EB-5 Events

Don’t forget to dial in today at 1 pm Eastern for the USCIS EB-5 stakeholder teleconference.

Here are other good conferences and webinars to keep in mind, if you’re seeking quality (and often free) EB-5 information and networking opportunities.

Please email to alert me of good EB-5 webinars that I’ve missed in this list.

IIUSA Day 2 (Congress, Markets, Securities, Impacts)

Additional notes from the IIUSA EB-5 Advocacy and Leadership Conference in Washington D.C. April 12-14…

Congressional Update
We heard from three members of Congress: Senator Ron Johnson (R-WI), Hon. Zoe Lofgren (D-CA19), and Hon. Darrell Issa (R-CA49). Senator Johnson encouraged us to fight the cultural tendency to cartoonishly villainize business and success, but he didn’t seem as eager to support the immigrant part of immigrant investment. As chair of the Senate Homeland Security and Government Affairs Committee, he has formulated a strategic plan that is all about securing borders and defending against threats, with no bullet points related to the welcome mat aspect of immigration. Lofgren and Issa did promise to support Regional Center Program reauthorization, with changes, and referred back to their respective (now dusty) IDEA Act and Skills Act proposals. Lofgren and Issa agreed that the qualifying investment amount needs to be increased and that it would be nice, if tough, to increase the visa cap. IIUSA’s advocacy panel discussed the climate in Congress generally and opined that program reauthorization is likely, but that it will likely be another extension rather than permanency, and will likely involve changes to the minimum investment amount, TEA process, and additional oversight provisions. Apparently the executive actions on immigration quelled Congress’ appetite to discuss immigration issues, especially across the aisle, and many members are unwilling to consider any other immigration measures until the executive action issues have been dealt with.
Markets Update
Panel discussions suggested that mainland China is still basically the only choice for large EB-5 capital raises (e.g. over about $20 million), because it’s the only country with infrastructure in place, though an increasing variety of other countries have supplied EB-5 investors in recent years. A change to the licensing procedure for migration agents in China has resulted in a proliferation of new agencies (over 2,000). However agencies dealing with immigration in China do still need to be licensed, and foreign parties cannot obtain such a license or legally do their own advertising or seminars in China. Provincial Entry & Exit associations continue to help oversee and organize migration agencies. The Guangdong association for example, provides training and screening and even publishes rankings for member agencies. The panel of representatives from Chinese migration agencies noted that the market for EB-5 investments in China is still strong, and that they do not anticipate demand reduction in response to the China EB-5 cut-off date or the possible increase to the EB-5 investment amount. For additional info on the China market, note recent posts on the Klasko Law Blog.
Securities Law
If only the panel with Catherine DeBono Holmes, Michael Homier, Ozzie Torres, and Lili Wang had lasted another hour or so. Such timely and critically important information! Homeier discussed the SEC’s crackdown on receipt of broker fees by unlicensed persons. The SEC has reached settlement agreements with a number of attorneys (with an announcement naming 15-25 firms expected soon), and the likely next step is SEC cases against any Regional Centers that paid impermissible finders fees. Torres reminded the audience that our SEC panelist from the previous day basically said that there is no such thing as a finders exemption. (From my notes: C. Joshua Felker called the so-called finder’s exemption “a popular belief.” He stated that somebody called a “finder” is actually a broker assuming his activity matches the defined activity of a broker, and that foreign “finders” can only be compensated as such if they provide a name only and give no investment advice.) Of course attorneys can get paid for legal services, but they cannot get paid to refer a client to a Regional Center, and they’d be wise to generally avoid transaction-based compensation, which attracts SEC attention. The panelists discussed possible exemptions to broker-dealer registration and ways to involve broker-dealers in the process of selling EB-5 investments. For better summary than I can give of the securities law details, see Catherine DeBono Holmes’ articles on the Investment Law Blog. Here is the PDF copy of the booklet Regional Centers & Sponsors and U.S. Securities Laws that Cathy was giving away at the conference.
Economic Impact
IIUSA unveiled an economic impact study of EB-5 Regional Center investments from 2010 to 2013. The report was prepared by David Kay of the Alward Institute for Collaborative Science, and uses a comprehensive data set thanks to the FOIA process, which allowed IIUSA to obtain redacted copies of Form I-924a filings for all Regional Centers. I’ll link to the summary report and charts when IIUSA posts information. The short story is that during FY2013, spending associated with Regional Center investors contributed $3.58 billion to U.S. GDP and supported over 41,000 U.S. jobs. Not bad! The impact study breaks down impacts by spending category and by geography, down to the Congressional District level.


I’m at the IIUSA EB-5 Advocacy and Leadership Conference in Washington D.C., where the mood is mixed. The proposed legislation and congressional champions that we applauded at last year’s conference are now gone. Journalists who get paid for sensation and senators who didn’t get their way in confirmation hearings have had a heyday with EB-5, and there’s every incentive for the news to get worse as other officials with tangential EB-5 connections (e.g. Hilary Clinton) stand for election/roasting. (EB-5 makes a great political weapon if it looks inherently bad, so purple insinuation pays.) A few real-life scandals have happened besides the political mirage ones, not helping matters. Despite this gathering gloom, however, the tone here at the conference is not that depressed. The ballroom is full of people who are continuing to raise capital, who are seeing their own projects and investors succeeding and economic development happening in their own areas, and who know enough to put media reports in context. With this concentration of positive personal experience in the room, it’s easy to forget what’s outside. But we can’t be complacent, because the general public isn’t in our conference room, and scandal-mongering sounds louder than boring business success. Former DHS Secretary Michael Chertoff discussed the Regional Center program’s vulnerability and emphasized the need to convey a message that will give people confidence that EB-5 is good for America – a message that can be supported by solid and understandable job creation metrics, rigorous vetting of people and investments in the program, quality control in overseas marketing, and cooperation with local development agencies. (PS Membership Committee: This is also a time to push to increase IIUSA membership, aligning a greater number of concerned people with the best practices and education and message of IIUSA and broadening the financial base accordingly, not a time to redefine the association as an exclusive Big Boys Club effectively limited to those who make the most money from EB-5 Regional Centers.)

A few notes from today’s conference presentations…

USCIS Updates
The USCIS Investor Program Office did not provide a representative to this year’s meeting, but we did receive updates from Maria Odom and Fredrick Troncone from the CIS Ombudsman’s office. The Ombudsman is independent of USCIS but they liaise frequently with USCIS, have more power to extract information from the agency than we do, and ask the kind of questions we’d want asked. We got a preview of statistics that will be included in the Ombudsman’s annual report to Congress (forthcoming in June) and comments on staffing and retrogression. (The following are my notes from the live presentation, and I may need to correct some details after I can review a recording.)

  • 329 I-924 Regional Center applications are currently pending at USCIS.
  • I-526 investor petition filings showed a 50% increase in 2014 over 2013 (which had about as many receipts as 2012).
  • In FY2015, USCIS received over 5,200 I-526 petitions by the end of March.
  • As of the end of March, USCIS had 585 I-526 petitions with a Request for Evidence pending, 629 petitions with decision pending after response to RFE, and over 400 I-526 petitions with an outstanding Notice of Intent to Deny.
  • USCIS currently averages, per month, about 800 I-526s received and 630 I-526s processed. That means that the backlog of I-526s awaiting adjudication — already at a faint-worthy 13,027 petitions – is growing as receipts regularly exceed decisions.
  • USCIS’s plan to address the backlog, as reported to the Ombudsman, involves adding staff and approving overtime. Ms. Odom said that IPO presently has 54 adjudicators, 18 economists and 12 program analysts, and plans to add 25 more staff by the end of the year. (She also commented that this plan hardly seemed equal to really addressing the backlog). Ms. Odom noted the effect of USCIS’s Quality in the Workplace initiative, which replaced quantitative with qualitative goals – a good move for employee morale but creating challenges for setting goals related to number of petitions adjudicated.
  • USCIS’s promised policy memo related to retrogression is reportedly in final process, but apparently, mysteriously, the memo will not focus on the specifics of retrogression but rather on the issue of what constitutes material change. Oh well, material change is an important issue too. Ms. Odom’s understanding is that the much-questioned 2.5 year job creation window, stated in the May 30, 2013 policy memo, will be reiterated in the forthcoming memo. No word on whether the new memo may cover questions related to sustaining the capital investment or priority dates and child status issues.
  • We are reminded that the CIS Ombudsman serves as “an office of last resort” when there are EB-5 case problems. If you have a case that’s pending 60 days over posted processing times (or presents special issues) and you’ve already tried contacting USCIS about the problem, you can go to the Ombudsman. See http://www.dhs.gov/case-assistance.

