This great summary is provided by AILA with the guidance of Tammy Fox-Isicoff. The EB5 program is of great interest to many applicants, especially those with the means to participate. he EB-5, Green Card through investment, was created to promote investments in businesses and to create and preserve jobs in the U.S. You can become a lawful permanent resident by establishing a new commercial enterprise and provide full-time employment to at least ten U.S. citizens, legal permanent residents, or other immigrants with employment authorization.
Under section 203(b)(5) of the Immigration and Nationality Act (INA), 8 U.S.C. § 1153(b)(5), 10,000 immigrant visas per year are available to qualified individuals seeking permanent resident status on the basis of their engagement in a new commercial enterprise.
Of these 10,000 visas, 5,000 are set aside for those who apply under a pilot program involving a CIS-designated “Regional Center.”
What is a Regional Center (RC)?
A RC is a proposed business venture often located in a targeted unemployment area supported by an econometric model based on a business plan forecasting indirect and/or direct job creation. Normally, RCs are located in areas of high unemployment or rural areas and require a $500,000 investment. However, some RCs are not located in targeted employment areas and therefore require investments of $1,000,000. An investor in an RC is not required to be actively involved in the management of the investment as long as the investor is a limited partner under the Uniform Limited Partnership Act. An RC normally structures one or more new commercial enterprises (NCE) that receive capital from investors to engage in direct or indirect job creation project or projects.
What does RC designation by USCIS mean?
It means that USCIS has reviewed the proposed business plan, any accompanying econometric model, location, and proposed job creation and has determined that the proposed business plan meets the requirements of The Immigrant Investor Pilot Program, created by Section 610 of Public Law 102-395 on October 6, 1992.
Are all RCs that have received designation from USCIS operational?
No, actually only a small percent of designated RCs are operational and have been the basis for approved I-526 Immigrant Petitions by Alien Entrepreneur. Even a smaller percentage have approved I-829 Petitions to Remove Conditions on Residence.
Is USCIS required to conduct background checks on RC managers or directors?
Does USCIS monitor the performance of RCs?
No. USCIS has sent out questionnaires to RCs, but it is not clear at this time what USCIS is doing with the information obtained from the questionnaires.
Does USCIS publish a list of operational RCs and those with approved I-526 and I- 829 petitions?
While USCIS does publish a list of designated RCs, it does not publish which RCs are operational or which RCs have approved or denied I-526 and/or I-829 petitions.
If an RC is designated by USCIS, are all NCEs formed in the RC automatically
No, each NCE within the RC must meet the requirements of the requisite investment amount and job creation. If the NCE will be investing in another business, that business must meet the requisite employment creation.
Is there a process whereby USCIS provides pre-approval of an NCE within an RC?
Yes. USCIS has recently created a pre-approval process. However, this process is not taken advantage of by many RCs as the time to obtain pre-approval of an NCE can be extensive, inordinately delaying the NCE from receiving funds from investors. The preapproval process is so new that it has not been adequately time tested.
If USCIS has approved a number of I-526 petitions for an NCE or pre-approved an NCE is it a guarantee that future petitions for the same NCE will also be approved?
No. USCIS will always examine the source and path of funds of the individual investor and failure to carefully document this can result in the denial of the I-526 petition. More baffling is that on frequent occasions, USCIS has raised questions pertaining to NCEs that have a long track record of approvals, and USCIS can also raise questions pertaining to NCEs that have been pre-approved. USCIS has also raised questions concerning an NCE’s qualifications after approving an I-526, at the I-829 stage. Thus, prior approvals for the same NCE, pre-approval of an exemplar petition for an NCE and even the approval of an investor’s I-526 for a particular NCE, does not mean that the NCE will not be further scrutinized by USCIS.
What happens to an investor who invests in an NCE that never gets off the ground?
The initial I-526 petition may be approved based on the business plan and supporting documents, but the I-829 petition to remove conditions on residence will be denied.
