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  • Article: Comments on Recent AAO EB5 Decisions By Joseph P. Whalen

    Comments on Recent AAO EB5 Decisions



    I’ve been keeping my mouth shut lately BUT upon reading through, and digesting key points made in, some recently released AAO EB-5 decisions I felt that I had something worth contributing. If you have read some of my prior articles and posts you know I don’t hold back. I just polished off four of AAO’s I-526 Denial/Revocation Remands[1] and one Regional Center (RC) Proposal Appeal Dismissal. Obviously that last one will also apply to I-924 decisions too. I suspect that all who have read even only a smattering of various recent AAO I-526 remands might have latched on to only a few big points, for example, the proper application of EB-5 deference policy, and may have only skimmed over other points (maybe absorbing some additional key points through some sort of osmosis without really trying or thinking about them very much). I am choosing to spell out some of those easy to miss points that struck me as important but might have been unintentionally only skimmed or glossed over by those who were in search of the juiciest bits and pieces as well as the sexiest highlights. Well, here I go again. You are welcome to come along for this ride along the “scenic route” if you like but, hold on tight!

    Opportunity to Make a Meaningful Appeal

    I believe that I am seeing indications that AAO is taking proactive steps to fend off potential due process challenges. In other words, trying to keep cases from going to District or Circuit Courts where the Judges might at least belittle or blast the agency or even worse, legislate from the bench---yuck! AAO has been remanding cases (even some clearly deniable at least on technical grounds) for a new detailed decision. Such new decision must make specific findings of fact and law; contain proper analysis citing specific examples and critical details gleaned from the evidence in the record of proceeding (ROP); and result in a narrative that clearly spells out well supported and logically reasoned conclusions supporting the decision at hand. All of this is to ensure that I-526 petitioners and counsel can make meaningful appeals. This concept should be universal across the board!

    Improving Initial Decisions

    Why all the hub-bub concerning the quality of initial decisions? I have my suspicions. Want to hear them? OK, here goes. Beyond creating the opportunity to make a meaningful appeal or motion, as the case may be, EB-5 is a multi-billion dollar per year industry. EB-5 involves numerous domestic developments and domestic investors in addition to EB-5 investors. Some domestic investors need the assurance of a future influx of foreign funding on the back end while the EB-5 investors want to back projects that also attract domestic investors up front. After all, if it’s a worthy project then Americans should be willing to sign on as well. Rather than viewing this as a “catch 22”, how about we view it as a two-way street or as assurances via mutual, bilateral votes of confidence in a particular specific project. Naturally AAO is dealing primarily with initial denials (or dismissed Motions (MTRs)) but all of this hub-bub has implications for Approval Notices as well. Read on for more on that aspect.

    Let us not forget the U.S. workers. Regardless of whether they are directly involved in any specific EB-5 affiliated project or indirectly in the supply chain as well as collaterally in the surrounding areas (“induced” jobs in economic analyses but “indirect” jobs for EB-5 adjudication and eligibility purposes). U.S. workers can be EB-5 stakeholder too. The harder that those few overzealous and narrow-minded adjudicators attempt to second guess RC Project Approval Decisions or prior I-526 Project Approvals involving the same huge projects, the more harm that they will inflict upon the U.S. investors, U.S. economy, and U.S. workers hired for, or worse, laid-off from, those huge projects!

    Material Changes in EB-5 Plans

    AAO found that some RC-affiliated form I-526 adjudications were ignoring the associated previously accepted business plans (BPs) and their accompanying previously accepted economic impact analyses (EIAs) which were fully supported by methodologies already deemed reasonable. Adjudicators on some sort of crusade to prolong the outdated Legacy INS “Culture of NO!” were attacking the underlying BPs, EIAs, and methodologies which were approved in the RC Proposal or I-924 adjudication process. They were issuing a succession of requests for evidence (RFEs), obtaining (or perhaps demanding) brand new or at least updated/modified EIAs and/or BPs then turning around and denying based on changed plans and analyses. Nobody can get away with such outright asinine and vindictive adjudication tactics. Talk about a “Catch 22”! Damn! I for one am grateful for the more level-headed Appeals Officers at AAO who caught this and nipped it in the bud.

