Nov
18

USCIS Requests Public Comment on I-924 & I-924A Through Dec. 22nd

On September 23rd, the U.S. Citizenship and Immigration Services (USCIS) issued a 60 day notice requesting public comment on Form I-924 and I-924A. The last day for comment will be next Saturday December 22nd. You can read the notice published by USCIS in the Federal Register in PDF or online.

SUMMARY: The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) invites the general public and other Federal agencies to comment upon this proposed revision of a currently approved collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the Federal Register to obtain comments regarding the nature of the information collection, the categories of respondents, the estimated burden (i.e., the time, effort, and resources used by the respondents to respond), the estimated cost to the respondent, and the actual information collection instruments.

DATES: Comments are encouraged and will be accepted for 60 days until
December 22, 2014.

ADDRESSES: All submissions received must include the OMB Control Number 1615-0061 in the subject box, the agency name and Docket ID USCIS- 2007-0046. To avoid duplicate submissions, please use only one of the following methods to submit comments:
(1) Online. Submit comments via the Federal eRulemaking Portal Web site at www.regulations.gov under e-Docket ID number USCIS-2007-0046;
(2) Email. Submit comments to USCISFRComment@uscis.dhs.gov;
(3) Mail. Submit written comments to DHS, USCIS, Office of Policy and
Strategy, Chief, Regulatory Coordination Division, 20 Massachusetts Avenue NW., Washington, DC 20529-2140.

EB-5 Regional Centers: Reminder to File I-924A 
This is a quick reminder to all EB-5 Regional Centers that it is time to file Form I-924A, the annual reporting form used to demonstrate a Regional Center’s continued eligibility for the Regional Center designation.

This form must be filed for each fiscal year (October 1 through September 30) within 90 days after the end of the fiscal year (on or before December 29) of the calendar year in which the fiscal year ended. The failure to timely file a Form I-924A Supplement will result in the issuance of an intent to terminate the participation of the regional center, which may ultimately result in the termination of the approval and designation of the regional center.

As a note, 340 of the 369 Regional Centers approved as of September 30,2013 submitted timely I-924As for that fiscal year;  Of the remaining 29, some filed late and some were issued a Notice of Intent to Terminate (NOIT) and some ultimately were terminated for failing to file (it is not clear how many might have been forgiven for failure to file on time).

An additional 24 NOITs were issued and remain pending based on failure to fulfill job promotion obligations under 8 C.F.R. 204.6(m)(6), and the speakers acknowledged that a letter explaining steps taken to cultivate projects may carry sufficient weight to counterbalance a lack of projectsand related filings.

IIUSA Members can view the powerpoint presentation from the November 6th webinar “Year Four of Regional Center Annual Reporting on Form I-924A” byclicking here. The webinar featured IIUSA President K. David Andersson, IIUSA Vice President Robert C. Divine, and Klasko Law Partners Associate Daniel B. Lundy.

The webinar recording is also available for $99/members and $199/nonmembers here.
Nov
12

Attention all EB-5 Regional Centers: I-924A Filing Reminder, Webinar Now Available OnDemand

Form I-924A – Annual Reporting for EB-5 Regional Centers

This is a quick reminder to all EB-5 Regional Centers that it is time to file Form I-924A, the annual reporting form used to demonstrate a Regional Center’s continued eligibility for the Regional Center designation.

This form must be filed for each fiscal year (October 1 through September 30) within 90 days after the end of the fiscal year (on or before December 29) of the calendar year in which the fiscal year ended. The failure to timely file a Form I-924A Supplement will result in the issuance of an intent to terminate the participation of the regional center, which may ultimately result in the termination of the approval and designation of the regional center.

As a note, 340 of the 369 Regional Centers approved as of September 30,2013 submitted timely I-924As for that fiscal year;  Of the remaining 29, some filed late and some were issued a Notice of Intent to Terminate (NOIT) and some ultimately were terminated for failing to file (it is not clear how many might have been forgiven for failure to file on time).

An additional 24 NOITs were issued and remain pending based on failure to fulfill job promotion obligations under 8 C.F.R. 204.6(m)(6), and the speakers acknowledged that a letter explaining steps taken to cultivate projects may carry sufficient weight to counterbalance a lack of projectsand related filings.

IIUSA Members can view the powerpoint presentation from the November 6th webinar “Year Four of Regional Center Annual Reporting on Form I-924A” byclicking here. The webinar featured IIUSA President K. David Andersson, IIUSA Vice President Robert C. Divine, and Klasko Law Partners Associate Daniel B. Lundy.

The webinar recording is also available for $99/members and $199/nonmembers here.
Nov
05

USCIS Announces next EB-5 Immigrant Investor Program Stakeholder Engagement to take place on December 5th

On November 3rd, the U.S. Citizenship and Immigration Services (USCIS) Office of Public Engagement announced the next EB-5 Program Stakeholder engagement will be held on Friday December 5th from 1:00 pm to 3:00pm EST. Stakeholders can register to attend in person or via teleconference. Below is the full message and link to invitation (PDF).

Dear Stakeholder,

U.S. Citizenship and Immigration Services (USCIS) invites you to participate in a stakeholder engagement session on Friday, Dec. 5, from 1 to 3:00 p.m. Eastern to discuss the Immigrant Investor Program. This engagement is part of our efforts to enhance dialogue with external stakeholders regarding the program, also known as EB-5.

During the first part of this engagement, we will provide EB-5 program updates from fiscal year 2014 and discuss initiatives for fiscal year 2015. The second part of the engagement will be a question-and-answer session. You may ask non-case specific questions or provide feedback on the EB-5 program.

You can attend this engagement either in-person or by teleconference. Please note that in-person attendance is limited to the first 80 people who register.

