Index to May 2019 EB-5 adjudicator training materials

In May 2019, the Investor Program Office held an I-526 “reset training” for adjudicators. I now know some of the content of that training, thanks to a Freedom of Information Act request (followed up by a lawsuit, because USCIS apparently didn’t want to release the materials). IIUSA has been promised 2,000 pages from its FOIA request, and has so far received about 500 pages.

IIUSA has chosen not to make the adjudicator training materials publicly available. The materials are available as a member benefit in the IIUSA Member Portal, accessible through this link.

For reference, I created a Table of Contents to the May 2019 training materials, copied below. This index can assist navigation for those able to access the file, and also highlights points of particular interest.

When I read adjudicator training materials, I look for guidance, interpretations, and examples that do not exist elsewhere. Much of the content is familiar – just the existing  published policy, regulations, and precedent decisions summarized in bullet point format on slides. But here and there, we find USCIS training adjudicators with guidelines and interpretations that they neglected to ever tell us, the public who’s trying to follow the rules. We who prepare documents for adjudicators to review particularly need to understand the standards and mindset that will be applied to those documents.

I also read between the lines of adjudicator training, attending to emphasis, angles, and omissions. I’ve studied every EB-5 adjudicator training since 2008, so I’m placed to notice how the training has shifted over time. (For those interested in the historical view, here are my articles on previous trainings: USCIS EB-5 Training Materials 2008 to 2011 published in the IIUSA 2013 Forum Handbook, 2014 USCIS EB-5 Adjudicator Training Materials published in the Regional Center Business Journal Vol. 2, Issue 4, December 2014, 2015 EB-5 Training Materials published on this blog in February 2017.)

What’s new in the May 2019 I-526 training materials provided so far? I particularly noted new content on economic impact analysis, TEA analysis, escrow arrangements, minor investors, path of funds, non-EB-5-investors, and capital at risk, and new perspectives on deference and material change. Future articles may address these points in detail.

Index to Immigrant Investor Program Office Training May 8, 2019

Page Section  Notes
1-5 Exercise prompts I-526 Exercise I has students practice when to not grant deference to prior I-526 and I-924 approvals

I-526 Exercise II has students practice denying for material change

I-526 Exercise III has students practice RFE/NOID over source and path of funds

I-924 Exercise focuses on what requirements apply to an Exemplar filing with no actual I-526 yet

6-40 Establishment of the New Commercial Enterprise Reviews the existing regulations and policy for an NCE

p. 28 clarifies that the investor could deposit directly into wholly-owned subsidiary’s account

p. 29 states that “It is the job creating business being undertaken by the NCE that must be examined in determining whether the NCE creation requirements found at 8 CFR 204.6(h) are met, not the NCE entity itself.” The training forgets Wei Gan v. USCIS, a 2016 decision that found based on Matter of Izummi that the founding date of the NCE, not the JCE, is the relevant date in the regional center context. (MAY182017_01B7203)

p. 31-35 have exercises with examples of what is(n’t) restructuring and reorganization, and wholly owned subsidiaries

41-67 Regional Centers and I-924 Adjudications Reviews the existing regulations, policy, and form instructions for regional center designation and amendments

 

67-109 Introduction to Job Creation in EB-5 Adjudications Reviews the existing regulations and policy with respect to job creation

p. 80 references 2009 Neufeld memos regarding economically direct construction jobs

p. 82-85 explain how the terms “direct jobs” and “indirect jobs” have different meanings in the legal and economic model contexts

p. 93 has a new section on Bridge Financing and what it means “to have a “nexus” between the investment and the employment creation,” as required. Students are taught to assess evidence that the bridge qualifies as short-term and temporary, and that there was contemplation of being replaced by more permanent long-term financing. Slide 97 gives a practical list of “factors typically present in bridge financing.”

110-134 Comprehensive Business Plan: Job Creation in EB-5 Adjudications Reviews Matter of Ho and the existing regulations and policy with respect to business plans

p. 123-125 provides a new list of “common supporting documents” for the business plan (market analysis, feasibility study, appraisal report, pro forma, biographical statements, staffing information, project status and milestones)

p. 125 lists out suggested “Open source information to verify the credibility of the business plan. i.e., property records, state business entity records, business license records, civil litigation records, google map, etc .”

p. 126-130 lists “questions for officers to ask” but all are redacted.

135-184 Regional Center and Indirect Job Creation p. 135-153 explain how the terms “direct jobs” and “indirect jobs” have different meanings in the legal and economic model contexts

p. 146 “Although USCIS may request additional evidence that the indirect jobs created, or to be created, are full time, in general, USCIS relies upon the reasonable economic models to determine that it is more likely than not that the indirect jobs are created and will not request additional evidence to validate the job creation estimates in the economic models to prove by a greater level of certainty that the indirect jobs created, or to be created, are full-time or permanent.”