    Objective v. Subjective

    AAO appears to be standing firm in applying the more liberal approaches embodied by, and espoused in, the May 30, 2013 Memo. This is another issue worthy of your attention in the recently posted AAO I-526 Remands. For instance, this is seen in a case where an I-526 adjudicator surreptitiously attempted to re-adjudicate the I-924 Approval by attacking the BP and EIA that was previously approved based upon methodologies previously reviewed and accepted as reasonable. In such a instances the adjudicator is now being told by AAO to write-up a new detailed decision and address whether a perceived change involves an objective mistake of law or fact rather than merely a subjective difference of opinion regarding the credibility of plans and reasonableness of methodologies. IF the adjudicator cannot succeed in such an analysis THEN that will be the end of that line of inquiry in that case and likely result in approval or abandonment of any attempted revocation.

    Nexus and Bridge Financing

    One zealot went to great lengths to try to deny an I-526 case involving bridge financing on the basis that that the BP and EIA lacked a sufficient nexus between the late stage infusion of EB-5 capital and the jobs created. The adjudicator asked for updated information and got it then used it to support a denial all the while ignoring what had come before that particular write-up which had laid out the history of the project. AAO obtained the ROP and reviewed it. In other words, AAO obtained the RC File(s) and examined the evidence of record and found that the intention to use EB-5 funds in this particular way pre-dated groundbreaking of that specific project! The EB-5 money was used to pay off bridge loans taken specifically with the intent to replace the original funding with EB-5 money. The EB-5 Adjudications Memo specifically allows this as well accepting a replacement of “short-term financing” even if EB-5 was never previously considered. The AAO has given us some good guidance on defeating that kind of collateral attack. AAO has also gone a long way towards “teaching them a lesson” on this topic. [Please forgive my use of that last double entendre, but it works so well there.]

    Legally Deficient

    The concept of nullifying an earlier Decision in the EB-5 process has been wrought with trouble at every hazardous step. And may I add that the concept can go in more than one way and come into play at different stages in the process. I am sure that USCIS doesn’t want you to realize it and that AAO probably never dreamed that someone would characterize it this way but that’s just too darn bad. Here goes my best shot, straight from the hip!

    An AAO I-526 Remand Decision dated September 20, 2013, discusses this concept in great detail and cites the May 30, 2013, Memo. The case involves a RC-affiliated EB-5 investor who was NOT the “guinea pig” or first investor in the project. There had already been at least one prior I-526 approved for the project and this petition had also been approved. The instant case before AAO was actually a challenge to a Revocation! AAO withdrew that Revocation and remanded for a new detailed decision, yadda, yadda, yadda.

    AAO also retained jurisdiction by instructing any adverse decision be certified back to AAO. While AAO did reverse serious and significant adverse findings which it deemed to be unfounded and unsupported by the evidence in the record, it did not go so far as to actually approve the underlying petition. As for the concept of “legally deficient” cropping up at different stages in the adjudication process, well, it seems that the remands that I read involved underlying initial decisions that were all quite “legally deficient”.

    Regional Center Appeal Dismissal

    The February 21, 2014, RC Appeal Dismissal I read harkens back to the very first AAO RC Appeal dismissal back in 2008 (also non-precedential and not cited). In 2008, AAO bluntly stated that in order to apply for any benefit, the applicant had to actually (and legally) exist. In 2008, a fictitious business name was given as the name of the applicant. Here is what AAO said about on that issue:

    “……For the reasons discussed below, the proposal appears, at best, to have been filed prematurely, before the entity to be designated a regional center even existed and before specific investment projects had been developed in cooperation with the entities that would utilize the invested fund. …..” (Emphasis added) Nov182008_01K1610.pdf at p. 2

