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  • Article: For Some Well-to-do China-born, A Faster, More Useful, And Perhaps Less Expensive Alternative Than Eb-5 Investment To U. S. Immigration By Alan Lee, Esq.

    For Some Well-to-do China-born, A Faster, More Useful, And Perhaps Less Expensive Alternative Than Eb-5 Investment To U. S. Immigration

    by


    EB-5 investment into the U. S. by the China-born in the past has proven a boom to U. S. cash starved projects, investors, immigration lawyers, and Chinese agents. Through the practice of gerrymandering almost disconnected parts of municipalities, much of the risk-taking which was supposed to be a component of the law has been removed for investors giving $500,000 (instead of the regular $1 million) for projects in targeted employment areas (TEA’s) for which the unemployment rate is supposed to be at least 150% of the national average. TEA projects abound in the richest areas, Midtown Manhattan being a prime example. However, there is a supreme party killer which has come into being because of the very success of the marketing effort to Chinese nationals – exhaustion of visa numbers as Mainlanders have taken up 85% or more of the world’s EB-5 quota over the years to the point that there is now a tremendous waiting time before China-born can expect to receive a conditional green card from the EB-5 category. U.S.C.I.S.’s Ombudsman estimated in its 2017 annual report that the waiting time for Chinese nationals beginning an investment today could be 10 years or even longer. Currently the EB-5 China availability date has been stuck at July 22, 2014 since October 2017.

    The waiting time is intolerable to many investors as it means that, not only do they have to watch their case for a long period of time, but also that their children may age out (over the age of 21) and not be eligible to immigrate at the time that the principal investor’s priority date is reached. Under the Child Status Protection Act (CSPA), a child’s age can only be “frozen” where the child is under the age of 21 (with credit for the time that the I-526 Immigrant Petition by Alien Entrepreneur pended with U.S.C.I.S.) when that priority date is reached and becomes available on the State Department visa bulletin. Even with the reported softening stance of U.S.C.I.S. allowing children to be the principal investors, how young would a child have to be to ensure his or her immigration vis-à-vis the immigration requirement that the investor be legally capable of signing a binding contract?

    The backlog situation does not have a solution at present, and may not be resolved as many members of Congress have been put off by the perceived abuses of the program. A fix was not seriously attempted as part of the Omnibus Spending Act which extended the status quo until September 30, 2018.

    For many well-to-do Chinese nationals who own or are majority shareholders of companies in China, use of the EB-1C immigration category for multinational executives and managers could be a viable alternative allowing U. S. immigration within 1-2 years. The requirements are that the China company be of reasonable size, and that the U. S. company be more than a tiny company, e.g. China company 100+ employees and U. S. company 10-20 employees. The U. S. company could be directly acquired by either the China company or the majority shareholder. (Beginning a new company from scratch in the U. S. rather than acquiring an existing company would add time and difficulty to the case). Such would satisfy the requirement that the companies be “affiliated.” The person to immigrate would also have to show working experience with the China company as an executive or manager of at least one year out of the past three before filing the petition. As a multinational executive or manager transferring between the China company and the U. S. company, the law would not require advance clearance by the Department of Labor for immigration, and a petition could be directly submitted by the U. S. company for the individual.

    Two questions that come up in this context are whether an L-1 visa (nonimmigrant intracompany transferee visa) approval is required before embarking on the immigrant visa petition, and whether this path which involves acquiring a U. S. company is too difficult. The short answer to the first question is that an L-1 approval notice, while helpful, is not a requirement to beginning a permanent residence application for a multinational executive or manager. For the second, while EB-5 investments are quite easy to get into (930 regional investment centers as of April 2, 2018) with regional center heads using tremendous advertising and middlemen to push and shove potential investors to their projects, effort on the part of the individual or China company will generally be required in choosing this path. Companies that are already doing business in the United States could use their network of customers and suppliers to assist, or go through business agencies, advertisements in trade journals or newspapers, or organizations which attempt to put business buyers and sellers together, etc. In addition, this would not have to be a lone effort as the individual or China company could band together with another China company wishing to do the same thing since the law contemplates investment percentage as low as 50% for a recognized “affiliation.”

    The EB-1C category is part of the first employment-based preference (EB-1) which is traditionally open for China-born as well as the rest of the world except that in the past two years, the category backlogged from June-September (FY 2016 and FY 2017) for China before springing open again in October. In 2018, the category just backlogged in April, but Charlie Oppenheim, the Chief of the State Department Visa Control and Reporting Division, was unclear as to whether high demand for EB-1 visas would be ongoing, but if not, that China EB-1 final action dates could be advanced late in the summer.