To register for this session, please follow the steps below:

  • Visit our registration page to confirm your participation
  •  Enter your email address and select “Submit”
  •  Select “Subscriber Preferences”
  •  Select the “Event Registration” tab
  •  Be sure to provide your full name and organization
  •  Indicate if you plan to attend in-person or by teleconference; and
  •  Complete the questions and select “Submit”

If attending in-person, please RSVP for this event no later than Friday, Nov. 14.

Once we process your registration, you will receive a confirmation email with additional details.

To submit questions before the teleconference, please:

If you have any questions regarding the registration process, or if you have not received a confirmation email within two business days after you register, please email us at Public.Engagement@uscis.dhs.gov.

We look forward to engaging with you!

Nov
05

RCBJ Retrospective: The Latest Analysis of What USCIS Looks For in EB-5 I-829 RFEs and Denials

The Latest Analysis of What USCIS Looks For in EB-5 I-829 RFEs and Denials (Vol. 2, Issue, 3, October, 2014 Pgs. 16-19)

By Sonia Sujanani, Student, Cornell Law School, Stephen Yale-Loehr, IIUSA President Emeritus, Founding President/CEO (2005-2010) Of Counsel, Miller Mayer, LLP and  ROBERT C. DIVINE, IIUSA Vice President, Head of Global Immigration Practice, Baker Donelson Bearman Caldwell & Berkowitz, PC

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Introduction

In three previous articles, published in 2012, 2013, and early 2014, we analyzed and interpreted over 2,700 pages of I-829 EB-5 requests for evidence (RFEs) and denial notices released by U.S. Citizenship and Immigration Services (USCIS) in response to three separate Freedom of Information Act (FOIA) requests filed by Invest In the USA (IIUSA), the trade association of EB-5 immigrant investor regional centers. The I-829 responses in the previous requests ranged from 2008 to early 2013. In mid-2014 IIUSA received an additional 1,068 pages of I-829 responses.

This article expands on our three previous articles by analyzing a number of recent EB-5 I-829 petitions from 2013 and one from 2014. The current article expands on the previous 509 cases  by adding an additional 245 petitions. The fourth of its kind, this article cumulatively analyzes all four FOIA requests, which total 3,801 pages and 754 I-829 petitions.

This series of articles analyzes real USCIS responses to I-829 petitions. The materials re-leased in response to the four FOIA requests are instrumental in understanding how USCIS applies EB-5 law to specific factual situations in the I-829 context. As such, this series of articles aims to inform practitioners and potential immigrant investors of trends in USCIS adjudications and how those trends have developed.

EB-5 Overview

The EB-5 visa program has existed for over two decades. Congress enacted the EB-5 program in 1990. At the time, the program granted lawful permanent resident status to immigrant investors who directly invested in and managed job-creating commercial enterprises. Since 1992, with enactment of the Immigrant Investor Pilot Program, potential immigrant investors could also invest through EB-5 regional centers. In 2012, Congress reauthorized the regional center program through September 30, 2015. Today, there are nearly 600 approved EB-5 Regional Centers. By comparison, there were only twenty-five EB-5 regional centers in 2006. The EB-5 program is growing in multiple ways: geographically, investor interest is now coming “from all corners of the globe,” and EB-5 filings have increased year over year for the past several years. In fiscal year 2013, the U.S. government issued 8,564 EB-5 visas.

As background, a potential EB-5 recipient must first file an I-526 petition for classification in the EB-5 category. Upon USCIS’s approval, the investor becomes a conditional resident for two years. Potential EB-5 recipients must undergo a procedure to remove conditions at the end of this two-year conditional period. The procedure is analogous to that followed by people who obtain conditional residence through marriage to a U.S. citizen or lawful permanent resident. The petition to remove conditions is filed on form I-829 and submitted to USCIS’s California Service Center. This petition must be accompanied by evidence that the applicant has fulfilled all requirements of the EB-5 program, including that the applicant has invested the required capital and that the investment created or will create ten full-time jobs for U.S. workers. The applicant may prove that the jobs were created by including payroll records, relevant tax documentation, and Forms I-9. The I-829 form must also prove that the applicant has “substantially met” the capital investment requirement and has continuously maintained his or her investment during the conditional two-year period.

In May 2013, USCIS issued an EB-5 Adjudications Memorandum clarifying the goals of the EB-5 program. The EB-5 program has three essential elements: “(1) (t)he immigrant’s investment of capital, (2) in a new commercial enterprise, (3) that creates jobs.”  Each of the requirements for removal of conditions is tied to these three elements.

Methodology

We reviewed the I-829 RFEs and denials released by USCIS to IIUSA in July, 2014 (the fourth FOIA response). This FOIA response did not include investors’ responses to the RFEs or any motions to reopen following I-829 denials. Therefore we do not know the ultimate outcome of the cases.

If USCIS denies an I-829, there is normally no appeal to the agency’s Administrative Appeals Office (AAO) unless USCIS itself certifies the case to the AAO. After an I-829 denial USCIS terminates an EB-5 investor’s status and issues a notice to appear before an immigration judge in removal proceedings. If an immigration judge rules against the investor, the investor can appeal to the Board of Immigration Appeals and then to federal court. We are not aware of any BIA decisions concerning EB-5 investors.

We classified the I-829 materials by issue type focusing on the same six issues as our previous articles: (1) job creation; (2) sustaining the investment, (3) redemption; (4) pooled trust, (5) business plan; and (6) material change. As in previous articles there were also some miscellaneous issues. In addition, some responses were so heavily redacted that it was impossible to identify any issue. These responses were classified as “No Issue.”

We aggregated the 245 case responses from the latest FOIA request responses and coded them into an Excel document called “I-829 cumulative Excel 8.28.14.xslx.” We preserved the 509 case responses from the earlier FOIA requests (167, 302, and 40 responses, respectively) and incorporated them into this Excel document as well. Finally, we aggregated the data from the four requests to show trends over time. We used pivot-tables and pivot-charts to map the trends, one of which is re-produced below.