 

p. 154-161 explain economic models and multipliers and how they work

p. 162 and 167 discuss how to select the appropriate geography for Type II multipliers

p.  163-180 discuss how to analyze an economic impact report to determine its reasonableness: is the geography appropriate, the inputs reasonable and eligible, the multipliers most recent, industry codes correct, math correct, model reasonable and used correctly (deflation adjustment), documents consistent

p. 166 To validate inputs to the economic model: “Relevant documentation may include receipts and other financial records for expenditures that have

occurred and a detailed projection of sales, costs, and income projections such as a pro-forma cash flow statement associated with the business plan for expenditures that will occur.”

p. 173 Cites a list of eligible inputs to 6/4/2015 stakeholder meeting, referred to as a “memorandum addressing accepted costs”

p. 180 compares common economic models

186-199 Troubled Business: Job Creation in EB-5 Adjudications Reviews the existing regulations and policy with respect to troubled businesses

 

200-218 Material Change in EB-5 Adjudications Reviews the existing regulations, policy, and precedent decisions with respect to troubled businesses

Emphasizes the difference between Stage I amendments (change) vs Stage II amendments (change to correct a deficiency) referencing Izummi

p. 211-212 asks without answering a series of questions about whether various types of location change are material

p. 213 “Material changes allowed for a I-526 exemplar are not allowable for a I-526.”

p. 214 “In correspondence, officers must tie the material change to one or more eligibility grounds”

219-238 Deference in EB-5 Adjudications Reviews the existing policy with respect to deference

p. 227-234 give specific examples of exceptions to deference

p. 227 “Absent a material change in facts, fraud, or willful misrepresentation, officers should not re-adjudicate prior agency determinations that are subjective, such as whether the business plan is comprehensive and credible or whether an economic methodology estimating job creation is reasonable.”

p. 230 states a principle “Deference is given to the previous favorable decision, not to documents”  “A document that supports a determination of eligibility for one application or petition at one point in time may not support a determination of eligibility for another application or petition at another point in time.” Reasons include documents becoming outdated.

239-255 Adjudication Worksheets and Instructional Guides Overview This presentation reveals that all previous adjudication worksheets have been discontinued and replaced by:

·        Form I-924 Amendment Worksheet

·        Form I-526 Worksheet

·        EB-5 Project Review Worksheet

·        Form I-526 Deference Worksheet

The worksheets are accompanied by instructional guides (the FOIA request response does not include the worksheets or guides)

The worksheets are to be used in combination: for example for a regional center I-526, the adjudicator first uses the deference worksheet to make a decision on deference, then the Form I-526 and EB-5 Project Review worksheets to make a decision whether to approve. (For pooled stand-alone adjudications, the deference step is omitted for some reason.)

256-326 Targeted Employment Area (TEA) Summarizes the pre-November 22, 2019 rules for TEAs

p. 273 Assessing TEAs at the I-924 stage

p. 282-287 discusses acceptable sources and methods for determining MSA, population, and unemployment rate

p. 292-302 and 320 gives instructions for verifying unemployment rate and geographic areas online

p. 306-307 evaluating rural areas

p. 314 poses multiple location scenarios with questionable TEA qualification, but does not specify which are acceptable and which not

327-443 Capital and Investment in EB-5 Adjudications Reviews the existing regulations, policy, and precedent decisions with respect to investment of capital

p. 339 redacts a comment on the Zhang Class Action

p. 354 lists items that an escrow agreement “normally includes”

p. 358-366 examples of problematic escrow agreement provisions, including extended discussion of hold-back clauses (p. 362 gives an example form CHAP of an acceptable holdback)

p. 391-393 gives some legally dubious guidance on impermissible debt arrangements, while p. 395-398 give questionable examples of impermissible redemptions

p. 403-405, 407 give examples of impermissible guaranteed returns

p. 409-415 is devoted to detailing the “chance of gain” requirement

p. 421, 423 discuss evaluating evidence of capital made available for job creation

p. 425-429 examples of multiple-JCE scenarios with capital not at risk

p. 435-439 examples of actual undertaking of business activity

P. 426 “If the NCE’s business is to pool capital to loan to a separate JCE, then sufficient business activity may be shown by an executed loan agreement obliging the NCE to loan Petitioner’s invested funds to the JCE.”

444-472 Minor Investors: Special Considerations for Adjudicating I-526 Petitions Filed by Minors Extensive discussion not published elsewhere on issues of minors as EB-5 investors. Most citations are to the USCIS-internal Consolidated Handbook of Adjudication Procedures (CHAP).
474-524 Lawful Source of Funds in EB-5 Adjudications Reviews the existing regulations, policy, and precedent decisions with respect to lawful source of funds

Emphasizes throughout the issue of path as well as source of funds

p. 483-484: References the Zhang class action and “Pre-Zhang” and “Post-Zhang” requirements

p. 502-506, 513 discusses requiring non EB-5 investors in an NCE to demonstrate lawful source of funds

p. 507-509 discusses in issues with E-2 investors filing for EB-5

p. 512 “If you see cryptocurrency ( e.g. Bitcoin, Ethereum, Ripple, etc.) anywhere in the source of funds claim, then please email IPO policy and your first line supervisor to seek guidance.”

