November 4, 2011
Washington, D.C.

The USCIS today announced a teleconference with Director Alejandro Mayorkas scheduled for Wednesday, November 9 at 1 PM eastern time.  To RSVP to this event, send an email to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

The Dial In # is 1-888-810-9647 Passcode: EB-5.

The announcement states that policy guidance will be uploaded for public comment at uscis.gov/outreach very soon.

Please check back regularly for updates.

The Case To Reform EB-5

by Joseph P. Whalen

After doing more in-depth research into the creation and development of the Immigrant Investor path towards a green-card, I have come to the realization that it is misclassified or at the very least the statute is inadequate to the underlying desired outcome. The Immigrant Investor visa classification is codified as the fifth preference employment-based visa at INA § 203(b)(5)^[1]. Preference category visas are technically limited to specific proportions of all visas available annually and are allocated in accordance with a precise formula that takes into account the limited worldwide and per country levels as well as authorities and processes described in INA §§ 201 through 205. It is for these underlying reasons that it has been necessary to be as fair as possible in issuing visas. The first step involves the filing of a petition for classification for the desired category of visa. It has evolved that this filing date will be used as a "priority date" which secures the "beneficiary" of the petition their place in a potentially very long line for a visa. Owing to the importance of the priority date, certain expectations have come into being and as have developed over time through the agency and court interpretations of the statutes and the statutory scheme. The realm of the "preference category visa petition" is a specific context. This particular context demands that the beneficiary shall be fully qualified and statutorily eligible for the visa classification at the time of filing and must remain so through time of adjudication and ultimately at time of visa issuance and in some cases beyond that for a specified period of time and with conditions attached to retention of status.

Immigrant Investors are initially granted a conditional status and will then be required to prove that they are deserving of the lifting of conditions at a later time. The only other immigrants who are initially granted a conditional status are those who gain status based on a recent marriage^[2] to either a USC or LPR who petitions for them. There is however another employment-based visa that has conditions attached to the attainment of the LPR status. The second preference employment-based national interest waiver provisions for physicians have strings attached. These physicians are not provided with conditional status, rather than that they have to fulfill conditions first and then get the full unconditional LPR status green-card. The physician may file an I-140 for the EB-2 NIW concurrently with an I-485 and get an EAD in order to legally work and fulfill the minimum commitment of service in a specified geographic area, medical specialty, facility, or for a particular qualified employer. In the alternative, a physician who has already met the minimum service will be granted LPR status faster after filing. There is always a certain amount of time required just to process and adjudicate anything. Even though e-filing will speed things up, immigration and nationality benefits will never be available like a pack of gum from a vending machine.

What do "Priority Dates" entail and encumber?

In general, one must be fully qualified for the visa classification at the time of filing. For instance, if a petition is filed for a child, then the beneficiary must meet the INA definition of a child as applicable. As an example, a step-relationship is reliant on several factors. The existing biological or adoptive parent must qualify as the parent of the child and the new spouse may be deemed a step-parent. IF the marriage is valid and legal and takes place before the child reached age 18 years and while the child was unmarried then the step-relationship has been formed. The child will only remain a child as long a petition is filed before the child reaches age 21 years. Depending on other factors a child may remain classified as a child beyond age 21 based on the CSPA (Child Status Protection Act) for visa issuance or adjustment of status purposes. Family-based visas may be either "immediate relative" or "preference visas".

In the realm of employment-based visas, they are all "preference visas". The importance of the priority date is really lost on some of the employment-based visa classifications because they are so hard to qualify for that they have never been oversubscribed and therefore always "current" for visa issuance or adjustment of status purposes. The fifth-preference "employment creation" or immigrant investor visa has always been "current" from day one of its existence. Competition has always been fierce but never robust. The coveted visa has always been a challenge to attain not from competition against a large pool of applicants but rather a struggle to meet the eligibility requirements and qualifications.

Congress has set some high bars. Some were on purpose: the minimum amount of capital must be invested and the alien must create or preserve a minimum number of full-time jobs for qualifying U.S. workers. Some high bars were inadvertent. For example, Congress took the previously created immigrant investor labor certification exemption category defined by INS via regulation and codified it among the preference visa categories. In doing so, Congress placed the "eligible at time of filing" yoke around the neck of the immigrant investor petition without clearly limiting the bare minimum eligibility that should be required in order to be so classified.