DOS Updates
Charles Oppenheim, Chief of the Department of State’s Visa Controls Office, announced a May 1, 2013 cut-off date for mainland China-born EB-5 visa applicants. (You can also read this news, with commentary, in the Visa Bulletin for May 2015.) Per-country limits kick in when DOS foresees running out of visa numbers for the year – a new problem for the EB-5 program, which historically didn’t get close to using its annual allocation of around 10,000 visas. Now demand is up and we have our first cut-off date (affecting mainland China-born applicants, because they use a disproportionate number of EB-5 visas). Starting next month if you (and your spouse) were born in Mainland China and you get approval of an I-526 petition filed sometime after May 1, 2013, you can’t move forward in the visa stage of the process until DOS advances the cut-off date. (Everyone else is not affected.) Mr. Oppenheim anticipates advancing the cut-off date gradually, at least in conjunction with the new visa allocation that will come with the new fiscal year starting in October. It’s also possible that he might move the cut-off date back (which I learned is the only part of this process that’s accurately termed “retrogression”) if visa numbers prove even more limited than expected (which might happen if USCIS does improve its processing speed and volume). We’re encouraged to keep an eye on Item D in the monthly Visa Bulletin for periodic updates on movement of the cut-off date. The current cut-off date involves a wait of about two years (not terribly onerous, considering how long people have to wait for I-526 processing anyway), and demand trends suggest a wait of more like three years by the end of 2016. Panelists David Hirson and Bernard Wolfsdorf (and Robert Divine) pushed for clarification on procedural questions related to securing priority dates for child status protection, and Mr. Oppenheim promised that his legal department would be addressing such questions in a memo to be released in the next few days. (He may also have answered the question himself, but you’ll have to ask Mr. Hirson to translate into English!) Mr. Oppenheim also mentioned that visa usage is about 45% principals (investors) and 55% derivatives (spouse/children) – rather different from the 1/3 to 2/3 breakdown that I’ve heard previously. He warned specifically against trusting bloggers for visa advice, but nevertheless I’m repeating links to posts that I found helpful from Robert Divine and Ron Klasko.

We got nice presentations from C. Joshua Felker (SEC Enforcement Division Assistant Director) and James Wrona (FINRA VP and Associate General Counsel) on the relevance of their agencies for EB-5 – but no breaking news that I could perceive. Felker mentioned five EB-5 enforcement actions but only named the three from 2013/2014. He did not discuss the forthcoming action involving some fee-taking immigration attorneys (see EB-5 Analytics for discussion of this important topic). The issue of whether/when a Regional Center may need to register as an investment adviser was also not really addressed (see Holmes & Shum’s recent article for discussion of this important topic). We got the usual reminders that SEC enforcement interests do cover registration issues as well as fraud, and that something that acts like a security is a security (and that acts like a broker, is a broker) regardless of what they’re called. I learned from Wrona that FINRA currently has about 60 broker-dealers engaged in EB-5 activity, a marked increase from previous years. The number of broker-dealers at the conference reflect this welcome trend. As we know, FINRA guidelines that particularly overlap with EB-5 include the suitability rule (which must consider both investment and immigration suitability for EB-5 per the Trustmont letter), the advertising rule, Bank Secrecy Act issues, and anti-fraud issues.

ABC News stories, New RCs, IIUSA Conference

ABC on EB-5 Investors
This has been a week of journalistic exposés of how unsavory high-net-worth people can be. The New York Times has published a series of articles unveiling shady characters who’ve been buying up prime New York real estate, the Guardian has a multi-part series on how HSBC’s Swiss private bank has facilitated financial malefactors, and ABC news has released a bunch of screamer articles and videos on EB-5 investors that ask the question “are suspected criminals, spies, terrorists buying their way into the US?”
There are a few lessons for businesspeople offering EB-5 investments. First, do be serious about vetting your investors, assuming you don’t want to end up some day with unsavory connections and cameras chasing you down a hallway. USCIS, the State Department, OFAC and their partners are much more serious and meticulous about vetting EB-5 petitioners than the ABC reports imply, but still you can’t be too careful with your own screening.
As you read the ABC stories yourself and field reactions from others, here are some points to keep in mind:

  • ABC’s key sources appear to be Senator Charles Grassley and a few disgruntled USCIS employee insiders who felt they were rushed and micromanaged;
  • Senator Grassley’s stand on immigration is to increase border security, beef up interior enforcement, oppose amnesty, scrutinize DHS, and find program abuse;
  • Each EB-5 investor’s petition currently takes an average 13.8 months to get reviewed by USCIS, which is not exactly a rush job; both the petition process and subsequent visa process involve stringent review and requirements;
  • In fact you can’t buy a green card in the US, not for $500,000 or for any other amount; some countries do have visa-for-sale programs but the US does not; the EB-5 program grants a visa in exchange for investor-funded business development resulting in job creation, not for money (to put the EB-5 program in context, see this Migration Policy Institute report on investor visa programs around the world);
  • The fact that an investigation exists is a cause for concern, but not sufficient basis for assuming that the investigation will close with a guilty verdict;
  • There are terrorists and spies and cheats in the world, but people are not terrorists because they’re Iranian and are not spies and cheats because they’re Chinese, despite ABC’s implications.

FYI: EB5info has posted a copy of the memo referenced in the story, and IIUSA and Klasko Law have issued reaction statements.

IIUSA Conference Registration
A reminder that this is the last week for early bird registration for IIUSA’s 8th Annual EB-5 Regional Economic Development Advocacy Conference on April 12-14 in Washington D.C. We’ll have a lot to advocate about this year.

New Regional Centers
Additions to the USCIS Regional Center List, 12/31/2014 to 2/3/2015

  • Dine’ Bi Keyah Regional Center, LLC (Arizona and New Mexico)
  • American Liberty Alliance (California)
  • Zhonghong Regional Center LLC (California)
  • Live in America – Colorado Regional Center LLC (Colorado): www.liveinamerica.us
  • EB5 Capital – New York Regional Center (Connecticut, New York, New Jersey, and Pennsylvania): www.eb5capital.com
  • Birch Miami Dade Regional Center (Florida): www.birchcapital.com
  • Mariana Stones Corporation Ltd. (Guam)
  • Live in America – Indiana, Michigan, Ohio Regional Center (Indiana, Michigan, and Ohio): www.liveinamerica.us
  • Live in America – South Regional Center LLC (Kentucky and Tennessee): www.liveinamerica.us
  • Diamond City Montana EB-5 Regional Center, LLC (Montana)
  • Lubert-Adler Northeast Regional Center, LLC (New Jersey and New York): lubertadler.com
  • Queens Fort New York Regional Center, LLC (New Jersey, New York, and Pennsylvania): queensforteb5.com
  • West Penn Regional Center (Pennsylvania)

FAQ page, Retrogression, I-829, Processing Times, New RCs (CT, IL, IN, LA, NJ, NY, TX)

I have started a new Frequently Asked Questions page that compiles official and unofficial USCIS answers to questions that affect business plans. So far I’ve linked in answers from USCIS policy guidance and stakeholder meetings, and I’ll be adding references to AAO decisions that treat sticky business plan questions.

