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EB-5 Insights

Where Government Policies and Business Realities Converge

Posted in EB-5 Investment, EB-5 Program

On November 19, 2015, 70 key stakeholders of the EB-5 industry, led by The Real Estate Roundtable, the U.S. Chamber of Commerce, and the EB-5 Investment Coalition, sent a letter urging House and Senate Leadership to reauthorize the EB-5 Regional Center program along with three other expiring immigration programs (R-1 visas for religious workers, the Conrad 30 waiver program for J-1 medical workers, and the E-Verify platform).  The letter encouraged congressional leaders not to avoid the program’s lapse in the event consensus reform legislation could not be agreed upon by lawmakers prior to the program’s sunset date of December 11, 2015.

The letter not only expressed the signatories’ commitment to support an extension of the EB-5 program for one year, but stated the desire to continue to work to resolve many complex issues that remain unresolved.  In the absence of consensus legislation on all outstanding policy issues, the letter further expressed support for the inclusion in an extension of broadly supported measures to enhance program integrity and provide U.S. Citizenship and Immigration Services (USCIS) with clear authority to provide even more rigorous oversight and accountability in the program.  This letter was signed by a diverse group of industry stakeholders, including regional centers, law firms, hotels, and a variety of trade and industry associations. Please find a copy of this letter on the EB-5 Investment Coalition website.

Posted in EB-5 Investment, I-829

As the numbers of filed I-526 Petitions have surged recently, there will arise new and unique issues largely due to the sheer volume of issues which can present themselves during the life cycle of an EB-5 investment. With that in mind, it is helpful to review the regulations which govern the adjudication of an I-829 Petition and what are the requirements of job creation at that stage.

First, it is worth noting that the INA merely requires creation of full-time employment for ten (10) individuals legally authorized to work in the U.S. Second, the Code of Federal Regulations is also fairly vague in that it requires “[E]vidence that the alien created or can be expected to create within a reasonable time ten full-time jobs for qualifying employees.” This sentence implies creation in the past tense or the future tense, and not in the present tense. Thus, the May 30, 2013, EB-5 Adjudications Policy memorandum (Policy Memo) is the strongest guidance we have regarding job creation at the I-829 Petition stage.

The Policy Memo is helpful only to a certain extent as well. The Policy Memo clarified that it is “…important to note…” that the EB-5 Program does allow an investor to remove the conditions on permanent residency if the investor is in “substantial” compliance with the investment requirements and that the “…jobs will be created within a reasonable time.” While USCIS does not explicitly define “reasonable,” in the context of I-526 Petition adjudication USCIS has explicitly stated a few interpretations which can be helpful here:

  1. USCIS has taken the position that jobs which are created within 2.5 years of admissions to the U.S. as a conditional permanent resident;
  2. Jobs which last for at least two years are not considered intermittent, temporary, seasonal or transient in nature (i.e. permanent); and
  3. USCIS has taken the position that jobs created within a year of the end of the investor’s initial 24-month period of conditional permanent residence will be considered reasonable.

Accordingly, if jobs are lost during the pendency of an I-829 Petition (which are now taking approximately 15.5 months to process!) it may not necessarily lead to the denial of the I-829 Petition. It is fairly clear from the amalgamation of USCIS guidance that jobs created by an EB-5 investment which are in existence for at least 2 years should count as qualifying jobs during the adjudication of the I-829 Petition even if such jobs no longer exist at that time. This is also consistent with the draft policy memorandum USCIS issued in August 2015 regarding job creation and sustainment of an investment.

Posted in Events

Greenberg Traurig presented at the recent 4th Annual U.S. Investment Immigration Forum (USIIF) in Shenzhen, China.  The EB-5 networking event brought together both U.S. stakeholders and leading Chinese migration agents.  With participants from the U.S. and Chinese migration agencies, the USIIF event brought together regional centers, project developers, immigration attorneys along with Chinese migration agents, investment consultants, wealth managers and other EB-5 professionals from the Chinese market.  The speakers and panelists from the U.S. and China addressed issues in the EB-5 community.

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Panelists and Speakers attend the 4th Annual U.S. Investment Immigration Forum in Shenzhen, China.

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Greenberg Traurig’s Kate Kalmykov with Kamyar Amiri-Davani.

