USCIS held a teleconference on April 23, 2014 to hear comments from stakeholders relating to future regulatory changes for the EB-5 Immigrant Investor Program. During the 90 minute meeting, USCIS listened to comments regarding regulatory changes from more than 30 stakeholders in the EB-5 community.
The EB-5 Program Today and Small Business
The EB-5 Program has acquired the lofty purpose of facilitating small business by providing an alternative financing mechanism to companies that would otherwise have difficulties obtaining traditional financing. USCIS affirmed this goal by having the chief counsel of Small Business Association Office of Advocacy on the call today and USCIS for the first time emphasized that they welcomed individual comments rather than consolidated comments from groups. These changes to the current order of the EB-5 world are appreciated.
The most frequently mentioned issue was processing times. The current processing times for I-526 to I-829 petitions are stated as being close to one year, however, some stakeholders suggested that their investors have been waiting for more than two years. Our experience has been that the timing of adjudications is haphazard. Premium processing for the I-924 and I-526 petitions were mentioned on four separate occasions. As you may recall, the issue of premium processing for the regional center petition was once considered by the former Director Mayorkas but firmly stamped out for fraud deterrence reasons. We have increasingly noticed that USCIS conducts due diligence on those projects and regional center petitions which come from the public domain.
We propose that rather than completely dismiss premium processing, it should be allowed in limited circumstances. Expedited adjudications should be made available in cases where an investor has already had his / her I-526 petition adjudicated and have needed to change projects or regional centers for some valid reason (such as a project rejection). In recent cases that we have dealt with, some investors waited nearly two years to have their 526 petitions adjudicated. The project documentation was subsequently rejected for a minor error and the same investors were forced to re-file –moving to the back of the line even though there was no issue on their source of funds. We propose that if the investors’ source of funds has been positively adjudicated under one project, that investor should be able to avail premium processing for future filings. .
Concurrently Filing for Aliens with Non-Immigrant Visas
The prolonged EB-5 processing time has been particularly troublesome for immigrants on non-immigrant visas or applying for non-immigrant visas. This has practical implications where an investor, for example, is planning a move based on children starting school. Stakeholders suggested that concurrently filing for non-immigrant visas (tourists/business/students/working, etc.) should be made available. It allows the investors with prolonged pending petitions to apply for work permits and travel documents.
We heartily applaud this proposition and would like to see investors who are on the final year of an H-1 working visa or F-1 students be given priority and/or allowed to file concurrently to extend their status until the EB-5 immigrant petition is granted.
EB-5 stakeholders proposed clarification of the redemption agreement under the EB-5 regulation and precedents. We concur with this request. In particular, USCIS should clarify its policies towards redemption agreements in terms of the return of capital in the form of property assignment and the prevalent usage of preferred equity structure in the regional center financing.
Big Regional Centers v. Small Business
An interesting phenomenon of EB-5 is the diversity of the stakeholders. Their subsequent views represent businesses from all spectrums, ranging from the billion-dollar regional centers to the green new-comers. Unsurprisingly the representatives from big regional centers suggested that USCIS posts statistics about the I-526, I-829 approval rates effectively limiting the competition.
In addition there were several suggestions to charge a re-verification fee. This fee would be used to increase scrutiny on all EB-5 projects, such as regular site visits. The increase of security, though creeping into the realm of SEC, is nevertheless welcome as it would enhance credibility. The fee would gradually oust the inactive regional centers from program.
We respectfully disagree with posting the regional center statistics, which would only reinstate the current status of the biggest players on the market - to help the big regional centers get bigger and to have the new-comers dream smaller.
Publishing regional center statistics can be misleading, to say the least. It provides unfair advantages to the early participants in the Program because of their approval track records. The fact that a regional center has hundreds of approval receipts can be wrongly interpreted by investors that this particular regional center has the best investment projects on the market. It couldn’t be farther from the truth. The authors represent multiple investors who invested in the biggest regional center projects but failed to receive their capital back upon the removal of the condition on their green cards and some investors, who happened to be at the back of the queue even failed to receive a permanent green cards. .
Healthy Competition in the EB-5 Industry
USCIS should not be seen to encourage one project or regional center over another. This sends the wrong message and is inherently discriminating.
The fact that USCIS began the program with an introduction from the chief counsel of the Small Business Association was an indication of a welcome shift towards an understanding of how EB-5 is infusing capital into the US affecting small businesses and start-ups.
In addition to promoting consistency, transparency, predictability and integrity of the EB-5 Program, we believe that USCIS’ proposed policy changes would encourage healthy competition among participants, rather than aggravating the monopoly of the big regional centers.
Mona Shah is the principal of Mona Shah & Associates in New York City. The firm has assisted many Regional Centers and Investors in navigating this complex, nuanced and constantly changing area of immigration law. Mona has more than 18 years of legal experience in immigration law and extensive knowledge in EB-5 law as well as prior participation in major regional centers. Mona's substantial litigation background includes her representation of clients in both state and federal courts. She has handled complex immigration law appeals before the US Circuit Courts of Appeal nationwide. Before coming to the US, Mona was a Crown Prosecutor in the UK. Mona has authored and published numerous articles and has spoken extensively both in the US and overseas.
Yi Song is an attorney at Mona Shah & Associates with advanced experience in EB-5 law and EB-5 related Securities law. She is admitted to practice law in New York and in the People’s Republic of China. She has authored many published articles on EB-5 financing and securities law. She practiced tax law in China and has experience in class action securities litigation cases. Yi is a graduate from Georgetown University Law Center in Washington, DC.
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