Speaking at the IIUSA conference on October 23, Charles Oppenheim predicted that the EB-5 visa category will likely retrogress in July 2015. This remains a moving target, however. Ron Klasko’s blog has published a timely article on Surviving and Thriving in Times of EB-5 Quota Backlogs.

You may thank us at the IIUSA editorial committee for another great edition of the Regional Center Business Journal (October 2014). Three feature articles provide advice and analysis for I-829 petitions: The Latest Analysis of What USCIS Looks For in EB-5 I-829 RFEs and Denials, It’s Never Too Soon to Begin Preparing for I-829 Petition Filings, and Removal of Conditions for EB-5 Investors: Practical Guidance in Preparing I-829 Petitions.

Processing Times
The USCIS website has a sharp new look as of last week, but no new EB-5 content except a IPO processing times update. I-829 times are back to normal, while average I-526 and I-924 processing times continue to inch up.
IPO 930

IIUSA Conference
Mark your calendars for IIUSA’s 2015 EB-5 Regional Economic Development Advocacy Conference on April 12-14, 2015 in Washington, DC.

Additions to the USCIS Regional Center List, 10/20/2014 to 11/04/2014

  • EB5 Fund, Inc. (Connecticut, New Jersey, and New York)
  • Great Lakes Regional Center, LLC (Illinois, Indiana, and Wisconsin): www.glrceb-5.com
  • Southern Opportunity Regional Center LLC (Louisiana and Texas)
  • Premier Regional Center, LLC (Texas): www.premierregionalcenter.com

12/5 EB-5 Stakeholder Meeting (in person)

From: U.S. Citizenship and Immigration Services
Sent: Monday, November 03, 2014 9:31 AM
Subject: USCIS Invitation: EB-5 Immigrant Investor Program Stakeholder Engagement, 12/05/2014

Dear Stakeholer,

U.S. Citizenship and Immigration Services (USCIS) invites you to participate in a stakeholder engagement session on Friday, Dec. 5, from 1 to 3:00 p.m. Eastern to discuss the Immigrant Investor Program. This engagement is part of our efforts to enhance dialogue with external stakeholders regarding the program, also known as EB-5.

During the first part of this engagement, we will provide EB-5 program updates from fiscal year 2014 and discuss initiatives for fiscal year 2015. The second part of the engagement will be a question-and-answer session. You may ask non-case specific questions or provide feedback on the EB-5 program.

You can attend this engagement either in-person or by teleconference. Please note that in-person attendance is limited to the first 80 people who register.

To register for this session, please follow the steps below:

  • Visit our registration page to confirm your participation
  •  Enter your email address and select “Submit”
  •  Select “Subscriber Preferences”
  •  Select the “Event Registration” tab
  •  Be sure to provide your full name and organization
  •  Indicate if you plan to attend in-person or by teleconference; and
  •  Complete the questions and select “Submit”

If attending in-person, please RSVP for this event no later than Friday, Nov. 14.

Once we process your registration, you will receive a confirmation email with additional details.

To submit questions before the teleconference, please:

If you have any questions regarding the registration process, or if you have not received a confirmation email within two business days after you register, please email us at Public.Engagement@uscis.dhs.gov.
Dec 5 EB5 Quarterly Stakeholder Engagement Invitation.pdf

IIUSA Conference, AILA Book, New RCs (CO, CA), Removed RCs (CO, FL)

To those in San Francisco this week for the 2014 IIUSA EB-5 Market Exchange, happy deal-making! I’m not able to make this conference, but send best wishes and look forward to sharing feedback from attendees.

To those stuck behind a desk this week, I recommend you to the virtual EB-5 masterclass that is AILA’s new Immigration Options for Investors & Entrepreneurs, 3rd Ed. I received a free copy as a contributing author (I wrote the chapter on EB-5 business plans), but can now testify that the book is worth the full price ($129 for AILA members, $199 for the rest of us). This is not a collection of quick opinions, general introductions, and veiled advertising but a set of serious articles that incorporate comprehensive research and extensive experience. If I were an immigration attorney working with EB-5, I’d buy the book for the sample documents and case materials alone, not to mention excellent articles such as Estelle McKee’s practical discussion of issues in demonstrating job creation in I-829 petitions and Carolyn Lee’s definitive analysis of the at-risk requirement. (And Suzanne Lazicki’s lucid treatment of the EB-5 business plan!)  If I were an investor or offering EB-5 investments, I probably wouldn’t buy the book for myself (it’s specialized and heavy) but I would make sure that the attorney representing me had a copy. The book works hard to make good on its promise “to provide everything you need to successfully represent clients in this highly specialized area.” Click here to preview the Table of Contents, and update your Christmas list as needed.

I expect to have important updates shortly, as USCIS is overdue to update Q4 2014 petition processing statistics, and the State Department may come out with the Report of the Visa Office 2014 any day. For now, we just know that average processing times are holding steady for I-526 (13.8 months) and I-924 (8.1 months), and have shot up for I-829 (to 15.1 months, likely in connection with the transfer from California to Washington DC).

Those interested in Targeted Employment Area issues should note the new approach to TEA designations adopted by California, which has tended to be a trendsetter.

Meanwhile, USCIS continues to add and subtract Regional Centers from its list (and continues to fail to update its FOIA reading room with designation letters for the Regional Centers approved since 2012).

Changes to the USCIS Regional Center List, 10/1/2014 to 10/20/2014


  • Dynasty Group Regional Center, LLC (California)
  • California Economic Development Fund, LLC (California)
  • California Capital Investment Regional Center, LLC (California)
  • InvestAmerica EB-5 (Colorado) www. investamericaeb5.com


  • Invest U.S. Regional Center (Colorado)
  • Hollywood Beach Regional Center LLC (Michigan)

9/10 EB-5 Stakeholder Meeting

U.S. Citizenship and Immigration Services (USCIS) invites you to participate in a stakeholder teleconference on Wednesday, Sept. 10, from 2:30–4 p.m. (Eastern) to discuss the EB-5 Immigrant Investor Program. During this teleconference, USCIS officials will share EB-5 Immigrant Investor Program updates and respond to your questions. Visit the USCIS Public Engagement registration page to confirm your participation.

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.

2014 Events, EB-5 Stats, New AAO Decisions, New RCs (CA, CO, FL, GU, MD)

EB-5 Events
It’s time to sign up for the best EB-5 event of the year: IIUSA 7th Annual EB-5 Regional Economic Development Advocacy Conference in Washington, D.C. May 7-9, 2014. I look forward to seeing you there! Also notice the IIUSA 2014 Webinar Series, with monthly webinars on topics including industry advocacy, securities laws, due diligence, retrogression, economic impact analysis, EB-5 in the capital stack, adjudication trends, TEAs, I-924a, and escrow and fund administration. The IIUSA webinars last year were substantive and timely, and I look forward to this new series.

EB-5 Statistics
If you’re interested in trends in receipts, approvals, and denials of EB-5 petitions, see: “IIUSA Obtains I-526/829/924 Adjudication Data for FY2013, Releases Comprehensive Dataset (1991-2013).” The FY2013 data shows a growth in receipts over 2012 of 8% for I-526 petitions, 71% for I-829 petitions, and 82% for I-924 applications. USCIS already doubled the number of approved Regional Centers in FY2013 by approving 220 applications, and – unless many of those 436 new I-924s received in 2013 were amendments – RCs will be facing a very crowded field moving forward. We’re on track to hit the annual EB-5 visa allocation cap of around 10,000 based on filings, with the only uncertainty being whether USCIS can manage to process enough I-526s in one year to make that happen (and whether processing times will speed up enough that Chinese investors would even notice being retrogressed). As with most things in EB-5, this issue is complicated. If you want to read more, see “Department of State Predicts EB-5 Visa Retrogression for China” on the EB-5 Insights Blog and “FAQs on EB-5 Quota Backlog” by Ron Klasko.