What Should The Minimum Requirements Be For EB-5 Investor Classification Approval?

First, they need to have the required investment funds. Second, IF they have not yet created the required jobs THEN they need a plan to create the required jobs. So for the vast majority, the bare minimum is enough money and a plan. Through regulation and Precedent, INS through AAO and later USCIS and the courts have shaped the requirements for an investor's "plan" to mean a comprehensive, detailed, and credible plan. The added requirements do not end there. The investor and his plan have subsequently been saddled with a prohibition against making a substantive material change. This became necessary in order to combat scam artists and fraudsters seeking to buy a green-card with lousy investment schemes and scams put forth by Regional Center promoters. The precautions have gone too far and may inappropriately block investors even (at least in theory) when they achieve the desired results of full investment and enough jobs. This point of a bare minimum as long as results are achieved needs clarification.

Bare Minimum Amount of Investment.

When INS created the immigrant investor labor certification exemption in 1966, they stated that the alien was required to invest or be actively in the process of investing a "substantial amount" of capital. Then INS set an amount. Initially it was $10,000, then it was increased to $40,000 (and there was an earlier attempt to set it at $25,000 that failed^[3] ). Then the whole program faltered because the non-preference visas were so scarce that the aliens stopped trying. Then there was almost no activity, then some visas were made available for those few who had actually made real investments. Finally, through IMMACT 90, Congress set the amounts at a significantly increased level to the current amounts of either one or one-half million dollars.

Job Creation.

The other fulfillment requirement of creating or preserving ten jobs was a later addition. Initially, there was no such requirement. Then INS stated that the alien would need to work in his business and be qualified to do so. Then a requirement was proposed to require the alien to create jobs for U.S. workers but the earliest proposal was fought and defeated. The job creation element eventually came back as a regulatory requirement that the alien investor "will employ a person or persons in the United States of which he will be a principal manager and that the enterprisewill employ a person or persons in the United States who are United States citizens or aliens lawfully admitted for permanent residence, exclusive of the alien, his spouse and children."

The Investment Plan.

Rather than making an up-front showing of the two basic elements, most alien investors will submit a plan to achieve the job creation requirement and sometimes they include plans for completing the infusion of capital once first showing that they actually have it. It is the evidentiary weight assigned or ascribed to the up-front plans that needs further clarification and refinement. The current difficult economic realities involved in any investment are at the forefront of the minds of many investors and the general public at the present time but these realities have been and shall continue to be important considerations for all EB-5 investors. In all business-not merely EB-5, plans are made but are subject to change along the way. The artificial and arbitrary prohibition against substantive material change has grown beyond its limited usefulness and become onerous. The concept of material change and the prohibition against it as well as its application need further clarification and refinement.

Conflating "Eligibility At Time Of Filing" With Using An Impermissible "Material Change" In Order To Demonstrate One's "Basic Eligibility Qualifications".

Most importantly and above all else, the basic bare minimum eligibility qualifications required to secure a priority date under EB-5 needs clarification and refinement. The eligibility for securing a priority date is quite different from the fulfillment requirements that must be demonstrated for the lifting of conditions at the very end of the EB-5 process. Through the arduous path from the 1990 enactment through the scam period and reaction to that mess and finally 2011's current rethinking, some wires got crossed. 

If you objectively look at EB-5, the requirements to secure a "priority date" are to:

1.) have enough clean money (lawful funds) available to invest, and
2.) have already started a business and created (or preserved) ten full-time jobs or be willing to take a stab at starting a business in which the alien will attempt to create (or preserve) ten full-time jobs, for legal U.S. workers.