Results and Analysis
Fourth FOIA Response

USCIS I-829 RFEs and denials in the latest FOIA response typically identified one or more of the following issues: job creation, sustaining the investment, redemption, miscellaneous, material change, and business plan. There were no pooled trust issues in the latest FOIA response. The high prevalence of job creation mirrors a USCIS trend. This is unsurprising given the goals of the EB-5 program discussed above.

In total, job creation issues comprised 34% of the cases analyzed in the latest FOIA response. Sustaining the investment arose in 61% of cases. Redemption issues arose 6% of the time. Miscellaneous issues accounted for 29% of cases. All other issues arose less than 5% of the time.

Some cases contained multiple issues. Job creation issues typically arose where there was a problem with the I-9 forms or other employment verification evidence was missing. In several cases, fraud or feared fraud was the issue. This is unsurprising. In the words of USCIS Ombudsman Maria Odom, “[EB-5] (p)rogram integrity is critical, and the agency should use existing USCIS Fraud Detection and National Security resources to identify and take action as warranted.”

USCIS requests for evidence in I-829 petitions tend to request the following evidence to support the investor’s claim that he or she has maintained his or her investment in an ongoing business creating jobs:

  • Federal income taxes, with all schedules and attachments, income statements and balance sheets with any financial statements provided (sometimes USCIS requires copies of returns signed by the company and certified by IRS or originally date stamped computer printouts from IRS), including all partners’ K-1 forms;
  • Business licenses at city, county or state or federal level;
  • Utility bills (usually “most recent” are re-quested);
  • Sales tax returns;
  • Seller’s permit from the state board of equalization or the like, or evidence that one is not required for the enterprise;
  • Major sales invoices that identify the gross sales amount reported on the income and expenses statement or on federal and state corporate income taxes;
  • Lease documents, all the way up to the primary lease in the event of a sublease;
  • Floor plan of the business premises showing the space occupied and used exclusively by the enterprise;
  • Detailed accounts of the enterprise’s expenditures reflecting dates, amounts, identity of payee, and reason for payment, such as bank statements, cash disbursement journals, details from relevant general ledger accounts, and other financial records;
  • Bank statements, invoices and/or receipts, contracts, and current business license;
  • Owned premises: escrow documents used to produce the property and evidence of title, available in the public records of the county recorder’s office;
  • Assets: some of the major assets that have been purchased for use in the project, including copies of invoices, sales receipts and purchase contracts containing sufficient information to identify such assets, their purchase cost, date of purchase, and purchasing entity;
  • Photographs of the inside and outside of the project, showing any company logos, emblems, or signs displayed on or in the building; color photos should show both the inside and outside of all production, warehouse, office and other spaces with equipment, merchandise, products, and employees clearly visible. If space is shared, identify each other organization which is also using the space and identify who uses which space;
  • Employment advertisements and documentation of hiring efforts;
  • Bank statements showing amounts deposited in the enterprise’s U.S. business ac-counts;
  • Evidence of all property transferred from abroad for use in the enterprise, including U.S. Customs Service commercial entry documents, bills of lading, and transit insurance policies containing ownership information and sufficient information to identify the property and to indicate the fair market valuation of such property;
  • Evidence of monies transferred or committed to be transferred to the enterprise in exchange for shares of stock; and
  • Evidence of borrowing secured by assets of the petitioner for which petitioner is personally and primarily liable.

To show direct job creation, USCIS typically requires the following:

  • For U.S. citizens: birth certificates with photo identification, certificates of naturalization, or the biographical page of U.S. passports;
  • For permanent residents, copy of valid permanent resident card, reentry permit, recent I-485 approval notice, valid audit (I- 551) stamp on or opposite immigrant visit in passport along with passport bio/photo page;
  • For asylees or refugees: biographical page and photo page of I-571 Refugee Travel Document. If not received yet, refugee or asylee cachet stamp placed in the individual passport at the time of entry into the U.S. along with passport bio/photo page;
  • For a foreign national granted suspension of deportation: copy of immigration judge’s decision to grant suspension of deportation (or, ostensibly, cancellation of removal);
  • State quarterly wage reports;
  • I-9 forms for each employee hired by the enterprise. Note that I-9s should be properly completed, signed and dated by the worker and the employer representative;
  • IRS Forms 941;
  • Federal tax returns;
  • Federal forms W-2 or W-3 for each employee; and
  • If available, E-Verify confirmation reports.

USCIS frequently states the following in I-829 RFEs about job creation:

USCIS understands that an employer is not expected to know with-out absolute certainty whether a document is genuine or not. However, with the filing of a petition before USCIS seeking benefits for aliens, the employer should follow appropriate guidelines in determining whether or not the evidence submitted for benefits meets the regulatory guidelines needed to be granted the benefit. In this instance, as noted above, the information provided with the filing of the instant petition does not meet EB-5 guidelines.

The creation of 10 full-time jobs for qualified employees is one of the criteria that need to be met. Employing individuals who are not qualifying employees and/or may have obtained their evidence through fraudulent means does not meet the criteria established for the creation of 10 full-time jobs or qualified employees through investment. Thus, although it is not a requirement for an employer to verify the status of an employee it seeks to hire through E-Verify, if the employer wishes to seek an immigration benefit for an individual by filing a petition before USCIS, it is recommended that the employer determine that the evidence presented for employment and later with the filing of a petition before USCIS meets EB-5 guidelines.

USCIS appears routinely to check various databases in I-829 adjudications, including the following:

  • State Secretary of State databases reflecting the status of registration of the enterprise. Sometimes parties fail to maintain these registrations, and USCIS has claimed that such failure results in failure of the petitioner to demonstrate that he has in good faith substantially met the capital investment requirement and maintained his capital investment when the new commercial enterprise is no longer authorized to conduct business in the state. Thus, investors should check state registration status before filing I-829.
  • Google search for the enterprise’s business. While such a website is not required, USCIS has mentioned the lack of credibility of the absence of an enterprise website when substantial marketing of the business’s products or services is part of the plan.
  • USCIS records concerning any permanent residence or other immigration status claimed concerning workers to be counted toward the ten full-time employee requirement.