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Kate Kalmykov and panelists provide insight on the EB-5 program.

Posted in EB-5 Program, USCIS

On May 30, 2013, following months of discussions, stakeholder comment, and even federal court litigation, USCIS finally issued its much-anticipated Final EB-5 Adjudications Policy Memorandum. The May 30th Memo sets forth an accepted framework for Regional Centers and Investors alike regarding topics such as amendments, escrow, bridge financing, states’ TEA designations, and material changes to the I-526 business plan at the time of condition removal. Yet, the May 30th Memo was largely silent on perhaps the most central and time consuming issue for most EB-5 investors: guidance on source of funds.

Determining what constitutes an acceptable EB-5 source of funds (and even more so, what documents are needed to carry the day) can be quite challenging for investors and their attorneys. The regulations provide that capital investments acquired “directly or indirectly by unlawful means (such as criminal activities)” are not qualifying. This is expected and painfully obvious. The regulations also provide a brief list of examples of documents which are very generally worded and are so encompassing that most are largely inapplicable unless an investor has a great many sources of capital. Determining exactly what is needed can be quite difficult in answering the one question nearly every investor has:

“How far back do I have to go to prove my investment is lawful?”

The regulations, memoranda, and case law give minimal guidance. It is of course accepted that the investor need only demonstrate by a preponderance of the evidence that the source of funds is lawful. See Matter of Chawathe, 25 I&N Dec. 369, 375-376 (AAO 2010). But what is the evidence needed to show wealth that was acquired long ago?

The regulations suggest including tax returns “of any kind filed within five years” (8 C.F.R. 204.6(j)(3)(ii)), but that suggestion is not terribly helpful in answering the question where, for example, the investor liquidated an asset acquired more than five years ago. Although never codified in a regulation or memorandum, longstanding agency lore led to an acceptance of the so-called “Seven Year Rule.” We covered that this “Rule” is no longer followed and RFEs seeking evidence going back even to the 1990s are disturbingly becoming more common.

Indeed, USCIS has never really addressed the source of funds topic publicly with guidance, instead sending its signals through stakeholder calls, RFEs, NOIDs, and denials. Such an approach unfortunately can lead to great inconsistencies between program administrators, individual adjudicators, and over time. We saw this most strikingly this past Spring when USCIS abruptly departed from a plain reading of the regulatory definition of “capital” and issued narrow and largely arbitrary guidance changing its policy on the use of loan proceeds as a source of funds, following months of surprise denials involving facts materially similar to cases approved just last year.

So perhaps now is the time for USCIS to re-engage its stakeholders as it did through much of 2012-2013 and develop comprehensive source of funds guidance (as it did compared to its draft guidance issued relating to I-829 issues) that can provide investors with greater clarity and reduce inconsistent adjudications. This would assist all stakeholders until comprehensive new regulations can be issued.

Until that happens, investors must continue with this somewhat unpredictable state of affairs. We all agree that investors need not be excused of their statutory requirement of showing the lawful source of capital simply because it was acquired long ago; it is just that it can be quite difficult. The following are some best practices to consider in documenting such cases:

  1. Focus on what is generally accepted to be commercially reasonable regarding document retention. Whether or not it was ever the law, the “Seven Year Rule” gave investors a Maginot Line with a general relaxation of the documentary requirements to prove a source of funds if an asset was acquired more than seven years prior to the filing. Even if not followed, the logic behind this practice can still be used by investors in arguing that it is not reasonable that they be required to produce documents from long ago that would not otherwise be kept in the normal course of business. Analogies can be made. For example, the IRS advises that absent fraud or failure to file, returns and records need not be kept indefinitely. The regulations as well, only reflect an intent to include five years’ of returns as described above. Investors can use such provisions to push back on tricky RFEs or affirmatively argue that including such documents would be unreasonable.
  2. Remember that only the source of funds must be documented, not the Investor’s entire net wealth. Under the regulations, Investors need not prove the legality of their entire net wealth, only the source of their EB-5 capital investment (and perhaps the administrative fee).There are a few caveats to this general point. Tricky issues arise when an asset is liquidated, such as when real estate is sold or mortgaged. USCIS has taken an increasingly stringent approach requiring an investor ability to purchase an asset liquidated for EB-5 capital. Further, USCIS often requires the investor to prove that beyond that purchase, his/her income or assets were sufficient to live on at the time.While the liquidation transaction documents may be quite recent, the documents contemporaneous to the purchase documents might be long discarded. 8 C.F.R. 103.2(b)(2)(i) instructs that“[I]f a required document, … does not exist or cannot be obtained, an applicant or petitioner must demonstrate this and submit secondary evidence … pertinent to the facts at issue.” Therefore, if a record cannot be obtained due to the passage of time, it is important to demonstrate this through valid and objective evidence, such as certifications from banks, property registration entities, and tax officials.

