Direct v RC Structure (AAO decision), New RCs

New AAO Decision (Direct EB-5 Investment Structure, Evidence Standard, Multiple Investors)
I keep seeing evidence of confusion about how direct EB-5 and Regional Center EB-5 differ, and cases that try to use a Regional Center structure for direct investment. Test question: Which structures in Figure 1 are options for a direct EB-5 investment in a hospice business: A and B, or B only? (Assume that the hospice is owned by the entity in whose box it appears.)
Figure1
The correct answer is: B only, because job creation in A is indirect with respect to the new commercial enterprise. Counting indirect jobs requires Regional Center sponsorship; in direct EB-5, you can only count employees who provide labor for and receive wages directly from the new commercial enterprise. The NCE and the hospice could potentially have different tax ID numbers, but they must be a single enterprise (a single entity, or one entity wholly owns the other) in order for the NCE to count the hospice jobs as direct jobs. If the NCE makes a loan to or investment in another enterprise, the jobs resulting from that investment don’t count because they’re not the NCE’s direct jobs. Figure 1 is similar to the fact pattern from an actual direct EB-5 case that USCIS denied in 2011 and whose appeal the Administrative Appeals Office just dismissed (see decision OCT022015_01B7203 Matter of H-G-). The petitioner in this case first filed I-526 with a Structure A fact pattern, was denied, then reported on appeal that “the entity previously in the middle … has been dissolved to make this a direct investment and job creator” (Structure B). But the fix came too late; a petitioner must demonstrate eligibility at the time of filing and may not make material changes in an effort to make a deficient petition conform to regulatory requirements.

Another timely reminder in the Oct. 2nd AAO decision concerns evidence quality. AAO quotes 8 C.F.R. § 103.2(b)(2) to support the point that a petitioner must submit primary evidence unless it’s demonstrated to be non-existent or unavailable. (In this case, the petitioner provided letters from city officials saying that licenses had likely been issued, but should have provided copies of the licenses themselves or demonstrated the unavailability of such primary evidence.)

I’m also interested in the decision’s statement on the issue of multiple investors. The AAO writes that since the I-526 petition revealed that at least six EB-5 investors would be involved in this enterprise, the business plan should have shown the total investment and job creation for all six investors, and the petition should have included an agreement among the investors for job allocation.

New and Removed Regional Centers
Additions to the USCIS Regional Center List, 09/21/2015 to 10/08/2015

  • MW International LLC (California)
  • Paramount Regional Center, LLC (California)
  • EB5 Affiliate Network New York/Tri-State Regional Center (Connecticut, New Jersey, New York): eb5affiliatenetwork.com
  • Liberty EB5 Regional Center (Pennsylvania)

Additions to the USCIS list of Terminated Regional Centers

  • Next Bay Properties, LLC (California), terminated 10/1/2015

About Suzanne (www.lucidtext.com)
Suzanne Lazicki is a business plan writer, EB-5 expert, and founder of Lucid Professional Writing.

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