New AAO Decisions
Since last time I checked, USCIS has uploaded 18 new 2013 AAO decisions on I-525 cases. (May 24 to June 18, and September 23 to November 15). Besides RFEs, which aren’t public, AAO decisions are my best chance to see what’s going on behind the scenes with adjudications and current policy applications. For me, the most interesting decisions in this batch are SEP232013_01B7203, which addresses a Regional Center’s attempt to claim deference to prior approvals, refers extensively to the 5/30 policy memo, and considers what amendments mean; JUN052013_01B7203, which withdraws the director’s assessment of a business plan’s credibility; and MAY242013_01B7203, which discusses which business activities prior to I-526 filing will help the investment to qualify as “fully invested and placed at risk.” Nearly all AAO decisions on I-526 cases include a section on source of funds problems. People involved in that area may particularly want to read JUN182013_03B7203, which goes into detail on what went wrong with a typical China source of funds scenario involving real estate. Or for comedy, you can review MAY242013_02B7203, which treats a petition for investment in a business that will trade in healthcare products and/or operate a restaurant and/or import textiles and/or export fly traps and avocado oil.

New RCs
New entries to USCIS’s Regional Center list 12/30/2013 to 1/22/2014
Live in America-California Regional Center (California)
U.S. Gateway Regional Center, LLC (California)
InvestAmerica EB-5, LLC (Colorado)
My Florida Regional Center, LLC (Florida)
E Development Corporation dba EDC (Guam)
Birch MD BioPark Regional Center (Maryland) USCIS Approval Letter

New I-526 form, new I-RIMS product, I-924a, new RCs (AL, AZ, CA, DE, FL, GA, ID, IL, KS, LA, MS, MT, NH, NJ, NV, NY, OR, PA, RI, TX, WA, WI)

October has been a busy month in the business plan department; apologies to frequent blog visitors. Here’s what I think you should know of recent happenings.

New I-526
USCIS has issued a new version of the I-526 form and instructions (09/24/13 edition). Previous versions of the form will only be accepted through the end of this year, so bookmark http://www.uscis.gov/i-526 instead of using what you have on file. If you accidentally use an old form, you’ll file in the wrong place. (The new I-526 instructions don’t give a filing address but direct petitioners to consult the USCIS website for an address – currently the Dallas Lockbox facility). Otherwise, the new I-526 doesn’t look dramatically different from the previous editions.

New I-RIMS Product
The IMPLAN Group, creator the IMPLAN methodology used by many RC economic impact studies, has stepped up to create a new product that works like the BEA’s now-discontinued RIMS II system, only using IMPLAN data sets. This looks like good news for the many RCs that liked RIMS II and hoped to continue using familiar methodologies even as the BEA is no longer providing updated data sets. For more information, see the IMPLAN Group page on 2011 I-RIMS Data, and an article on the IIUSA blog “New IMPLAN “I-RIMS” Product Introduced & Available as Alternative to RIMS II.” To refresh your memory about what happened to RIMS II, see the BEA’s notice on Impact of Sequestration Reductions on the Availability and Quality of Data from the Bureau of Economic Analysis.

I-924a Reminder
Approved Regional Centers, don’t forget that the clock is ticking for you to file a Form I-924a for fiscal year 2013. See http://www.uscis.gov/i-924a and http://www.uscis.gov/forms/questions-and-answers-form-i-924a. If you don’t file by December 29, USCIS will contact you in the Spring with a nice letter threatening to terminate your RC. IIUSA has had a chance to see the I-924as filed in 2011 and 2012, and is hosting what should be a very useful webinar on 11/19/2013 on
“3rd Year of Regional Center Annual Reporting on Form I-924A.” To participate, sign up at

Other useful items

  • IIUSA has another promising webinar on Tuesday, November 12, 2013 at 1pm on the subject of “EB-5 Bridge Financing & Escrow Options.” Register at: http://eventcallregistration.com/reg/index.jsp?cid=41195t11
  • Those of you concerned with keeping securities registration exemptions may benefit from Steven Anapoell’s helpful article on “Determining Whether a Potential Investor is a Resident or Non-Resident for Securities Law Purposes”
  • Speaking of keeping on the right side of the SEC, if you are a Regional Center principal, please pick up the phone right now and make two calls: one to your website designer to temporarily disable your RC’s website, and one to your favorite attorney to review the website content before it can go back up again. I recently checked a lot of websites in process of refreshing my Regional Center directory, and was torn between suspicion of the mysterious RCs with no web presence and sorrow on behalf of those RCs whose websites are full of content that could get them into trouble. I can see that websites are often left to innocents in the marketing department who have no idea which pretty pictures, useful information, and careless word choice could derail the RC and all its offerings. Don’t let that happen to you!

New Regional Centers
I have decided to quietly update my Regional Center directory as I receive new information, and to announce new RC names only in occasional posts. If I have contact info or other detail about these Regional Centers, you’ll find it in my directory. I also started a log of recent Regional Center approval letters to track information of interest to me (the length of I-924 processing times, the number of approvals based on actual vs. hypothetical projects, the economic methodologies being approved, and so on). To date I am only able to link to letters for 46 of the 179 Regional Centers approved (by my count) so far in 2013, but I will continue to update the log as I get additional information. Maybe one day these public licenses will all be made publicly available! Thank you to Regional Centers that have shared their letters. Note also that the IIUSA Regional Center Directory includes relatively comprehensive listings for all IIUSA-member RCs.

New entries to the list of approved Regional Centers at www.uscis.gov/eb-5centers from 9/24/2013 to 10/28/2013

EB-5 Event, New RCs (AL, CA, CT, FL, GA, IN, KY, MS, NC, NJ, NY, PA, PR, SC, TN, VA), New AAO Decisions, TO Training

EB-5 Event Reminder
If you are reading this blog as a way to investigate the EB-5 program, save yourself time by making sure that you have the CDFA Intro EB-5 Finance WebCourse on your calendar (Sept. 18-19). The Council of Development Finance Agencies has organized one of the very few EB-5 events whose number one purpose is to educate, not to sell products and services, and the line-up of topics and contributors looks great.  If you have something to learn in EB-5, I don’t think you can find a more solid, comprehensive, and time-efficient introduction than this course.

New Regional Centers
New entries to the USCIS list of Regional Centers from 8/16 to 9/6/2013:

168 America Regional Center, LLC (California)

FutureCare Regional Center of Southern California, Inc. (California)

HT Asset Holding Inc. (California)

San Francisco EB-5 Regional Center, LLC (California)
Designation Letter

South Florida EB-5 Regional Center, LLC (Florida)

Southern Film Regional Center, LLC (Georgia)

Civitas Indiana Regional Center (Indiana)

CP Southern Regional Center (Alabama, Kentucky, Mississippi, Tennessee, Virginia)
Designation Letter

Encore Mississippi Regional Center (Mississippi)

New York Metropolitan Regional Center (New Jersey, New York, Pennsylvania)

US EB5 New York City Regional Center (Connecticut, New Jersey, New York, Pennsylvania)

U.S. Business Regional Center Inc. (New York)

Carolina Global Regional Corporation(North Carolina, South Carolina)
Designation Letter

North Carolina – East Coast RC (North Carolina, South Carolina)

Reside in America Puerto Rico, LLC (Puerto Rico)
c/o The LCP Group, White Plains NY. Ph: (212) 692-7228
USCIS Designation Letter

Dominion Mid-Atlantic Associates, Inc. (Virginia)

(Note: See my Regional Center directory page for my most updated listings for all RCs. And please email me if you would like to provide additional information regarding your RC.)

