2010 AAO Decisions (CARc)

USCIS has updated its website with EB-5-related decisions from the Administrative Appeals Office through February 18, 2010. The following is a summary of salient points from the newly-posted decisions:

Nov 09, 2009_01: No content of note.

Jan 06, 2010_01: This decision concerns a stand-alone EB-5 case involving an operational hotel purchased through investment by the petitioner in 2006. It was denied for the following reasons:

• The petition did not establish creation of 10 new jobs (in addition to preserved jobs) and did not provide a satisfactory business plan.
• The petition did not establish a personal investment of $1,000,000 (“an investment by a corporation cannot be considered a personal investment by its sole shareholder”). (This issue was introduced by the AAO, not a point in the original denial by the service center.)

Feb 18, 2010_01 to _07: These decisions concern I-526 petitions filed in August 2008 for an investment within Capital Area Regional Center Job Fund (for renovation of the former Watergate Hotel). The decisions are similar, and include the following reasons for denial:

• The petition was supported by agreements substantially amended from those filed with the original regional center proposal, and did not disclose that the agreements had been amended. The petitioner subsequently filed an amendment with USCIS, but this did not help matters since “amendments to agreements or business plans that postdate the filing of the petition will not be considered.” CARc’s informal and ex parte communications with a USCIS official concerning the acceptability of the amendments were also not admitted.
• The Operating Agreement included disqualifying provisions relating to reserve accounts, interim investments, membership units in exchange for services and the waiver of expense fees from the aliens.
• EB-5 Project Capital toward job creation and organizational fees were paid out of the same account, and it wasn’t demonstrated that the account included sufficient funds to pay organizational fees without the use of any of the $500,000 being invested by each alien.
• Use of EB-5 investment to back a letter of credit to secure a construction loan does not sufficiently place the investors’ funds at risk for job creation.
• The petitioner did not demonstrate that the location of the investment was considered a TEA at the time of filing or investment.
• The business plan included “material changes” from the original business plan. (“While we recognize that business plans often require some flexibility to deal with unforeseen circumstances, the business plan and the terms of the commitment letter in this matter have been amended with nearly every filing. These amendments go far beyond mere clarifications.”) The petitioner failed to demonstrate that the original business plan and projections continued to be viable.

I note that, as usual, all the decisions cite Matter of Ho on business plans.