    * * * * *

    “The regulation at 8 C.F.R. § 204.6(j) notes that additional evidence other than that specified in the regulations may be required. Clearly, only an entity that exists can be designated as a regional center. Thus, it is reasonable to require evidence of the proposed regional center's existence. We concur with the appellant, however, that the absence of organizational documentation is the type of issue that can, under certain circumstances, be easily resolved with a request for additional evidence. The evidence submitted on appeal, however, reveals that the appellant is not capable of resolving this issue as of the date the proposal was filed. As the nonexistence of the regional center at the time the proposal was filed is not a flaw that can be remedied for the reasons discussed below, remanding this matter to the director for further action would be repetitive and unreasonably delay final action in this matter. See generally Deering Milliken, Inc. v. Johnston, 295 F.2d 856, 867 (4th Cir. 1961) (finding that a second remand by the National Labor Relations Board would cause unreasonable delays).” (Emphasis added) Id at p. 5

    In 2014, a similar situation cropped. It is not exactly the same but close enough such that these two AAO RC case decisions should be read together. The more recent case involved an applicant business that stated it was an LLC in good standing but when AAO checked with the state’s Secretary of State website, AAO found out that what was stated in the application was (at its most generous) “incorrect information”. AAO has been checking with state websites for years in a wide variety of business and employment based applications and petitions. Also, USCIS as a whole has VIBE.

    The misinformation was not only a clear case of ineptitude but lead AAO to present a deep discussion of consequences of presenting misleading, incorrect, or fabricated information. AAO went on and on with numerous case citations about unsupported, uncorroborated, false, contradictory, and unverifiable “assertions” by counsel (or an applicant). Please read all about it in AAO’s own words. The bottom line to all of this is the “diminished evidentiary weight” then given to ALL testimony (oral or written); briefs (if any); or narratives presented by the “liar” caught with his or her “pants on fire”!

    Anyway, back in 2008, AAO discussed an “entity” not existing when it filed and basically created the only real filing prerequisite for a RC Proposal (now an I-924 application). The form instructions (which are then incorporated into and made part of the controlling regulation as per 8 CFR § 103.2(a) (1)) specifically ask for the RC entity’s documentation of its structure such as articles of incorporation, or legal creation as partnership or LLC, etc… In 2014, AAO zeroed in on the term “economic unit” found in the definition of “regional center” as per 8 CFR § 204.6(e). Additionally, in an I-526 remand, AAO instructed the adjudicator (either at CSC or IPO[2]) to look into whether or not a project’s sponsoring entity’s status which had lapsed as per the state’s website; continued to meet the definition of a “commercial enterprise”. In that the regulatory definition contains the element of “ongoing conduct of lawful business” the question of the lapse in status needed further consideration. The state may have a retroactive remedy available. Heck, the EB-5 “Pilot Program” lapsed in the past and Congress reauthorized in retroactively. The concept of a remedy at the state level is not out of the question.

    AAO’s Reticence

    The RC Dismissal fell short of addressing a key point brought up in the underlying denial. In other words, AAO chickened out of determining the potential Form I-924 evidentiary requirements for the RC’s administration, oversight, management, and recordkeeping, etc… All of that would be expected due to the need for annual reporting via form I-924A as per 8 CFR § 204.6(m)(6) and it just makes sense to ensure that the RC as a whole possesses the required knowledge, skills, and abilities[KSAs] to properly and competently function as a Regional Center.

    In addition, AAO would do well to consider the concept of Designation as a Regional Center by USCISas being a form of licensure which allows the RC to market itself and its projects (all in accorance with any applicable other laws, i.e. SEC or state administered laws and regulations) and associated services to intending EB-5 immigrants. AAO has considered the concept of USCIS approval as licensure of a service provider in another form type. That other form is the I-905,Application for Authorization to Issue Certification for Health Care Workers.

    Such licensure allows the Regional Center to market projects specifically designed to meet the EB-5 criteria required of the EB-5 investors when they file their I-526 VISA PETITIONS and later when they seek to LIFT CONDITIONS via form I-829. Please keep the distinct roles in their proper perspectives. You’ll sleep better if you do!

    While there are no Regional Center AAO Precedents yet and only a few non-precedent and thereby, non-binding, EB-5 Administrative Decisions, the following excerpt is from none of them. It is from a completely different application. However, the excerpt below says something to which it would be wise for you to pay close attention. In this non-precedent AAO decision involving a form I-905AAO recognized the application for what it was—an application for a “license”.

