This fascinating AAO decision (April 23, 2010) was referenced by CSC Division III Supervisor Blake Gotto at the March 16, 2010 EB-5 Forum at the California Service Center as an example of USCIS thinking on the “material change” issue. Apparently a lot of people asked about it, and the decision was distributed by USCIS to participants in the June 16 EB-5 Stakeholder Meeting in Washington, DC, with the caveat that it is “not being used as a binding decision on the agency, but does reflect their perspective.” The decision includes a number of very interesting features.
Reading between the black-outs, the case involves a Partnership under Philadelphia Industrial Development Corporation (PIDC), which is operated by CanAm Enterprises, a weighty and professional player in the EB-5 field. The petitioner in this case filed an I-526 in May 2005 and an I-829 in November 2008. The I-829 was denied for the following reasons:
- Material change issue: “The petitioner’s failure to execute the plan presented in support of the form I-526 petition by not only switching to a project that USCIS had never reviewed but also by financing different expenses with the original project than those projected in the original business plan.” The project as presented at the I-526 stage involved acquisition and renovation of a warehouse to be used by a discount seller of home improvement materials; the EB-5 funds were in fact used to pay off interim financing and an existing mortgage for a restaurant. Citing Matter of Izumi, Chang vs. United States of America, and the 12/11/2009 Neufeld Memo, the AAO argued that the I-829 could not be decoupled from the I-526, or rely on approval of a Form I-526 for an investment project that USCIS did not review as part of that adjudication.
- TEA designation issue: The petitioner demonstrated TEA-designation for an address other than the address where the project was in fact located.
- Investment structure issue: A bridge loan does not allow the petitioner to be credited with the statutorily-required job creation.
The website for Philadelphia Industrial Development Corporation states, presumably relevant to this case, that “Consistent with the offering [for EB-5 Immigrant Investment Project loan to 1801 Restaurant Partners], an attractive alternative investment was recommended by the general partner. All limited partners who elected not to make the alternative investment have received a full return of their $500,000 principle investment.”