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Biometrics Requests and other issues in the fourth FOIA response

Numerous I-829 RFEs and denials issued in 2013 concerned the failure to supply updated biometric information. These RFEs and denials concerned investors in the Chang class action litigation. That case, filed in 1998, challenged the retroactive application of new rules applied by the legacy Immigration and Naturalization Service to EB-5 investors. The Ninth Circuit ruled in 2003 that the agency could not apply its new EB-5 interpretations retroactively to investors who had already obtained conditional resident status. The case was eventually settled fifteen years later, in March 2013. The settlement agreement provided for the approval of I-829s for class members, contingent upon the completion of certain conditions, including the submission of updated biometric information for criminal and national security background checks. If Chang class members failed to supply their biometric information, RFEs, and then denials, followed. In our view, the RFEs and denials relating to the Chang case were a one-time event and are not relevant in analyzing general I-829 trends.

Somewhat more surprising in the latest batch of I-829 RFEs and denials was an in-crease in RFEs on sustaining the investment. However, often there was not much information as to why that issue arose in a particular case. Many RFEs simply consisted of the same boilerplate language asking for additional information, such as updated K-1 annual statements.

A few miscellaneous issues arose because the applicant was already an unconditional permanent resident by the time their I-829 petition was reviewed. In several of those cases, the EB-5 investor had invested in one EB-5 project that ran into difficulties, with-drew their money, and invested in a second EB-5 project. They then obtained an I-829 approval in the second project. They apparently failed, however, to withdraw their first I-829 petition.

Cumulative Analysis

Cumulatively, this series of articles analyzed 754 USCIS responses from a six-year period ranging from 2008 to early 2014. The most prevalent issue, as in our previous articles, overall was job creation. Overall, job creation issues arose in 34% of the I-829 RFEs and denials that we reviewed. Although the percentage of job creation issues fluctuates from year to year, job creation has always been the most prevalent issue, except in 2013. Most job creation issues arose due to verification of employment eligibility and full-time/part-time job status. In particular, USCIS seriously reviews the forms I-9, Alien Registration Numbers, Birth Certificates, Passports, I-551 cards, and other documentation provided to support employment eligibility. It is in the best interests of practitioners and potential investors alike to keep accurate records and submit as much supportive evidence as possible to avoid an RFE. Similarly, UCSCIS routinely does a spot check of full-time/part-time status by calculating full-time wages (using the State minimum wage times the mini-mum number of hours a week to be full-time) and comparing these wages to the evidence.

The second most prevalent issue was sustaining the investment. Sustaining the investment issues often arose where the investment did not last the entire two-year conditional period, or insufficient evidence of investment was presented.

All other issues (miscellaneous, material change, business plan, redemption, pooled trust, and no issue) occurred at relatively similar rates. Given the small differences between the rate of occurrence of these issues in the six-year period and 754 cases, it is statistically impossible to differentiate the relative importance of each of these issues.

Conclusion

In total, IIUSA’s four FOIA requests resulted in the cataloging of 754 USCIS I-829 RFEs and denials. Although some years had smaller samples than others, certain trends have remained constant in the six-year cross-section these FOIA requests encompass. It is clear, for example, that job creation is the most prevalent issue in USCIS RFEs and denials.

Given the goals of the EB-5 program, it is no surprise that USCIS views the job creation requirement seriously. Practitioners and potential investors alike should bear in mind USCIS’s commitment to integrity and its searching review for fraud, particularly when verifying employment eligibility. Similarly, sustaining the investment has consistently appeared as the second most prevalent issue.

Nevertheless, current trends may differ from what we found in the data. This latest FOIA contained cases adjudicated as recently as January, 2014. However, since then USCIS has approved over 800 and denied nearly 100 I-829 petitions. Moreover, as of June 30, 2014, USCIS had a backlog of nearly 1,800 I-829 petitions. Thus, our sample of 754 cases continues to graze the surface of USCIS EB-5 I-829 adjudications, especially given the lack of follow-up responses to RFEs. However, the responses reveal a glimpse at USCIS’ EB-5 priorities in I-829 adjudications. ■

Oct
31

CIS Ombudsman Annual Conference Next Week (11/6) Will Discuss Immigration Challenges faced by Individuals, Families & Employers

The Office of the CIS Ombudsman invites stakeholders to its Fourth Annual Conference, titled “Government and Stakeholders Working Together to Improve Immigration Services,” on November 6th at the National Archives in Washington, D.C. The event is schedules from 8:30am to 4:30 pm and

This conference provides a forum to exchange ideas and suggestions on the current legal immigration challenges faced by individuals, families, and employers with leaders from across the government, non-governmental organizations and the private sector.

If you would like to attend, please register by emailing your name, title, business/organization/agency affiliation, and phone number tocisombudsman.publicaffairs@hq.dhs.gov with “Annual Conference” in the subject line. Registration will remain open until all registration slots are full.
For more information on the Ombudsman Annual Conference, including archives blog posts, teleconference and more, visit www.dhs.gov/public-engagement.
Oct
24

California State Governor’s Office of Business and Economic Development (GO-Biz) Launches New EB-5 Web Portal

On October 2, 2014, the California Governor’s Office of Business and Economic Development (GO-Biz) launched a new EB-5 portal to expedite the application process for certifying Targeted Employment Areas (TEAs).

Want to learn more about TEAs? Purchase IIUSA’s September Webinar here.

