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  • Article: 5 Takeaways from USCIS IPO’s November 2017 Stakeholders Meeting: New Challenges for the EB-5 Industry By Bernard Wolfsdorf, Joseph Barnett, and Robert Blanco

    5 Takeaways from USCIS IPO’s November 2017 Stakeholders Meeting: New Challenges for the EB-5 Industry


    On November 7, 2017, the U.S. Citizenship and Immigration Services’ (“USCIS”) Immigrant Investor Program Office (“IPO”) hosted an EB-5 Stakeholders meeting in New York City. The EB-5 community uses these stakeholder meetings to obtain guidance from IPO on recent adjudication trends. Here are five major takeaways from the meeting:

    1. “Sustainment” Requirement. Attorney Bernard Wolfsdorf asked a question impacting mainland-Chinese investors regarding USCIS’ draft June 2017 policy guidance on redeployment. He asked whether, due to the visa backlog for mainland-Chinese investors, USCIS’ policy guidance means that a mainland Chinese investor’s EB-5 capital must be “at risk” for much longer than the EB-5 capital of an investor from any other country (unless Vietnam and India also become backlogged). He further asked whether keeping the investment at risk until the filing of the I-829 might be inconsistent with Congress’ intent at INA § 216A(c)(1)(A) that an EB-5 investment must only be “at risk” for 2 years. USCIS responded that the 2-year period listed in the EB-5 law starts at the beginning of each investor’s respective conditional green card status. USCIS was not able to provide any update on modifying guidance in consideration of the EB-5 visa backlog.
    1. Material Change Issues. Another issue related to the visa EB-5 backlog for mainland-Chinese is the effect of EB-5 project changes or problems and/or Regional Center terminations prior to “landing” and obtaining conditional green card status. In the past when these issues occurred, EB-5 investors could request a refund and re-file a Form I-526 for a new project. However, now with the visa backlog, re-filing a Form I-526 loses the important priority date for Chinese investors. IPO indicated the following situations may constitute a “material change” which would require those who haven’t landed (including those with approved Form I-526s) to re-file a Form I-526:
    • Termination of Regional Center designation for entity sponsoring EB-5 project;
    • Switching from one new commercial enterprise (“NCE”) to another NCE
    • Switching from one job-creating entity (“JCE”) to another JCE

    Moreover, IPO appears to provide little relief for Regional Centers who have already marketed their EB-5 projects and structured the return of EB-5 capital from a job-creating entity (“JCE”) to a new commercial enterprise (“NCE”) without any plans for “redeployment”. The USCIS Policy Manual states that any further deployment of EB-5 capital that occurs before the immigrant investor becomes a conditional permanent resident must be adequately described in the original Form I-526 record.

    Mainland-Chinese investors stuck in the EB-5 visa waiting line who have invested in EB-5 projects experiencing difficulties appear to have significantly fewer options for relief.

    1. Bridge Financing. Numerous questions were raised on the issue of using EB-5 capital to pay down “bridge financing” that was used by the JCE for job creation purposes. Developers have relied on USCIS’ guidance from May 2013 to structure projects in a way that allows job creation to occur for “shovel ready” projects prior to the receipt of EB-5 capital, and then to use EB-5 financing to lower their cost of capital, and give credit to EB-5 investors for jobs created from either the bridge or EB-5 financing. However, USCIS may be restricting the use of EB-5 capital for this purpose when “bridge financing” is not sufficiently temporary or short-term. There also appears to be some restrictions on the use of EB-5 capital to repay financing used by an EB-5 project that has completed construction. USCIS wants to see a connection or “nexus” between the EB-5 capital replacing the bridge loan and the jobs created by the bridge loan. This emerging issue needs to be watched closely, as both investors and Regional Centers want to ensure that EB-5 projects are structured properly for the use of EB-5 capital. Since EB-5 adjudications can take years, it is hard to turn around EB-5 projects to make them compliant without adequate notice.
    1. Interview for Adjustment of Status Applicants. IPO confirmed that in-person interviews for EB-5 investors seeking conditional permanent residence in the U.S. through the filing of Form I-485 application for adjustment of status began in October 2017. These interviews are being conducted in accordance with USCIS’ new policy . It is important for EB-5 investors and Regional Centers to thoroughly prepare for these important interviews. EB-5 candidates applying for adjustment of status may not take advantage of section 245(k) of the Immigration and Nationality Act that provides some leeway for applicants that may have been out of status or worked without authorization for less than 180 days.
    1. Job Creation Standard for I-829 Purposes. IPO indicated that an EB-5 investor may still be eligible for removal of conditions on permanent residence even if there are not 10 employees working for the JCE at the time of filing the Form I-829, or if the EB-5 company has declared bankruptcy, as noted in the draft August 2015 memo . Note, both the regulations and USCIS’ guidance use past tense when describing the job creation standard at the Form I-829 stage.

    While the EB-5 community is grateful to the IPO for its generous outreach, it appears many of the positions taken will have harsh consequences for good faith investors where EB-5 projects run into difficulties, or where USCIS feels there has been inadequate progress on the EB-5 Project for job creation.

    This post originally appeared on Wolfsdorf Immigration Law Group. Copyright © 2017 Wolfsdorf Connect - All Rights Reserved.

    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 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 represents immigrant investors seeking permanent residency in the United States through USCIS-designated Regional Centers and investment in their own businesses. Mr. Barnett also assists developers with the establishment of complex corporate and financing structures for EB-5 capital. He works with economists, securities lawyers, business plan writers, and other professionals to prepare Regional Center applications, amendments, and project “exemplar” approvals. Robert Blanco specializes in business and employment immigration cases. He prepares both immigrant and non-immigrant petitions for skilled workers, executive managers, high net worth investors, and people of extraordinary ability in the arts, sciences, and business. As a member of the firm’s EB-5 team, Mr. Blanco prepares cases for individual investors and advises U.S. businesses on how to structure investment projects under the regulations of the EB-5 program. He also represents clients before the United States Citizenship and Immigration Services (USCIS). Mr. Blanco graduated cum laude with a Bachelor of Science degree in Business Administration from the McDonough School of Business at Georgetown University. He earned his Juris Doctor degree from Loyola Law School with a concentration in Corporate Law. Mr. Blanco is admitted to practice law in the state of California.

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

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