About Suzanne (www.lucidtext.com)
Suzanne Lazicki is a business plan writer, EB-5 expert, and founder of Lucid Professional Writing. Contact me at suzanne@lucidtext.com (626) 660-4030.

18 Responses to Index to May 2019 EB-5 adjudicator training materials

  1. Allen says:

    Thanks Suzanne for another informative post. It’s disappointing to see so many unpublished guidelines / policies that could be used to reject petitions, especially for potential investors who need to put their own capital at risk for extended periods of time.

    I’m personally most curious to see changes last section (lawful source of funds) if this document is ever made available to the public, specifically around loan proceeds (zhang vs. uscis) and currency swap. USCIS policy changes in this area tend to be arbitrary, have severe impact to investors from countries with capital control, and sometimes unpublished / unannounced.

  2. Mark says:

    Susan ,

    502-506, 513 discusses requiring non-EB-5 investors in an NCE to demonstrate a lawful source of funds.

    That’s equivalent to asking every Eb-5 investor about SOF about every other investor in Eb-5 for the regional center.

    Do you have specifics on this ?

    • Yes, I have a blog post forthcoming on this topic. It actually isn’t applied to regional centers, but as a way to hassle direct EB-5 investors.

      • Mark says:

        That’s insane. Law does not define capital differently for the regional center and direct. I have a few points if you want to DM me.

    • Joe says:

      This provision only relates to non EB-5 financing invested in the NCE. It does not involve other investors’ EB-5 capital. Also, in the RC context, if the non-EB5 capital is invested in the JCE, and not the NCE, then 204.6(g) ( 1) does not apply.

      • Mark says:

        It’s convenient assumption .

        204.6(g) can not create new definition of capital .

        Why in the world there can be two definition of capital ?

        204.6(g) Does not define capital it just uses the word capital which is defined in 204.6

        It just says all capital .

        And it’s just a false assumption that a pilot program created under main program will have different definition of capital.

      • Mark says:

        Also does 204.6(g) say sources of all non Eb-5 capital or sources of all capital ?

      • Mark says:

        I also saw somewhere that it also mentioned some details about Eb-5 investors able to invest in JCE directly . May be same training material ? I have seen it .

      • Mark says:

        Here is the (g)

        It’s clear it does not separate non Eb-5 from Eb-5 neither it differentiate between RC non RC . It’s hard to Have interpretation That it does not apply to RC and it’s only talks about non Eb-5 capital .

        So it’s in best interest of industry not to say it only applies to NON RC .

        (g) Multiple investors –

        (1) General. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien investor by more than one investor, provided each petitioning investor has invested or is actively in the process of investing the required amount for the area in which the new commercial enterprise is principally doing business, and provided each individual investment results in the creation of at least ten full-time positions for qualifying employees. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien investor even though there are several owners of the enterprise, including persons who are not seeking classification under section 203(b)(5) of the Act and non-natural persons, both foreign and domestic, provided that the source(s) of all capital invested is identified and all invested capital has been derived by lawful means.

  3. Amy says:

    Hi Suzanne, thank you. How can I become a member of IIUSA? When I select the link to sign up I get an error saying page does not exist.

  4. Thengai Mandai says:

    Suzanne,

    I received an RFE w.r.t source of funds. My source of funds are from a gift from a family member who themselves got the funds over 4 decades ago as part of a family inheritance. However, adjudicators are asking for an evidence of how the inheritance came to be that is essentially going back 40 years which is proving hard to prove and put together. Is this normal? Or is this just another way of them trying to do their best to find a way to deny the petition? Seems really bizarre that they would expect an applicant to preserve 40 years worth of source of funds evidence.

    Going to be talking to my attorneys but wanted to get your thoughts on whether you’d come across anything like this in your experience before. As always, your content and expertise is massively helpful. Thanks very much in advance!

    • Paul says:

      Hi Thengai,
      What is Priority date for your application?

    • Unreasonable source-of-funds requests do seem to be the status quo, currently. But I doubt they could actually deny the case for lack of 40-year-old records. Your lawyer should know the best way to respond and explain available evidence. Best of luck!

    • Roberto Virga says:

      I’m in a similar situation. My funds come from the sale of a property that my father bought in 1951 (!) and that he donated to me a few months before he died. When I first read in the RFE that they were asking for my father’s tax returns and bank statements from 70 years ago, I didn’t know whether to laugh or cry!
      That they play these games with investors at a time when the US unemployment rate is at 8% is beyond belief.

  5. Tuan Uong says:

    Thanks to Suzanne who supported the EB5 community, my application date (PD) was April 2017, August 2018 I received the RFE providing the funds and money transfer content, and got Response To. USCIS ‘Request For Evidence Was Received November 2018. It’s now 22 months. I don’t understand what happened to the delay.

    • Hi Tuan,
      You and your lawyer should definitely start the process of inquiring about this case (through the IPO customer service mailbox, and Ombusdman and Congressional representative if necessary). It’s definitely not normal for a case to be tabled for 22 months after it was assigned. It looks as if your case was somehow misplaced — perhaps the adjudicator who started the review left his/her job, but neglected to get the case reassigned.

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