 

A TEA is an area which is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate . The minimum qualifying investment either within a high-unemployment area or rural area in the United States is $500,000, otherwise a $1 million investment is required to satisfied capital investment requirements.

 

Effecting October 2, 2014, the process for determining qualifying TEA census tracts outside of the State’s designated high unemployment census tracts or, to determine and apply for special TEAs and/or, for requesting a Certification Letter will be automated through a new interactive database tool. 

 

Prior to the new TEA web portal, applicants for the EB5 program were required to search through a series of spreadsheets and different websites to determine if their project was located in a qualifying Targeted Employment Area. Applicants can now enter in a project address and quickly determine whether it would qualify as a TEA or, if necessary, create a qualifying TEA under the state’s policy and guidelines. The new online database also allows for quicker response times from GO-Biz and more certainty for the applicants.

How to identify a qualifying TEA?
Step One: Qualifying Cities, Counties, CDPs, or MSAs
Step Two: Find Your Census Tract
Step Three: Qualifying Census Tracts
Step Four: Certification Letter 

Read more at the Go-Biz EB-5 Investor Visa Program Portal

Oct
22

EB-5 Market Exchange Attendees: Stop By the “EB-5 Is Working” Advocacy Center at the Registration Desk And Get Your Pin

Unite and advocate on behalf of the EB-5 Regional Center Program – which is due to sunset in September 2015!

Today begins the full first day of IIUSA’s 4th Annual EB-5 Market Exchange at the Westin St. Francis Hotel in San Francisco. eb5 is workingWe encourage all attendees to stop by the “EB-5 is Working” Advocacy Center & Help Desk, adjacent to the registration table, and send a brief letter to your local congressional representative letting them how the EB-5 Program is affecting YOUR COMMUNITY by stimulating the economy, adding jobs and improving the welfare of your city/county/state. The Advocacy center will be open from Wednesday through Friday from 7:00am to 5:00pm.

Help IIUSA educate Congress on the EB-5 Program by stopping by our on-site Advocacy center and help desk. You can visit IIUSA’s legislative action center to learn more about IIUSA’s advocacy platforms.

 

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Oct
20

October Rewind: Prepared Remarks of Nicholas Colucci, Chief, Immigrant Investor Program, USCIS at IIUSA’s 7th Annual EB-5 Regional Economic Development Advocacy Conference

IIUSA Executive Director Peter D. Joseph greets USCIS EB-5 Program Chief Nicolas Colucci following his remarks to the EB-5 Stakeholder Community at the IIUSA EB-5 Regional Economic Development Advocacy Conference on May 8th, 2014 in Washington, D.C. Tickets are now on sale for IIUSA’s 2015 EB-5 Advocacy Conference, April 12-14 in Washington, D.C.

As IIUSA’s 4th Annual EB-5 Market Exchange approaches, we take this opportunity to look back on a keynote speech from oIIUSA’s 7th Annual EB-5 Regional Economic Development Advocacy Conference.

On May 8, 2014 U.S. Citizenship and Immigration Service (USCIS) Immigrant Investor Program Chief Nicholas Colucci delivered a 20-minute prepared speech and held a short Q & A with EB-5 stakeholders in Washington, D.C. This engagement marked the first time that Mr. Colucci addressed the EB-5 community in person.

IIUSA Members can listen to the USCIS recordings below:
9/10/14 – USCIS EB-5 Stakeholders Engagement Teleconference 09/10/2014
8/14/14 – Dialogue with USCIS Director Leon Rodri­guez, 08/14/2014
USCIS ELIS (Electronic Immigration System) Webinars
7/30/14- USCIS ELIS (Electronic Immigration System) Form I-526, Immigrant Petition by Alien Entrepreneur
8/5/14 August 5, 2014 – USCIS – Step-by-step Overview of the ELIS Document Library

Below is a full transcript of Mr. Colucci’s remarks. A full report of IIUSA’s 7th Annual EB-5 Regional Economic Development Advocacy Conference will be made available on the blog next week.

Prepared Remarks of Nicholas Colucci
Chief, Immigrant Investor Program
U. S. Citizenship and Immigration Services
Association To Invest in the United States (IIUSA)
Eb-5 Regional Economic Development Advocacy Conference
May 8, 2014
Washington, D.C.
 
Good afternoon, and thank you to Executive Director Joseph, the Board of Directors, and the entire IIUSA membership for inviting me to your conference today. I read on your website that IIUSA represents more than 170 regional centers, which account for greater than 95 percent of all the capital formation associated with the Employment-Based Fifth Preference (EB-5 program), and over 195 associate members of the regional center industry, which include attorneys, broker-dealers, consultants, developers, economists, financial advisors, migration intermediaries, etc. Thus, our engagement with stakeholders such as IIUSA offers a unique opportunity for the U.S. Citizenship and Immigration Services (USCIS) to reach many of the stakeholders who have an interest in the program. But they’re not the only reason I’m here today. I’m here because I sincerely hope to continue the meaningful dialogue that exists within the EB-5 stakeholder community, of which we’re all a part.

 

 

While I plan to provide a number of program-related updates here today, I also want to spend a little time discussing my background, as it has helped to shape how I plan to lead the program.

I’ve spent more than 20 years in federal government service, with three different Departments, and this experience has provided me with exposure to many geographic regions, business types, and government and non-government programs. It is through these experiences that I’ve developed a better understanding of the positive impacts of collaborative, constructive engagements.

One such example is when I served at ATF, the Bureau of Alcohol, Tobacco, Firearms and Explosives. One of ATF’s main goals as the Federal regulator for several industries is to increase each industry’s rate of compliance with Federal laws and regulations. At ATF, I was associated with developing a program that concentrated on a subset of a particular regulated industry, whose rate of compliance had historically trailed that of other members of the industry.