    The I-905 is the one form type that USCIS and AAO have experience with which shares certain critical basic elements with the I-924, Application For Regional Center Under the Immigrant Investor Pilot Program.

    Ø Both are applications by an “entity” seeking to lend its expertise to aliens seeking visas.

    Ø Both involve applicants who profess to have very specific expertise which will be utilized by individual aliens seeking help in obtaining highly specialized visas.

    Ø Both “expert organizations” will provide specific support services to their alien clients for a fee.

    Ø USCIS is giving them permission to do so and MUST make sure that these applicants seeking such licenses have the ability to follow through and not cheat their alien clients.

    Here is that important excerpt from that I-905 AAO Appeal Dismisal from 2006. I hope that you find it as enlightening as I did. If you don’t then heaven help the suckers investors who invest in one of your projects!

    “In the space on the Form I-905 application labeled "Occupations for which you are seeking authorization" the applicant entered,”[REDACTED] is one of the partner and member [sic] of evaluation team. We need approval of all medical profession." The applicant did not otherwise state the medical positions it is seeking licensure to certify and did not demonstrate that its evaluators are competent to certify the educational credentials of those medical professionals seeking such certifications.

    As to the process pursuant to which it would issue certificates[3] the applicant stated on the application that it would check documents presented for authenticity and interview the person seeking certification. In an addendum the applicant stated that foreign documents are critically examined to determine the number of years of study, the content of the courses and institutions, the "medium of study," and the educations and degrees of the faculty at which degrees were earned.

    Another section of the Form I-905 requests that the applicant "Explain [its] expertise, knowledge, and experience in the health care occupations for which [it seeks] authorization." In answer to that question the applicant stated that it does "all kinds of credential evaluation including medical profession," [sic] and that "The expert opinion of [REDACTED] is always taken if there is any need, any other expert opinion in the similar field is obtained before a final issuance of the certification and its proper records are maintained." The applicant did not otherwise explain its expertise, knowledge, and experience pertinent to health care occupations. [Vague does not suffice.][4]

    In answer to the request that it explain how it meets the standards described in the instructions sheet FN2 the applicant referred to an addendum. In the addendum the applicant asserted that it is a legal incorporated entity, that it is independent of hospitals and other health care providers, that it is impartial, that its fees are not contingent, and that the applicant is able to obtain outside expert advice. The applicant did not provide evidence in support of any of those assertions.” Nov092006_01M4212.pdf At p. 7 [Emphasis Added.]

    Final Agency Action

    AAO has gone out of its way to remind petitioners, applicants, and counsel that a “certified decision” is NOT a “final agency action” as defined in statute which means the case is not ammenable to judicial challenges and revies yet. AAO cited to the Administrative Procedures Act (APA) 5 U.S.C. § 704.

    This section of the law reads:

    §704. Actions reviewable

    Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review. A preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action. Except as otherwise expressly required by statute, agency action otherwise final is final for the purposes of this section whether or not there has been presented or determined an application for a declaratory order, for any form of reconsideration, or, unless the agency otherwise requires by rule and provides that the action meanwhile is inoperative, for an appeal to superior agency authority.

    (Pub. L. 89–554, Sept. 6, 1966, 80 Stat. 392.) [Emphasis added.]


    RC applications and associated I-526 petitions as well as stand-alone ventures and non-RC group investments, otherwise labeled as “Direct Investment” I-526 petitions are now being scrutinized by a cadre of professionals. Those teams may include economists, business analysts, entrepreneurs, and attorneys. However, it is the USCIS adjudicator who must synthesize the entire expert, specialized input and evaluate the application as a whole. The adjudicator must make findings of fact and apply them to the applicable rules (statues, regulations, precedents) and agency policy in a well reasoned and fully supported analysis. Such analysis will lead to specific conclusions that must then support the final adjudication decision. This approach is applicable across-the-board and throughout the entire process. Specificity is a critical element sorely lacking in many underlying decisions that rely too heavily upon canned language found in templates. While templates are useful tools as a starting point they do ask for analysis to be inserted as the rules are applied to the evidence presented with the specific case under consideration.