As was mentioned,most will rely on "plans" to create jobs. Through a slow evolution and in the course of combating fraud, far too much emphasis has been placed on the initial plan advanced by the alien entrepreneur at the time of filing the I-526. The concept of impermissible material change cropped up in the Regional Center affiliated I-526 context as to financial arrangements. It has spread to the job creation aspect or "business plan" in the I-829 context. In the Regional Center affiliated investor context, the "business plans" form the basis for the "economic analyses" that predict indirect job creation. So in the RC context the plans take on a greater significance. Material Changes to the RC affiliated business plans have a direct effect on the job counts and therefore may indeed undermine the investors' ability to meet the requirements for the lifting of conditions on status. Through the use of previously USCIS-vetted and approved plans, a Regional Center sponsor and/or the affiliated I-562 filer (immigrant investor) is pretty much locked-in to the approved plan in order to reasonably rely on USCIS deference to the job predictions and thereby to lift conditions. This is a precarious position and when substantive material changes happen, all bets may be off. Through the use of transparent complexity, contingency plans can be put forth up-front, thereby putting USCIS "on notice" of the potential changes or shifting from one vetted plan to another vetted plan. Although the final analysis at the I-829 stage may be slightly more complicated than desired, if the results bear out the job counts needed, then conditions can still be lifted and the question of an impermissible material change drops from the mix.

The Time For Corrective Action Is At Hand.

USCIS is currently undergoing a metamorphosis as to the processing of the Alien Investor Program. Regulations and forms are being reviewed for the needed changes and are yet to be advanced for consideration through notice and comment rulemaking or Information Collections (ICs). As a small part of the government-wide retrospective review ordered by the President, ancillary matters are also under serious review simultaneously. AAO is still working on new regulations that are long overdue since the creation of USCIS as a part of DHS back on March 1, 2003. The form I-924 used in order to seek Regional Center Designation only came into use just under one year ago and is already up for revision. USCIS has already announced that further refinement to the I-526 and I-829 would take place in the near future. With so much up in the air at the same time, this is an excellent opportunity to address some fundamental underlying concepts and requirements and set the stage for successful expansion of the EB-5 Immigrant Investor Program for a long time to come. Above all other complaints from stakeholders, they want clear and consistent answers. They crave certainty. They desire reasonable reliance and have sought assurance of deference on settled points. Some shady characters seek to abuse any assurances as to deference and turn it into unreasonable reliance and would try to force USCIS to grant unworthy requests to lift conditions on the unfulfilled promises of failed businesses. Clearly, controversy can always be manufactured by anyone willing to devote some time to it. However, that is not a reason to be overly and unreasonably restrictive from the start. The inclusion of disclaimers and warnings should suffice to deflect the bogus claims of the unworthy when they come along in the future. A little additional background follows.

A Brief Synopsis of the History the Immigrant Investor Visa^[4]

Congress did not create the concept of an immigrant investor classification, they merely codified it and modified it twenty-four years after the fact in the Immigration Act of 1990 (IMMACT90). Previously, in 1965, Congress made a major overhaul of the Immigration and Nationality Act. That 1965 amendment did not include an immigrant investor visa category. The 1965 amendment included an undefined category of "other qualified immigrants" among the "nonquota immigrants" newly renamed "special immigrants" in INA § 101(a)(27).

INS Created the Immigrant Investor Classification

The "investor visa" was created originally in 1966, by INS through regulation utilizing the Attorney General's broad authority under INA § 103 [8 USC § 1103] by construing and interpreting INA § 203 [8 USC § 1153] (a)(8)'s "other qualified immigrants" who could demonstrate that they did not require a labor certification from the Secretary of Labor. It was not termed as a visa classification but rather as a "labor certification exemption". It seems that everybody needed some guidance on who the phrase "other qualified immigrants" actually applied to. Who exactly were these "other qualified immigrants" that did not need a labor certification?

These visas were allocated under INA § 203 (a)(8) but issued as a "special immigrant" class found in INA § 101(a)(27) [8 USC § 1101 (a)(27)]. The Immigration and Nationality Act Amendments of 1965 (Public Law 89-236, Sec. 8 (a)) renamed nonquota immigrants as special immigrants in INA § 101(a)(27). These special immigrants were eligible for visas and investors were among these immigrants but defined in the regulation, not the statute.

The original version of 8 CFR § 212.8 stated, in pertinent part:

(b) Aliens not required to obtain labor certifications. The following members are not considered to be within the purview of section 212(a)(14) of the Act and do not require a labor certification: .......