Specifically, the program called for ATF to do the following three things in an attempt to reach our goal of producing a measurable increase in compliance:

1. increase its proactive interaction with the industry subgroup;
2. promote transparency with respect to the types of violations being discovered during audits and the steps the industry could take to avoid these violations in the future; and
3. dedicate additional resources to auditing these industry members over the next three years.

The results we achieved were dramatic. However, we would not have been able to achieve these results without the involvement and engagement of the industry. At the end of two years, the compliance rates of this industry subgroup had increased significantly. I can confidently state that this could not have happened had ATF developed a program that did not involve that significant outreach component. Because we had an engaged stakeholder, and because we could have honest conversations between the two organizations, we changed the dynamic of the relationship and worked collaboratively towards achieving a common goal. I hope to establish a similar relationship with our stakeholders across the EB-5 community, as we must work together, and have honest conversations to build a stronger and more vibrant program.

A second experience that helped shape how I plan to administer the EB-5 program is an experience I had at FinCEN – the Financial Crimes Enforcement Network, which is the anti-money laundering regulator for US financial institutions. The same week I was appointed FinCEN’s associate director of the Analysis and Liaison Division, the Secretaries of Treasury and Housing and Urban Development held a press conference with the Attorney General to announce the Administration’s “Making Home Affordable” program, which would provide qualifying homeowners a lower interest rate to help them keep their home. They also announced that FinCEN, and specifically the Division that I was leading, would serve to coordinate the Government’s anti-fraud efforts associated with the program.

Through my work on this program, I learned two important things:

  • One is the resources that can be brought to bear across the interagency community, particularly in coordination with not-for-profit and other private entities, can be extremely powerful when focused and coordinated; and
  • two, that there are very bright individuals out there who spend a lot of time developing ingenious fraud schemes and that they will not hesitate to take advantage of others when they are at their most vulnerable.

With respect to interagency community coordination, at FinCEN we worked with members from the Federal Bureau of Investigation, Secret Service, the Department of Housing and Urban Development’s Office of the Inspector General, the Federal banking regulators, and a host of other Federal, state and local agencies. I met and worked with key players within each of these organizations, and throughout my time at FinCEN, I probably worked with two dozen more Federal agencies. Each agency, as you know, has a specific role and responsibility, and I was able to learn and understand the roles, tools, and sources of information that they could contribute to an effort.

I have begun to develop this same depth of knowledge in the context of the EB-5 program as many agencies intersect with EB-5, whether it is the Securities and Exchange Commission, Immigration and Customs Enforcement, or the Department of Commerce. One of the things I propose to do, and one of the reasons that the program was relocated to Washington, DC, is to facilitate greater interaction among the interagency community. Just as the EB-5 program cannot be successful without your support, we need to build strong partnerships with other Federal agencies who are likewise stakeholders in the program.

Now, with respect to those out there who take advantage of others: I learned quickly at FinCEN that where there is money, there will be fraudsters. In the context of mortgage fraud, I saw families who were struggling to save their homes only to be victimized by someone, usually a part of an organized group, who claimed they could help families remain in their home for an upfront fee of around $3,000. Of course, after the money was paid, help was not provided.

During my five years at FinCEN, we worked with law enforcement, regulators, and industry to combat not only mortgage fraud, but many other types of fraud including, but not limited to income tax refund fraud, health care fraud, and fraud against senior citizens. The one consistent theme is that organized groups follow the money, and when one source would dry up they would develop a fairly sophisticated scheme to go after the next one.

Given the amounts of monies involved in the projects undertaken in the EB-5 program, fraud is something against which we must all be vigilant. USCIS cannot do this on our own. Many times, you will be in the position to hear or see something suspicious or “too good to be true” before we do. In these cases, I ask that you share this information with us through our immigrant investor mailbox at USCIS.ImmigrantInvestorProgram@uscis.dhs.gov. When fraud does occur, as you know, the entire program suffers, so it is imperative to all of us to maintain and strengthen the integrity of the program.

So, to summarize, the three things from my past experience I hope to bring to the program include:

  • an active and honest dialogue with our stakeholders;
  • a coordinated effort within the interagency community; and
  • with the assistance of our stakeholders, to guard against fraud and other transgressions that damage the integrity of the program.

Now, I’d like to take the remainder of the time to provide a few program updates. As I mentioned at my first stakeholder engagement in February, I plan to concentrate my time primarily in three areas:

  • building the foundation;
  • customer service and transparency;
  • and performance and predictability.

With respect to building the foundation, by the end of this month, we hope to have upwards of 75 staff on board. This does not include those individuals from the Office of Chief Counsel and Fraud Detection and National Security, who work with the program. This is an almost 40 percent increase from where we were at the end of February. We also just had a few job announcements close, for experienced and entry-level adjudicators. It remains our goal to be at or exceed 100 staff members by the end of the fiscal year.

In terms of training, we are striving to ensure our staff continues to participate in professional development opportunities. In fact, just last week we provided our staff with a 3-hour block of instruction from the Securities and Exchange Commission. We are also providing two additional training courses in the next month or so – one on business organizations and documents, such as subscription agreements and private placement memorandums, and another on international banking and money laundering. Finally, we are customizing a decision writing course to assist our adjudicators and economists in drafting clear and concise requests for evidence (RFE) and decision letters. All of this will serve to expand the depth and breadth of the knowledge of our workforce and continue to strengthen the program.

With respect to customer service and transparency, we’ve spent a significant amount of time concentrating on this area in the last month or so. Specifically, we’ve begun to update the website each month with current processing times for each of the form types and we will continue to do this on a monthly basis.

We’ve also recently created a customer service team to respond to inquiries that come to us via the immigrant investor mailbox and service request management tickets, which stakeholders can create themselves online or have created for them by our customer help line. I am proud to state we are ahead of agency standards in our responses to these inquiries.

