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Article: This Time it Looks Real: Is the End of the $500,000 EB-5 Investment Program Coming Soon? By Brandon Meyer and Bernard Wolfsdorf

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  • Article: This Time it Looks Real: Is the End of the $500,000 EB-5 Investment Program Coming Soon? By Brandon Meyer and Bernard Wolfsdorf

    This Time it Looks Real: Is the End of the $500,000 EB-5 Investment Program Coming Soon?

    by


    The minimum $500,000 investment amount into a qualifying EB-5 project in either a rural or high unemployment area (better known as “Targeted Employment Areas or TEAs”) has not changed since the United States Congress created the modern EB-5 program in 1990.  The $500,000 program has had a great run for nearly the past three-decades, but as Jim Morrison and The Doors once sang “This is the End.”  And while rumored changes to the EB-5 program have been nearly as numerous and equally false as Elvis sightings at Las Vegas trailer parks, this time the rumored changes appear real.  The window for participating in EB-5 at the $500,000 level is likely closing soon.

    What makes this round of assumed changes more real than the previously rumored changes that have filled up endless EB-5 blogs and conference panels?  Why should the market, tired of hearing pollyannaish screeds from the EB-5 industry about how “EB-5 is coming to an end, so invest now” take it any more seriously this time?

    The reason to take it more seriously is that the United States government appears to have spoken on the issue.  On June 27, 2019, the Office of Management and Budget (OMB)  announced that it has concluded its review of the EB-5 Immigrant Investor Program Modernization Rule.  Nearly 2 ½ years in the making, the original proposed rule sought to significantly increase the minimum investment amount from $500,000 to $1,350,000, and also proposed numerous other technical rule changes.  Industry feedback about the proposed new investment amount increase was vociferous in opposition.

    The June 27, 2019 OMB announcement did not specify what the actual new rules would be, making only a passing reference that “substantial changes” have been made to the original proposal.  More importantly, this announcement did not specify when the new rules would become effective (thus clarifying how much longer applicants have to move forward at the $500,000 level) but it hints that publication of these new rules was imminent.

    Reason and common practice for these types of administrative rule changes usually dictates either a 30 or 60-day window before the new rules become effective.  And while there is a (minimal) possibility that the new rules would either become effective upon publication or hopefully, not with retroactive effect, such retroactive implementation is generally disfavored in the law and such an action would be manifestly unfair and would result in significant litigation.

    While the EB-5 industry awaits publication of the final rule, those individuals considering EB-5 would be smart to move forward at once since time really is running out.  Some industry players are advocating or suggesting to potential applicants that they should even consider submitting “skeletal” EB-5 petitions.  Examples of “skeletal” EB-5 petitions include, but are not limited to, EB-5 petitions in which less than $500,000 has been invested into the EB-5 project prior to filing and/or an EB-5 submission with incomplete source and/or path of funds documents. 

    While skeletal filings may be appropriate in limited circumstances, they should be approached with caution and should only be undertaken after consultation with qualified legal counsel specializing in EB-5 matters.  At a minimum, “skeletal” filings will be delayed by the likely issuance of a Request for Evidence (RFE), in which USCIS will ask for the applicant to add some flesh to the skeleton of their EB-5 filing.  In some instances, the initial filing may be considered so “skeletal” that attempts to address the underlying issues may be unsuccessful, citing Matter of Katigbak, which has been interpreted to mean that an applicant must have been eligible for the benefit sought at the time of filing, disallowing material changes that render the person eligible only after the fact.  In other instances, USCIS may reserve the right to simply issue an outright denial, with no chance to cure any deficiencies, if the filing was considered too skeletal.  Thus, skeletal filings are best avoided unless absolutely necessary.

    The EB-5 industry knew that this day of reckoning would eventually arrive, and it appear it is now imminent.  There is still time to participate in the $500,000 EB-5 program, but this window of opportunity will likely close shortly.

    This post originally appeared on Wolfsdorf Rosenthal LLP. Reprinted with permission.


    About The Author

    Brandon Meyer is a partner at Wolfsdorf Rosenthal LLP and manages the firm’s San Francisco office. Mr. Meyer is highly experienced in all business immigration practice areas (both immigrant and nonimmigrant) including immigrant investor matters (E-1, E-2, L-1, EB-5 and Regional Center representation), H-1B, L-1, O-1, outstanding researcher, extraordinary ability, multinational manager, exceptional ability, national interest waivers, TN, and immigration compliance for start-ups and multinational corporations. Mr. Meyer is a member of the American Immigration Lawyers Association (AILA), Academy of Political Science, British American Business Council (BABC), Bay Area Mobility Managers (BAMM), and Invest in the USA (IIUSA) among other professional organizations. He has also authored of numerous articles on the intersection of economics and politics with immigration law and policy. Mr. Meyer received his Juris Doctorate degree from University of San Diego School of Law, his Masters of Arts in East Asian studies from George Washington University, and a Bachelor of Arts in Economics from American University.

    Bernard Wolfsdorf is the past National President of the 15,000-member American Immigration Lawyers Association (AILA) and is Managing Partner of the top-rated Wolfsdorf Rosenthal LLP immigration law firm. The firm is known worldwide for providing exceptional quality legal services. With over 80 professionals including 18 lawyers, and offices in Los Angeles, New York and Shanghai, the firm provides high-quality, excellent-value global immigration services. Mr. Wolfsdorf specializes in a broad range of immigration areas, including business and EB-5 investment visas and he also handles the full range of global immigration matters. Best Lawyer’s US News and World Report ranked him as its 2018 “Lawyer of the Year” for Los Angeles. In 2017, Mr. Wolfsdorf was listed as Who’s Who Legal’ s “Leading and Most Highly Recommended Immigration Lawyer in the United States” for the 7th year. Mr. Wolfsdorf secured the top spot after earning the most votes from hundreds of highly-rated immigration lawyers around the world. WWL calls Mr. Wolfsdorf a “leading expert in EB-5” who has “strengths in many practice areas.” He has been described by other highly reputable sources, such as Chambers and Partners (USA), as an “excellent” attorney.” The firm is one of only 3 in California awarded Band 1 recognition, and the only one in Southern California with the honor. Mr. Wolfsdorf has been recognized as “an undoubted leader” and “one of the prestigious names in the field” who “knows his stuff back to front”. He is listed in Southern California Super Lawyers, while Chambers Global: The World’s Leading Lawyers for Business has rated him in its top tier. EB5 Investors Magazine has rated Mr. Wolfsdorf in its “Top 25 Immigration Lawyers” for the past 4 years. Mr. Wolfsdorf has been certified by the California State Bar as an Immigration and Nationality law specialist for over 25 years. Chambers USA: America’s Leading Lawyers for Business described him as “one of the hardest-working immigration lawyers around,” adding that “he continues to lead from the front with astute strategic and tactical decisions”. Mr. Wolfsdorf is a long-standing member of the Alliance of Business Immigration Lawyers (ABIL) and ABIL Global, which include the Managing Partners of the top immigration firms worldwide. He has authored numerous publications on immigration law and frequently lectures on visa matters. He is renowned for his broad knowledge of immigration law and his ability to successfully navigate complex immigration matters. Over the years, Mr. Wolfsdorf has had a major impact on the practice of immigration law. In recognition of his contribution, the American Immigration Lawyers Association honored him with its Service Excellence Award for his distinguished work.


    The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

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