

USCIS stated that the investor’s Form I-526 petition must show that the area in which the capital investment has been made qualifies as a “rural” area or an area of “high unemployment as of the date of filing of the Form I-526 petition or the date of the capital investment, whichever occurs first. For additional information regarding the statistics to use in making TEA determinations, stakeholders may contact the Local Area Unemployment Statistics (LAUS) division within the U.S. Bureau of Labor Statistics (BLS) as the BLS has published technical bulletins on this topic.

Moreover, two avenues by which someone can establish an area as a TEA are by providing the statistical documentation directly to USCIS or by obtaining a TEA determination from the state in the area in which the investment is going to be made. In every case, the TEA determination is made as part of an I-526 petition adjudication.

Let's examine the regulatory definition of TEA.

Targeted employment area

means an area which, at the time of investment, is a rural area or an area which has experienced unemployment of at least 150 per cent of the national average rate.

Rural area

means any area not within either a metropolitan statistical area (as designated by the Office of Management and Budget) or the outer boundary of any city or town having a population of 20,000 or more.

According to some EB-5 practitioners, even though the regulation uses the word "or," the USCIS interprets this definition as meaning that an area must be both outside a metropolitan statistical area and have a population of less than 20,000. This means some truly rural areas cannot qualify as TEAs for EB-5 purposes because they happen to be located in a sprawling MSA. If the USCIS refuses to change its interpretation of the definition, Congress should fix the problem legislatively. Personally, USCIS' interpretation seems more convincing here, but the real question is does this reflect the statutory goal, because the regulations are made up by USCIS, and USCIS did not have to define "rural area" in this restrictive manner. I know many areas within populated city or county which is undeveloped and should be considered "rural area".

Again, this seems to be a very restrictive approach. Why take this approach if the underlying purpose of the EB-5 Program is to create jobs. Let businesses create jobs, and the government should interfere as little as possible. Again, it quite doesn't make sense to this author what is the benefit of trying to kick out EB-5 investors who have not committed crimes and who undoubtedly did help the US economy, although may not have met the 10 full-time jobs creation requirement.

Yes, even if EB-5 investors compose a minority portion of all investors (EB-5 and non-EB-5 investors) in the project. Theoretically, even if out of 100 investors only one investor is EB-5 investor, all jobs from the project can be allocated to this single EB-5 project, in which case a single EB-5 investor can be credited with creating 500 jobs or more. This is another way of saying if a project creates 500 jobs, and there was only one EB-5 investor in the project, all 500 jobs could be allocated to this single EB-5 investor for his or her I-829 petition.

Let's see what INA 274B(a)(6) states:

A person's or other entity's request, for purposes of satisfying the requirements of section 274A(b), for more or different documents than are required under such section or refusing to honor documents tendered that on their face reasonably appear to be genuine shall be treated as an unfair immigration-related employment practice if made for the purpose or with the intent of discriminating against an individual in violation of paragraph (1)."

If it can be shown that (a) the employer is requesting documents for a purpose other than satisfying the I-9 requirements of 274A(b), and (b) the request for documents was not made for the purpose or with the intent of discriminating against an individual, then it appears that it would not be an unfair immigration-related employment practice or "document abuse

It seems to me that as long the US employer can show that the USCIS requires this for non-I-9 purpose and non-discrimination purpose, the employer will be insulated from any lawsuits by employees.

Probably not. USCIS stated that its legal position is that municipalities cannot act for a state by issuing high unemployment area designation letters. Specifically, Texas better change its policy to comply with this USCIS position.

No, under the regs, a state cannot designate a specific area as "rural"; they can only provide a designation letter for a high unemployment area.

Yes, in regional center and also troubled business context. In other words, if an EB-5 project is a regional center affiliated and also qualifies as a troubled business, then direct, indirect and induced job numbers created OR saved can make up the 10 full-time positions required.

EB5 or more accurately EB-5 stands for Employment Based 5th category. Basically, it's a 5th (and last) category of all employment-based immigration categories.

More accurately, it is often referred to "employment creation category" or "investor immigrant category", rather than "employment based 5th category", because this category is supposed to create jobs not be employed by a U.S. employer.

We believe if run properly, the EB-5 category can truly help the U.S. economy and U.S. workers by creating much-needed jobs for American workers. Anyway, we do not like hazy and confusing ways to count the jobs created; we believe USCIS has to require a simpler and more transparent job counting methodologies to maintain the integrity of the EB-5 Program.

This new concept was first referred in the Neufeld Guidance Memo of December 2009. Basically, USCIS has left the term to the "when we see it, we will know it" standard. Obviously, this will not work. Logically, one cannot say something is "material", without first asking "in respect to which requirement"? Obviously, the requirements here are the specific I-829 requirements stated in the regulations.

The strange thing is why did USCIS feel the need to bring in this new concept, because either you meet the specific I-829 requirement or you don't.

USCIS is legally wrong to bring the Matter of Izumii case to aid their argument, as this case is completely inapplicable to I-829 situation.

USCIS is also legally wrong to say that this concept existed in the past. However, that's what USCIS is saying. And until USCIS changes its policy (of which there is some chance as USCIS specifically asked for comments on the Neufeld Memo) or there is a court decision stating so, the concept of "material change" will impact I-829 petitions. It's just an unfortunate situation of USCIS missing the ball and muddying the water.

The bottom line is you either met the specific I-829 requirements or you don't. Why does USCIS need to bring in the "material change" concept? You only bring in a new concept when you have no legal basis to deny. That's why.

Matter of Katigbak, 14 I&N Dec. 45 (Comm’r 1971).

Katigbak held that an I-140 beneficiary must meet all requirements specified on her employer’s labor certification application as of the date of the application’s submission. Specifically, the Katigbak case found: You must determine whether the beneficiary has met the minimum education, training, and experience requirements of the labor certification at the time the application for labor certification was filed with DOL. You cannot approve a petition for a preference classification if the beneficiary was not fully qualified for the preference by the priority date of the labor certification.

As you can see, this was a very narrow holding involving a labor certification based I-140 immigrant petition. The Service appears to be intent on applying this case with a very narrow holding to the situations where changes occur AFTER I-526 approvals. That's just a bad reasoning because no one is arguing that I-526 should be approved where the I-526 does not meet the legal requirements at the time of filing. Instead, we are talking about changes that occur due to good faith business necessities or economic factors AFTER I-526 approval, based on the I-526 petition which did meet all legal requirements at the time of submission.

After many years of practicing in the EB-5 area, the best practical answer we can give is "EB-5 law is whatever USCIS says it is UNLESS the Congress or federal court says otherwise." :) Forget a long legalese explanation; this is the best practical definition we can provide.

Yes, legally speaking, neither petition will be adversely affected by the other. This is because H-1B nonimmigrant petition is a "dual" immigrant and nonimmigrant intent -- that is H-1B petitioner may possess an immigrant intent as shown by the submission of I-526 immigrant petition.

Of course, the Child Status Protection Act (CSPA) applies to all family-based and employment-based immigration cases. As you know, EB-5 stands for Employment-based Fifth Category. :)

As usual, USCIS and DOS interpret CSPA narrowly.

For the reasons explained below, we believe there is no legal support under the current U.S. immigration law for the outlined procedure of reacquiring CPR status just given up via Form I-407 by filing I-485 adjustment of status application. What the Memo is espousing is in fact a violation of the U.S. immigration law.

The December 11, 2009 Neufeld Memorandum states that the conditional resident who abandons his or her conditional residence via Form I-407 is eligible to adjust status to a new two years period of conditional residence. But upon detailed examination, this position appears not to have legal support.

First, INA Section 245(f) prohibits the adjustment of status of an alien lawfully admitted for conditional residence under Section 216A -- which presumably includes any aliens who initially obtained CPR status under Section 216A, even if the CPR status was abandoned through submission of Form I-407 -- but in Matter of Stockwell, 20 I & N Dec. 309 (BIA 1991), the Board has interpreted the implementing regulations (8 CFR Sec. 245.1(c)(5)) as allowing adjustment of status to those aliens whose conditional status have been terminated, which presumably supports the underlying assumption in the Neufeld Memo that if the investor abandoned his CPR status via Form I-407, then he can adjust again to reacquire the new CPR status.

But the problem with the above argument is that INA Section 245(c)(7) prohibits adjustment of status for any alien seeking adjustment under employment based categories and is not in a lawful nonimmigrant status. In essence, the adjusting alien must have a lawful NONIMMIGRANT status in order to adjust, but if the alien gives up his CPR status, which is NOT a nonimmigrant status anyway, where is the lawful NONIMMIGRANT status required for adjustment of status? There simply is no lawful nonimmigrant status from which to adjust status. By filing I-407 concurrently with the new I-485 adjustment of status application, the alien may be in a lawful immigration status, but the alien certainly is not in any lawful NONIMMIGRANT status, which is a clear requirement.

Lastly, from a practical perspective, USCIS examiners looking at the new I-485 adjustment of status application will probably deny such I-485 application under the existing immigration laws governing I-485 adjustment of status, no matter what the Dec 11, 2009 Neufeld Memo says. After all, the Neufeld Memo is not a law, as the Memo states at the end.

This shows you that the procedure outlined in the Dec. 11, 2009 Neufeld Memo lacks legal foundation. Basically, you can't carry out what is outlined in the Memo without violating the existing U.S. immigration law!

[Q] Two questions. Can two individuals join and invest 100% of either $500k or $1m as single investment entity and would such investment still be valid to qualify for EB5?

Let's say it's a TEA case, and the requisite capital investment amount is $500,000. Two EB-5 investors cannot together come up with this amount; neither investor will satisfy the capital investment amount. An easy way to understand is to realize that both the capital investment amount and job-creation requirement must be met by each EB-5 investor, separately.

