Updates from the IIUSA Economic Development Advocacy Conference

This year’s IIUSA annual meeting in Washington DC on May 7-9 was remarkable not so much for what was said but for who spoke. At the IIUSA Washington DC meeting back in 2011, the mood was depressed and we were lucky to get prominent attorneys on the podium. Now in 2014, EB-5 is booming and we were honored by the presence of dignitaries including three members of Congress; top executives from USCIS, the State Department, the SEC, FINRA, the Department of Commerce, and even CBS; and chairpersons from eight of China’s provincial entry-exit associations.

A few things I learned from the conference:

• USCIS Immigrant Investor Program Office Director Nicholas Colucci did not break any major news in his speech – appropriately, I think, given the private context. But his presence was a generous and appreciated gesture. [UPDATE: You can now read exactly what Mr. Colucci said, as his prepared remarks have been published on the USCIS website.] He reiterated that the Washington DC office is still ramping up on personnel, with a goal to reach 100+ staff by the end of the fiscal year; is investing additional resources in customer service through the immigrant investor program mailbox; and is taking care to provide expert training in areas including business organization and documents, SEC issues, money-laundering, decision-writing, and customer service. One of his new ISOs sat at my table and presented herself very nicely – with just the bright, collected, solicitous manner and edge of East Coast hustle that you’d want in the adjudicator for your case. I have to say that she impressed me much more than the aggrieved-looking examiners lurking at the back of the room at the California Service Center in-person EB-5 engagement in 2010. I suppose that not having to work in a Cold War bunker is good for morale. She is one of the ISOs who is new to EB-5 but not new to DHS. Mr. Colucci noted that his office has developed a 4-6 week certification process for ISOs hired from other departments, with the goal to get adjudications up to speed as quickly as possible – and at least to have the number of decisions exceed the number of receipts each week. Mr. Colucci gave us several things to look forward to: draft regulations revisions by September 15, filing tips based on analysis of RFEs, and – a surprise treat – a FY2014 Annual Report planned. Finally, he offered a few filing tips focused on economic impact analysis. He reminded economists to clearly explain economic model inputs used and to exclude ineligible inputs (e.g. some construction soft costs). He also emphasized a requirement that I haven’t previously heard made explicit by USCIS – that the economist must in all cases distinguish model direct and indirect components, not just provide an aggregate total. Economists are also reminded to break down the number of jobs associated with each distinct model input. We’re not sure how much to make of the fact that Mr. Colucci twice referenced examples of reasonable economic models and each time said “IMPLAN, REMI, and REDYN” and either accidentally or on purpose did not mention RIMS II – a model that’s currently not being updated by BEA but still very popular in EB-5 and still useable for now and being approved by USCIS, so far as we know.
• Department of State Visa Controls Office Chief Charles Oppenheim discussed the intricacies of EB-5 visa availability and handed down his prediction that China retrogression will likely not occur until Summer 2015, with a May 2013 cut-off date possible at that time. He repeatedly advised the audience to only credit official information in the State Department Visa Bulletin and not to listen to bloggers. Apparently some of my kind have been panicking about immanent multi-year backlogs, so the audience was happy to hear from Mr. Oppenheim that we’re probably only looking at a 2-year backlog for Chinese investors (not too painful, considering that I-526s have been taking 1+ year to process anyway) and that this probably won’t occur until later next year. Mr. Oppenheim said that he would try to give 2-3 month’s notice of any new developments, and that otherwise we may expect news in the June 2015 Visa Bulletin. For those who are still confused about how the visa numbers process works, you may want to read articles on the Visa Office’s Immigration Statistics page and Ron Klasko’s simplified FAQ on the subject. For those who would like this problem to just be eliminated by an increase in the number of visas allocated to EB-5, call your Congressman and advocate.
• SEC Division of Enforcement Chief Steve Cohen gave a speech that gently but pointedly emphasized the breadth of the SEC’s jurisdiction and enforcement interest in the EB-5 program.  While the SEC’s actions have so far focused on egregious fraud, Mr. Cohen noted that fraud is fraud whether egregious or not, that the SEC is concerned by any kind of misstatement (with its attention particularly drawn by Regional Center websites that state or imply that “approval by USCIS” means that the federal government provides a cloak of integrity to the Regional Center’s activities), and that SEC will attend not only to fraud but also to failure to comply with registration requirements. Rumor at the conference confirmed that some Regional Centers have recently been contacted by the SEC regarding registration issues.   To remind yourself about the requirements involved, you can review materials and posts around the USCIS/SEC joint conference call.  Regarding the SEC’s enforcement philosophy, Mr. Cohen stated that ignorance is not a defense, that the agency will take into account good faith compliance efforts and does not want to eviscerate the program, and that you’re strongly advised to approach the SEC for help to fix problems before the SEC comes to you to tell you that you have a problem.
• FINRA Directory of Emerging Regulatory Affairs Kavita Jain joined Mr. Cohen and discussed how to get on the right side of registration requirements. Ms. Kavita noted that FINRA has been seeing an increase in applications related to EB-5 players and activities, and listed areas of concern for FINRA including due diligence, risk disclosures, suitability analysis, and finder’s fees.
• Other notes. See IIUSA’s post on highlights from the Advocacy Conference for a more comprehensive summary and links to resources provided at the conference.
• Mark your calendars. IIUSA is hosting its annual Trade Mission to China September 6-10, 2014 and the 4th annual EB-5 International Investment & Economic Development Forum in San Francisco on October 22-24, 2014.  Details here.