Notes from 4/22/2015 U.S. Citizenship and Immigration Services (USCIS) EB-5 Stakeholder Engagement
By Robert C. Divine, Vice President, IIUSA; Shareholder Baker, Donelson, Bearman, Caldwell, & Berkowitz, P.C.
On April 22, 2015 USCIS held another EB-5 stakeholder meeting by telephone.
Mr. Nicholas Colucci, Director of the Investor Program Office (IPO), first provided some data about the office’s staffing and activity:
- 101 staff members, including 53 adjudicators and 21 economists, with 5 more adjudicators coming soon. He targets having 121 staff by September 30, 2015. He expects that staffing to be able to keep up with receipts and possibly to get more staff to progress on backlogs.
- For first time since start of IPO, in March it completed 1100 I-526s, more than the 680 received.
- First half of fiscal year (October through March)
I-526: 5250 received 4236 completed
I-829: 1523 received 341 completed
I-924: 170 received 135 completed
- Compared to same time period last year (first two quarters of fiscal year), IPO received 12% more 526s, 76% more 829s, 34% 924s.
- Processing times at end of February:
I-526 – 14.2 months
I-829- 12.3 months
I-924 – 11.7 months
- Two years ago, IPO received 340 I-924A forms, issued 29 NOITs for failure to file 924A (essentially for inactivity), and of those terminated 8 RCs. IPO issued 30 NOITs for failure to promote economic growth (essentially, inactivity) and terminated 7 for this reason.
- Last year, of the 581 designated RCs, 524 filed 924A, 57 failed to file, and an unidentified number of NOITs for other reasons. IPO also terminated 4 other RCs for other than inactivity: 1 RC dissolved, 2 after criminal investigation, and 1 for alleged failure to promote economic growth based on a determination that the RC misallocated investor funds and was unable account for EB-5 investments under sponsorships, among other shortcomings.
Mr. Colucci urged stakeholders to call or email USCIS about violations by parties involved in the EB-5 process.
Other representatives spoke on issues and answered some questions on the following topics:
Visa number retrogression: USCIS is aware of it and is coordinating with State Department.
USCIS is working through the internal agency clearance process on a draft policy memo relating to the implications of retrogression, including the effect of delayed immigration process on compliance with the I-829 requirements to maintain the investment and create the jobs. No further details on that.
Eligible investors can submit I-485 for adjustment of status within the U.S. as long as on the date of filing it a visa number is available. After such filing, if a visa number becomes unavailable, the USCIS field office will hold the I-485 in abeyance until number becomes available [and child’s adjusted age will not be affected].
[For a recent article about visa number retrogression and child status protection, particularly in the context of immigrant visa processing,click here.]
Contribution of “indebtedness” as capital: IPO reported that it persists in a hard line on its treatment of loan proceeds used for EB-5 investments. While some argue that the regulations’ reference to the contribution of “indebtedness” as capital relates only to situations where the investor puts in less than all of the minimum investment and provides a promissory note for the rest (see Matter of Hsuing), USCIS has been denying petitions by investors who used for their EB-5 investment the proceeds of loans that were not secured by the personal assets of the investors. Stakeholders asked if someone obtains a loan and then gifts the proceeds of that loan to the investor, would that be acceptable. A USCIS representative first avoided the question but then seemed to say that if the gift for the EB-5 investment comes down the chain from a loan not secured by the investor’s personal assets, it will not be approvable. USCIS also noted that if the written loan terms restrict use of the proceeds to purposes that could not include an EB-5 investment, USCIS will deny the petition because the funds were obtained through fraud on the lender. USCIS said it will post a policy statement on this topic on the USCIS Interactive web site. USCIS had discussed these issues internally in detail before the meeting and clearly stated that they would not engage in any debate about it but would only answer questions about the parameters of the policy.
SEC Investigations: IPO refused to comment on SEC investigations but clearly acknowledged that it is coordinating with the SEC.
IPO and AAO: IPO stated that IPO and the USCIS Administrative Appeals Office (AAO) are components of USCIS, with a duty to collaborate for consistency on policy issues, but when it comes to adjudication of cases, AAO is not involved in adjudication of cases at
IPO and IPO is not involved in appeals adjudication process and AAO.
Bridge financing: IPO clarified on its own initiative that bridge financing can used be both for RC-sponsored and for non-RC-sponsored (“direct”) deals according to the parameters in the May 30, 2013 policy memo.
I-924 Exemplar: IPO continued to promote the use of the I-924 exemplar, which it emphasized can resolve and eliminate project issues sooner than going directly to investor subscription and I-526 petitions, noting this results in reduced USCIS workload on duplicative RFEs, NOIDs, etc.
One stakeholder asked about filing a “John Doe I-526” rather than an I-924 exemplar. USCIS said that is an exemplar, and it welcomes such. [But this answer could be misunderstood to have encouraged the filing of a “John Doe I-526,” with the expectation that USCIS would adjudicate it resulting in deference to subsequent I-526 petitions for the same project. But I think the USCIS representative only meant that a “John Doe I-526” is the whole idea behind an I-924 exemplar, which is encouraged. I believe that a stand-alone John Doe I-526 would be rejected or denied by USCIS, and only a real investor can file an I-526, which could only result in an approval notice in the name of “John Doe” anyway with no reference to any regional center, capital investment project, or documents, as opposed to an I-924 exemplar that specifies all those things. The reason this matters is because only a regional center can file an I-924, which means that there is no way to seek project approval for a “direct” EB-5 investment (without RC sponsorship) in advance of the first real investor’s I-526. Another reason is that stakeholders continue to worry that USCIS will hold processing 526s for other projects while an exemplar petition for a new project is being reviewed, and in fact one stakeholder asked that question with reference to a specific situation and IPO unfortunately responded that they cannot answer case specific questions, although in previous engagements USCIS has stated that they only hold I-526s for the project that is the subject of the I-924 exemplar.]
Government seals: IPO emphasized that the use of government seals for EB-5 deal promotion is not allowed without prior written approval of DHS [which we know will not be forthcoming].
RFEs: IPO said that if it issues a request for evidence that clearly is not well grounded in USCIS policy (i.e., reflective of deficient training), the recipient could send it with a request for review and correction by email to the USCIS IPO mailbox, but the RFE recipient should plan to respond on time to the RFE as issued unless and until told otherwise.
Next engagement: IPO mentioned that on June 4 it will hold its second “EB-5 Interactive” engagement presenting IPO economists as panelists, with a focus on the types of costs that are eligible for deriving indirect job creation.