[Q] Sometimes, EB-5 projects may encounter delays to projects caused by various factors that make it tough to create jobs within 2 years of CPR period. Will this be deemed a "material change" under the December 11, 2009 Neufeld guidance memo and therefore require a new, 2nd I-526 filing?

Yes, if one chooses to accept the argument that "material change" after I-526 approval must require a new, 2nd I-526 petition filing. However, USCIS has not explained why is some change "material" in respect to what I-829 requirement and why? The memo appears to not set forth a clear standard for determining what changes are indeed "material" -- to what? Or why a simple amendment to the already-approved I-526 cannot be a solution.

USCIS should not say some change to the project after I-526 approval is material without first explaining how and why such change is material to what specific requirement of I-829.

[Q] I am planning on doing a direct, individual EB-5 case based on a lowered $500,000 investment in a rural area, i.e. TEA qualification. I am planning on investing $200,000 of my own money and coming up with the remaining $300,000 from a collateralized bank loan. Is this permissible?

It all depends on which asset is used to collateralize the loan of $300,000 from the bank. If the underlying EB-5 investment asset was used as a collateral to obtain a loan of $300,000, then forget it -- you can't do it. But if your own personal asset, such as your house, was used as a collateral to obtain additional $300,000, then that would be fine.

Rationale: The definition of permissible "capital is defined in such a way to exclude any loans obtained using the underlying EB-5 business as a loan collateral or security.

[Q] As per the new EB 5 guidelines contained in the December 11, 2009 Neufeld guidance memo governing "material change", I may need to apply for a fresh I-526, and once this gets approved I need to abandon my CPR using form 407 and reapply for adjustment of status again. My question is what would be my status after abandoing of CPR and waiting for adjustment of status the second time around? Can I live and work here legally while waiting for adjustment of status the second time around? Also I read somewhere that you cannot apply twice for adjustment of status under INA 245(a) - if so what does one do?

First, in the event you accept the validity of the Neufeld memo as the correct application of the EB-5 law AND you accept the fact that there was "material change" -- which USCIS has not explained or defined clearly -- then yes, you may file a new, second I-526 immigrant petition and file I-407 to give up the existing CPR and then submit a new I-485 to acquire a new CPR. Your status would be the same status you would have whenever someone files I-485 -- which is legal status which allows you to work and travel as long as you apply for EAD and Travel Permit.

Presumably, USCIS allows an alien who entered the U.S. as a CPR to adjust under 245(a) because he or she gave up the CPR.

[Q] Let's say a troubled business has 50 jobs, and 4 alien EB-5 investors invested and saved 40 jobs, will all of them get their permanent green cards?

Common sense would say "Of course." However, according to a recent EB-5 stakeholders meeting, USCIS orally "opined" that all of a troubled business’ jobs must be saved in order for any investor to qualify for condition removal. In other words, if a company has 50 jobs, and the investments of 4 investors saved 40 jobs, none of the 9 investors would get I-829s approved, since all in effect 10 jobs were lost.

Folks, this interpretation, if really true, is not only against common sense, but practically makes EB-5 cases through a troubled business impossible. We sincerely hope that USCIS "corrects" or clarifies its opinion on this matter.

Again, where is the statutory or regulatory support for this "opinion"? Oh yes, USCIS is sort of correct if they take the position that "there is nothing in the statute or regulation which specifically says otherwise." But then, there is nothing in the statute or regulation which supports what USCIS says. On the other hand, their "opinion" on this issue goes against the common sense and policy of EB-5 Program. Yes, let's allow the troubled business to go down under and not even try to save some jobs. This kind of policy promotes inefficiency: why should alien EB-5 investors save all jobs when they can operate the troubled business with less than all jobs?

This is why we inform any potential EB-5 investors trying to do an EB-5 case through a troubled business, we tell them to think twice.

Answer: If the petition was denied, then it is not possible to submit the second petition. If it remains pending, you can submit withdrawal of the I-829 along with the second I-526.

Source: CSC Stakeholders Meeting on April 28, 2010 at Laguna Niguel California.

[Q] I’m currently on F-1 visa status, and am planning to marry my boyfriend (who is also on OPT status in the US) in the next few months. Can we file our application together with me as the principal applicant, and my boyfriend as the dependant? Do we have to get married before we submit the EB-5 application, OR can we get married after the application has been submitted, and is under review?

Under the general U.S. immigration law, you don't have to marry your boyfriend BEFORE you submit the I-526 immigrant petition in order to include him in your EB-5 case; but you do have to marry him before you obtain immigrant visas. However, practically speaking, to avoid a delay in the processing, I would just marry before submitting the I-526 immigrant petition.

No, I guess USCIS does not want to encourage people from working in out-of-status.

No, not unless they are divorced, or the principal applicant is dead. This can create all kinds of sticky situations for attorneys and everyone involved.

No, the two concepts are separate and different. An EB-5 project can be regional center based but require $1 Million USD investment. Any EB-5 project must be one of below four categories.

1. Non-regional center based and non-TEA: Only direct, full-time positions can count, and $1 Million USD investment required per each EB-5 investor.

2. Non-regional center based and TEA: Only direct, full-time positions can count, and $500,000 USD investment required per each EB-5 investor.

3. Regional center based and TEA: Direct, indirect and induced positions can count, and $500,000 USD investment required per each EB-5 investor.

4. Regional center based and non-TEA: Direct, indirect and induced positions can count, and $1 Million USD investment required per each EB-5 investor.

Having said this, almost all of regional center based EB-5 projects are TEA projects to take advantages of the benefits offered under both concepts.

[Q] Dec 11, 2009 Neufeld guidance memo discusses "material" changes to EB-5 projects AFTER I-526 petition approval that make I-829 conditions removals fatal and therefore, require new, additional I-526 filings, in addition to longer CPR status. What are the legal differences between "material" and "immaterial" changes to EB-5 projects?

This is big "black hole" issue which has not been well articulated by USCIS/CSC and needs to be addressed quickly.

In our opinion, if one reviews I-829 requirements carefully, the only "reasonable" conclusion that can be reached is that only those changes to the EB-5 project -- after I-526 has been approved -- which would be fatal to meeting I-829 requirements should be considered to be "material" changes -- and therefore require filing of new, additional I-526 petition. Any other changes should be considered "immaterial" and I-829 petition submitted which contains any "immaterial" changes should be reviewed and approved, without subjecting the case to go through another filing and approval of I-526 petition -- and also without subjecting petitioner to undergo additional CPR time periods.

It's an entirely different story if the changes occur before I-526 is approved, or while I-526 is pending.

No, you can't use 245(k) to adjust in the U.S. based on approved I-526 immigrant petitions.

Only aliens in the following preference categories are eligible to take advantage of Section 245(K) if you otherwise meet the conditions mentioned above:

* Employment-Based First Preference (EB-1) – All priority workers.
* Employment-Based Second Preference (EB-2) – Professionals with advanced degrees or aliens of extraordinary ability (National Interest Waiver).
* Employment-Based Third Preference (EB-3) – Skilled workers, professionals or other workers.
* Employment-Based Fourth Preference (EB-4) – Religious workers (only).

The section also applies to spouses and children of eligible aliens.

As stated above, INA 245(k) allows some aliens, who are eligible for permanent residence based on a family relationship or job offer to become lawful permanent residents (with green cards) without leaving the United States. Most aliens who have entered the United States without being inspected, overstayed their visa or otherwise violated the immigration laws of the United States in some way, are unable to adjust status to lawful permanent resident without leaving the United States.

Unfortunately, EB-5 category is not covered as one of the classifications allowed to use 245(k). We do not know what the rationale is in excluding EB-5 category from the benefit of 245(k) though.

Dependents would also lose their conditional PR status also. Until the Principal Applicant obtains permanent green card status, dependents' status depends on PA's status.

[Q] If an alien investor makes requisite investment into a business and turns 12 part-time positions into 12 full-time positions, will this count as more than 10 full-time jobs?

Interesting question. We think (we are not sure as CSC has not answered this one definitively) that CSC would say "no", because they would argue that these were existing part-time positions which got "upgraded" to full-time positions and therefore, they are not "new" jobs. However, one can easily argue that even though the existing part-time jobs were NOT "new", full-time jobs are indeed "new".

Again, one can make a strong argument that there is nothing in the EB-5 statues and regulations prohibiting this kind of "full-time" jobs from being counted, but here is the problem: USCIS can also argue there is nothing in the EB-5 statues and regulations that says you can do this. Who's right? We believe where the issue is grounded in real life situation, and relevant EB-5 statues and regulations do not prohibit specifically, USCIS should follow practical approach and count this kind of full-time jobs.

Does this make sense? We do not think so. Anyway, this question should be posed to CSC directly.

The reason why we believe EB-5 Program has not reached its potential is precisely because there is no clear guidance on this type of questions. It's weird when the EB-5 Program has been in existence for over 15 years but to date, there has been no answers to these kinds of important questions. We, as EB-5 practitioners, should not be timid about asking this type of questions.

[Q] Potential EB-5 investor client is going to establish a new (2010) corporation. His new corporation plans to purchase a nursing home, which has been in business since the 1970s. Based upon my reading of the relevant case law (Matter of Soffici), it is the age of the nursing home operation in question that is controlling, and not the fact that this new corporation was formed in 2010. It appears that USCIS could argue that this will not be a "new" commercial enterprise because the nursing home was in operation prior to 1990.

We believe that USCIS will rule that this is not the "new" commercial enterprise. We believe there was AAO case law on this. Also, common sense would dictate this conclusion. Therefore, unless there is a requisite "expansion" or "restructuring", no "new" commercial enterprise has been established. Basically, under the EB-5 law, "restructuring" is a very hazy concept which USCIS has not bothered to clarify; therefore, it's best to avoid any "restructured" EB-5 project. Also, when it comes to proving "expansion", not that easy in practice.