If either the I- 526 or I- 829 is denied, will the invested funds be returned to the
This depends to some extent on the agreement between the investor and the RC. Some RCs hold funds in escrow pending approval of the I-526. Others do not. At the I-829 stage, it is doubtful that funds will be returned if the I-829 is denied as the funds must have been placed at risk in order for the I-526 to be approved in the first place. See Matter of Izumii, 22 I&N Dec. 169 (Assoc. Comm. 1998). The RC cannot provide any guarantee of the return of the invested funds if the I-829 is denied.
What happens to an investor if the I-829 is denied by USCIS?
The investor can renew the I-829 in removal proceedings before an immigration judge. If the I-829 is denied by the judge, the investor can appeal to the Board of Immigration Appeals and to federal court. If the investor does not prevail, the investor can be deported.
What happens if the I-526 is approved and the NCE is ongoing, but the completion of the project is delayed, has yet to receive sufficient capital for completion, or is adversely impacted by a natural disaster?
If the NCE experiences a “material change” (“material change” has not been defined by USCIS), the petition to remove conditions on residence will be denied. A “material change” might mean a slight deviation from the business plan, a delay in the progression of job creation, or something much greater. At this time, USCIS has left RCs and investors questioning how much deviation from a business plan due to normal business events is acceptable.
Can an investor in the situation in Question above take action to protect himself?
Yes. USCIS has recently announced the creation of a new petition process if there is a material change in the NCE. However, this new petition will require review of the NCE anew by USCIS, the filing of a new I-526 petition, and the creation of a new two year conditional residence period. Furthermore, an investor has no way of knowing if a material change occurred, because of the USCIS failure to provide guidance regarding what “material change” is, until the I-829 is denied.
Will the new petition process protect an investor’s family?
It will protect a spouse and children under 21. It will not protect a divorced spouse and children who are over 21 when the new petition is filed.
What if an NCE goes bankrupt?
The investor will likely lose all invested funds and be subject to removal proceedings.
Is there any process for an RC to work with USCIS if an NCE’s submitted business plan cannot be realized?
No. At this time there is no process for an ongoing dialogue between USCIS and an RC or investor.
Is the RC or USCIS required to notify investors if other petitions for the same NCE are denied?
Does USCIS work with the investor and/or the RC to preserve an investor’s lawful status in this country?
Has USCIS ever placed a good faith investor in removal proceedings where the investor actually invested the required funds in a targeted area and jobs were created but the NCE’s business plan changed or job creation was delayed?
Can an area qualifying as a targeted employment area upon RC designation by USCIS fail to maintain status as a targeted employment area during the course of a particular project engaged in by an NCE?
Yes. A targeted employment area designation is determined at the time of filing the I-526 or at the time of the investment, whichever is earlier. Thus, it is possible that sometime during the course of a project, the targeted employment area designation can change, and the requisite amount of capital to qualify for the EB-5 program can change from $500,000 to $1,000,000. Investors who already invested in an NCE during the time the NCE was located in a targeted employment area should be insulated from any change. An RC will have great difficulty complying with securities laws if an NCE previously requiring a $500,000 investment suddenly requires a $1,000,000 investment.
Is it smart to be the first or last investor in an NCE?
No. An investor should be able to inquire of an RC if the R.C. has obtained pre-approval for an NCE and if other petitions have been approved for the NCE. Though prior approvals of I-526 petitions for the same NCE or the pre-approval of an NCE does not stop USCIS from later questioning aspects of the NCE, it does provide some predictability. An investor may not want to be amongst the last of the investors in a particular NCE, as any direct or indirect employment creation may have already been allocated to prior investors. Any shortfall in projected employment creation could potentially impact investors who are the last to invest in a particular NCE.
Should an investor have his or her own attorney and/or financial professional involved in the process of selecting an RC and/or filing the I-526 petition?
It is the author’s opinion that every investor should conduct his or her own due diligence and employ trusted financial advisors before investing in an RC to conduct a thorough review of the RC business plan and investigate the managers and directors of the RC. It is
also the author’s opinion that regardless of whether or not an RC requires preparation of the I-526 petition and/or filing of the I-526 petition by RC counsel, it is wise for an investor to have his or her own attorney, especially one skilled in the EB-5 investor area, involved in the petition process. An attorney who represents the RC and the investor may have a conflict if the attorney representing the RC learns adverse information about the RC.