(4) an alien who will engage in a commercial or agricultural enterprise in which he had invested or is actively in the process of investing a substantial amount of capital.

[31 FR 10021, July 23, 1966; 31 FR 10355, Aug. 22, 1966, as amended at 34 FR 5326, Mar. 18, 1969][A modified version of this extraneous regulation is still in 8 CFR but has been slated for repeal as obsolete in the recent USCIS Business Transformation Rule I.]

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Footnotes

For a much more extensive review of the older and current Administrative Decisions and additional court cases on the Immigrant Investor Classification from 1966 through 2011, see:http://www.slideshare.net/BigJoe5/a-survey-of-the-immigrant-investor-visa-1966-2011-june-27-2011-jw
Conditional status is given if the marriage is less than two years old at time of approval of I-485 or entry on an Immigrant Visa. 
In an earlier version that was put forth in the rulemaking process, INS had wanted to make the minimum capital investment $25,000.00 and include a job creation element termed as a prospective economic benefit requirement. These additions did not make it into the final version codified. 
For a much more extensive review of the history and development of the Immigrant Investor Visa see: http://www.slideshare.net/BigJoe5/a-survey-of-the-immigrant-investor-visa-1966-2011-june-27-2011-jw

Reposted from: http://www.ilw.com/articles/2011,1014-whalen.shtm

Baltimore, Maryland - October 3, 2011

The private firms developing two major state-sponsored projects say they are trying to take advantage of a little-known element of immigration law that provides green cards to foreigners who invest $500,000 to $1 million in a job-creating enterprise in the United States. It's apparently the first time something like this has been tried in Maryland, and it's making some people uncomfortable, including Senate Minority Leader Nancy Jacobs of Harford County. She's contemplating legislation to make the use of investor visas illegal for state projects, saying it sounds like we're selling citizenship and "turning the country over to the Chinese."

That's nonsense. The program, which has been around since 1990 but has expanded significantly in the last few years, certainly needs close monitoring to make sure it is achieving its maximum potential in terms of creating jobs. But the idea that we should give priority in immigration to people who are already successful in their native countries and who have the capital to invest in the development of this nation is absolutely sound.

Complaining that this visa program — known as EB-5 — amounts to selling American citizenship reveals a misunderstanding of how our immigration system works. Our borders aren't like a deli counter where people take a number and wait their turn. We give preference, and always have, to people who are most likely to integrate easily into American society and to contribute the most to it. Skilled workers, people with advanced degrees or promises of employment, or those with family members already here get pushed to the front of the line. The reason the investment visa is known as "EB-5" is that there were already four other employment-based visa programs before it. The government allots 10,000 visas a year to the EB-5 program, or 7.1 percent of those allowed for all employment-based visas, though the quota has never been met.

Those who are concerned about immigrants in American society tend to raise several objections, none of which apply here. EB-5 visa recipients are not illegal immigrants; they broke no laws to get here. They are not taking away jobs that could have gone to native-born Americans. On the contrary, they are creating jobs that, by law, must go to American citizens or legal residents. They are not straining the social safety net. Instead, they are sufficiently rich to afford a six- or seven-figure investment, and they are volunteering to come here and pay federal, state and local taxes.

And finally, allowing people to participate in projects like the expansion of Seagirt Marine Terminal at the Port of Baltimore and the redevelopment of the State Center office complex doesn't amount to turning the country over to the Chinese or anyone else. The people who take advantage of this program are putting themselves and their entire families on a path to become American citizens. If the firms completing these projects sought financing through traditional means, the money could have come from investors anywhere. This way, they are selling ownership stakes in their ventures to people who will live here and who will have a tremendous incentive to make sure the developments' job creation potential is realized. Their legal status in this country depends on it.

The state also realizes real benefits from the willingness of the private development firms it has partnered with to consider the EB-5 program. Because the state has a limited ability to issue bonds to pay for projects like the Seagirt expansion or the State Center renovation, it has increasingly looked to public-private partnerships. EB-5 investors make it easier for private firms to make those projects viable. Not only has it been more difficult since the financial collapse of three years ago to secure traditional financing, but EB-5 investors often require less stringent terms, since they are also getting the benefit of a path toward U.S. citizenship out of the bargain.