Even if the above structure qualifies as a "new" commercial enterprise, as readers of the www.eb-5center.com site knows, additional jobs must be created in addition to any existing jobs.

[Q] EB-5 Investors (each with $1 million or more to invest)want to invest with me to form a new direct EB-5 investment company whose business will be to make direct loans to other businesses that will have job creation enough to reach 10 new jobs per investor. Can this new business loan company be structured as a direct investment for the EB-5 Investors?

No, you cannot, because direct, individual EB-5 cases require jobs to be created directly. Jobs that are created by making loans to job-creating business(es) are all indirect and/or induced jobs.

[Q] Imagine a situation where a current E-2 investor has 3 companies in which he has invested approximately $400K in each (total $1.2 million investment). He is the 100% owner of all 3 companies. One of the companies owns the job-creating business, let's say a car wash, which already created 10 full-time positions. The other 2 companies own real estate leased to the business. The investments were made several years ago.

To try to qualify for EB-5 case, can the investor form a holding company in which he would be 100% owner, and then transfer all of his shares in each of the 3 separate companies to the holding company? In this way, there would be one holding company and the 3 corporations would be wholly-owned subsidiaries of the holding company. Would this structure comply with the definition of commercial enterprise at 8 CFR 204.6 and, as a result, allow all investments in the 3 separate companies to be pooled for purposes of showing $1m investment?

This is an interesting question and happens more often that one thinks.

Now, EB-5 law says one holding companies which wholly-owned subsidiaries can be treated as a New Commercial Enterprise for EB-5 purpose. Also, the investment and jobs created in the past can qualify for EB-5 case, as long as the jobs are maintained for a new CPR period after I-526 approval. However, we would not take the case if we were the processing attorney for the following reasons:

1. CSC could argue that not all $1 MM (assuming this is a regular, non-TEA EB-5 case) went towards the job creation. In the instant case, only $400,000 was applied towards the job-creation, and that the remaining two companies (now wholly-owned subsidiaries) did nothing.

2. CSC could argue that since you materially change the original structure, you now have to make an entirely new investment.

All of the above arguments that could be made by CSC might not be practical or fair, but they could and will likely make those arguments and deny your EB-5 case. No, we would not take the above case, given this possibility.

In a direct EB-5 case, the answer is "no", because the underlying new commercial enterprise must create jobs directly, and only for-profit entities can be new commercial enterprises. However, in a regional center EB-5 case where a new commercial enterprise is engaged in making loan(s), i.e., Izumii case, borrower entity creating jobs can be a non-profit organizations such as museums and non-profit hospitals or churches.

{Q} Would a loan backed by future cash flows qualify? Can an EB-5 investor argue that the loan is collateralized by his business which generates the future income? Basically, does this loan qualify as "capital"?

In our opinion, USCIS will have some issue with this arrangement, because basically this loan is given on the borrower's good credit or name. It's like Bill Gates going to any bank and getting a loan purely based on his perceived ability to make money. What is a loan collateralized by personal asset is sometimes a grey area, because one could argue that one's good name is personal asset also.

[Q] USCIS requires that the EB-5 petitioner, a holding company that owns a restaurant 100% (the job creating entity), show that it has made the full amount of money available to the restaurant, per Izumii. Izumii does not define what "make available" actually means. Are there cases or memos that define what it means for a holding company to "make available" the full amount of money to its wholly owned job-creating entity?

There is no other case or memo, although it is true that the full amount of money must be made available to the entity most closely related to the job-creation. The best guidance for the phrase "make available"is dictionary definition and common sense: either loan (in case of regional center based EB-5 project), invest, give or provide money to the job-creating entity, i.e., restaurant subsidiary in this case and use it some way towards the job creation.

You must have a nice friend. :) The EB-5 regulations state that the capital must have been obtained "through lawful means." 8 CFR 204.6(j)(3). Therefore, the emphasis of proof should be on showing that the giver of this gift made money "lawfully", rather than showing that the gift tax was paid.

It should be noted that different countries have different laws about gifts. Some countries do not impose tax on gifts, while some countries require receivers, rather than givers, to pay tax on the gifts.

[Q] Can an I-526 be filed and approved based on the requisite investment and 10+ job-creation in or by a new commercial enterprise where both the investment and the job creation took place 4 or 5 years in the past, without having to create additional jobs after the I-526 petition is approved? Also, if the answer is "Yes", do the previously created 10+ jobs have to be maintained during the conditional resident period for the I-829 to be approved?

USCIS Answer: Yes, the jobs created a number of years ago still count, and yes they must be maintained during the conditional resident period.

If the new commercial enterprise entity just changes its name and EIN number but remains the same in other respects, USCIS will accept the entity as the same entity, but if any additional changes are involved, USCIS will decide on case-by-case basis.

Having said this, we have seen situations where USCIS or AAO will not accept the successor-in-charge concept, so realize that the EB-5 law as understood by USCIS varies among examiners.

According to USCIS, at the time of filing (not at the time of investment) I-526 petition. Even if TEA designation changes in future, it's OK, as long as this initial requirement has been met.

Note USCIS later clarified the controlling time as either the filing date or time of investment, whichever is earlier. Where an escrow mechanism is used, the controlling point of time is when I-526 petition is filed, but if no escrow is used, it's time of capital investment. See Dec 11, 2009 Policy Memo, pages 16 to 17.

The above position seems to have changed, as USCIS stated most recently during the January 23, 2012 Q & A meeting the following:

TARGETED EMPLOYMENT AREAS

Q: Please clarify whether a TEA exists only for a specific application, allowing geography to change to meet investment need or if a TEA in a metropolitan area is set for a period of time (one year from approval) making the TEA community sensitive.

A: The following is taken directly from the December 11, 2009 policy memo, Adjudication of EB-5 Regional Center Proposals and Affiliated Form I-526 and Form I-829 Petitions:
“If the regional center proposal bases its predictions regarding the number of direct or indirect jobs that will be created through EB-5 investments in the regional center, in whole or in part, by offering investment opportunities to EB-5 investors with the reduced $500,000 threshold, then the Targeted Employment Areas (TEAs), Rural Areas (areas with populations under 20,000 people) and areas of high unemployment (areas with unemployment rates 150% or more of the national rate), should be identified.

Note: An alien filing a regional center affiliated Form I-526 must still establish that the investment will be made in a TEA within the regional center at the time of filing of the alien’s Form I-526 petition, or at the time of the investment, whichever occurs first, to qualify for the reduced $500,000 capital investment threshold.” Therefore, the current policy is Form I-526 specific; i.e., each alien investor must demonstrate that his/her investment has been made or is in the process of being made within an area of high unemployment as part of the Form I-526 process.

It's a form used to give up one's permanent residence status in front of a consular office at the American Embassy abroad. Under the U.S. immigration law, a permanent resident can "give up" his or her permanent residence at the American Embassy by giving a written affidavit statement.

[Q] Many USCIS Field Offices refuse to stamp passports of people who have pending I-829s with temporary evidence of permanent resident status with I-551 stamp, on the ground that I-829 receipt notice should suffice for work and travel purposes. However, this view does not take into account the fact that CPB often wants to see temporary stamps. Will you issue a memo to all USCIS Field Offices telling them that all pending I-829 applicants should get their permanent resident stamps in their passports?

In USCIS' own words:

USCIS is in the process of updating the language regarding this issue on the Form I-829 receipt notice which will resolve this issue.

[Q] If an I-829 petition is denied because of a determination that the jobs will not be created within a reasonable time or because the investor was not aware of the need to file an amended I-526 petition, will the investor be placed into removal proceedings in order to renew the I-829 before an immigration judge? What are USCIS’ procedures to place an EB-5 investor in removal proceedings? We have heard stories of EB-5 investors waiting months before a notice to appear is issued. During that time, what is the investor’s status until the removal proceedings are initiated? If the investor or a family member is outside the United States, what document will be issued to enable the investor or family member to be reunited with the remainder of the family or to appear in the removal proceeding?

USCIS' answer:

In accordance with 8 CFR 216.6(d)(2), if after review of the petition, the director denies the petition, he or she shall place the investor in removal proceeding by issuing a Notice to Appear (NTA). The investor may seek review of the petition during removal proceedings. Petitions are sent to CSC’s NTA unit after the denial of the petition. The NTA unit prepares the NTA and issues it to the investor via mail. The investor's lawful permanent resident status and that of his or her dependent spouse and children are terminated as of the date of the director's written decision. Generally an NTA is not issued if USCIS determines that an investor or a family member is out of the United States and their status is terminated. If an investor or a family member is out of the United States at the time that their status is terminated, then he or she will be put into removal proceedings at the time of their application for admission. An alien investor retains conditional resident status and is entitled to proof of that status while he or she obtains review of the USCIS termination in removal proceedings.

[Q] An EB-5 investor invests in a company that operates several retail outlets. The company’s headquarters office is in a designated TEA, but the retail stores directly owned and operated by the company are not in TEAs. Assume 5 jobs will be created in the headquarters location and 5 jobs will be created at retail stores that are not in TEAs. How much money must the investor invest: $500,000 or $1 million?

This is what USCIS stated on this issue.

This question cannot be answered in the abstract without a clear presentation of the facts in the record of proceeding. Whether a particular case with this fact pattern can be approved is dependent upon a review of the specific evidence of record.

Actually, in our opinion, USCIS did not need to hedge their answer. In our opinion, the answer would be "no" based on the USCIS' past rationale on a similar issue and the Izummi precedent AAO case, because the entity closest to job-creation are retail stores and they must be located in TEA; otherwise, the requisite investment should be $1 MM case.