    IF, petitions associated with RC projects that have been fully reviewed, assessed, and above all found to be not only possible, plausible, and probable, but above allcredible, THEN, deference is due for the materially unaltered plans, analyses, and any associated transactional and/or organizational documentation. The specificity in a Regional Center Approval Notice whether for Initial Designation or an Amendment will be used to gauge the amount of deference that is due. When an Approval Notice states certain findings then future deference must be accorded where there have been no substantial, substantive, or material changes.

    Denials or Revocation Decisions, on the other hand, must be fully supported and well documented for other reasons. Petitioners, applicants, and their counsel must be given sufficient notice of the grounds for denial. Painstaking assessments of all of the evidence within the record of proceeding[5] must be spelled out blandly and bluntly so as to afford the petitioner, applicant, and counsel an opportunity to make a meaningful appeal.

    Additional Links

    I have written a heck of a lot of articles and posted many items of interest at:

    http://www.slideshare.net/BigJoe5 or http://eb5info.com/eb5-advisors/34-silver-surfer.

    Here are some documents that you may wish to review. I will be posting some on USCIS’ Ideascale website concerning EB-5 Regulatory Review and Updates.

    Ø http://www.slideshare.net/BigJoe5/revised-and-updated-suggested-re-write-of-8-cfr-2046-m-regional-center-regulations-march-2012 This one is dated and was written before the May 30, 2013, Memo. References to Service Center Officers might now apply instead to IPO Officers. Other portions might have been rendered moot or obsolete by the Memo as well. This revision came a year after it was first written and submitted to USCIS.

    Ø http://www.slideshare.net/BigJoe5/coastal-washington-rc-appeal-dismissal-nov-18-2008-first-aao-rc-dismissal-ever

    Ø http://www.slideshare.net/BigJoe5/further-discussion-of-regional-center-designation-as-licensure

    Ø http://www.slideshare.net/BigJoe5/quality-of-case-preparation-and-presentation-counts-for-immigrant-investors-or-entrepreneurs From September 2013.

    Ø http://www.slideshare.net/BigJoe5/a-review-of-the-two-post-policy-memo-regional-center-aao-decisions-jw-9-113

    Ø http://www.slideshare.net/BigJoe5/proposed-regional-center-appeal-regulations From March 2011.

    Ø http://www.slideshare.net/BigJoe5/aao-reform-and-i-924-appellate-review-expanded-discussion From March 2011.

    Ø http://www.slideshare.net/BigJoe5/inappropriate-rigidity-in-regional-center-designation-appeals-to-aao From February 2011.

    Ø http://www.slideshare.net/BigJoe5/proper-consideration-of-form-i-924 From February 2011.

    Ø http://www.slideshare.net/BigJoe5/administrative-appellate-jurisdiction-in-immigration-matters From March 2011.

    Ø http://www.slideshare.net/BigJoe5/prohibited-divide-and-conquer-analysis-in-appellate-review From September 2012.

    [1] See also:

    [2] IPO = Investor Program Office.

    [3] I equate this with the EVIDENCE to be handed to the EB-5 Investors in support of their forms I-526 and the later I-829.

    [4] Comment added for this article, it was not in the AAO decision.

    [5] Note that the evidence of record can and in many cases will be “built up” during the overall adjudication process.

    This post originally appeared on ... Reprinted with permission.

    About The Author

    Joseph P. Whalen

    Joseph P. Whalen is an independent EB-5 consultant, advocate, trainer and advisor.
    1348 Ridge Rd | PMB 36 | Lackawanna, NY 14218
    Phone: (716) 604-4233
    E-mail: joseph.whalen774@gmail.com

    DISCLAIMER: Work is performed by a non-attorney independent business consultant. It is the client's responsibility to have any and all non-attorney work products checked by an attorney. I provide highly-individualized training based on consultation with my clients. I serve Regional Center Principals and their counsel, potential EB-5 investors, and project developers. I am not an attorney myself although I have trained numerous attorneys and INS/USCIS adjudicators in complex issues within immigration and nationality law when I was an adjudicator there for many years. I do not prepare forms, write business plans, or create economic analyses. I do review them for clients prior to submission and suggest corrections and/or modifications to run by your attorney and investment advisor.
    NAICS Code: 611430 Professional and Management Development Training

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

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