There's a reasonable case to be made that we should not be quick to hand public assets over to private management. But absent a willingness to take on substantial public debt — and to raise taxes to pay for it — there is no other viable way, for example, to expand the Port of Baltimore to handle the big cargo ships that will be moving through the Panama Canal starting in 2014. The fact that some of the investors in these projects might be new legal immigrants bringing their families and their capital to this country should sweeten the deal, not be cause for alarm.

The Senate hearing on EB-5 has been rescheduled from October 12 to November 9, 2011.

September 29, 2011 - Washington, D.C.

Report and Comments on EB-5 Meetings in Washington
by H. Ronald Klasko

I share the following comments after spending two days in Washington, DC attending the Congressional EB-5 hearing and the EB-5 Stakeholders Meeting, as well as listening to the meeting with USCIS Director Mayorkas:

Premium processingis unlikely to be implemented in the very near future.  My best estimate is the first half of calendar year 2012, and maybe the first quarter.  It will likely be limited to regional center designation applications and exemplar I-526 (project pre-approval) petitions.  There is a possibility that individual I-526 investor petitions will be eligible for premium processing at a later date.  In the meantime, regional centers and investors should file petitions in the normal fashion.  If premium processing is implemented, almost certainly it will apply to pending petitions.

There appears to be agreement between Republicans and Democrats in the House of Representatives for a long term and hopefully permanent extension of the regional center pilot program.  The biggest area of disagreement may be whether, as part of the extension, Congress implements a new EB-6 program for venture capital financing of startup ventures in the U.S.  If so, there is some indication that at least the Republicans in the House of Representatives may want to take the visa numbers for the EB-6 program out of the EB-5 quota.  EB-5 advocates will be arguing against any attempt to reduce EB-5 numbers.

USCIS has already hired three new business analysts and is in the process of hiring one or more economists.  Hiring and training these individuals will be a critical part of implementing premium processing and implementing the proposed Decision Board, which would allow for in-person or telephonic discussions between regional centers and CIS prior to decisions on regional center designations and project pre-approvals.

Even without premium processing, regional center designation applications and project pre-approval applications will likely be processed more promptly than the present 8 to 10 months.  Now that USCIS has mostly completed the November 2010 filings, and since there were far fewer filings in the months following November 2010, processing times should improve.  It is not as clear that processing times will improve on the investors’ I-526 petitions.

USCIS will not commit to a formal position on three legal issues “for several weeks” and likely will include most or all of the positions in a new policy memorandum.  The three issues are:

• Deference to safe designation letters with respect to geographical areas of TEAs;
• EB-5 money used to pay down bridge financing;
• Definition of “material change” for purposes of condition removal and what must be done in the event of a material change.
• It appears likely that CIS will agree that it should defer to state designation of geographical areas of TEAs and that EB-5 money can be used to pay down bridge financing.  Until issuance of a policy memorandum, there are indications that CIS adjudications on these issues have been more favorable since we had our meeting with Director Mayorkas on August 10.  The material change issue will likely be the subject of a separate USCIS stakeholders engagement meeting prior to issuance of any memorandum.

Following our August 10 meeting, it appears that USCIS is rethinking its policy on exemplar.  Hopefully, the policy memorandum will include a commitment that, if the documentation regarding the regional center and the project in the investor’s I-526 petition is identical with the exemplar 526, CIS will be bound by the approval of the exemplar.  Unless and until that happens, there does not appear to be any good reason for waiting the necessary time for approval of the exemplar 526 if it will be filed independently of a regional center designation application. If it will be filed concurrently with a regional center designation application, since the processing time will be the same as the regional center designation processing time, it may be sensible to continue filing the exemplar 526 for the first project.

Link to Original Article:  http://blog.klaskolaw.com/2011/09/29/report-and-comments-on-eb-5-meetings-in-washington/

Los Angeles, September 3, 2011

David Joyce marched his way to the front of the U.S. immigration line using his pocketbook, sinking half a million dollars into a Vermont ski resort.

The British citizen had spent years in a futile effort to secure green cards for himself, his wife and their 9-year-old son so they could relocate to sunny Florida. Then, a fellow emigre tipped him off to a little-known federal program that helps foreigners gain permanent U.S. residency by investing in American businesses.