[Q] Pursuant to 8 C.F.R. § 204.6(i), please confirm that a targeted employment area (TEA) may consist of a geographic area designated by a governor's delegate, that is described by a collection of wards, census tracts, and/or other political descriptions (such as sets of city blocks), even when the precise location of a particular commercial enterprise is located in a ward or census tract that does not by itself have an unemployment rate of 150% of the national average.

Because this question is very important, USCIS' answer is quoted below in its entirety.

The regulation at 8 CFR 204.6(i) provides that a state government may designate a particular geographic or political subdivision located within a metropolitan statistical area or within a city or town having a population of 20,000 or more within such state as an area of high unemployment (at least 150% of the national average rate.) The following reasoning for involving states in this process was noted in legacy INS’ final rule implementing the initial EB-5 regulations, Employment-Based Immigrants, [56 FR 60897]:
Twelve commenters called for the Service to change the definition of targeted employment area. The Service cannot, of course, alter the statutory definition of targeted employment area. The Service has concluded, however, that the designation of smaller geographic or political areas within metropolitan statistical areas or within cities or towns with a population of 20,000 or more as areas of high unemployment would comport with the intent of Congress regarding targeted employment areas. [emphasis added]

This part of the rule contains a method for the designation of such geographic or political areas as areas of high unemployment. Under the final rule, a state government may delegate to any agency, board, or other appropriate state governmental entity the authority to certify that geographic or political subdivisions of non-rural areas within the state qualify as areas of high unemployment. The delegation must be reported to the Immigration and Naturalization Service through the Associate Commissioner for Examinations prior to the issuance of any area designation. The evidence of such area designations that a state provides to a prospective alien entrepreneur should include a description of the boundaries of the geographic or political subdivision and the method or methods by which the unemployment statistics were obtained.

This part is not intended to place any unnecessary burden upon any state. With respect to geographic and political subdivisions of this size, however, the Service believes that the enterprise of assembling and evaluating the data necessary to select targeted areas, and particularly the enterprise of defining the boundaries of such areas, should not be conducted exclusively at the Federal level without providing some opportunity for participation from state or local government. This part of the rule is merely intended to afford the states a method by which particular areas of high unemployment within their boundaries may qualify as “targeted,” and to allow alien entrepreneurs the opportunity to invest in such areas under the targeted employment area guidelines, including lowered investment amounts.

Based upon the reasoning provided in the final rule, state-issued TEA designations under 8 CFR 204.6(i) must be in accordance with the statutory definition of targeted employment in INA §203(b)(5)(B), which requires that a targeted area either be “rural” or an “area of high unemployment.” Further, 8 CFR 204.6(i) does not provide states with the authority to make TEA designations regarding whether a certain area qualifies as “rural”. Any state TEA designation must involve the assembly and evaluation of data in a manner sufficient to arrive at a defensible finding of high unemployment within the bounds of the area to be designated in a manner that is in keeping with the statutory requirement. That is why 8 CFR 204.6(i) provides that state designations be accompanied by a description of the boundaries of the geographic areas, and explain the method or methodologies by which the unemployment statistics were obtained. While state governments clearly have the authority to make TEA designations, states governments do not have the authority to designate areas as high unemployment that do not in reality qualify as a targeted area under INA §203(b)(5)(B).

It appears that this question solicits confirmation from USCIS that state-sanctioned attempts to “gerrymander” a finding of high unemployment that is not in accordance with the statutory requirement, through the cobbling together of various portions of political subdivisions so that an investment in a commercial enterprise in a location that is not a high unemployment area would ultimately qualify as one, is an acceptable business practice for EB-5 purposes. On its face, this supposition blatantly frustrates the congressional intent behind INA §203(b)(5)(B). As such, USCIS cannot confirm that this is an acceptable business practice for states to use in making TEA designations.

Whew . . . a long answer, huh? Whenever an answer is this long, that means they want to hedge both ways: they want to allow and disallow . . . at the same time.

[Q] Can an EB-5 investor use funds unrelated to the EB-5 investment to purchase insurance from a third party (e.g., Lloyd’s of London) in which insurance proceeds would be paid to the investor if the commercial enterprise fails to repay the investor? Assume the third party is unrelated to the commercial enterprise or a regional center.

Let me quote USCIS' answer to this particular question in its entirety, because this issue opens up interesting stuff.

Yes, as long as the alien investor’s capital is “at risk”, and the indemnity policy does not constitute a redemption agreement or a guaranteed buy-back arrangement for the alien investor’s investment in the commercial enterprise. A determination as to whether a specific indemnity policy is contrary to the statutory and regulatory requirements has to be made on a case-by-case basis.

USCIS, to make sure that EB-5 investors do not rush into buying insurance (assuming they can get an insurance for this kind of thing), states that a "case-by-case basis" determination will be made. This kind of language usually means: "It's legally possible but we don't think it's a good idea."

We would not be surprised to see this arrangement being attempted in near future.

CSC takes the position that such relocated jobs cannot count. Their rationale is as follows:

This question asks that if a large architecture firm moved offices from New York City to San Francisco, would those relocated jobs count for EB-5 purposes since San Francisco would benefit from an increase in jobs? The answer is no, because jobs that were in existence prior to the alien investor’s capital investment into the commercial enterprise cannot be credited towards the requisite creation of 10 jobs per each alien investor.

This is a curious answer given the fact that USCIS readily admits that

USCIS is unaware of any statutory or regulatory requirement, or of any vetted and published policy guidance that addresses the “discounting of relocated jobs” within a regional center’s economic analysis.

Basically, USCIS had an opportunity to choose a more practical position, but it simply chose to stick to a position which does not jibe with the real world needs, perhaps fearing that it would not have the means to check whether such relocation was truly necessary due to bona-fide business reason.

We believe a federal court will not agree with USCIS on this issue. Common sense wise, if a job is "new" to SF, and there was a bona fide business reason why the relocation was necessary, and there is a nexus between the alien investor's investment in SF and the "new" jobs being relocated to SF, then all EB-5 requirements have been met. Really, the heart of the issue goes to whether the jobs are "new" from the perspective of the United States, or are "new" from the perspective of SF, the underlying region. Where USCIS already stated that indirect jobs created outside the underlying region cannot count towards I-829 petition, it seems incongruous or illogical to state that the jobs relocated into the region should not count: if the jobs are "new" to the underlying region, and such relocation was due to bona fide business reason, then the relocated jobs should count as "new" to the underlying region.

Of course, disagreeing with the USCIS is one thing; spending a lot of money and time to fight USCIS is an entirely different matter.

[Q] Can an EB-5 investor purchase an existing business created AFTER November 29, 1990, and not have to expand or restructure this business and still qualify it as a "new" commercial enterprise?

Yes, because of the Section 11036 of the 21st Century Department of Justice Appropriations Authorization Act, Public Law No. 107-273, the alien investor does not have to have been involved in the creation of the existing commercial enterprise as noted above. Moreover, the alien’s investment would qualify without the need to show that the “new” commercial enterprise was “expanded” or “restructured/reorganized” under 8 CFR 204.6(h)(2) and (3).

However, the alien EB-5 investor still has to create the requisite 10 full-time employment.

Therefore, an EB-5 investor can purchase an existing business, as long as the business was established AFTER November 29, 1990, and meet the "new" commercial enterprise requirement; but the investor still has to create ten, new jobs, and cannot rely on the existing jobs.

By the way, CSC will not like the buyer-investor purchasing just assets (excluding existing employees) and then rehiring the same laid off employees.

In context of a regional center based EB-5 project where a new commercial enterprise engages in making loan(s) to job-creating businesses, while a non-profit cannot act as a new commercial enterprise entity (NCE), as the very definition of NCE precludes non-profits, a NCE can pool money and loan such pooled funds to non-profit which creates jobs. Why, simply because there is no prohibition, and jobs are jobs whether created by a non-profit or a profit entity. For example, a limited partnership can be set up to pool investors' funds and then loan such funds to a non-profit arts organization to construct a museum in a regional center geographic area.

The answer is "no". Don't try it, even though such action would save a lot of tax for the EB-5 investor. USCIS or CSC will deny your case. Their current position is that any transfer of money into a new commercial enterprise other than from the EB-5 investor's personal bank account does not comply with EB-5 law. We do not know if USCIS will allow transfers into a new commercial enterprise from a trust in which the EB-5 investor is a beneficiary.

The key is not get too creative, or you will get slammed.

[Q] EB5 Question regarding the targeted employment areas – the regs require that the investment must be made in a new commercial enterprise in a “targeted investment area”. And the definition of targeted investment area is defined by having a high unemployment rate or you also have rural area. Question – for the 10 employees – do they have to be in the same area or if the business in located in the TEA or Rural but jobs are somewhere else? I am thinking that by the definition of TEA and Rural, this would be circumventing the intent of the law?

I assume this is a non-regional center but TEA EB-5 case. The answer is "yes". Since this is a non-regional center EB-5 case, only direct jobs would count; therefore, those direct jobs created should be in the underlying TEA area in which the new commercial enterprise is located in. Otherwise, you can have a new commercial enterprise located in Hawaii and the jobs created in California. USCIS would not like that too much.

Each investor in a “troubled business” must show that the investment will save ten jobs. Therefore, 4 more jobs must be created. Basically, although 6 full-time jobs can be saved, 4 more full-time positions must be created. An EB-5 project involving a "troubled business" may offer some advantages, but from a marketing point of view, potential alien investors are afraid of investing in any business that is considered to be "troubled".

A flippant but not a false answer is "EB-5 law is whatever USCIS decides the EB-5 law is." There are certain broad EB-5 statutes and USCIS regulations promulgated pursuant to these statutes, plus precedent AAO decisions, guidance memos and some federal court cases. The problem is that there is no clear guidance on many of the issues arising from real-world scenarios. Also, if USCIS ever decides to construe adjudications of cases strictly, more denials will occur. Because the EB-5 law is not very clear aside from some basic requirements, you almost have to sacrifice the business side of the new commercial enterprise in order to satisfy the I-829 requirements.