    And of course one should also…

  3. Liberally use personal and third-party statements. Few investors’ cases are perfect or crystal clear. As USCIS takes the position that statements by counsel are not evidence, investors themselves should execute personal statements filling in any “gaps” of evidence brought about because of time.

Of course, USCIS sometimes sees such gaps as self-serving, and thus they can be bolstered through third party statements corroborating the petitioner. Such statements are most probative when executed by individuals unrelated to the petitioner or the transaction, who to all outward appearances do not have any interest in the approval of the I-526 petition.

Finally, investors and stakeholders would do well to remind USCIS that the case is to rise or fall not based upon the inclusion of any one particular document, but instead based on the preponderance of the evidence. In other words, just because an investor cannot meet every single specific request of an RFE, that does not necessarily mean that his or her burden has not been met. Proving the lawful source of funds can be done even if certain requested documents are cannot be provided.

Posted in EB-5 Program

More often than not, EB-5 investors want to immigrate to the United States with their families, including their spouses and children. Marriage and divorce are important life events that can affect the EB-5 process in different ways at each stage of the process, particularly regarding when the spouse is eligible to derive the benefits as the principal applicant’s dependent. Below is an overview of common scenarios and general principles.


EB-5 State
of Filing
Effect of Marriage Effect of Divorce
1. I-526 Immigrant Petition by Alien Entrepreneurs to USCIS If the investor is married when the I-526 petition is filed, his or her spouse should be included in the petition to USCIS for the purposes of creating a comprehensive record. There is no formal way to add a spouse to an I-526 petition as the form does not request such information, as opposed to other immigrant visa petitions such as an I-140 employer sponsored petition. However, the spouse’s information should be included in the cover letter so that following the approval of the I-526 petition, the National Visa Center (NVC) should issue a fee bill for the next stage that includes the spouse. If the spouse is not included in the I-526 petition cover letter, the spouse will have to be requested to be added to the NVC fee bill for the case, which takes additional time. If the investor gets divorced during the adjudication of the I-526 petition, he or she will have the opportunity to inform the NVC of the divorce and that the former spouse is no longer also immigrating.
2. (A) Immigrant Visa Application to U.S. Consular Post by Investor Abroad

If the investor gets married after the I-526 petition is approved, he or she can add the spouse as a dependent beneficiary to the NVC fee bill to begin the consular processing procedure. The spouse must complete all required application forms, obtain the required civil documents (including the marriage certificate), pay the required fees, and undergo the medical examinations required of all immigrants undergoing consular processing.

If the investor obtains his or her immigrant visa prior to getting married but before entering the U.S., the new spouse can still consular process on the basis of the investor spouse’s I-526 petition. Depending on the timing, the spouse can apply for an immigrant visa to accompany the investor to the U.S., or can later submit Form I-824 along with other documentation to “follow to join” the investor.

As referenced above, if the investor is divorced by the time he or she is able to consular process, the former spouse will not be included in the application to the NVC.
2. (B) Adjustment of Status Application to USCIS by Investor in the U.S. If the investor gets married after the I-526 petition is approved and is in the U.S. in valid status, he or she can apply to Adjust Status when the applicable immigrant visa number is available and should include the new spouse with the adjustment application along with proof of the marriage. If the investor is divorced by the time he or she is able to file for Adjustment of Status, the divorce certificate should be included in the application along with other biographical information.
3. I-829 Petition by Entrepreneur to Remove Conditions to USCIS If the investor gets married during the period of conditional permanent residence, his or her spouse will be eligible for an immigrant visa (or may be the beneficiary of an I-130 petition) under the Family-Based Second Preference (“F2”) category as the spouse of a Lawful Permanent Resident, the dates of availability for which are updated each month on the Department of State’s Visa Bulletin. Pursuant to the regulations at 8 CFR §216.6(a)(1), the former spouse of an entrepreneur (i.e. investor) who was divorced from the entrepreneur during the period of conditional permanent residence may be included in the foreign national entrepreneur’s I-829 petition or may file a separate petition to remove the conditions.