2013 AAO EB-5 Decisions

I-924 Decisions (see Request for Participation as a Regional Center Decisions Decisions Issued in 2013)
Issues: geographic area, industry focus, “general proposals,” “hypothetical” projects and approvals

In 2011-2012, we saw a trend toward increasing granularity in Regional Center approvals, with USCIS insisting that RCs submit to the mandate to “focus on a limited geographic area,” and to strictly define their industry focus down to at least the 4-digit NAICS code level.  I had wondered whether the 5/30/2013 EB-5 policy memo would effectively blow the lid off such limitations, and it seems that it has. I definitely didn’t report new five-state Regional Centers last year, but recent new approvals include many with expansive geographic areas.  The AAO decisions published in 2013 on I-924 cases both cite the 5/30 policy memo to overturn USCIS’s decisions to deny cases for being too general.  JUN122013_01K1610 discusses a Regional Center amendment that sought to add the whole of five states plus four industry categories defined at the 2-digit NAICS level. USCIS predictably denied this request, but the AAO withdrew the USCIS’s denial.  The AAO determined that:  “The record contains a general proposal based on Census Bureau and other data and general predictions concerning the kinds of commercial enterprises that will receive capital, the direct and indirect jobs that will be created as a result of such capital investments based on RIMS II data and  multipliers, and other positive economic effects. Thus, the AAO withdraws the director’s concerns. While the amendment request is approved, it is based on hypothetical projects and, therefore, is not  due any deference in future filings.”  JUL192013_01K1610 likewise indicates considerable leeway for what can approved at the I-924 stage, provided that the approval has a “hypothetical” basis.  USCIS’s denied the I-924 initial application because “The director determined that the applicant had not provided a business plan with verifiable detail regarding how the proposal will create sufficient jobs.” The AAO disagreed, determining that “The record contains a general proposal based on general predictions concerning the kinds of commercial enterprises that will receive capital, the jobs that will be created as a result of such capital investments based on RIMS II data and multipliers, and other positive economic effects. As the record contains a general proposal, the applicant is not required to submit letters of intent or commitment from the prospective sources of matching funds for regional center designation.”

I welcome the openness to general industry categories and hypothetical projects, but would caution new applicants about wide-ranging geographic area. If a course doesn’t make sense, the powers that be will eventually realize that it doesn’t make sense and change course.  I see the concept of limited geographic focus at the very core of the Regional Center program — its impetus and defining feature. Congress instituted the Regional Center program based on the economic concept that the synergies that result from pooling investment in a region give more bang for the buck than the separate effects of  individual investments here and there, as occurs with the traditional/direct EB-5 program. When a “Regional Center” covers the whole of five states, I don’t even know what the title means anymore.  I don’t want to return to the granularity of 2012, when USCIS likewise departed from Congressional intent by defining Regional Center designation so restrictively that it essentially just meant approval to pursue one project. But neither extreme restriction nor extreme flexibility are good for the program, and I hope and believe that we’ll soon find ourselves back to a reasonable middle ground, especially with respect to the key question of target geographic area.

I-526 Decisions (see Form I-526 and Form I-829  Decisions Issued in 2013)
Issues: “at risk,” “meaningful concrete action,” “overcapitalized,” “inconsistencies”

The 2013 investor petition decisions all involve I-526 petitions, and all but APR172013_01B7203 are for direct EB-5 cases. I’m interested to note that whoever’s now writing AAO decisions is highly detail-oriented and influenced by the precedent decision Matter of Ho. (In contrast to last year’s writer, who was all about Matter of Izummi and who didn’t bother with microscopic rehearsals of detail from the record.) In re Ho is best known for its paragraph definition of the comprehensive business plan, but our AAO writer repeatedly returns to the decision’s treatment of the “at risk” requirement. According to Matter of Ho: “Simply formulating an idea for future business activity, without taking meaningful concrete action, is similarly insufficient for a petitioner to meet the at-risk requirement. Before it can be said that capital made available to a commercial enterprise has been placed at risk, a petitioner must present some evidence of the actual undertaking of business activity; otherwise, no assurance exists that the funds will in fact be used to carry out the business of the commercial enterprise. This petitioner’s de minimis action of signing a lease agreement, without more, is not enough.” For the first time that I’ve noticed, the AAO repeatedly harps on the issue of “meaningful concrete action,” to the point of requiring the petitioner to provide evidence of funds already spent in the business, contracts already executed, and employees already hired prior to I-526 filing. I kept thinking I must be reading I-829 cases, but no. Take warning, direct EB-5 investors: if you have primary control over your business’s bank account, USCIS may require you to show evidence at I-526 that you not only invested $500K/$1 million but that your business has already spent or was irrevocably/contractually committed to spending that amount before you even filed the I-526 petition.
I wonder if the AAO is going overboard with its application of Matter of Ho, and will be interested to hear the lawyers’ take on this new batch of cases. Is it fair to deny a case because the petitioner provided, in RFE, a copy of a lease that post-dated I-526 filing? Because the petitioner, prior to I-526 approval, spent only a few hundred thousand of the one million invested in his business? It seems to me that the distinction between I-526 and I-829 is a key feature of the EB-5 program, and that we’re seeing a negative trend toward pushing I-829 requirements into the I-526 stage. I-526 is the plan review stage, and gives USCIS opportunity to shut down non-compliant proposals (and the investor the opportunity to change course, if EB-5 turns out not to be an option). I-829, then, is the stage where the petitioner demonstrates that he implemented his USCIS-approved business plan. I think it doesn’t make sense to require the I-526 petitioner to prove that he already did what he hasn’t yet been approved to do. 2013 AAO decisions that approach the at-risk requirement through Matter of Ho include APR012013_01B7203, APR032013_02B7203, APR152013_01B7203, APR152013_02B7203, APR162013_01B7203.
Besides the new focus on “meaningful concrete action,” our 2013 AAO writer is concerned that EB-5 enterprises may be “grossly overcapitalized” (not proving that their job-creating activities require the full amount of EB-5 investment). The decisions also devote pages to dissecting apparent inconsistencies in the record, and repeat the warning that “Any attempt to explain or reconcile such inconsistencies will not suffice unless the petitioner submits competent objective evidence pointing to where the truth lies.”

More on Tenant Occupancy
IIUSA has obtained and published a presentation used by USCIS to train adjudicators on “tenant occupancy” cases. I note that the disclosed material does not discuss the requirement to demonstrate whether tenant jobs would be new or relocated – the issue that emerged as the final deal-breaking issue in several recently-denied cases. But maybe this issue is just so juicy that it explains the many pages redacted from the presentation.

More DC news, CA TEA update, IIUSA conference, New RCs (AR, CA, MS, MD)

A few more important posts from this week:

Also, additions to the USCIS Regional Center list bring the total new centers approved in 2013 to 43.

Arkansas and Mississippi
Liberty South Regional Center

San Gabriel Valley Regional Center

Maryland Area Regional Center, LLC

(Note: See my Regional Center directory page for my most updated listings for all RCs. And please email me if you would like to provide additional information regarding your RC.)

Comment on USCIS SEC Engagement

Today’s EB-5 Engagement with the Securities and Exchange Commission and USCIS featured representatives from the SEC Division of Corporate Finance, Division of Trading and Markets, Division of Investment Management, and Division of Enforcement. The panelists discussed EB-5 offerings as securities and conditions for exemption from securities registration, individuals involved in EB-5 as broker-dealers or investment advisers and associated registration issues and exemptions, and SEC enforcement with particular reference to the recent Chicago case. Two passing comments from Barbara of the Division of Investment Management stand out to me as a summary of the call: “you need to be worried,” and “it does get very complicated.” As a non-attorney I would have liked to hear “just do it this way and you’re safe” but instead I heard something like: here are some of the many lines to avoid crossing, and if in doubt you’re probably not compliant, but the issues are fact-specific so  consult a good lawyer. Rob Silvers opened the call by noting that USCIS has been engaging with the SEC at the programmatic and case-specific level, but did not comment on the results of this engagement.  The call declined to tell us whether this joint review of actual cases has identified endemic or repeated practices in the EB-5 program that are problematic from the SEC perspective (though Robert Divine did ask the question). I hope that USCIS and/or the SEC and/or securities attorneys in the EB-5 industry can come up with a set of basic practical “dos and don’ts” that focus on the positive (how to get it right) and also highlight the relative black and white amidst all the grey areas. Panelists at meetings like this tend to hedge their statements so much that we non-attorneys can get lulled into thinking that the fine print rules are too ambiguous to be a serious guide or threat. We struggle to distinguish between practices that may raise issues in 15% of situations and those that are problematic 99.9% of the time. Obviously false statements and schemes to defraud are always wrong, but beyond that what do offerors most need to know when structuring and promoting investments? Who will help us identify and publicize any commonly-used practices  in EB-5 deal structure and marketing that are almost certainly problematic, securities-wise? Or reassure us about what is most likely okay, for that matter?  We want to keep our job-creating American business people safe from litigation. We don’t want EB-5 to become the new asbestos, or to fade based on unfounded fears.