Having said this, there have been some important improvements and efforts made by USCIS in the EB-5 area during the last 5 years, but not enough and not fast enough. Oh well, I sound like a broken record . . .

[Q] I invested over $1 Million USD in two coffee shops and one restaurant several years ago and obtained E-2 visa. I am operating two coffee shops via Corporation A, and one restaurant via Corporation B, both of which are owned by me 100%. Coffee shops created 3 new full-time jobs, whereas the restaurant created 9 full-time new jobs, even though $800,000 USD was invested in the two coffee shops, while $400,000 was invested in the single restaurant. Can I now form a holding company with two subsidiaries and apply for direct individual EB-5 case?

The relevant issue is as follows. Although it is permissible for the fund to be invested in different businesses and different businesses created different number of jobs, this holding company (to be considered a new commercial enterprise) is contemplated to be formed "after the fact", and the holding company did not exist at the beginning of the investment period. Therefore, my answer would be no.

If the holding company had been formed before the relevant facts have transpired and then the two subsidiaries were formed, received funds and then operated the respective businesses, then the answer would be "yes", but that's not the case here.

People might disagree on the answer, but in our opinion, USCIS denied a majority of I-526 petitions during this "black" period for EB-5 Program primarily for two reasons. First, they did not believe jobs were being created in the applicable region. Second, promissory notes were being used so that eb-5 investors were not investing that much money to begin with, i.e., often deposited around $125,000 of the requisite $500,000 USD and carried the remainder on a promissory note. Third, limited partnerships contained provisions stating that it would guarantee payments, etc.

Like any new program, there were some new programs that just "bent" the rules too much, and honestly, USCIS had also issued inconsistent or conflicting guidelines. This is why USCIS does not want to make the same mistake again and is now being very sensitive about making sure any guidance memos they issue are at least consistent and comply with their interpretation of the EB-5 statutes.

[Q] USCIS recently stated during June 2009 stakeholders teleconference that it is in the process of drafting and releasing several guidance memos on various important EB-5 issues. When will such guidance memos be released?

No one knows. We don't even think USCIS itself knows because they are very busy, and they need to think through very carefully before they release anything. Also, such guidance memos need to be reviewed by many USCIS officers and revised before they can be released. Based on how long USCIS took to release the first guidance memo -- the Neufeld memo of June 2009 -- we would not be surprised if it takes several years for next 3 or 4 guidance memos to be released. There is some chance that EB-5 statutes might be amended before then. :)

There is a regulatory provision which specifically prohibits a new commercial enterprise from non-commercial activity such as owning and operating a personal residence. Although legally speaking, you would be using the houses for commercial activities in housing your employees and customers, I would make sure not to count the houses in the capital amount of your investment. It would all depend on the individual examiner reviewing and adjudicating your I-526 and I-829 submissions, but spending 80% of the requisite investment amount towards the purchase of a house (used for whatever purpose) will not look good and raise suspicions all over the place.

Commercial enterprise

means any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to, a sole proprietorship, partnership (whether limited or general), holding company, joint venture, corporation, business trust, or other entity which may be publicly or privately owned. This definition includes a commercial enterprise consisting of a holding company and its wholly-owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business. This definition shall not include a noncommercial activity such as owning and operating a personal residence.

The word "new" in the context of "new commercial enterprise" is defined as any commercial enterprise formed after November 29, 1990. If the commercial enterprise is formed before this date, then to fall within the definition of "new", the existing, i.e., already-established commercial enterprise must be "restructured" or "expanded". No one is sure what is meant by "restructured"; therefore, proceeding through a "restructured" case is not recommended.

The "commercial enterprise" is defined as "any for-profit entity formed for the ongoing conduct of lawful business." Therefore, a limited partnership or corporation can and does qualify as a new commercial enterprise.

[Q] Does the amount of tax I pay during the 2-year CPR period affect my I-829? I ask this is because I'm planning to transfer the ownership of my current company abroad to one of my parents before I become a CPR.

No, the approval of I-829 and the U.S. tax obligations are two separate matters. Tax planning, where appropriate, is recommended in advance of obtaining CPR status.

We have no doubt that these cases will be scrutinized more closely from both security and lawful source angles, although there is no formal words from USCIS stating such; and I don't think USCIS will ever make such formal statements. Having said this, there is no prohibition on Iranian EB-5 cases and they are doable. Following links are relevant to Iranian EB-5 cases:

http://www.bis.doc.gov/policiesandre...tions/Iran.pdf

http://www.ustreas.gov/offices/enfor...ran/iran.shtml

Another helpful resource is: 31 C.F.R. Section 560 and Appendix A to part 560

[Q] Several years ago, I invested $1 MM in direct, individual EB-5 case. I filed I-829 and I believe it will be denied for fialure to create 10 full-time jobs because I only created 3 or 4 jobs. What can I do at this point?

Our advice is that you immediately sit down with your current EB-5 attorney or with another EB-5 attorney and figure out what are your options. Do not wait until you get a I-829 denial to do this because it may be too late by then: You will be deemed to be "out of status" upon your receiving a I-829 denial notice from USCIS, and this will prohibit you from applying for adjustment or change of status in the United States.

Go to www.eb-5center.com/eb-5_requirements to read an overview of the essential requirements of EB-5 case. Many articles helpful to your understanding of the EB-5 law are posted at "Easy as EB-5" section above.

[Q] Regional Center EB-5 has many Units for multiple investors. What are the restrictions imposed on the marketing of these Units (spots) to potential EB-5 investors. both within and outside the United States?

I am no expert on the U.S. Securities law, but the below is my understanding. Most, if not all, Regional Center EB-5 projects are offered or marketed to potential EB-5 investors without SEC and/or state registration requirements under either Regulation D or Regulation S exemptions, because such registration requirements are onerous. This means they can be (according to my understanding) offered to potential EB-5 investors as follows:

Within the United States: In reliance upon Rule 506 promulgated by the SEC, to only those persons who are deemed to be "Accredited Investors" within the meaning of Rule 501 promulgated by the SEC. Accredited Investor is defined as any person whom the issuer reasonably believes at the time of subscription to be:

  • any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000 USD;
  • or

  • any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of two most recent years, and has a reasonable expectation of reaching the same income level in the current year.

Outside the United States: In reliance upon Regulations promulgated by the SEC, only to those persons who are not "U.S. Persons" within the meaning of such Regulations. U.S. Persons are defined as any natural person "resident" of the United States. "Resident" presumably means who are not physically residing in the United States, and as such, non-immigrants will probably not qualify as "non-U.S. Persons".

Attorney named Jennifer Moseley appears to be very knowledgeable in this area, so we recommend that you talk to her.

[Q] Can I purchase an existing business by paying purchase price of $1 MM to owner or shareholder of the business, and then counting this $1 MM to meet the requisite investment amount, assuming of course, that I will create 10 new jobs?

I-526 can be filed based on the investment made in the past and requisite jobs created in the past, but those jobs must be maintained during CPR period. In some sense, with the jobs already created, USCIS might be more inclined to approve I-526 without any hassle.

Under the relevant regulation, EB-5 project (whether RC project or non-RC project) can involve a "troubled business".

Troubled business

means a business that has been in existence for at least two years, has incurred a net loss for accounting purposes (determined on the basis of generally accepted accounting principles) during the twelve or twenty-four month period prior to the priority date on the alien entrepreneur's Form I-526, and the loss for such period is at least equal to twenty per cent of the troubled business's net worth prior to such loss. For purposes of determining whether or not the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.

The regulations confer certain benefit(?) to an EB-5 project involving "troubled business", as follows:

(ii) Troubled business. To show that a new commercial enterprise which has been established through a capital investment in a troubled business meets the statutory employment creation requirement, the petition must be accompanied by evidence that the number of existing employees is being or will be maintained at no less than the pre-investment level for a period of at least two years. Photocopies of tax records, Forms I-9, or other relevant documents for the qualifying employees and a comprehensive business p lan shall be submitted in support of the petition.

The non-legal problem with an EB-5 project involving a "troubled business" is a negative connotation associated with the troubled business. Many potential EB-5 investors may say rightly or wrongly "I don't want to invest in an EB-5 project if it's troubled."

Also, certain undetermined issues related to "troubled business" EB-5 project is whether there must be 10 or more full-time jobs at pre-investment point of time. For example, if there were only 7 full-time jobs at the pre-investment point of time, can this qualify? What if 3 new full-time jobs are created in addition to maintaining 7 full-time jobs that pre-existed? As you can see, the questions remain.

[Q] I lawfully earned over $500,000 USD in the US, and that money is in my US bank acct. I also brought additional money from abroad. Do I have to show that these money brought from abroad was also lawfully earned?

The answer is No. If you had to show lawful source for all 100% of your entire assets, even Bill Gates would not be able to do that. Usually, the only thing that is required is for you to show that you lawfully earned the requisite investment amount for EB-5. Having said this, however, in limited cases, USCIS might ask for additional docs and proof; therefore, a careful planning might be required; and you should discuss in detail with your U.S. immigration attorney.

Pursuant to EB-5 law, an EB-5 investor must create 10 full-time positions. The regulations allow two part-time positions which qualify as "job-sharing" positions to combine and count as one full-time position. What is meant by such "job-sharing" arrangement?

"Job sharing" is defined as a form of part-time employment in which the schedules of two part-time employees are arranged to cover the duties of a single full-time position. For example, each job sharer may work a portion of the day or week.