Finally, we are also seeking a new platform to receive and respond to customer service inquiries, as the mailbox does not lend itself to monitoring for trend and other types of analysis. With this type of information, I’m confident that we will be better able to determine what type of updates and suggestions we can provide to our stakeholders proactively, in an effort to reduce the number of inquiries we receive, thus freeing up more time to adjudicate cases, while providing the best possible service to our customers.

We recently held our second stakeholder engagement since the end of February. At this engagement we asked stakeholders to express their thoughts and input regarding potential EB-5 regulatory changes for USCIS to consider. More than 700 individuals participated and we were able to hear thoughts and feedback from a number of them. We also invited stakeholders to express their ideas and thoughts via a new online tool, called the USCIS Idea Community. More than two dozen individuals provided comments and greater than 200 votes were cast on these comments. We would like to thank those shared their thoughts through the Idea Community.

Finally, in an effort to increase transparency, we are beginning to frame out an annual report beginning in fiscal year 14. My hope is to provide the report sometime around the end of this calendar year.

Now, to address performance and predictability. As I announced in February, I expected to start seeing reduced processing times for regional center applications. In fact, we are starting to see them trend this way. January’s processing time for Form I-924, Application for Regional Center Under the Immigrant Investor Program, was 12 months, and the most recent report, which is March, indicated it has been reduced to around 10 and a half. It is clear that our economists are becoming more efficient and I expect we will see additional improvements in processing times in the coming months.

Similarly, we are seeing progress in the area of Form I-829, Petition by Entrepreneur to Remove Conditions. Our processing time, as you may have seen in our website, has been reduced to about 9 months from more than 11 in January. As you may recall, Form I-829 will be worked in the California Service Center for the remainder of the fiscal year. We will begin to transition this workload to the Immigrant Investor Program Office in Washington, D.C. in July, with a complete handover expected to take place on October 1.

The news is not as good for FormI-526, Immigrant Petition by Alien Entrepreneur. In January, we were around 10 months, and the latest data I have through March indicates we are at a little over 13 months. However, I believe we will soon begin to make progress in this workload as well. In recent weeks we’ve hired a number of adjudicators and we are in the process of hiring another round. We’ve also taken steps to increase the efficiency of our training program for new adjudicators who have previous USCIS experience. In fact, we’ve now begun to certify experienced adjudicators to work on 526s in a matter for 4 to 6 weeks, whereas in the past, it took longer than 2 months.

While ensuring quality, we are working diligently to have our actions equal or exceed the number of receipts each week, and this month I have set an office-wide goal to do this. I can assure you that we are committed to achieving additional efficiencies within the I-526 work and that our staff are aware of the fact that the number of pending petitions equals billions of dollars that will potentially be invested in in the American economy and create tens of thousands of jobs for qualified American workers. They are also aware that this means that thousands of families are checking their mailboxes each day waiting to see if their petition has been approved so they can participate in the American dream. Please know we take our responsibility seriously and we are working with a sense of urgency to move through these petitions.

Finally, before I close, one of the other things we are doing to help increase productivity and predictability is analyzing the RFEs we’ve issued. By sharing this information with all of you, likely via our annual report, our hope is that it will assist you in avoiding potential RFEs as you assemble new applications and petitions.

I’d like to share one such topic to begin this dialogue. As you know, USCIS has and will continue to rely on a variety of economic models and reasonable methodologies (like feasibility studies) to establish by a preponderance of the evidence that a project of a job creating entity will create a sufficient number of indirect jobs for the immigrant investors in that project. USCIS currently reviews economic impact analyses that use the results of economic modeling software such as IMPLAN, REMI, and REDYN to establish the number of indirect jobs created by the job creating entity. And while USCIS recognizes that these modeling platforms are valid economic modeling systems for estimating job creation, as you know, the burden of proof is on the applicant or petitioner to clearly explain the inputs used in the model and to demonstrate the mechanism of job creation.

Please note that jobs with a duration of less than 24 months are not eligible to be counted for EB-5 purposes. Nor are jobs from transactional expenses, for example attorney’s fees for closing costs. Also, please note that transfers or transfer payments are not eligible expenses for job creation. Transfer payments like taxes, insurance premiums, permits and fees are classified by economists as redistributions and not activities that create output. So, while EB-5 investor funds can be used to pay all legitimate business expenses, not all business expenses can be used in job creation calculations. Therefore, the economic models should provide an explanation of the inputs used and show that ineligible expenses and transfers are not included in job creation calculations.

One common reason for an RFE relating to the economic modeling analysis relates to direct versus indirect jobs. As you know, USCIS regulations refer to direct jobs as those at the new commercial enterprise; however, economic models distinguish direct job and indirect jobs differently. With respect to the economic models, direct jobs refer to jobs directly related to the project. For example, construction jobs for a project are often considered “direct jobs” in the economic analysis and may be credited toward the EB-5 requirement if the jobs are expected to last at least 2 years.
Any economic analysis based upon models such as IMPLAN, REMI, or REDYN must be sufficiently transparent to allow USCIS to distinguish between the model’s calculation of direct and indirect jobs. If the model used in an economic impact analysis aggregates direct and indirect jobs, the economist preparing the analysis for the regional center should demonstrate how the model’s result can be disaggregated into its direct and indirect jobs components. This may involve running the model twice: once to calculate direct effects and once to calculate the indirect and induced effects. In most cases a narrative by the economist preparing the analysis that explains how direct and indirect jobs can be derived from the aggregate job total is sufficient.

Additionally, the economist preparing the analysis for the regional center should provide the number of direct and indirect jobs created that is attributable to each of the model’s inputs. For example, differentiating the jobs created from construction expenditures from those created from the ongoing operations of the property constructed. In addition, USCIS recognizes that indirect jobs that are estimated through use of an economic model and are located outside of the geographical boundaries of a regional center may qualify if the economic methodology is reasonable.
I hope that by sharing this example, which will be included with the rest of my comments on our website, we can begin to inform you how we evaluate economic models and the steps that you can take to make the models more transparent so that an RFE can be avoided, which will obviously increase our efficiency for that particular application or petition, as well as others in line behind it.

