Comment: New EB-5 Legislation, Asylum

Today's Immigration Daily issue features several items of interest, including Article, Blogging and News about New EB-5 Legislation, Asylum and more. Please scroll down to find the item(s) below. Please let us know your thoughts by writing to editor@ilw.com.

Article: New EB-5 Legislation Addresses Chronic Wait Lines: Relief for Chinese, Vietnamese, and Indian Applicants? By Bernard Wolfsdorf and Joseph Barnett

Article: Political Asylum Overdone By Harry DeMell

Blogging: Supreme Court's Muslim Ban decision states INA 212(f) "exudes deference" to presidential power to bar immigrants - but that decision will not save Trump's health insurance ban By Roger Algase

News: USCIS Assists in Case Where Federal Grand Jury Indicts Lawyer and Accountant in Visa Fraud Scheme to Obtain LPR Status for South Korean Nationals

News: USCIS Implements $10 Fee for H-1B Visa Registration

Focus: EB5 Under $500K – 4 Strategies

In these last few weeks before the new EB5 Regs take effect on November 21, a large number of last minute investors have sprung forth, who want to apply within the $500K amount (instead of the $900K amount soon to come), but who do not have $500K ready cash. There are two distinct groups among these last minute investors: those with assets in excess of $500K and those with assets under $500K. In other words, there are those who are “asset-rich but cash-poor” and there are also those who are just “poor” (for the asset rich, the problem is that it is impractical to liquidate their assets into cash in time).

For attorneys faced with such investors, presented below are two different strategies for each of these two groups to effectuate and perfect their EB5 investment in time for the Nov 20 filing deadline. (Note: This informational piece presumes that issuers will accept the strategies outlined – which is a business decision for the issuers, the herebelow is simply how things could be worked out at USCIS should a business decision to move forward be made by the parties.)

1-EB5 For The Asset-Rich But Cash-Poor
  • 1A – Collateralized loans to the investor
  • 1B – Promissory note TO the investor (NOT BY the investor) by a 3 rd Party
2-EB5 For The Poor
  • 2A – Partial payments
  • 2B – Unsecured loans

1A – Collateralized loans to the investor
Collateralized, fully-secured, loans by 3rd parties (not necessarily banks, but also including private companies and individuals) have reportedly always been acceptable to USCIS for EB5 petitions. While historically such loans have originated in the country in which the asset is located, there are now lenders who offer such loans in the USA against assets located overseas.

1B – Promissory note TO the investor (NOT BY the investor) by a 3 rd Party
When an investor gives a promissory note, such note appears on the investor’s balance sheet as a liability; however when the investor receives a promissory note, this note appears on the investor’s balance sheet as an asset. USCIS recognizes that EB5 investments may be made by any combination of assets owned by the investor – whether those assets are land, buildings, machinery, patents, cash, or promissory notes. Thus a 3rd party promissory note can be used to perfect an EB5 investment without any risk whatsoever to do with USCIS’s future interpretation of the statutory “in the process of investing” language, since the complete and entire investment would have been made through the 3rd party promissory note before November 20th – there would be no “in the process of” at all. To ILW’s knowledge, only a few dozen attorneys have experience with 3rd party promissory notes in EB5, and only about a half dozen of these have actually obtained approvals from USCIS with 3 rd party promissory notes. Four documents are necessary to satisfy USCIS about the validity of the asset for EB5 purposes: (a) the note itself, which must be valid under the law of the jurisdiction; (b) legal opinion from counsel in that jurisdiction attesting to the validity of the note; (c) a term sheet under US law accepting the promissory note as payment for the underlying subscription agreement together with the PPM; and (d) a hedging instrument which would ensure that the dollar-denominated value of the note never falls below $500K. If properly structured, all four documents can be put together at a minimal cost – perhaps a few thousand dollars or less – but the expertise to do so is in short supply, and if available, will surely command a premium in the six figures.

2A – Partial payments
Notwithstanding the Adjudicator’s Field Manual, the near-unanimous opinion of immigration attorneys is that USCIS has historically treated partial payments for direct EB5 cases more liberally than partial payments for RC EB5 cases. It therefore appears to follow that I-526 petitions filed with less than $500K before November 21st for EB5 direct cases will likely not run afoul of future USCIS interpretations of the statutory “in the process of investing” language. However, for partial payments made for I-526 filings for RC cases before November 21st, these cases will be subject to USCIS’s future interpretation of the statutory “in the process of investing” language.

2B – Unsecured loans
The fate of unsecured loans in EB5 cases revolves around the resolution of the Zhang litigation. USCIS’s appeal in this matter is pending before the DC Circuit Court of Appeals, and a final decision is likely by summer 2020.

ILW cannot respond either to projects or to investors, both of whom are encouraged to talk to their immigration counsel on the above matters, and be guided solely by the advice given to them by their attorney. We trust that immigration attorneys will find the above refresher on EB5 strategies useful.

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Letters of the Week

ComingsNGoings: Immigration Reading
India's Low-Skilled Migration to the Middle East: Policies, Politics and Challenges By S. Irudaya Rajan and Prem Saxena Palgrave Macmillan, 370 pp. Hardcover, ISBN: 9811392234, $149.99 https://www.amazon.com/Indias-Low-Skilled-Migration-Middle-East/dp/9811392234.


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