Banking and Finance

Was EB-5 Retrogression Averted by Obama’s Executive Order?

 There has been furor about Obama's executive order and of course much has been written, with countless opinions raised. The possibility of Chinese retrogression has been a huge topic in EB-5 since 2012 and with real force from August 2014, mainly because of the many difficulties retrogression will cause[1]. Will Obama’s Executive Order prevent a potential backlog?  While some writers are hesitant to draw a definite conclusion, even to go as far as to say that “there will be no significant impact on EB-5”, the authors’ opinion and ultimate conclusion, is that Obama’s Executive Order will likely avert retrogression.

To all but the discerning eye of an EB-5 practitioner, the line from President Obama was fleeting – but substantial.

“Second, I’ll make it easier and faster for high-skilled immigrants, graduates, and entrepreneurs to stay and contribute to our economy, as so many business leaders have proposed.”[2]

The inclusion of Entrepreneurs in this sentence is significant. It is no secret that the Obama Administration has favored EB-5. The reference to “business leaders” immediately reminds us of an endorsement by Bill Gates, Warren Buffet and Sheldon Adelson[3] earlier in the year. The action of increasing the EB-5 visa numbers would avert retrogression and thus positively impact EB-5 investors.

Increasing the visa numbers

This could be tackled in two ways: Firstly, by recapturing permanent resident numbers based on numbers allocated by Congress but left unused. So, in effect, the additional visas would be carried over to the next year’s available numbers. What this means in actuality is that over demand in one specific year, can be balanced out by the unused visas from previous years. This would be especially significant if the President allowed the State Department to go back five years or more and recapture the thousands of unused immigrant visas in the EB-5 classification during those years.

Secondly: visa numbers can be increased by not counting derivative spouses and children toward the final EB-5 visa quota. Currently, when an EB-5 investor files for and has an approved I-526, he and his family count against the 10,000 EB-5 immigrant visa cap. This impact is potentially huge and of course it would also substantially reduce the risk of retrogression in the EB-5 classification.

Why would the Presidential Order make this happen?

EB-5 has evolved from a simple immigration program to becoming a real alternative financing mechanism that has injected meaningful capital into the US Market. The players have changed. In New York City itself, we have seen the big players enter the market and raise millions of dollars, changing the entire makeup of the program. Recently, USCIS has approved jumbo infrastructure projects and projects that included government bonds. The approval of large infrastructure projects shows that USCIS has opened the doors to private public partnerships. This year the EB-5 program has raised over $2 billion in fresh capital, and billions more indirectly. This includes a boost in income through the jobs created, through real estate sales by new immigrants, and many more related areas.

Does the President have the Authority?

These executive actions are well within the President’s authority whatever his critics may say. Former chief counsel of USCIS and a law professor, Stephen Legomsky, wrote[4] that President Obama has the legal authority for his executive action on immigration. Mr. Legomsky is one of the 138 law professors specializing in immigration who wrote to President Obama two months ago confirming the President's authority to use deferred action on a large scale.

Professor Legomsky wrote: The president's legal authority is clear. First, the prosecutorial discretion that the president has exercised is a well-established, vital law-enforcement tool. When resources don't permit 100% enforcement, agencies are forced to set priorities […]. The president is not creating a new path to permanent residence. He recognizes that only Congress can do that. His decision will be only a temporary measure, one that settled law and layers of executive precedents clearly permit.

Recent Litigation filed against the Executive Order

Seventeen states filed a joint lawsuit in federal court on December 2, 2014, to try blocking President Barack Obama’s executive order on immigration. Many top Republicans have denounced Obama's order, which was primarily designed to spare millions living illegally in the United States from deportation. However Texas Gov.-elect and current Attorney General Greg Abbott took it a step further. On December 2, he filed a formal legal challenge in federal court in the Southern District of Texas. Abbot’s state is joined by 16 other mostly conservative ones, largely in the south and Midwest, such as Alabama, Georgia, Idaho, Indiana and the Carolinas.

The White House responded to the lawsuit by saying it is “confident that the President’s executive actions are well within his legal authorities.” Officials pointed to a memo from the Office of Legal Counsel justifying their move and a letter from 135 immigration law professors backing them up.

“The Supreme Court and Congress have made clear that federal officials can set priorities in enforcing our immigration laws,” said White House spokeswoman Brandi Hoffine.[5]

It is highly unlikely this law suit will get very far. Further, the law suit focuses upon the undocumented aliens and does not even mention blocking the reshuffling of visa numbers, which is a non-controversial area.

In conclusion: We are boldly hopeful to see logic and common sense win through. Specific guidance is expected within the next six months. No doubt the lobbyists on Capitol Hill will be at work making sure that through these proposals, EB-5 remains strong for businesses and investors.


[1] The quota backlog will affect the increasing number of EB-5 investors from mainland China. According to the latest statistics released by USCIS, by September 2014, there are 12,453 I-526 petitions pending. Visa backlog and the retrogression will affect children nearing 21 year old. Other pressing questions under the quota backlog is how long does the direct job have to be maintained if the visa backlog occurs? For regional center projects, the visa backlog affects the timing of the capital deployment. It is unclear whether Regional Centers can return the capital to the EB-5 investors prior to the I-829 adjudication? What about returning the capital to the new commercial enterprise, if not to the individual investor? The visa backlog adds uncertainties to the pre and post immigration planning.

[2] See Transcript of Obama’s Executive Order:

[3] Bill Gates, Warren Buffett and Sheldon Adelson Support EB-5 Program on New York Times: (July 14, 2014)

[4] Wall Street Journal November 21


 Mona Shah has over 17 years of legal experience, Mona’s extensive knowledge of all facets of U.S. immigration law, and her practical expertise ranges from specialist business petitions to complicated, multi-issue deportation and removal litigation. Her firm, Mona Shah and Associates, represents individual, high profile and corporate clients from all over the world.

Mona is highly proficient and experienced in EB-5 law and practice; she has authored numerous articles and blog posts and is the author of a published book for investors on the EB-5 laws and procedures (EB5 for the Chinese Investor, available on Amazon). The second updated edition is scheduled to be published shortly. Mona is voted Top 25 EB-5 Attorneys by and Top 10 EB-5 Attorneys by She is also an adjunct professor at the Zicklin School of Business at Baruch University, NYC.

 Yi Song is an attorney at Mona Shah & Associates in New York City. Yi is a dual licensed attorney in the US (New York State) and in People’s Republic of China. Before joining Mona Shah & Associates, she worked at a securities litigation firm in Manhattan. She clerked at China’s highest court – the Supreme Court of People’s Republic of China. At Mona Shah & Associates, Yi practices EB-5 law and securities law and works on many successful EB-5 capital raising projects. She received her LL.B. degree from Beijing Foreign Studies University and she is a graduate from Georgetown University Law Center in Washington, DC. Her articles on EB-5 and securities law are published by LexisNexis, AILA,, and ILW. Yi serves on the advisory board of Magazine Chinese Edition and is a speaker on American Immigration Lawyers Association (AILA) EB-5 Conference. She writes a column for the Chinese newspaper Legal Weekly on American law and society. Yi is a native speaker of mandarin Chinese. She speaks fluent English and basic French.

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