 Stephen Yale-Loehr, President Emeritus, IIUSA; Of Counsel, Miller Mayer LLP On February 26, 2015, the U.S. Citizenship and Immigration Services (USCIS) hosted a teleconference. USCIS labeled the call the first in a series of “Interactive” engagements designed to address adjudicative issues USCIS observes in reviewing EB-5 filings. This Interactive focused on how to deal with requests for evidence (RFEs) in EB-5 source of funds issues.
As background, every EB-5 investor must show that the money they are investing in the United States was lawfully obtained. There are a variety of ways to prove lawful source of funds. The key is good documentation showing both the source and path of the money* (see footnote).
Key points of focus in the “Interactive” discussion included the importance of third party documentation. Self-serving documents prepared by the petitioner or friends are not as credible as documents from third parties, such as governmental authorities and banks.
USCIS officials explained common EB-5 source of funds scenarios and how to document them. For example:
- Earned income: The investor should present proof of their salary, employment certificates, affidavits from past employers, income tax records, and bank statements showing deposits over time. USCIS prefers objective evidence, such as bank statements, over statements from friends or relatives. If an employer writes a letter certifying that the investor works there, corroborate the letter with bank statements showing regular monthly deposits of the investor’s salary.
- Investment proceeds: The investor should show: (1) that the money used to make the initial investment were obtained lawfully; (2) that the investor owned the investment; and (3) receipt of the capital from the investment proceeds. Bank statements and documents of the sale of the investment are key here.
- Sale of property: The investor should show the lawful source of the money used to buy the property. The investor should include the purchase contract for the property, the ownership registration or deed, and tax receipts for property taxes paid on the property. Document the property sale and any taxes paid on the sale. If a mortgage has to be paid off as part of the property sale, include documentation of that payoff in the source of funds package.
- Property loans: The investor should include documentation of the loan or mortgage contract, the notation of the lien on the ownership documents, evidence of the value of the property compared to the value of the loan, and any relevant bank records. The USCIS may question a loan document that doesn’t mention repayment terms, loan duration, or the property used as collateral for the loan. The investor must be personally liable to repay the loan.
- Ownership in a company: The investor should show the lawful source of the money used to buy an ownership interest in the company.
- Company loans: The investor must show that the company has enough assets to make the loan to the investor. If the investor is a shareholder, include financial audit reports, bank statements, etc. The investor should submit a copy of the shareholder meeting minutes documenting and approving the loan.
- Gifts: The donor must show how they lawfully obtained the money to give the money to the investor. For example, if a parent earned money over years, the documentation described above concerning earned income would apply here to show that the parent lawfully earned the money to give it to his or her child to make an EB-5 investment.
The USCIS concluded the call with general tips for avoiding a source of funds RFE:
- Explain any inconsistencies in the documents provided;
- If a required document is unavailable, explain why;
- Consider the probative value of evidence (i.e., evidence from an objective third party is better than evidence from the investor, his or her friends or family members, or his or employer); and
- Provide full translations of foreign documents. Do not translate just part of a document.
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