Only in a limited circumstances can two part-time waiter/waitress positions be argued to fall under a "job-sharing" arrangement, but I guess one can try to make that argument.

Why do we believe that the above reg. is flawed? Because of the very fact that it is too hard to make a distinction between one regular part-time position and a "job-sharing" part-time position. No matter how you slice an apple, it's still an apple. In addition, 0.5 + 0.5 should equal 1.0. In other words, jobs are jobs, whether they are part-time positions or full-time positions.

We believe that it would make more sense to allow two part-time positions of the same job duties to be combined to count as one full-time position. For example, it does not seem to us to be unreasonable that two "part-time" waitress positions at the same restaurant where each is working 25 hours per week should be allowed to be combined to count as one "full-time" position for EB-5 purpose, regardless of whether they are in a "job-sharing" arrangement?

[Q] I understand that there was in the past a requirement that an EB-5 investor "establish" the New Commercial Enterprise, and that this requirement was done away with around 2002 that helped "revive" the EB-5 Program in general. Can you explain what this is all about?

Let's examine how this "establishment" requirement used to adversely affect both the regular, direct, individual EB-5 project and Regional Center EB-5 project.

In context of regular EB-5 project, the "establishment" clause meant that the investor could not just purchase an existing business even though the business was "new" -- that is, it was created after November 1990. This meant if the investor decided to acquire an existing business, he had to "materially" alter the business, so he could argue that he "established" a new business (or new commercial enterprise). This was the kind of requirement that prohibited bona-fide EB-5 projects to take place, because there is really no reason why you should discourage foreign EB-5 investors to invest in existing U.S. businesses.

In context of Regional Center EB-5 project, since the new commercial enterprise was usually a limited partnership or a like-kind legal entity into which the pooled moneys of individual EB-5 investors were invested, the requirement that an individual EB-5 investor(s) "establish" this Limited Partnership meant that such individual investors had to be the very individuals who initially set up and put in their investment at the beginning. This was totally contrary to the real-world commercial requirements, because in the real world, an incorporator establishes a corporation or limited partnerships and then goes about attracting investments from individual investors. Anyway, this is just one amendment which had to take place to make the Regional Center EB-5 Program work.

Therefore, this was a "hardware" amendments which were made to at least make the RC Program feasible, and some "software" improvements or changes were made, but more are supposedly underway. Of course, some people are concerned that these changes may not really be improvements but rather impairments. We just have to wait and see, but at least now, USCIS is more sensitive to the needs of EB-5 Program, but is vigilantly guarding against any RC Programs that are not bona-fide.

There is INS memo by Weinig, Acting Asst. Comm. Adjudications (Aug 5, 1992), reprinted in 11 AILA Monthly Mailing 776 (Oct. 1992) that says this is allowed. In practice, this should be no problem.

[Q] Let's say in a $100 Million USD project, $30 Million USD comes from foreign EB-5 investors seeking green cards, where as the remaining $70 Million comes from USC or green card holders or corporations. Let's assume 700 jobs are created in total (directly and indirectly). Can all 700 new jobs be allocated to the 60 foreign EB-5 investors only?

Yes, the regs specifically allow this. Here is the regulation on point.

Employment creation allocation. The total number of full-time positions created for qualifying employees shall be allocated solely to those alien entrepreneurs who have used the establishment of the new commercial enterprise as the basis of a petition on Form I-526. No allocation need be made among persons not seeking classification under section 203(b)(5) of the Act or among non-natural persons, either foreign or domestic. The Service shall recognize any reasonable agreement made among the alien entrepreneurs in regard to the identification and allocation of such qualifying positions.

[Q] My wife was the principal investor, and based on her I-526 petition approval, my wife, our children and I obtained CPR status. The time to file I-829 to remove conditional status is fast approaching. Can I still get permanent resident green card even though I am now divorced from my wife?

You should not lose your immigration status if you become divorced after having obtained CPR status, and the viability of I-829 does not depend on your divorce. In fact, the immigration regulations specifically state that "the former spouse of an entrepreneur, who was divorced from the entrepreneur during the period of conditional residence, may be included in the alien entrepreneur's petition [to remove conditions - Form I-829] or may file a separate petition."

[Q] My friend in Los Angeles owns a successful Chinese restaurant that was set up in 1999 with about 10 full-time and 5 part-time employees. He wants me to invest $1 Million USD to expand his restaurant, create new positions and split the profit. I saw the restaurant, and it seemed to be doing well. My question is: Can I go for $1 Million direct, individual EB-5 case based on the facts?

Yes, this issue was answered recently by USCIS in a liaison meeting minutes. See below copied content from this liaison meeting minutes on point. Basically, as long as you create 10 new, full-time positions (in addition and separate from the existing full-time positions), you can go for an EB-5 case. However, creating 10 new, full-time positions for an existing restaurant is easier said than done. And no, you cannot fire all the existing restaurant employees and then hire new employees to replace the existing employees who were let go. That comes close to a fraud. Of course, if there is a bona-fide business reason why the business being purchased did not have any existing full-time positions, then it would be permissible not to have any full-time employees at the time of purchase.

ii. Does Congress' deletion of the establishment requirement in 2003 (which did away with the requirement that the alien entrepreneur personally establish the commercial enterprise) mean an EB-5 investor can purchase an existing business that was created after November 1990 (meaning the commercial enterprise is "new"), as long as job requirements are met, without having to restructure the commercial enterprise? Section 22.4(h) of the Adjudicator's Field Manual seems to suggest this interpretation.

Response: Yes, an alien may demonstrate that a new commercial enterprise has been established by proving that it was established after November 29, 1990. In such cases, the alien does not need to further restructure, reorganize, or expand the business in order to meet the requirements of 8 CFR, 204.6(h).

The first requirement of any investor after they receive the visa at the United States overseas consulate office is to enter into the United States within 180 days of visa issuance from the consulate. The investor must then establish residency in the United States. Evidence of intent to reside includes opening bank accounts, obtaining a driver's license or social security number, paying state and federal income taxes, renting or buying a home. The United States resident may work overseas if required based upon the nature of the business or profession. For those permanent residents living outside the U.S., we suggest the investor and family re-enter the U.S. no less than once every six months. The longer the investor and family are present in the U.S., the less likely the government is to claim that the investor "abandoned" the United States as a permanent residence – thereby endangering his green card status. In some cases, investors may seek the issuance of a "reentry permit" which allows the Investor permission to remain outside the U.S. for as long as two years without having to reenter the country to maintain permanent resident status.

An accredited investor is a term defined by various security laws that describes investors permitted to invest in certain types of higher risk investments, limited partnerships, hedge funds and angel investor networks. In the U.S. an individual is considered to be an accredited investor if they have a net worth of at least $1 million US dollars or have made at least $200,000 US dollars each year for the last two years ($300,000 with spouse if married) and have the expectation to make the same amount in the current year.

See below for recent change:

Dodd-Frank Act makes immediate changes to accredited investor standard in private placements

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) was signed into law on July 21, 2010. The Act modifies the net worth standard for an “accredited investor,” authorizes the SEC to review and adjust “accredited investor” standards as they apply to individuals and prohibits the offer or sale of securities under Regulation D by certain “bad actors.”

Immediate Change to Net Worth Standard for Accredited Investors

Effective July 21, 2010, the date of enactment of the Act, Section 413(a) of the Act changed the net worth standard for an individual accredited investor to exclude the value of the individual’s primary residence. The net worth threshold for an accredited investor remains $1 million, either individually or jointly with a spouse; however, individuals are no longer permitted to include the value of their primary residence for purposes of reaching the $1 million net worth standard. The SEC recently provided guidance, in a July 23, 2010 Compliance and Disclosure Interpretation, that the amount of any indebtedness that is secured by a primary residence up to the value of the residence should also be excluded in determining net worth, but any such indebtedness in excess of the value of the residence should be considered a liability and deducted from an individual’s net worth.

This change affects the definition of an accredited investor for Regulation D offerings.1 Rule 505 of Regulation D permits sales to be made to an unlimited number of accredited investors and up to 35 non-accredited investors as long as the size of the offering does not exceed $5 million. Rule 506 of Regulation D permits sales to be made to an unlimited number of accredited investors and up to 35 financially sophisticated non-accredited investors without any limit on the size of the offering. In either case, substantial disclosure must be provided to non-accredited investors.

The $1 million standard (excluding a primary residence) remains fixed for four years following the Act’s passage. After the initial four-year period, the SEC may further adjust the accredited investor net worth standard.

Given that the change was immediately effective on July 21, 2010, any issuer conducting a private placement under Regulation D or Section 4(6) should revise its subscription documents to incorporate the new net worth standard.

Subsequent Review and Adjustment by the SEC

Discretionary Review and Adjustment of Accredited Investor Standards. The Act authorizes, but does not require, the SEC to review its accredited investor standards, as applicable to individuals, to determine whether the standards should be adjusted for the protection of investors, in the public interest or in light of the economy. Currently, an individual is an accredited investor if he or she had an income above $200,000 individually or $300,000 jointly with a spouse in each of the two previous years, as well as a reasonable expectation of maintaining those income levels, or a net worth (individually or jointly with a spouse) of at least $1 million. The Act authorizes the SEC to adjust these income and net worth standards for individuals, except that the $1 million net worth standard (excluding the value of a primary residence) may not be adjusted until four years after the date of enactment. This change applies to the accredited investor standard as applicable to both Section 4(6) and Regulation D offerings.2

Adjustments for Inflation. Although the Act does not specifically address this point, any review by the SEC of the accredited investor standards for individuals may consider that the income and net worth have not previously been adjusted to account for inflation. The $1 million net worth and $200,000/$300,000 income standards were established in 1982. If the accredited investor income standards were fully adjusted for inflation, the required annual income currently would be approximately $449,000 individually and $674,000 jointly with a spouse, and the net worth standard would be approximately $2.25 million. Such an adjustment would, of course, significantly reduce the number of persons who qualify as accredited investors. At this point it is unclear whether the SEC will adjust for inflation, and, even if it does, whether it would set standards to account for the full effect of inflation since 1982.