That said, the call was substantive and helpful, and I would recommend it to everyone involved in an EB-5 offering. You are welcome to download my recording of the call from Dropbox.

Update: USCIS has published an Executive Summary of the call.

Update: See also “Investor Alert: Investment Scams Exploit Immigrant Investor Program” (10/1/2013). Published at http://www.sec.gov/investor/alerts/ia_immigrant.htm.

Update: I’ve added a section of securities compliance links to my Resources page.

Ombudsman meeting reaction

In case you missed yesterday’s EB-5 stakeholder meeting hosted by the CIS Ombudsman’s Office, here’s the gist: “the processing of EB-5 petitions and applications has not been smooth, and it’s USCIS’s fault.” The Ombudsman listened politely and made notes to convey to USCIS, which was not offered a speaking part at the meeting. I can share my recording, if you want to hear all the EB-5 stakeholders’ complaints and suggestions in detail. Since none were new to me (although some were constructive and worth stating), I shall report instead on an imagined meeting. Let’s pose St. Thomas More as Ombudsman for the American people, and imagine how USCIS representatives might tell him their side of the EB-5 processing story.

St. Thomas, thank you for holding this meeting and giving your faithful civil servants here at USCIS the opportunity to express concerns regarding the American people and their handling of the EB-5 program.

Sir, the people complain about consistency and predictability in processing of EB-5 cases. They are angry that documents similar to those approved a few years ago are not approved today. They mutter that EB-5 may be heading for a crash such as it experienced in the late 1990s – a crash that they blame on us and our track-changing. But look at the facts of the late nineties. Hundreds of Interbank Group investors lost their green cards – but Interbank was convicted on dozens of counts of visa, mail and wire fraud and a couple operators went to jail – whose fault was that? Back then hundreds of AIS investors ended up in legal limbo – but AIS had been structuring EB-5 deals so that foreign investors only had to actually invest $125,000, a fraction of the legally required amount. How could we not change course and crack down when it became clear to us that the bottom line of the EB-5 program – real investment and real job creation – was not being realized, and that fraud was being given a chance to flourish? And look at us now. The people have been sending us economic impact reports that soberly claim, for example, that building one new hotel or one new office building will result in thousands of new jobs in the community. When our in-house economists that the people agitated for us to hire point out problems with such analyses, and explain why we should not and should never have rubber-stamped claims like this – how can we not act on that? What would the newspapers and the voting public say if we didn’t adjust? How can the people gasp and swoon when our economists challenge certain job count practices when a little thinking or a call to the local university economics department would raise the same issues that our economists are raising?

How come a country full of smart people can only tear their hair and cry “you approved it before therefore you should approve it again,” and “why can’t you tell us the right way to do this?” Why can’t those smart people put their heads together and figure out together what constitutes a reasonable economic analysis, a quality business plan, and solid offering documents? Why can’t they come up with best practice guidelines for the industry, based on the combined intelligence of a range of experts in business, economics, and law? You think we wouldn’t welcome those guidelines and take them into account? We would love to see the community self-regulating to file more consistent and high-quality documentation that’s easy for us to process and approve, and that won’t get innocent investors or business people in trouble later. Who thinks we like wasting our time issuing tons of Requests for Evidence, telling people one by one to please source the claims in your documents and avoid tenuous assumptions and make your paperwork consistent and follow the relevant rules and regulations? Who thinks we like spending months wading through binders stuffed with paperwork that could have been approved more quickly if prepared differently? Sure, we should probably publish more clear instructions and more extensive policy guidance, but why wait on us? Why can’t the lawyers and economists and business experts out there participate in the challenge of creating best practices for a healthy EB-5 program that fulfills Congressional intent and resists fraud? Why are they just fixated on “what we got away with before,” leaving all the reigning in and guidance to us? Why do they promote self-serving proposals that leave a wide-open window for fraud – such as the suggestion that people should be able to freely deviate from plans approved at the I-526 stage and should have the option of not proving job creation at the I-829 stage (effectively, never having to prove job creation)? Why do the people have to resist our reform attempts all the way? The people agitate for us to limit our standards to what’s “commercially reasonable,” and yet they were angry when we started to issue Requests for Evidence with the simple question: “please reference sources to show what is commercially reasonable in this situation.” They blame us for approving that Regional Center in Chicago that’s now being taken to court by the SEC and causing an international stink, but they’re angry when we implement procedures to help to help ensure that future applicants aren’t inflating numbers and forging documents like the Chicago people did.

So you see, St. Thomas, we’re in a hard spot. No one longs more than we do for EB-5 processing to go smoothly and quickly. We want to receive paperwork that’s clear and reasonable and easy to approve. We want to quickly approve real investment that will create real jobs and give immigration benefits to investors with clean money. But we can’t do this alone. We need the American people to step back from their adversarial approach to us. We need them to support and share the goal of making EB-5 cases easier to process. We need their shared commitment to regulate the EB-5 program so that it results in real investments in solid US business, real job creation for US workers, real economic development in distressed areas, and immigration benefits for people whom we’ll be proud to call fellow Americans.

[As a business plan writer I strive for imaginative sympathy with my audience, EB-5 adjudicators, but I don’t actually know anyone at USCIS and have no evidence that this speech reflects the views of any living person.]

In other news, Steven Anapoell at GreenbergTraurig has published an article raising issues with major potential implications for use of bridge financing in the EB-5 context. Any thoughts from other securities attorneys on this article? See: The Investment Company Act of 1940 and Underwriting the Financial Gap Between Filing and Approval of the I-526 Petition

New RCs (CA, ID, FL, NE, NY, NM, NY, OK, PA, TX), New NAICS, IIUSA Meeting, Visa Numbers, SEC Issues

A brief post to catch up on a very busy few weeks.

Processing Update and New Regional Centers: The EB-5 team at USCIS has been busy issuing approvals! I hear rumors of I-526s being adjudicated in record time, and twelve new names have appeared on the USCIS list of approved Regional Centers. Kudos to the adjudicators and leadership who have prioritized improved processing times. My enthusiasm is somewhat mitigated by the discovery that some of these new centers are in the dark so far as the Internet is concerned. Thank you to the centers with website for letting us know who you are and what you plan to do. I look forward to seeing more information about all these centers.


Harris Investment Immigration Fund, LLC


Idaho Global Investment Center, LLC   http://idahogic.com/


American EB-5 Centers   http://www.americaneb5centers.com/

Leaf Fisher Investment Group LLC

Omega Florida Regional Center http://omegaregionalcenters.com/omega-designation

Orlando EB-5 Investments Regional Center http://www.orlandoeb5investments.com/


NuNebraska Regional Center, LLC

New Mexico

Allied Artist High Desert EB5 Regional Center
Geographic Area:New Mexico Counties of San Bernalillo, San Miguel, and Santa Fe
Industry Focus:Motion Picture and Video Industries (NAICS 5121), Advertising and Related Services (NAICS 5418)
Designation Letter

New York, New Jersey, Pennsylvania

New York Federal Regional Center

New York

Real Estate Immigration Fund, LLC  http://www.reifrc.com


Briight Partners Regional Center http://www.briight.com/


Civitas Texas Regional Center http://www.civitascapital.com

(Note: See my Regional Center directory page for my most updated listings for all RCs. And please email me if you would like to provide additional information regarding your RC.)