Posted in EB-5 Program, State Department

Chief of the Immigrant Visa Control and Reporting Division Chief Charles Oppenheim appeared at the IIUSA Market Exchange on October 22, 2015 in Dallas, Texas and shared preliminary FY2015 usage numbers as well as his predictions for FY2016.

Mr. Oppenheim reported that the preliminary data shows strong visa usage from natives of countries other than Mainland China, evidencing the program’s growth into new markets.

Chart 1

Unfortunately, not all of the FY 2015 visas were used. EB-5 immigration is limited to approximately 10,000 visas per fiscal year – the number varies slightly based on unused visa numbers in other categories as well as Executive priorities and Mr. Oppenheim’s discretion. Mr. Oppenheim explained that several hundred visas were not used this past year because investors missed their consular appointments or received preliminary visa denials because their applications were not complete at the time of the interview.

Mr. Oppenheim also shared his forecast for the coming months with respect to the EB-5 Mainland China final action cut-off date:

Chart 2

Mr. Oppenheim stated that because of the looming sunset of the Regional Center program on December 11, all immigrant visa interviews for the month of December are to be scheduled during the first 10 days of that month. Note that, due to the limitations placed on Guangzhou U.S. Consulate’s workload by Chinese  New Year celebrations, stakeholders will see a relatively modest advancement of priority dates in February.

Posted in EB-5 Program, I-924, USCIS

USCIS recently held a stakeholders teleconference as part of its informational series, EB-5 Interactive. The main topic of the teleconference concerned the “time to file” for the Form I-924A, which must be filed annually in order to demonstrate continued eligibility for designation as a regional center.

It is increasingly important to focus on the submission of the I-924A.  USCIS is focusing on increased scrutiny on the Form I-924A, especially as it relates to the integrity of the information provided about investors sponsored under the regional center.  USCIS has indicated that they will be conducting site visits to regional center offices as well, which may lead to interviews with regional center owners, principals, and staffers to verify data provided on the I-924A and also to verify the regional center’s activities over the past year.

Particularly for those regional centers that do not have any I-526 Petitions or I-829 Petitions filed within the past fiscal year, or for more than one fiscal year, it is paramount to address the regional center’s activities and strategies to generate projects and investment.  Each regional center must continue to promote economic growth and development, improved regional productivity, job creation or increased domestic capital investment in the center’s geographic area.

USCIS also may compare information reported on the I-924A to current I-526 Petitions and I-829 Petitions being submitted to USCIS, particularly as it relates to the amount of the investment and the amount of jobs created over the fiscal year.  Accordingly, it is critical for the regional center to accurately maintain records on investors, investments, and jobs created in each EB-5 Project so that accurate reports can be given not only at the I-829 Petition stage, but also each year on Form I-924A.

The Form I-924A is paramount for demonstrating eligibility for continuing designation as a regional center.  Regional centers that were designated on or before September 30, 2015, will need to submit their Form I-924A by December 29, 2015. Additionally, the Form I-924A form may be filed during other time periods if requested by USCIS. It should be noted that there is no filing fees associated with the Form I-924A form and all Form I-924As and supporting documentation must be filed with the USCIS at the California Service Center as opposed to the Immigrant Investor Program office in Washington, DC. Failure to file the Form I-924A in a proper and timely manner may result in USCIS issuing a Notice of Intent to Terminate (NOIT) the regional center’s designation, which serves to terminate participation in the EB-5 Regional Center Program.

Posted in Targeted Employment Area, TEA

Two members of the Senate introduced The American Job Creation and Investment Promotion Reform Act, S. 1501, in June 2015.  The bill has many provisions seeking to provide reform to the program, including provisions for integrity measures, increased capital investment amounts, and provisions to redefine Targeted Employment Areas (TEAs).

Under current law, a TEA is defined as “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.”  The definition of a “high unemployment area” is defined as a “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.”  The state is given the authority to designate TEAs.