Finally, in closing, I want to again express my appreciation for the invitation to speak to you today. I very much look forward to our dialogue in the coming months and I encourage all of you to provide us with ongoing constructive feedback with respect to how we are administering the program. We can only continue to improve the program so long as you, as our stakeholders, are willing to share your thoughts and concerns with us and we can have that open and honest dialogue I discussed at the beginning of my comments. EB-5 is not simply a government or USCIS program, it is a program of the entire EB-5 stakeholder community and it is through our combined efforts that the program provides the greatest possible benefit to the U.S. economy, job-seekers, and the immigrant entrepreneurs and investors. Thank you all for your time and attention today.

Oct
13

Securities and Exchange Commission (SEC) Issues Investor Alert for Private Placements Under Regulation D

On September 24, the SEC’s Office of Investor Education and Advocacyissued an Investor Bulletin to educate investors about investing in unregistered securities offerings, or private placements, under Regulation D of the Securities Act.

The alert highlighted several “red flags” that investors of Regulation D offerings should be aware of. These red flags include claims of high returns with little or no risk, unregistered investment professionals, aggressive sales tactics, problems with sales documents, no net worth or income requirements, no one else seems to be involved, sham or virtual offices, not in good standing, unsolicited investment offers and suspicious or unverifiable biographies of managers or promoters.

The Investor Bulletin also defined the three SEC rules-Rules 504, 505 and 506-that issuers often rely on to sell securities in unregistered offerings and things that investors should consider before investing.

Rule 504

Rule 504 permits certain issuers to offer and sell up to $1 million of securities in any 12-month period.  These securities may be sold to any number and type of investor, and the issuer is not subject to specific disclosure requirements.  Generally, securities issued under Rule 504 will be restricted securities (as further explained below), unless the offering meets certain additional requirements.  As a prospective investor, you should confirm with the issuer whether the securities being offered under this rule will be restricted.

Rule 505

Under Rule 505, issuers may offer and sell up to $5 million of their securities in any 12-month period.  There are limits on the types of investors who may purchase the securities.  The issuer may sell to an unlimited number of accredited investors, but to no more than 35 non-accredited investors.  If the issuer sells its securities to non-accredited investors, the issuer must disclose certain information about itself, including its financial statements.  If sales are made only to accredited investors, the issuer has discretion as to what to disclose to investors.  Any information provided to accredited investors must be provided to non-accredited investors.

Rule 506

An unlimited amount of money may be raised in offerings relying on one of two possible Rule 506 exemptions.  Similar to Rule 505, an issuer relying on Rule 506(b) may sell to an unlimited number of accredited investors, but to no more than 35 non-accredited investors.  However, unlike Rule 505, the non-accredited investors in the offering must be financially sophisticated or, in other words, have sufficient knowledge and experience in financial and business matters to evaluate the investment.  This sophistication requirement may be satisfied by having apurchaser representative for the investor who satisfies the criteria.  An investor engaging a purchaser representative should pay particular attention to any conflicts of interest the representative may have.

As with a Rule 505 offering, if non-accredited investors are involved, the issuer must disclose certain information about itself, including its financial statements.  If selling only to accredited investors, the issuer has discretion as to what to disclose to investors.  Any information provided to accredited investors must be provided to non-accredited investors.

What should investors do before investing?

considerTo read the Investor Bulletin, Click Here. 
Oct
08

USCIS Updates: Form I-829 Comments, Recommendation on Regulator Reform, New Mailing Address, I-924A Filings

With the beginning of the new fiscal year comes some anticipated updates and notes from the U.S. Citizenship and Immigration Services (USCIS).

Form I-829 Comments
In the September 15th Federal Register (Vol. 79, No. 178), it was announced that “The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) invites the general public and other Federalagencies to comment upon this proposed revision of a currently approved collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the Federal Register to obtain comments regarding the nature of the information collection, the categories of respondents, the estimated burden (i.e., the time, effort, and resources used by the respondents to respond), the estimated cost to the respondent, and the actual information collection instruments”.

 

Dates: Comments are encouraged and will be accepted for 60 days until November 14, 2014.

 

Addresses: All submissions received must include the OMB Control Number 1615-0045 in the subject box, the agency name and Docket ID USCIS- 2006-0009. To avoid duplicate submissions, please use only one of the following methods to submit comments: (1) Online. Submit comments via the Federal eRulemaking Portal Web site atwww.regulations.gov under e-Docket ID number USCIS-2006-0009; (2) Email. Submit comments to
USCISFRComment@uscis.dhs.gov;  (3) Mail. Submit written comments to DHS, USCIS, Office of Policy and Strategy, Chief, Regulatory Coordination Division, 20 Massachusetts Avenue NW., Washington, DC 20529-2140.

 

To read supplementary information, click here.

 

Recommendation on Regulatory Reform
IIUSA’s Public Policy Committee’s has put together a subcommittee taskforce to propose comments on behalf of IIUSA. If you have comments on regulatory reform, please e-mail info@iiusa.org and we will be sure that they reach the taskforce.

 

Reminder To File I-924A & Next IIUSA Webinar
The annual reporting is used to demonstrate a Regional Center’s continued eligibility for the Regional Center designation, which must be filed for each fiscal year (October 1 through September 30) within 90 days after the end of the fiscal year (on or beforeDecember 29) of the calendar year in which the fiscal year ended. The failure to timely file a Form I-924A Supplement will result in the issuance of an intent to terminate the participation of the regional center, which may ultimately result in the termination of the approval and designation of the regional center.

IIUSA’s next webinar, to be held on October 30th, will be holding a practical workshop for how to approach Regional Centers filings of Form I-924A. Sign up now!