"In six months, we had our green cards," said Joyce, 51. "Considering everything we've been through, this was easy."

Joyce is one of thousands of foreigners speeding through the U.S. immigration labyrinth — for a price.

Those who invest $500,000 in a U.S. enterprise that creates at least 10 jobs in a rural area or a community with a high unemployment rate are eligible for special visas that put them and their families on the fast track to becoming permanent residents.

For some wealthy immigrants lacking the family ties or special skills required for traditional U.S. visas, it's the fastest way to establish permanent residency apart from marrying a U.S. citizen. Investors aren't required to work in the business or participate in its management; some never even see the enterprises they buy into.

The federal program, known as EB-5, is relatively small, capped at 10,000 visas annually. But applications have skyrocketed since 2006 as entrepreneurs and cash-strapped towns have begun aggressively wooing wealthy foreigners as a low-cost source of capital.

In San Bernardino, the city is tapping EB-5 funds to redevelop its downtown theater district. In Jupiter, Fla., overseas money is fueling the construction of an outdoor amphitheater, marina slips and entertainment hub. In Philadelphia, it was used to expand a hospital complex and improve a school for disabled children.

Once the federal government gives preliminary approval to a project and conducts background checks, the would-be immigrant can invest in the deal and apply for the visa.

But the government's initial approval doesn't always lead to desired results.

Some immigrants have faced deportation when their investments failed to create enough jobs or otherwise didn't comply with program rules. Others have secured their green cards but lost their entire investments when projects foundered.

Yet the prospect of U.S. residency has proved so enticing that some are willing to take the chance. Once approved for the program, the investor can apply for a conditional green card, good for two years. If the investment creates 10 jobs during that time, he or she can apply to live in the U.S. permanently.

Applications from mainland China have soared in recent years, fueled by well-off parents eager to get their children into U.S. schools.

"They can afford to do this," said Zhang Runan, an immigration attorney in Washington.

Proponents laud the program as a way to boost struggling local economies while rewarding immigrant risk-takers.

In the hamlet of Jay, Vt., where Englishman Joyce was part of a $215-million investment pool, EB-5 money has helped finance luxury condos and a new ice hockey arena. Up next: an indoor water park, a golf complex and a hotel aimed at attracting more visitors to the ski town hit hard by the recession.

"We tried going to banks, but the lending environment was impossible," said Bill Stenger, chief executive of the Jay Peak Resort. "There is no way we could have done this without EB-5."

But some critics contend this is little more than a cash-for-visa program, one that is more beneficial to project promoters than the depressed communities it's supposed to help. A cottage industry of middlemen has emerged to introduce investors hungry for permanent U.S. residency to American developers and communities eager for money.

A flurry of EB-5-related websites has popped up with pitches written in Chinese, Korean, Spanish and Arabic. Promoters regularly offer seminars in hotel ballrooms in China, as well as in the U.S., proffering deals and collecting hefty fees.

(Source: The Los Angeles Times)

August 2, 2011 - Washington, D.C.

Secretary of Homeland Security Janet Napolitano and U.S. Citizenship and Immigration Services (USCIS) Director Alejandro Mayorkas made an announcement today regarding a series of policy, operational, and outreach efforts to fuel the nation's economy and stimulate investment by attracting foreign entrepreneurial talent of exceptional ability or who can otherwise create jobs, form startup companies, and invest capital in areas of high unemployment.

The section of the press release that is most relevant to EB-5 can be found here:

"The EB-5 immigrant investor program is also being further enhanced by transforming the intake and review process. In May, USCIS proposed fundamental enhancements to streamline the EB-5 process which include: extending the availability of premium processing for certain EB-5 applications and petitions, implementing direct lines of communication between the applicants and USCIS, and providing applicants with the opportunity for an interview before a USCIS panel of experts to resolve outstanding issues in an application. After reviewing stakeholder feedback on the proposal, USCIS is developing a phased plan to roll out these enhancements and is poised to begin implementing the first of these enhancements within 30 days."

The full text of the USCIS press release can be found here: http://www.dhs.gov/ynews/releases/20110802-napolitano-startup-job-creation-initiatives.shtm