New NAICS Codes: I belatedly noticed that the 2012 NAICS codes released by the U.S. Census Bureau include a few significant differences from the 2007 NAICS codes. For example, the 2012 codes combine full service and limited service restaurants under one four-digit code, though they had been separated by the 2007 codes. The six-digit codes for restaurants have been changed accordingly. The code 6233 that used to be called “Community Care Facilities for the Elderly” is now defined as “Continuing Care Retirement Communities and Assisted Living Facilities for the Elderly.” And so on. These changes shouldn’t be a major issue, but Regional Centers should be aware of the updates to the definitions for their industry categories.

EB-5 Meetings: Be sure to register for the 3rd Annual IIUSA EB-5 International Investment & Economic Development Forum Association to Invest In the USA (IIUSA) on Wednesday, June 19, 2013 at 4:30 PM – Friday, June 21, 2013 at 12:00 PM (PDT) in Las Vegas, NV. This is the best and most comprehensive EB-5 event of the year. USCIS hasn’t yet announced dates for 2013 EB-5 stakeholder meetings, but don’t forget the CIS Ombudsman EB-5 stakeholder meeting on 03/05/2013.

Visa Numbers and SEC Issues: The EB-5 Insights blog by GreenbergTraurig continues to publish valuable posts. EB-5 Retrogression for China Unlikely in 2013 reports that “According to Charles Oppenheim of the Department of State Visa Office, EB-5 usage has dropped in recent months. As a result, it is no longer expected that China will reach its per country limit in 2013.” The Myths of Retrogression of the Visa Numbers in the EB-5 Program further explains what retrogression does (and does not) mean. Addressing concerns with securities compliance highlighted by the recent SEC action against a Regional Center, Steve Anapoell has published useful articles on EB-5 Program Securities Offerings: Considerations for the Drafting Process and EB-5 Program Securities Offerings: Preparing Appropriate Disclosure Documents. The IIUSA blog has also been posing valuable resources related to securities compliance.

Help with I-924A

Alert all approved Regional Centers: Do not forget to file a Form I-924A with USCIS by December 29! This form is used to demonstrate a Regional Center’s continued eligibility for designation, and must be filed annually. If you forget, USCIS will send you a Notice of Intent to Terminate. It’s important to not only file the form but to prepare it carefully, since USCIS can review the information provided to judge whether or not your center continues to be eligible. The Form and Instructions are not very clear, but note that USCIS has published an FAQ about I-924A. Joseph Whalen has published a useful article on Addressing USCIS Form I-924A Instructions. Also note that  IIUSA has announced a webinar (November 9th 2pm Eastern) that will include a panel of experts discussing Strategies for Form I-924A Annual EB-5 Regional Center Reporting in 2012.

10/16 USCIS EB-5 Stakeholder Meeting

Unfortunately I was not able to be in Washington DC for today’s EB-5 Stakeholder Engagement with USCIS, but I did listen in by teleconference and have uploaded my recording of the call. The most significant update is that “next month” promises another “Conversation with the Director” including Director Mayorkas and Rob Silvers that will tell us what we really want to know: what’s happening with “tenant occupancy” and the EB-5 policy memo.  Today’s engagement deferred those topics, but did provide substantive comment on a number of issues. We heard a detailed description of the work flow process and staffing in the EB-5 adjudicative team and confirmation of the rumor that USCIS is working with the SEC to investigate some regional center activities. The panelists responded to questions regarding NAICS codes, construction timeline and job counts, job preservation for a troubled business, timeline for sustaining investment, conditions for use of bridge loans, and investment return in the form of real estate, among other issues. Ears pricked up when the panelists revealed some reasons that I-526 may be put on “operational hold” (e.g. all I-526 for one project on hold while the first is adjudicated, and I-526 for a Regional Center on hold while an amendment is adjudicated for that RC). I learned several things, though I’m never sure what I can take to the bank from a stakeholder meeting. Will the adjudicator who gets my I-526 with a new economic methodology be impressed when I play my recording of Blake Gotto at the 10/16 meeting saying that nothing precludes me from doing this instead of filing an amendment? Can I count on Kevin’s statement that a troubled business does not need to save the same positions that were in place prior to investment, so long as the head count remains the same, including FT/PT positions? I’ll have to listen again to the recording and re-read Matter of Hsiung. This meeting did not include a presentation, but I look forward to the eventual executive summary. I see that EB-5 Center has posted some notes on the meeting, and I will link here to other comment as it emerges. I’m also eager to hear reports from the IIUSA conference this weekend, which I am sorry to have missed as well.

7/26 EB-5 Stakeholder Engagement

Today’s EB-5 stakeholder engagement was very substantive, with the USCIS panelists providing detailed answers to many questions submitted in advance of the call. I encourage you to review my recording if you weren’t able to join the teleconference. Robert Silvers, Senior Counselor to the Director, took an active role in this call and seemed well-prepared and genuinely engaged, upholding the standard set by Director Mayorkas.

Rob Silvers discussed process enhancements for EB-5, including the new EB-5 program office, new hires, case specialization, and the forthcoming review board for I-924 applications recommended for denial. He also suggested that a new draft of the EB-5 policy memorandum will be published in the next four weeks, and that movement on the “tenant occupancy” cases can be expected “very soon.”

Stakeholder questions addressed in the call included questions related to the requirements for sustaining investment, evidence requirements for I-924 petitions and amendments, metrics for determining acceptable geographic boundaries for a Regional Center, RFE practices, acceptable evidence of non-EB-5 capital commitments, acceptability of investor returns and distributions during the CPR period, acceptability of investors receiving real estate as a return on investment, counting jobs in business acquisition scenarios, and the issue of deference to prior approvals. For more detail see  the detailed summary of the call posted by the EB-5 Center blog, or review my recording of the call.

5/1 Engagement Mega Executive Summary! (Tenant Occupancy! TEAs! Bridge Financing! RC Sunset! More!)

Many people left the California Service Center disappointed after the Quarterly EB-5 Stakeholder Engagement on 5/1/2012, but now USCIS has made up for telling us little in person by publishing an amazing 17-page Executive Summary that covers what they didn’t say at the meeting. I’ll probably be commenting on this summary for weeks. Particularly note the Q&A on tenant occupancy, which is less ambiguous and more restrictive than the guidance from Chief Economist John Rodgers. I’m copying a few of the hottest new releases below, and I encourage you to download and review the full document.

Selected Q&A from USCIS’s Executive Summary of the 5/1/2012 EB-5 Quarterly Stakeholder Engagement

Q: In a regional center application, kindly confirm that two digits of North American Industry Classification System (NAICS) codes are considered sufficient with the industry cluster specified and economic report elaborating the same. The rationale behind this is because in a retail and office setting, three digit code tenants are not ascertained at the time of filing the I-924.
A: This is not acceptable. Even within clusters and projects that incur similarities, USCIS requires four digit NAICS codes at a minimum.

Permissible Expenditures
Q: Any reasonable budget will include line items for “contingencies” and “operating capital” which are required in order to sustain a business successfully during the development process. Some business plans have been approved with such lines (as they should be) while others have been rejected specifically citing these budget lines as “not being job creating activities”. Please confirm that such expenditures are permissible – no business plan is believable without such budget lines.
A: Whether a particular line item in a budget presented in support of an EB-5 petition is appropriate cannot be confirmed in general, but must be analyzed in the context of the instant case. However, USCIS does agree that a credible business plan should contain a reasonable budget that outlines the prospective expenses of the business.