Prohibition on Offering or Sale of Securities by Certain “Bad Actors”

The Act requires the SEC, not later than one year after the Act’s passage, to issue rules disqualifying any offer and sale of securities under Regulation D by certain “bad actors.” The new rules disqualifying such “bad actors” from Regulation D exempt offerings must be substantially similar to the disqualifying provisions of Rule 262, and must disqualify any offering of securities by a person that (1) is subject to a final order barring the person from engaging in the business of securities, insurance or banking; (2) is subject to a final order that is based on a violation of any law or regulation prohibiting fraudulent, manipulative or deceptive conduct within the ten years prior to the new offering; or (3) has been convicted of any felony or misdemeanor in connection with the purchase or sale of any security or involving false filings with the SEC. Rule 262’s disqualification provisions cover directors and officers of an issuer and beneficial owners of 10% or more of any class of equity securities of an issuer.

SEC Review of Regulation D Offerings Not Required

The Act as signed into law does not include a provision, contained in an earlier version of the bill, that would have required the SEC to review Regulation D offerings. A prior version of the bill would have mandated SEC review of Regulation D offerings and given the SEC 120 days to complete its review. If the SEC did not complete its review within 120 days, the securities being issued would lose their exempt status and would become subject to state securities laws. The final Act does not contain the proposed Regulation D review requirements.
http://www.lexology.com/library/detail.aspx?g=2786cfd0-c190-4ece-b8f7-e7...

There are specific risk factors for each limited partnership, which are included in the offering materials for the limited partnership. Risk factors differ for each partnership but general risks include economic conditions, failure to meet job requirements and denied immigration status under the USCIS EB-5 Immigrant Visa Program.

The above risks are set forth in standard language, similar to the risk disclosure whenever you purchase mutual fund, etc.

Sure. A limited partnership, used by most Regional Center EB-5 project as a New Commercial Enterprise, is a business organization with one or more general partners, who manage the business and assume legal debts and obligations, and one or more limited partners, who are liable only to the extent of their investments. Limited partners also enjoy rights to the partnership's cash flow, but are not liable for company obligations.

No, unlike the Canadian Investor Immigrant Program, the EB-5 investor is not required to have any prior business experience. Likewise, the investor is not required to demonstrate any minimum level of education. The only requirement for the investor is that he or she has the required net worth and capital and prove that the funds are legal, through proper documentation.

The EB-5 program allots 10,000 visas per year for aliens and family members whose qualifying investments result in the creation or preservation of at least ten (10) full-time jobs for U.S. workers. Three thousand (3,000) of these immigrant visas are set-aside for aliens who invest through regional centers. But it should also be noted that additional 3,000 of these immigrant visas are set aside for aliens who invest in TEA area.

Yes, but all CPRs or LPRs are subject to certain parameters of being away from the U.S. for a prolonged period of time. Therefore, you should discuss with your U.S. immigration attorney in detail your need to travel outside the U.S. after you acquire CPR status.

I don't know if it's such a good idea for friends to go into a business together, but even if each of you invest the required amount, each of you also must create the requisite jobs -- meaning each of you must create 10 full-time jobs. As long as you can do that, both of you can process EB-5 cases.

Legally speaking, the regs say the requisite employment must be created within the two-year period immediately following the investor acquiring conditional permanent resident (CPR) status. However, for practical purposes (and in our opinion, the only logical interpretation) is that the requisite jobs must be created by the time I-829 is reviewed, or if USCIS allows in its discretion, within "a reasonable period of time therefrom". In our opinion, the two years definitely is not from the submission or approval of I-526 petition, because that would lead to a totally incongruous results, because CPR acquisition date definitely does not equal the I-526 submission or approval date. Some sort of "reasonable" interpretation must be applied to any statutes and regulations. This is not to say that some portions of EB-5 statutes and regulations are unclear; they are unclear, and read literally, leads to an unworkable results.

The problem might have been created by sometimes inconsistent interpretations of the statutes and regulations utilized by USCIS. An argument can be made that USCIS appears to ignore the literal languages of the statutes and regulations, while at other times, USCIS appears to apply the literal language. This is okay, as long as there is an over-arching philosophy or objective behind where the EB-5 Program should be headed, but often, the principals of USCIS governing EB-5 Program changes. It is sincerely hoped that more consistent, reasonable and practical interpretations of relevant statutes and regulations be applied and implemented by USCIS examiners. After all, it's the examiners who decide each individual I-526 and I-829 cases, not the policy-makers or Congressmen.

No, but your relative or friends can fill the positions, as long as the positions are bona-fide positions, and they really will be working.

"New" means any for-profit entity established after November 29, 1990. For practical purposes "new commercial enterprise" can take any one of four forms: 1) the creation of new business; 2) the purchase of an existing business, which is reorganized to form a new enterprise (you don't want to try this!); 3) the expansion of an existing business; or 4) the saving of a failing business.

Note that the new commercial enterprise entity and the job-creating entity may differ, depending on investment structure of a particular EB-5 project.

Legally, you can show that you have invested or be in the process of investing, but in the latter case, you have to prove availability of the funds and an actual commitment of the required fund. Therefore, it is a lot more difficult route that you should avoid in all cases.

Although both statutes and regulations are silent on this point, the AAO has held, however, that construction jobs do not qualify for direct job creation, but USCIS has stated that it is willing to allow the indirect and induced job creation from construction jobs in EB-5 regional center cases, but of course, not in direct, individual EB-5 case.

The practical difficulty in counting direct, construction jobs is that often these jobs are not full-time and are independent contractors of sub-contractors. Perhaps a certification letter from the General Contractor overseeing the entire project might work for I-526 purpose, but it might be very hard to get all documentation needed to prove Direct jobs at I-829 stage.

The advantages of Regional Center EB-5 (the "RC EB-5) case over E-2 visa are:

1. Since E-2 is a nonimmigrant visa/status, obtaining E-2 does not lessen the need to obtain permanent resident status.

2. With RC EB-5 case, you can reside anywhere in the U.S., whereas with E-2 visa, you have to reside near the location of your E-2 business.

3. With E-2 dependent children, once they become 21 years old, they automatically fall out of E-2 status. This means they have to, on their own, apply for other NIV status -- usually F-1 student status. With RC EB-5 case, as long as the I-526 petition was submitted prior to their reaching 21 years of age, the dependent children's ability to obtain LPR status will not be adversely affected.

4. RC EB-5 Investor does not need to exert energy towards the day-to-day or even primary managerial control over the new commercial enterprise.

5. RC EB-5 Investor can pursue other jobs and/or activities, whereas for E-2 Investor, that is pretty difficult in practice.

6. In many cases, the amount of investment is not a lot. Many E-2 business investment requires more than $300,000 USD and even close to $500,000 USD, which is the same amount that RC EB-5 case that also combines TEA feature.

7. With RC EB-5, there is rarely a need to contribute additional capital infusion, but with E-2 investment, additional capital infusion may be required depending on the business situation.

8. There is a greater chance to fail in E-2 investment than with RC EB-5, at least from our perspective.

The bottom line is this. E-2 may seem like a great deal, but if the business doesn't do well, the business dream of being an E-2 Investor may turn into a nightmare.

No, under the EB-5 law, investor and family members cannot be included in the 10 full-time jobs to be created. Also, only CPR, LPR or USC workers qualify, meaning someone who is on F-1 visa cannot be included in the 10 new positions.

The "EB-5 law" is a term of convenience and has a broad meaning. It refers to the law governing EB-5 under the U.S. immigration law system. This means appropriate immigration statutes must be examined, then immigration regulations promulgated pursuant to these statutes, then agency rules, Department of State or consular regulations, as well as USCIS guidances. The term also includes precedent Administrative Appeals Office (AAO) on EB-5 cases, as well as some federal court cases deciding on some key issues of EB-5 law. Furthermore, the term also includes what is "understood" to be allowed and disallowed by USCIS EB-5 Headquarters. At this time, the USCIS is trying to make their positions more clear on various material issues related to EB-5 projects.

Therefore, sometimes it is a challenge for even an an experienced U.S. immigration attorney to keep up with all the nuances and developments within the EB-5 area.

Under the EB-5 law, the EB-5 project has to be either Targeted Employment Area or Rural Area, to permit only $500,000 USD investment. Definitions of these terms are as follows:

Rural area

means any area not within either a metropolitan statistical area (as designated by the Office of Management and Budget) or the outer boundary of any city or town having a population of 20,000 or more.

Targeted employment area

means an area which, at the time of investment, is a rural area or an area which has experienced unemployment of at least 150 per cent of the national average rate.

Since the TEA concept includes rural area concept, the simple answer is that the EB-5 project has to be a TEA area project. Note being a Regional Center EB-5 project has nothing to do with the amount of investment required; it has to do with the way the requisite jobs can be created.

Under the EB-5 law, the principal applicant's spouse and the children who were under 21 years of age at the time I-526 immigrant petition was received by USCIS office can obtain CPR and LPR status.

It should be noted that even in case of the principal applicant's death or divorce, the dependents can obtain permanent resident status assuming all conditions, such as job-creation, are met.

Not at all. Since under the EB-5 law, an EB-5 project located in the Targeted Employment Area (TEA) or Rural Area (RA) legally requires only $500,000 rather than the $1 Million USD required in the regular EB-5 project, there are no advantages and disadvantages resulting from the investment amount.

No, EB-5 law does not allow corporations or companies to apply because permanent status can only be given to individuals. Also, the money cannot come from a corporation or company, even though the individual may be the 100% shareholder in the company.

