RC Terminations, investor litigation victory, China trends, agent ethics, RC list changes
May 30, 2017 5 Comments
Regional Center Termination Reasons
USCIS has terminated 109 regional centers over the past decade, and 23 regional centers in May 2017 alone. This month USCIS also initiated a page for Regional Center Termination Notices, with most notices up to November 2016 posted so far. The page explains that “USCIS will remain consistent and committed to transparency in the EB-5 program by proactively publishing Regional Center termination notices as they become available. This is an important step in assisting investors, the EB-5 industry, and the public to understand the reasons why a regional center has been terminated and what types of regional center activities may trigger the end of a regional center’s designation.”
I’ve started a Termination Log spreadsheet (also linked to my RC List page for ongoing reference) to correlate USCIS’s terminations list with its notices list, and facilitate analysis. Pivot table analysis of this log provides a quick overview of termination reasons (from the 69 termination notices posted so far) and timing.
In fact the termination notices are not very informative (most reference Notices of Intent to Terminate, which are not attached, for specific reasons), but we can generally learn that about 77% of RC terminations from 2008 through November 2016 occurred for one of two reasons: failure to file an I-924A annual report, or the fact that the I-924A report reflected inactivity (i.e. no investor petitions in three or more years). Just 12% (notices for eight regional centers) referenced problematic behavior by the regional center as a basis for termination. Other reasons include the regional center’s voluntary request to withdraw from the program. One letter dated July 13, 2016 explains “USCIS notes counsel’s request to withdraw from the program. The mechanism to end a regional center’s designation, whether initiated by the regional center or USCIS, is termination of the designation.” (This particular letter could’ve raised on-going FBI investigation as a termination issue, but that’s another story.) The Final Fee Rule published 10/24/2016 confirms that a regional center may elect to withdraw from the program, but does not offer an exit more dignified than termination. “A regional center may elect to withdraw from the program and request a termination of the regional center designation. The regional center must notify USCIS of such election in the form of a letter or as otherwise requested by USCIS. USCIS will notify the regional center of its decision regarding the withdrawal request in writing.” This is a pity, as the terminated regional center list looks like a walk of shame, and I think voluntarily withdrawal should be treated differently from termination initiated by USCIS.
Legal Win for EB-5 Investors
Investors who think they’ve fallen victim to errors by USCIS will be interested in this long but ultimately successful battle by a group of EB-5 investors.
- 2013: Twelve EB-5 investors file I-526 petitions based on investment in a regional center hospital project that sought to qualify as a troubled business
- 2013-2015: USCIS denies the I-526 petitions, and then denies Motions to Reopen filed by the petitioners. The petitioners appeal the denials to the Administrative Appeals Office.
- March to May 2016: AAO posts decisions dismissing appeal of I-526 denials (for example, MAR252016_02B7203)
- April 2016: Four petitioners file civil action against USCIS in district court: Wei Gan v. USCIS
- May 2017: USCIS and the plaintiffs resolve the case
- May 2017: AAO posts decisions sustaining appeal of the previously-denied I-526s (For example, MAY182017_01B7203. Other May 18 2017 decisions sustain appeals for other investors in the same project)
Trends, Pitfalls, and Ethics in Working with Overseas Agents
China Market Demand Trends
Ronald Fieldstone reflects on a recent China trip in his post EB-5 Marketplace Measurement – China and Beyond (May 25, 2017). We’re reminded of the extent to which demand shapes supply in EB-5 investment.Agent Marketing Claims
The Kushner Companies EB-5 roadshow in China continues to reverberate, with Senator Grassley mining it for yet another press release, this one calling for investigation of the Chinese agent involved, and its sales claims. (Grassley Seeks Investigation of Companies’ Promises of Green Cards 5/25/2017.) The regional center has protested to journalists that the senator’s allegations are baseless in this case, but all regional centers can take the reminder to double-check what their agents overseas are saying and posting online. Also keep in mind IIUSA’s best practices for engaging with sales intermediaries.Ethics for US Lawyers Retained by Migration Agents
Lawyers who deal with overseas agents in EB-5 may be interested in a March 2017 Ethics Opinion by the New York State Bar Association. The opinion discusses conditions under which a lawyer may enter into an arrangement whereby a nonlawyer “foreign migration agent” hires the lawyer on behalf of the client and assists the lawyer in communicating with the client. Cyrus Mehta explores the matter further in his post EB-5 Green Card, Ethics and Trump (May 22, 2017).