    Other advantages of the EB-1C category are not only the faster immigration that will generally include all members of the family and even children who have reached the age of 20 prior to the start of the case, but also the ability of others to work and ultimately immigrate through the same U. S. company, lesser attention to source of funds, on how the funds are transmitted to this country, the possible lesser required amount of investment, and that this form of immigration does not involve a conditional green card. It should be remarked here that as the individual would be coming over as manager or executive, he or she would be expected to work in the U. S. company in that capacity rather than just being a passive investor. But even here, an interested individual could use the same tactic employed in many EB-5 cases of having the spouse be the principal applicant, the only difference being that the spouse would also have to have the qualifying experience of being a manager or executive in the China company for at least one out of the past three years prior to the filing.

    The connection between the two companies could eventually allow other managers, executives, and persons of specialized knowledge with qualifying experience in the China company to enter the U. S. quickly on nonimmigrant L-1 intracompany transferee visas to work for the U. S. enterprise. If the U. S. company later wished to petition for their permanent residences, managers and executives could qualify without needing to go through the Department of Labor for PERM labor certification. Those under specialized knowledge would have to obtain a labor certification and qualify under another category, EB-2 for advanced degrees or for persons of exceptional ability, or EB-3 for professionals with a baccalaureate degree or 2 years of required skilled work experience. For the month of April 2018, immigrant visa availability under EB-2 is open to China-born who began their labor certification applications prior to August 1, 2014, and for those under EB-3 who began their papers prior to June 1, 2015. The projected time period for China EB-2 cases is approximately 3-5 years and for EB-3 3 years.

    A prime concern in EB-5 investment cases to U.S.C.I.S. is the source of funds to ensure that they are actually from the investor and that the funds are not from illegal sources. Documenting the source of funds is usually a painstaking process. Although there is always a concern with ill-gotten gains, that is not of paramount concern in EB-1C cases, and the funds do not have to emanate from the individual, but can come directly from the China company. Also in EB-5 cases, there is great concern with the transfer of funds to show a paper trail of the funds from the investor in China to an account in the U. S. As the funds do not have to directly come from the individual in an EB-1C multinational executive/manager case, the paper trail could be directly from the company in China through banking institutions to an account in the U. S. or even to the owners of the company to be acquired.

    There is no fixed amount of investment in EB-1C as opposed to EB-5 cases, and the expended amount for capitalization can be less. In the scenario of the individual or China company acquiring a U. S. company, many factors are considered in the final price such as the customer base, goodwill, company debt, receivables, inventory, willingness or need to quickly sell, etc. Also the individual or China company would not have to acquire the entire company, but just enough to have majority control. The individual or China company could leave the present U. S. owners with minority shares or even have a joint venture with a partner or partners as long as the individual or China company winds up with at least 50% of the U. S. company.

    Finally, once the priority date is reached for an EB-5 case and the individual approved for residence status, he or she is assigned conditional residence for a two-year period of time, and must then file an I-829 Petition by Entrepreneur to Remove Conditions (present fee $3835) to remove the conditional basis of the residence status. The I-829 must show that all conditions promised in the I-526 approval were met. That is not a case for an EB-1C approval which is permanent and does not involve a further application and/or interview in the future.

    With the uncertainty and unfavorable outlook of many in Congress surrounding the EB-5 program raising a huge question as to whether the China backlog situation will be remedied, it might well be in the interest of those who fit the above bill to look into the possibilities of EB-1C immigration.

    This article © 2018 Alan Lee, Esq.


    About The Author

    Alan Lee, Esq. Alan Lee, Esq. The author is an exclusive practitioner of immigration law based in New York City with an AV preeminent rating in the Martindale-Hubbell Law Directory for 20+ years, registered in the Bar Register of Preeminent Lawyers, on the New York Super Lawyers list (2011-12, 2013-14, 2014-2015, 2015-2017), and recognized as a New York Area Top Rated Lawyer. He has written extensively on immigration over the past years for Interpreter Releases, Immigration Daily, and the ethnic newspapers, World Journal, Sing Tao, Epoch Times, Pakistan Calling, Muhasba and OCS; testified as an expert on immigration in civil court proceedings; and is a regular contributor to Martindale-Hubbell’s Ask-a-Lawyer program. His article, "The Bush Temporary Worker Proposal and Comparative Pending Legislation: an Analysis" was Interpreter Releases' cover display article at the American Immigration Lawyers Association annual conference in 2004; his 2004 case in the Second Circuit Court of Appeals, Firstland International v. INS, successfully challenged Legacy INS' policy of over 40 years of revoking approved immigrant visa petitions under a nebulous standard of proof, although its central holding that the government had to notify approved immigrant petition holders of the revocation prior to the their departure to the U. S. for the petition to be able to be revoked was short-lived as it was specifically targeted in the Intelligence Reform Act of 2004 (which in response changed the language of the revocation statute itself). Yet Firstland lives on as precedent that the government must comply with nondiscretionary duties established in law, and such failure is reviewable in federal courts. His 2015 case, Matter of Leacheng International, Inc., with the Administrative Appeals Office of USCIS (AAO) set nation-wide standards on the definition of “doing business” for multinational executives and managers to gain immigration benefits.


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

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