Real Estate Acquisition
Q: One of the most effective ways to attract investors is for the business into which they are going to invest to buy and own the real estate in which they will operate the business, rather than merely lease it. This makes the investor feel that the business is more likely to succeed, or, if it fails, the real estate could perhaps be used to establish a second business. Therefore, where part of the investment expenditure is spent on real estate in which the business is to be operated, is it correct that such expenditure is a job creating expenditure for which appropriate job creation credits can be obtained. For example, if an investor invests $1million to acquire a building for $500,000 and then spend another $500,000 to renovate and equip as well as fund operating capital for a restaurant, would the entire $1million be considered an appropriate EB5 investment, assuming it otherwise qualifies.
A: This is a simple transfer of real estate with renovations occurring subsequent to the purchase. The renovation and outfitting of the facility will create temporary jobs, and it is possible that a trivial number of jobs could be created by the fees charged for the real estate transfer. Summarily, yes—the $1 million could be considered an appropriate EB-5 investment—assuming that the other requirements of the EB-5 regulations are satisfied.

Bridge Financing
Q: Under what circumstances will USCIS approve bridge financing? Will the memo address this? This does not appear to be covered with adequate specificity in the last iteration of the policy memo. Stakeholders are not aware of any written guidance on bridge financing other than am AAO decision on the Victorville case, and this is an extreme example with specific facts. Of the two memos in 2009 (June and December) on construction, the December 2009 memo superseded the June memo, but stakeholders continue to receive RFEs referencing the June memo.
A: Pursuant to 8 C.F.R § 204.6(j)(4)(i), the new commercial enterprise, not the EB-5 investors, must create the requisite employment. As such, it is acceptable for the developer or the principal of the new commercial enterprise, either directly or through a separate job-creating entity, to utilize interim, temporary or bridge financing – in the form of either debt or equity – prior to receipt of EB-5 capital. If the project commences based on the bridge financing prior to the receipt of the EB-5 capital and subsequently replaces it with EB-5 capital, the new commercial enterprise still gets credit for the job creation under the regulations.
This policy will be issued in the forthcoming EB-5 policy memo in Section C, the Creation of Jobs section:
“It is important to recognize that while the immigrant’s investment must result in the creation of jobs for qualifying employees, it is the new commercial enterprise that creates the jobs. This distinction is best illustrated by an example:
Ten immigrant investors seek to establish a hotel as their new commercial enterprise. The establishment of the new hotel requires capital to pay financing costs, purchasing the land, developing the plans, obtaining the licenses, building the structure, taking care of the grounds, staffing the hotel, and the many other types of expenses involved in the development and operation of a new hotel. The immigrant’s investments can go to pay part or all of any of these expenses.”

Verifying RC Job Creation
Q: Can expenditure models based on RIMs II Final Demand Multipliers, if they project adequate number of jobs to satisfy the 10 full time job requirement per investor, satisfy the job creation requirement and proof of such expenditure submitted with the I-829 in accordance with the business plan submitted with the I-526?
A: This is an acceptable methodology if the structure of the business entities precludes the acquisition of tax documents or other evidence of employment for the components projected to be involved in direct job creation. USCIS would require a detailed explanation as to why the use of a model projection as opposed to evidentiary proof is necessary.

Q: In a case where the EB-5 business is a real estate development, which leases space to tenant businesses who then hire employees, do the following factors increase the likelihood that those tenant’s jobs can count toward satisfying the job requirements of the development’s EB-5 investors:
a. The tenant business is a new business which did not merely move from another location
b. The tenant business received cash from the development for tenant improvements
c. The tenant business received a loan from the development
d. The tenant received free rent or rent reductions
e. The tenant received an equity investment from the development
a. The tenant business is a new business which did not merely move from another location
This is not acceptable. None of the EB5 capital would be flowing to the jobs created by the tenant.
b. The tenant business received cash from the development for tenant improvements
This is not acceptable. The tenants would still be responsible for creating the jobs. The EB-5 capital would simply be improving/outfitting/customizing the structure already owned by EB-5 capital.
c. The tenant business received a loan from the development
This is acceptable with caveats. This effectively represents the co-mingling of capital. Similar to the quid pro quo expenditure agreement referenced above, however, this will render the agency vulnerable to fraud because the tenants could form an agreement beyond the adjudicative scope of USCIS to funnel the funds back to the developer. In addition, USCIS would need to define the constraints of the loan amounts and duration. Otherwise, the developer could loan $0.01 to a tenant to take credit for any jobs created. Finally, the tenant business must verify that the jobs are new jobs not transferred from elsewhere.
d. The tenant received free rent or rent reductions
This is acceptable with caveats. Similar to (b) above, this effectively represents the co-mingling of capital as the free rent/rent reductions acts as a loan. The same caveats apply here as in (b) above. In addition, this will cause a significant decrease in rental income for the EB-5 NCE, which should be an investment at-risk, not at-loss. USCIS would still need to define the constraints of the rental discount required, which effectively serves as a loan. It is highly unlikely, however, that the free rent or rent reduction over a 2.5-year period would sum to a total amount that could be considered a substantial investment in the tenant business.
e. The tenant received an equity investment from the development
This is acceptable with caveats. Again, this effectively represents the co-mingling of capital as in (b) above. The same caveats apply here.

TEA Designations and Census Tracts
Q: Will a single or multiple contiguous census tracts be considered as a geographic subarea?
A: USCIS encourages that standard Bureau of Labor Statistics (BLS) estimation methodology be used. In the event that subareas for which Local Area Unemployment Statistic estimates are not regularly produced, such as census tracts, the TEA applicant should be aware of the following: (1) the census-share technique be used ONLY where inputs for the preferred BLS methodology are not available and (2) only household-only inputs be used, in order to eliminate the impact of the Census 2000 Group Quarters processing error. More information regarding this answer can be found at the Bureau of Labor Statistics webpage at: http://www.bls.gov/bls/empsitquickguide.htm

Q: Can a qualifying census tract with unemployment 150% of the national rate be certified as a TEA?
A: Yes, but designation will depend on the quality and timeliness of the data used to support the 150% of the national average rate of unemployment claim. Acceptable data sources for purposes of calculating unemployment include Local Area Unemployment Statistics produced by a government agency, U.S. Census Bureau data, and data from the American Community Survey.

Q: Has there been any progress on further defining an acceptable vs. gerrymandered TEA? Will USCIS be providing additional guidance?
A: This issue is being examined in the context of the draft memorandum, which will be posted for comment in the near future.

Profit Requirements
Q: At the end of the two year period, to remove the restriction, does the business created have to make profits? Or can the business lose money as long as the ten job creation requirement is satisfied?
A: There is no “profit” requirement in the statue or regulations. As long as the investment has been made and is at risk of loss and the required jobs have been created there is no additional profitability requirement.

USCIS Staffing
Q: What will the USCIS EB5 unit organizational chart look like once hiring is complete?
A: We can only provide a generalized org chart, without specific staffing numbers.

Non-Profit Organizations
Q: How can non-profits benefit from this program? Can they receive a direct investment from an EB-5 investor or do they need to work through a regional center?
A: An EB-5 investment must be in a for-profit entity, so a direct investment in a non-profit probably does not meet program requirements. EB-5 promoters may be able to advise on structuring specific investment opportunities, but the premise of the EB-5 program is investment in for profit activities. Job creation is the same, but premise of program is for for-profit commercial entities.

EB-5 Sunset
Q: What is the status of the EB-5 “sunset” scheduled for September 30, 2012, and how might this affect current and future applications and projects?
The EB-5 Immigrant Investor Pilot Program is scheduled to end or “sunset” at the end of the current fiscal year, on September 30, 2012.
Without Congressional reauthorization, the Immigrant Investor Pilot Program will end on September 30, 2012. Congress may choose to end or extend the program.
If Congress does not reauthorize the Immigrant Investor Pilot Program, all existing regional center designations will expire automatically.
Following the sunset of the Immigrant Investor Pilot Program, USCIS will no longer possess authority to approve a regional center designation.
USCIS will continue to monitor Congressional actions pertaining to the EB-5 Immigrant Investor program, and will keep stakeholders informed as new information becomes available.