DHS Director and EB-5
Lee Francis Cissna, President Trump’s nominee for Director of USCIS, committed to finalizing EB-5 reforms in his Senate Judiciary Committee hearing last week. In other words, new EB-5 regulations are still on the table. Mr. Cissna spent much of the past two years working for Senator Grassley on immigration issues, and reportedly wrote dozens of the letters sent under the senator’s name to Homeland Security officials. This does not bode well for his attitude to immigration generally or EB-5, though he made a nice statement at the hearing.
Regional Center List Changes
Additions to the USCIS Regional Center List, 05/08/2017 to 05/30/2017
- Atlantic Casino & Entertainment Group Regional Center (Delaware, Maryland, New Jersey, Pennsylvania)
- New York Immigration Regional Center (Connecticut, New Jersey, New York, Pennsylvania): www.goeb5nyc.com/
- American Family Regional Center (Washington)
New Terminations
- Dallas Regional Center (Texas) Terminated 5/22/2017
- East Plumas County Regional Center, LLC (California) Terminated 5/22/2017
- Immigration Funds LLC (former name United States Investors Regional Center) (Maine, Massachusetts, New Hampshire) Terminated 5/22/2017
- Ohio Regional Center, LLC (Ohio) Terminated 5/21/2017
- EB5 Express Regional Center (California) Terminated 5/18/2017
- Arkansas Regional Economic Development Center, LLC (Arkansas, Oklahoma) Terminated 5/16/2017
Art District Los Angeles Regional Center, LLC (California) Terminated 5/16/2017(this RC was removed from the terminated list and added back to the approved list on 6/19/2017)
- The Z Global Corporation Regional Center (California) Terminated 5/16/2017
- Mariana Stones Corporation Ltd. (Guam) Terminated 5/15/2017
- NatureAll Co., Inc. EB-5 Regional Center Terminated 5/15/2017 (New Jersey)
- USA Regional Center, LLC (California) Terminated 5/15/2017
- Eight Islands Regional Center, LLC (Hawaii) Terminated 5/3/2017
- Diamond City Montana EB-5 Regional Center, LLC (Montana) Terminated 5/10/2017
- New York Pioneer Regional Center (New York) Terminated 5/3/2017
- Optima Arizona Regional Center, LLC (Arizona) Terminated 5/3/2017
- Puget Sound RC, LLC (Washington) Terminated 5/3/2017
EB-5 Updates 
Most terminated RC are inactive for many years. Therefore no investors would be impacted.
How many of these recently terminated RC are still actively managing projects? Once RC is terminated, does that mean investors will be ineligible for I-526 and I-829? What about investors whose I-526s have already been approved, and still waiting for a visa? Do they have their I-526s revoked and lose their spot on the waitlist? If this is the case, then Chinese investors may have to face much more disadvantages simply because of their place of birth.
I’m hoping to get an immigration lawyer to write on the question of investor recourse following regional center termination. The EB-5 material change policy in the USCIS Policy Manual suggests that investors in the conditional residence period may be able to change projects/regional centers and still remove conditions at I-829. Investors with I-526 or visa applications pending are out of luck under current policy, though both draft regulations and draft legislation propose adding protections for them.
Current regulations only address a limited scenario, the rest is not very clear.
8 C.F.R. §204.6 Petitions for employment creation aliens.
(m) Immigrant Investor Pilot Program—
(9) Effect of termination of approval of regional center to participate in the Immigrant Investor Pilot Program.
Upon termination of approval of a regional center to participate in the Immigrant Investor Pilot Program, the director shall send a formal written notice to any alien within the regional center who has been granted lawful permanent residence on a conditional basis under the Pilot Program, and who has not yet removed the conditional basis of such lawful permanent residence, of the termination of the alien’s permanent resident status, unless the alien can establish continued eligibility for alien entrepreneur classification under section 203(b)(5) of the Act.