[Q] During the conditional resident status, if I, the principal applicant/investor give up or get taken away such conditional resident status by USCIS/CBP, does this affect the same conditional resident status of my dependent family members?

If you are the principal investor and applicant, and then you abandon or get taken away your conditional green card status during the CPR period, then your dependents will also be deemed to have lost their conditional green cards. However, after "permanent" green cards are obtained, one family member's loss of permanent green card status has no adverse effect on the other family members' permanent green card status.

The Canadian Investor Program does not require job-creation, and either the federal program or the regional government guarantees the return of the investment, so there is less risk. However, the Canadian Investor Program requires previous management experience and additional eligibilities of the applicant and takes longer to immigrate under than the U.S. counterpart. The Canadian Investor Program also gives a permanent green card straight away.

The significance of an EB-5 project being located in a Rural Area is that the required investment amount is only $500,000 USD, not $1 Million USD. Therefore, if a particular EB-5 project is located in either TEA or Rural Area (RA), then the required investment amount is only $500,000 USD.

Rural Area (RA): An RA is a geographic area situated outside a metropolitan statistical area, or an area which is part of the outer limits of any city or town with a population of 20,000 or less. In a less densely populated state, an approved statewide probably holds both TEAs and RAs.

TEA is commonly referred to both TEA and RA interchangeably. As the Targeted Employment Area signifies, it's an area where the job-creation is more needed than other areas either because of the 150% or higher unemployment rate or because the area is a Rural Area. The problem with the projects being located in a Rural Area rather than TEA area is that it's hard to create EB-5 projects involving large companies on a continuous basis mainly because there are lack of large demand markets.

It's refers to either a rural area or a geographical area that has experienced unemployment rate of at least 150% of the national average unemployment rate. Of the 10,000 immigrant visas available for investors, 3,000 are set aside for TEA EB-5 cases. In the regulations, TEA is defined as:

A TEA is a geographic area or political subdivision set within a metropolitan statistical area OR inside a city or town with a population of more than 20,000 and an unemployment level at least 150 percent of the national unemployment rate. Governors identify and designate TEAs within a state (except the District of Columbia , where the mayor makes the designation). A typically seeks to include one or more TEAs, which within a large city are those delineated census track areas, identified according to measured population unemployment rates within these locations.

The significance of TEA is that only $500,000 USD investment is required instead of $1 Million USD investment.

[Q] I heard it's important to submit I-526 immigrant petition before one's child turns 21 years of age. Why is that?

That is true only where the subject child wishes to immigrate as a dependent child of the principal alien investor. However, if the child wishes to apply as the principal alien investor, then it does not matter whether the child exceeds 21 years of age.

To clarify, it's important that the I-526 petition be received at an appropriate USCIS office before the dependent child wishing to immigrate together turns 21 years old.

It stands for Employment-based 5th category. Under the U.S. immigration law, there are five different categories of immigrating through employment-based avenues, and since EB-5 deals with employment-creation, it's been designated as the 5th category of Employment-based methods of immigrating. EB-5 is also commonly referred to as Investor Green Card or Investment Green Card.

No, under the EB-5 law, an individual investor can individually invest in only for-profit entity, such as a for-profit limited partnership entity. In the context of a regional center EB-5 project, however, an individual investor (usually along with numerous other individual investors) may invest in a for-profit limited partnership enterprise, which in turn can loan the money to a non-profit entity, such as a quasi-governmental development agency, creating jobs.

[Q] Does EB-5 law require that the investor and/or family members live close to where the EB-5 project is located?

The answer depends on whether the investor has participated in a Regional Center project or Direct Individual EB-5 case. Although there is no specific legal provision on point, it is understood that for Regional Center project, an investor (who acts as a limited partner in a Limited Partnership) or his family members do not need to live in the same area of the Regional Center EB-5 project. But in the latter case, where the investor is taking part in the day-to-day management of the business, the investor will probably have to live in the same geographic area.

You can go to the "Easy as EB-5" section in this site, which has been specifically created for laymen who wish to obtain solid understanding of EB-5 law and requirements. You can click: www.eb-5center.com/easy_eb-5.

[Q] I know Regional Center and Targeted Employment Area (TEA) concepts are separate and different concepts. What types of EB-5 projects can result from an interplay between these two concepts?

Yes, Regional Center and Targeted Employment Area (or Rural Area) are two different concepts. The following four types can result from an interplay between these two concepts:

1. Regional Center and TEA/RA project -- that is a project in which 10 positions can be created indirectly and also requires only $500,000 USD investment instead of $1 Million USD investment.

2. TEA/RA project that is not a regional center -- that is the project requires only $500,000 USD investment but requires Direct job-creation of 10 new positions.

3. A Regional Center project that is not TEA/RA -- that is $1 Million USD investment is required but the requisite jobs can be created Indirectly.

4. A project that is neither Regional Center nor TEA/RA -- that is $1 Million USD investment is required and the requisite jobs must be created Directly.

Obviously a good project that falls within the Type 1 category is the best from an EB-5 investor's point of view.

[Q] I heard often that practically speaking, a regular, direct investment EB-5 case may have a difficult time meeting the 10 full-time direct job-creation requirement. Is this true, and if yes, what are some of the reasons?

Practically speaking, it is often true, for the following reasons:

1. Direct EB-5 case requires the creation of requisite jobs directly. This means the business has to create ten new (not existing) jobs directly. This is easier said than done.

2. Often, businesses set up are very sensitive to economy, and enough positions may not be created.

3. Often the required jobs may not be created by the time I-829 is adjudicated, since if it involves a new business that is often a small business.

For the above reasons, many people are choosing Regional Center Program over regular, direct EB-5 case.

Yes, in theory and practice. For example, there are several EB-5 Programs in Washington state and Washington, DC geographic areas. For example, in NY, CA and Florida, there are many regional centers doing similar types of projects in the same regions.

[Q] If the project offering documents or the project Limited Partnership includes a provision which states that the fund will be returned in the event of I-829 denial, is this allowed under EB-5 law?

No, USCIS recently made it clear through an official statement that this kind of arrangement will not be allowed. The released statement reads:

If your clients have pending I-526s at a USCIS Service Center or have had approved I-526s returned by NVC that contain subscription agreements that promise to return their investment if their I-829 is denied then the subscription agreement needs to be amended. That wording has been deemed to constitute a redemption agreement and such an agreement is prohibited.

The above statement makes it clear that such provision will be deemed to constitute a redemption agreement and will be prohibited.

As of January 29, 2009, there are around 30 designated Regional Centers which have been approved by USCIS to put together EB-5 projects which comply with the parameters of their approved Regional Center. Note however that many of the Regional Centers are relatively new, and many of them have scant track records, and some have not even completed a successful project, let alone have any records of successful I-829 conditions removal cases. Therefore, selecting a suitable regional center and a suitable EB-5 project, in itself is an important and difficult task to a layman. Of course, our opinion is a smart and practical layman might do a better job than a lazy and dumb professional any day (see what happened to the Wall Street), but a helping hand of an experienced and capable professional in the U.S. immigration field will probably help.

Just like cars, there are better known car companies and lesser-known car companies; but a lesser-known car company does not mean its car is not suitable for you or vice-versa. However, having said this, cars and regional center programs are not the same types of products.

Yes, under the U.S. immigration law, a conditional permanent resident has the same rights and obligations as the "permanent" resident. See below regulation.

Sec. 216.1 Definition of conditional permanent resident.

A conditional permanent resident is an alien who has been lawfully admitted for permanent residence within the meaning of section 101(a)(20) of the Act, except that a conditional permanent resident is also subject to the conditions and responsibilities set forth in section 216 or 216A of the Act, whichever is applicable, and § 216 of this chapter. Unless otherwise specified, the rights, privileges, responsibilities and duties which apply to all other lawful permanent residents apply equally to conditional permanent residents, including but not limited to the right to apply for naturalization (if otherwise eligible), the right to file petitions on behalf of qualifying relatives, the privilege of residing permanently in the United States as an immigrant in accordance with the immigration laws, such status not having changed; the duty to register with the Selective Service System, when required; and the responsibility for complying with all laws and regulations of the United States. All references within this chapter to lawful permanent residents apply equally to conditional permanent residents, unless otherwise specified. The conditions of section 216 of the Act shall not apply to lawful permanent resident status based on a self-petitioning relationship under section 204(a)(1)(A)(iii) , 204(a)(1)(A)(iv) , 204(a)(1)(B)(ii) , or 204(a)(1)(B)(iii) of the Act or based on eligibility as the derivative child of a self-petitioning spouse under section 204(a)(1)(A)(iii) or 204(a)(1)(B)(ii) of the Act, regardless of the date on which the marriage to the abusive citizen or lawful permanent resident occurred. (Amended 5/23/94; 59 FR 26587 ) (Amended 3/26/96; 61 FR 13061 )

[Q] Under the U.S. immigration law, is there any other immigration classification which requires an applicant to have to go through conditional residence status before obtaining "permanent" residence status?

Yes, an applicant is required to first go through the conditional residence status when the alien applies for green card based on his or her marriage to a U.S. citizen. For example, if an alien marries a U.S. citizen in May 2009 and interviews for immigrant visa let's say in December 2009, the alien will be given conditional residence status. Just like EB-5 category, the alien will have to apply for "permanent" residence status or often referred to as "conditions removal" 21 ~ 24 months after the acquisition of conditional permanent residence (CPR) status.

The CPR status in context of EB-5 case is necessitated by the real world constraints that the applicant show that his or her investment has been maintained for some time and also necessary job-creation has taken place. USCIS is justifiably trying to prevent a situation where an applicant invests and then pulls out the investment right after obtaining green card.