DC Circuit Court Decision Holds that EB-5 Loan Proceeds Qualify as Cash

On October 27, the U.S. Court of Appeals for the D.C. Circuit issued an important decision on the investment of loan proceeds in EB-5 cases (opinion available here).

In 2015, USCIS held a stakeholder engagement where it announced a new policy regarding the investment of loan proceeds. Under that policy, cash obtained from a loan was classified as “indebtedness” rather than “cash.” This meant that USCIS would accept the investment only if the investor’s loan was secured by the investor’s own personal assets. Because USCIS announced this policy with little warning and insisted on applying it to pending petitions, the policy resulted in the denial of hundreds of pending I-526 petitions. For example, the policy affected investors who obtained unsecured loans from family members or businesses, or who took out loans secured by assets co-owned by a parent or other family member.

In its October 27 opinion, the D.C. Circuit affirmed a 2018 district-court decision invalidating this loan proceeds policy. The court held that under the plain meaning of the regulation defining “capital,” loan proceeds are “cash,” not “indebtedness.” This, in turn, means that USCIS has no lawful basis to apply the special collateralization rules for indebtedness when an EB-5 investor invests cash loan proceeds.

This case is a class action, and so the D.C. Circuit’s decision applies to any EB-5 investor who received an I-526 denial on or after June 23, 2009, if the denial was based solely on USCIS’s loan proceeds policy. EB-5 Investors who believe they are class members and can benefit from this decision should follow the procedures on USCIS’s website (https://www.uscis.gov/working-in-the-united-states/permanent-workers/eb-5-immigrant-investor-program), under the heading “Class Action Member Identification Notice,” to inform USCIS. The I-526 petitions of eligible class members should be reopened and re-adjudicated.

If you have any questions, please contact Edward Ramos (eramos@kktplaw.com) of Kurzban Kurzban Tetzeli & Pratt—the firm that brought this case, and that represents the certified class.





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