I wanted to point out that voluntarily withdrawal from the program is like any other withdrawal request, it is ultimately up to the discretion of the responsible Official (Director or Chief) as to how to handle it. Sometimes it would be handled differently due to major issues that must be pursued. When there are no problems, withdrawal may be “acknowledged and permitted” with no further action required. Sometimes USCIS could have discovered something derogatory and not only has to address it, they have to inform the petitioner or applicant about it and let them address it, if they want to address it. But (there seem to be many buts) there are also those times when adjudication may be withheld for up to a year without disclosing any information due to an ongoing investigation. Notice the regulation says the request may not be retracted, it does not say the agency has to turn a blind eye to criminality. There is an old precedent (Matter of Cintron from 1976) that says a pending petition that has been withdrawn may not be denied, but AAO has ruled many times that findings of fraud and willful misrepresentation may be entered independently of a formal denial, such as in a memo to file or as part of a withdrawal acknowledgement, as a footnote if need be.
8 C.F.R. §103.2 Submission and adjudication of benefit requests.
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(b) Evidence and processing.
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(6) Withdrawal. An applicant or petitioner may withdraw a benefit request at any time until a decision is issued by USCIS or, in the case of an approved petition, until the person is admitted or granted adjustment or change of status, based on the petition. However, a withdrawal may not be retracted.
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(9) Appearance for interview or biometrics. …………….
……….. Any person required to appear under this paragraph may, before the scheduled date and time of the appearance, either:
(iii) Withdraw the benefit request.
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(11) Responding to a request for evidence or notice of intent to deny.
In response to a request for evidence or a notice of intent to deny, and within the period afforded for a response, the applicant or petitioner may: submit a complete response containing all requested information at any time within the period afforded; submit a partial response and ask for a decision based on the record; or withdraw the benefit request. ……..
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(15) Effect of withdrawal or denial due to abandonment.
The USCIS acknowledgement of a withdrawal may not be appealed. A denial due to abandonment may not be appealed, but an applicant or petitioner may file a motion to reopen under §103.5. Withdrawal or denial due to abandonment does not preclude the filing of a new benefit request with a new fee. However, the priority or processing date of a withdrawn or abandoned benefit request may not be applied to a later application petition. Withdrawal or denial due to abandonment shall not itself affect the new proceeding; but the facts and circumstances surrounding the prior benefit request shall otherwise be material to the new benefit request.
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(16) Inspection of evidence. An applicant or petitioner shall be permitted to inspect the record of proceeding which constitutes the basis for the decision, except as provided in the following paragraphs.
(i) Derogatory information unknown to petitioner or applicant.
If the decision will be adverse to the applicant or petitioner and is based on derogatory information considered by the Service and of which the applicant or petitioner is unaware, he/she shall be advised of this fact and offered an opportunity to rebut the information and present information in his/her own behalf before the decision is rendered, except as provided in paragraphs (b)(16)(ii), (iii), and (iv) of this section. Any explanation, rebuttal, or information presented by or in behalf of the applicant or petitioner shall be included in the record of proceeding.
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(18) Withholding adjudication.
USCIS may authorize withholding adjudication of a visa petition or other application if USCIS determines that an investigation has been undertaken involving a matter relating to eligibility or the exercise of discretion, where applicable, in connection with the benefit request, and that the disclosure of information to the applicant or petitioner in connection with the adjudication of the benefit request would prejudice the ongoing investigation. If an investigation has been undertaken and has not been completed within one year of its inception, USCIS will review the matter and determine whether adjudication of the benefit request should be held in abeyance for six months or until the investigation is completed, whichever comes sooner. If, after six months of USCIS’s determination, the investigation has not been completed, the matter will be reviewed again by USCIS and, if it concludes that more time is needed to complete the investigation, adjudication may be held in abeyance for up to another six months. If the investigation is not completed at the end of that time, USCIS may authorize that adjudication be held in abeyance for another six months. Thereafter, if USCIS determines it is necessary to continue to withhold adjudication pending completion of the investigation, it will review that determination every six months.
Thank you for this additional input!