The new bill proposes to redefine TEAs and high unemployment areas.  Under the proposed bill, a TEA means “a high unemployment area, a rural area, or any area within the geographic boundaries of any military installation closed, during the 20-year period immediately preceding the filing of an application . . .based upon a recommendation by the Defense Base Closure and Realignment Commission.”  8 C.F.R. §204.6.  The TEA designation determination, under S. 1501, shifts the responsibility to the Department of Homeland Security and takes away the designation authority from the state.  In addition, high unemployment area is redefined under S. 1501 as “an area, using the most recent census data available, consisting of a census tract that has an unemployment rate that is at least 150 percent of the national average unemployment rate.”

The new proposed definition of a TEA under S. 1501 limits the word “area” to only one census tract.  This action restricts the EB-5 program’s economic benefits into many mid-sized cities and suburbs across the country, as many areas that currently qualify as a TEA will no longer qualify as a TEA under S. 1501.  The EB-5 Investment Coalition (EB-5IC) has compiled data on select states demonstrating the percentage of census tracts that would be disqualified in certain Metropolitan Statistical Areas (MSAs).  Please refer to the  following documents: 1501’s TEA Proposal: The Economic Consequences Made Clear and Cities of All Sizes Will Lose Jobs Under S.1501.

Posted in EB-5 Program, Foreign Exchange Management Law

In an effort to promote the depreciating kyat, the Central Bank of Myanmar announced that it was revoking foreign exchange licenses issued to hundreds of businesses. Effective October 19, 2015, companies must return their foreign exchange licenses by the end of November and will no longer be able to trade in U.S. dollars.

The government of Myanmar has permitted foreign exchange since 2011, and non-banking businesses had previously been allowed to deal in foreign exchange since the Foreign Exchange Management Law was enacted in 2012. However, in May 2015, the Central Bank halved U.S. dollar withdrawal limits in light of growing concerts over depreciation of the kyat.

Under the new policy announced October 16, banks and non-bank money changers will still be permitted to exchange foreign currencies, but other businesses that accept U.S. dollar payments such as hotels, hospitals, airlines, restaurants, tour companies, and supermarkets, among others, must give up their licenses. Banks are not affected by this policy change and prefer to have businesses uniformly transact in kyat.

The Central Bank of Myanmar aims to promote the weakening kyat, which has depreciated by about 25% against the U.S. dollar this year as a result of a strengthening U.S. dollar and Myanmar’s widening budget deficit. The Central Bank also hopes the new policy will prevent more widespread use of the U.S. dollar and encourage use of the country’s struggling local currency, particularly in the tourism industry.

Practically speaking, this new policy may be problematic for individuals from Myanmar who are considering making an EB-5 investment, as hundreds of businesses will no longer be able to transact directly in U.S. dollars. Consequently, investors will be required to raise more kyat to meet the minimum U.S. dollar capital investment amount given recent currency devaluation.

With the opening of Myanmar in recent years, it will be interesting to continue to monitor country developments to evaluate the viability of this market for EB-5 investment.

Posted in EB-5 Program, Events

Greenberg Traurig attorneys Laura Reiff and Kate Kalmykov recently attended and presented at the 2015 China Overseas Investment and Entrepreneurship Summit (COIES) Forum in Beijing.  This twoday international investment and business conference featured leading EB-5 industry professionals and Chinese private equity partners seeking international opportunities.  The conference aimed to help Chinese companies, entrepreneurs, and institutional investors explore overseas business and investment opportunities.  This event featured some of the top U.S. attorneys, real estate developers, and business professionals to present on hot topics in the EB-5 arena. 

Greenberg Traurig’s Laura Reiff presents at the 2015 COIES Forum in Beijing.

Greenberg Traurig attorney Laura Reiff and Illinois State Senator Mattie Hunter

Performance from Peking Opera

Greenberg Traurig attorneys Kate Kalmykov and Laura Reiff pose with Jeff Carmichael.


Greenberg Traurig’s Kate Kalmykov with Senator Scott Brown.

Greenberg Traurig attorneys Kate Kalmykov and Laura Reiff with the COIES VIPs.

Greenberg Traurig attorney Laura Reiff and Artisan Business Group CEO Brian Su accepting awards at the recent COIES event in Beijing.