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  • Article: 9 Tips for Fraud Detection and National Security Directorate (“FDNS”) EB-5 Site Visits. By Joseph M. Barnett and Bernard P. Wolfsdorf

    9 Tips for Fraud Detection and National Security Directorate (“FDNS”) EB-5 Site Visits

    by


    The Immigrant Investor Program Office (“IPO”) within U.S. Citizenship and Immigration Services (“USCIS”) announced during its April 25, 2016 EB-5 stakeholder call that USCIS’ Fraud Detection and National Security Directorate (“FDNS”) will begin implementing three new compliance measures regarding the EB-5 Immigrant Investor Visa Program:

    (1) regional center audits,

    (2) investor interviews at the I-829 petition stage, and

    (3) site visits to the offices of regional centers, new commercial enterprises (“NCEs”), and job-creating entities (“JCEs”).

    When Fraud Detection and National Security officers arrive at your front desk, only to face a receptionist who hasn’t been briefed, it’s a potentially difficult predicament.

    Here are nine tips to prepare for, manage, and follow-up after a site visit from FDNS.

    1. FDNS site visits are either (a) indiscriminate and without warning or (b) based on suspected fraud or misuse of EB-5 capital. Accordingly, even the most meticulous and prudent regional centers, NCEs, and/or JCEs may be subject to a site visit.  This is particularly true as USCIS and Congress deliberate permanent “integrity” measures.
    2. Continuous and careful record-keeping in all areas of operations is essential not only for the I-829 petition purposes, but also for FDNS site visits. FDNS will likely demand to examine many different types of documents during a site visit, such as, but not limited to:
      • Corporate documentation of NCE and JCE, such as annual statements filed with Secretary of State or minutes of annual meetings;
      • Deployment of funds into NCE
      • Deployment of funds into JCE
      • Use of EB-5 capital by JCE;
      • Availability and use of non-EB-5 capital by JCE, consistent with business plan;
      • Financial statements and tax records;
      • Evidence of job creation or preservation;
      • Compliance manuals regarding federal and state securities laws;
      • Compliance manuals regarding regulations from the U.S. Department of Treasury;
      • Compliance manuals regarding, and contracts with, affiliates;
      • Compliance with an approved business plan;
      • Market analysis;
      • Status of pending litigation; and
      • Agreements with EB-5 investors;
    3. Create and implement an action plan in the event of an EB-5 site-visit by FDNS. Ensure all reception, security, and/or first-contact personnel are on notice of the possibility of a FDNS site-visit and ensure they know the primary contact to notify if/when a FDNS site inspector or any other government investigator arrives.  All employees in the action plan chain of command must understand and strictly adhere to the response plan.  It is recommended that one individual be designated as the primary contact for the FDNS site visit and one back-up contact in case the primary is out.  Have the FDNS site inspector wait for the primary contact in a conference room or waiting area.
    4. Request photo identification and a business card from the site inspector and make a copy. Have someone take down the key information as an FDNS “intake.”  Key information includes: date, location, agent’s name, badge number, agency, telephone, email, records requested, individuals requesting to interview, etc.  Insist that at least one individual (preferably the primary contact) accompany the site inspector at all time.  Where possible, the site inspector should not be permitted to wander around the premises on his or her own.
    5. If you are unsure of an answer to a question, do not guess the answer! Ask to respond at a later date so you can verify the answer rather than invent a response.  Under no circumstances should one guess or provide inaccurate information. Similarly, if you do not understand what documentation is being requested, ask for clarification – do not guess at what you are being asked to produce.
    6. Take detailed notes during any interview in the event any follow up is necessary. Be sure to make photocopies of any and all documents presented to the site inspector.
    7. If the company office or workplace is closed, the FDNS site inspector may stop in to adjoining businesses and inquire whether they are familiar with your place of business. The inspector may also take photographs of the exterior of the building, including signs, posted placards, etc.
    8. Regardless of whether the workplace is closed, the FDNS site inspector may research all information shared online regarding the regional center, NCE, JCE, or immigrant investors (e.g., social media, such as LinkedIn, Facebook, Google, or public records, such as title or lien documents at the local Recorder of Deeds), so ensure whatever is shared online or publicly accessible is accurate, up-to-date, and consistent with any approved or pending EB-5 petitions.
    9. Periodically review your FDNS EB-5 site visit action plan. Make sure the primary contact knows the location of, and how to quickly produce, the documents that will likely be requested.  Conduct regular internal audits to ensure that everything is accurate, complete, and up-to-date.

    Being prepared for an EB-5 site visit by FDNS and establishing an action plan is essential.

    This post originally appeared on Wolfsdorf Immigration Law Group. Copyright © 2016 Wolfsdorf Connect - All Rights Reserved. Reprinted with permission.


    About The Author

    Bernard Wolfsdorf Bernard Wolfsdorf is the managing partner of the top-rated law firm, Wolfsdorf Rosenthal LLP (www.wolfsdorf.com), and the past national president of the 14,000-member American Immigration Lawyers Association (AILA). Established in 1986, Wolfsdorf Rosenthal LLP is known worldwide for providing exceptional quality legal services. With 19 lawyers and offices in Los Angles and New York, the firm was recently listed as a top-tier immigration practice by Chambers & Partners with several of the firm's attorneys listed in the 2015 International Who's Who Legal. Mr. Wolfsdorf specializes in EB-5 investment immigration in addition to the full range of global immigration matters.

    Joseph Barnett Joseph Barnett is licensed as an attorney in the State of Illinois and the State of Wisconsin and practices exclusively in immigration and nationality law. Mr. Barnett's practice focuses in the area of EB-5 Immigrant Investor Program and other business immigration matters. Mr. Barnett received his J.D. from Vermont Law School. Mr. Barnett may be contact at jbarnett@wolfsdorf.com

    For more information REGISTER HERE for a free webinar on June 9, 2016 at 7:00 PM PST (June 10, 2016 at 10:00 AM Beijing Time).


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

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