Source of all invested capital

From: Suzanne Lazicki
Sent: October 8, 2020 7:04 PM
To: ‘public.engagement@uscis.dhs.gov’
Subject: EB-5 Question

Dear IPO,

This email asks a single important question in response to the EB-5 Call for Questions. My small business owner clients and I look forward to your response.

Why does the May 2019 USCIS Adjudicator Training instruct adjudicators to apply the lawful capital requirement in 8 CFR 204.6(g)(1) only to “non-EB-5 sources of capital invested in the NCE,” creating a requirement specific to standalone petitioners to identify and be liable for source of funds for other NCE owners?

8 CFR 204.6 (g)(1) does not say that pooled investment is allowed “provided that the source(s) of all non-EB-5 capital is identified and all non-EB-5 owner capital has been derived by lawful means.” Rather, the regulation says “all capital.”

” ….. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur even though there are several owners of the enterprise, including persons who are not seeking classification under section 2 0 3 (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.8 CFR 204.6 (g)(1) (emphasis added).

8 CFR 204.6 (g)(1) refers to all capital and all owners. What’s required — and not required — of a given petitioner with respect to other NCE owners applies regardless of owner type per the regulations.

The Form I-526 and I-526 Instructions request evidence only for the petitioner’s own lawful source of funds. It is unreasonable to interpret 8 CFR 204.6 (g)(1) as requiring each petitioner to identify, validate, and bear responsibility for the source of all other funds in the same NCE, whether from non-EB-5 or EB-5 owners. But if USCIS does make this extreme interpretation, then it would have to apply per the regulation to “ALL INVESTED CAPITAL”. The regulation does not justify applying 8 CFR 204.6 (g)(1) to non-EB-5 capital only, and using it just to hassle stand-alone petitioners, as has been occurring in I-526 Requests for Evidence issued since May 2019.

USCIS does not deny or revoke the I-526 for EB-5 investor A if EB-5 investor B in the same NCE is found to have a problem. Apparently recognizing that B’s identity and funds are not pertinent to A’s eligibility, USCIS does not ask regional center Petitioner A to identify EB-5 investor B or to validate B’s lawful funds – either in the Form I-526 or in RFE. How then is it reasonable in the standalone context for USCIS to interrogate EB-5 Investor A in RFE about Investor B, predicating A’s eligibility on B?

The basic unreasonableness and lack of justification in the request helps to explain why the Form I-526,  I-526 Instructions, and published policy and filing tips say nothing about evidence to be provided by a petitioner to USCIS for other NCE investors and their source of funds. With no such evidence officially or publicly required, NCEs and petitioners have no way no know when filing I-526 what evidence may be requested, and adjudicators are left to individual caprice in issuing evidence requests. For example, from a sample of four RFEs issued to standalone investors in December 2019, one RFE asks for government ID or business registration document for each other NCE owner, one RFE asks for ID documents plus filed income taxes for each other NCE owner, one RFE asks for ID documents plus narrative description of business activities corroborated by “complete bank statements” for each other NCE owner, and one RFE does not ask about source of funds for non-EB-5 NCE owners. Is this not the definition of arbitrary and capricious processing? Even if such evidence were likely to be available to a petitioner post-hoc from independent parties not seeking immigration benefits. How do evidence requests that are unsupported in theory, unevenly applied, unprecedented in prior practice, impractical in fact, and undisclosed except in a few RFEs support program integrity? These RFEs clearly reflect an error that IPO should correct quickly in order to protect credibility and avoid litigation.

Suzanne Lazicki     Lucid Professional Writing
(626) 660-4030       Cell, WhatsApp, Telegram
suzanne@lucidtext.com
2314 Washington Blvd., Ogden, UT 84401
www.lucidtext.com/

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.

7 Responses to Source of all invested capital

  1. Cecilia says:

    Hi Suzanne ,
    Thanks again for all that you do. I cannot believe what I just read! What did these petitioners do ? Did they supply the info required or sue USCIS or what?

    • The ones I know about tried to supply the requested info, though it’s naturally difficult and extremely unfair. One of my direct clients invested last year in a very cool business along with dozens of other people, including a couple A-list British actors — something he would never have done if he could’ve known at the time of I-526 filing about the ridiculous new practice of holding the direct EB-5 petitioner liable for other investors in the NCE. I really hope that USCIS has abandoned the practice as unjustifiable and stupid before they get to this client’s adjudication. Obviously this phone call to the actors would not go well “Sorry you don’t know me but we invested in the same project a couple years ago and now the U.S. immigration service says that they want your passport copy/bank statements/tax filings.”

  2. Mark says:

    Susan,

    On primary reading of CFR

    Not only that it’s unfair but the interpretation of CFR ignores the definition of capital defined in same CFR 8 C.F.R. 204.6(e).

    When CFR uses the word “capital” for interpretation they must use the definition of capital already defined .

    8 C.F.R. 204.6(e) defines capital as meaning:

    cash,
    equipment,
    inventory,
    other tangible property,
    cash equivalents, and
    indebtedness secured by assets owned by the alien entrepreneur (provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness).

    The definition of capital is always in context of Eb-5 investor . So when the word “all capital” is interpreted the interpretation should be strictly for with already defined word capital which Eb-5 funds for the Eb-5 investor And no one else.

    Congress intended to promote more domestic investment with Eb-5 , this interpretation does the opposite .

    As a matter of fact purpose of 8 CFR 204.6 (g)(1) is not intended for capital lawfulness but it’s intended for allowing counting jobs and not for capital .

    • Thank you. I hope you send this message to USCIS as well.

      • TM says:

        Suzanne,

        I’m being asked to provide family inheritance documents going back 5 decades for my RFE despite providing a good amount of evidence around my source of funds through a gift. Sadly, while my attorney says he will do his best to work with the evidence we have, I have prepared mentally to give up on America.

        • Don’t despair yet. There’s a difference between what they’ll do to hassle petitioners in RFE, and what they’ll actually deny a petition for. The standard is “preponderance of the evidence,” not “beyond a reasonable doubt going back five decades.”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.