What To Do With EB-5 Third Party Promoters?

by Joseph P. Whalen


I. Introduction

The most recent EB-5 legislation passed on March 15, 2022, did many things.  This essay addresses only one of them, albeit a multi-faceted one.  Direct and Third-Party Promoters will be subject to rules and standards to be set by the Secretary of Homeland Security, which as we all know means USCIS.  Immediately below is the statutory language.

8 USC § 1153  Allocation of immigrant visas

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(b) Preference allocation for employment-based immigrants

Aliens subject to the worldwide level specified in section 1151(d) of this title for employment-based immigrants in a fiscal year shall be allotted visas as follows:

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       (5) Employment creation

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      (K) Direct and third-party promoters

(i) Rules and standards

Direct and third-party promoters (including migration agents) of a regional center, any new commercial enterprise, an affiliated job-creating entity, or an issuer of securities intended to be offered to alien investors in connection with a particular capital investment project shall comply with the rules and standards prescribed by the Secretary of Homeland Security and any applicable Federal or State securities laws, to oversee promotion of any offering of securities related to the EB–5 Program, including-

(I) registration with U.S. Citizenship and Immigration Services, which-

(aa) includes identifying and contact information for such promoter and confirmation of the existence of the written agreement required under clause (iii); and

(bb) may be made publicly available at the discretion of the Secretary;

(II) certification by each promoter that such promoter is not ineligible under subparagraph (H)(i);

(III) guidelines for accurately representing the visa process to foreign investors; and

(IV) guidelines describing permissible fee arrangements under applicable securities and immigration laws.

(ii) Effect of violation

If the Secretary determines that a direct or third-party promoter has violated clause (i), the Secretary shall suspend or permanently bar such individual from participation in the program described in subparagraph (E).

(iii) Compliance

Each regional center, new commercial enterprise, and affiliated job-creating entity shall maintain a written agreement between or among such entities and each direct or third-party promoter operating on behalf of such entities that outlines the rules and standards prescribed under clause (i).

(iv) Disclosure

Each petition filed under section 1154(a)(1)(H) of this title shall include a disclosure, signed by the investor, that reflects all fees, ongoing interest, and other compensation paid to any person that the regional center or new commercial enterprise knows has received, or will receive, in connection with the investment, including compensation to agents, finders, or broker dealers involved in the offering, to the extent not already specifically identified in the business plan filed under subparagraph (F).

 II. Who are these “Promoters” that need rules, standards and guidance?

According to the statute, “promoters” consist of agents, finders, broker dealers, migration agents. It does not matter if they are employed by or not employed by “a regional center, any new commercial enterprise, an affiliated job-creating entity, or an issuer of securities intended to be offered to alien investors in connection with a particular capital investment project”.  The underlying target of these anticipated rules and standards are anybody trying to make money off of the EB-5 immigration process, not domestic investors. As has been noted over the years, some sleazeballs have tried all sorts of fraud, misrepresentation, other criminal behaviors-such as outright theft of the investment funds and all sorts of double dealing schemes.  Granted, while most problems have been caused by a minority of well meaning but incompetent actors. Deliberate malfeasance among actors is not such an unknown quantity that USCIS cannot come up with a multitude of examples of both intentional and unintentional bad acts or poor performance, they can. 

III. What does USCIS need to do with regard to these “Promoters”?

First of all, it is imperative for USCIS to tackle this area as swiftly as possible.  The sooner that these EB-5 Stakeholders are “Put on Notice” the better. According to the statute, USCIS has specific line items to account for.  They include a registration regime, 

which I believe could be accomplished if USCIS treated this under the Administrative Procedures ACT (APA), as a form of licensing. More specifically, USCIS needs to look at and utilize 5 USC § 551 et seq, and build these rules and standards to withstand challenges brought under § 701 et seq (pertaining to judicial review).  This would be in keeping with the general approach being employed by Congress. 

IV. What is required for applicants for registration?

The registration requirements entail revealing identifying and contact information which may be made public by the Secretary (USCIS). The applicant for registration must submit a self-certification (under penalty of perjury, no doubt) that (s)he is not a prohibited person as defined by statute.  I can smell a new form and a new fee in the works as I write this missive. I imagine a self-certification supplement for use in such filings could also be in the works.  

The applicant must also submit, in writing, the guidelines they have developed in regard to how they explain the visa process to prospective investors, all legally allowed fees to be charged, and they have to furnish a written and signed agreement between that promoter and each EB-5 investors and/or with Regional Centers, New Commercial Enterprises, Job Creating Entities, or others involved in the issuance of securities. USCIS would likely be satisfied with template documents for those written disclosures, they will be visited time and time again. The required written agreements must be disclosed in multiple adjudications not only by promoters seeking registration but also by alien investors and regional centers.  Any “bait and switch” tactics will be easily found and you can bet that USCIS will check filings against each other in search of fraud.  Remember that both IPO and AAO have FDNS Officers embedded in them and co-located with them.

The parts of the APA most closely related to the anticipated new processes and procedures, are found in 5 USC § 551 “Definitions” (copied below), § 552. “Public information; agency rules, opinions, orders, records, and proceedings”; § 553 “Rule making”, § 554 “Adjudications”, § 555 “Ancillary matters” (includes subpoenas, required appearances, and investigations, among others matters), § 556 “Hearings; presiding employees; powers and duties; burden of proof; evidence; record as basis of decision”, § 557 “Initial decisions; conclusiveness; review by agency; submissions by parties; contents of decisions; record”, § 558 “Imposition of sanctions; determination of applications for licenses; suspension, revocation, and expiration of licenses”,  § 559 “Effect on other laws; effect of subsequent statute”, and in accord with the general rulemaking directives in the latest legislation, shown immediately below.  Of particular note to the EB-5 Stakeholder community is that Congress has specifically given USCIS the power to suspend processing any applications or petitions until all security checks are completed.  I hope that nobody is planning on being anything but constructive and helpful to USCIS during the anticipated rule making.  Please also note that while the Secretary (USCIS) is directed to prescribe rules and standards, no deadline is specifically given for that rulemaking.  I would like to remind the EB-5 stakeholder community and USCIS that this agency has often issued a variety of documents including memos, Policy Manual updates, form instructions, and Adopted Decisions, to serve as interim guidance while awaiting formal rulemaking which can be rather lengthy.  I will urge USCIS to issue whatever they can as Direct Final Rules and Interim Final Rules, both can be issued subject to a comment period but effective  as of date of publication pending modification or withdrawal.

V. Excerpts from the new legislation.

P.L. 117-103 Consolidated Appropriations Act, 2022.

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SEC. 103. REAUTHORIZATION AND REFORM OF THE REGIONAL CENTER PROGRAM. 

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(b) AUTHORIZATION.— 

(1) IN GENERAL.—Section 203(b)(5) of the Immigration and Nationality Act (8 U.S.C. 1153(b)(5)) is amended by adding at the end the following: 

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‘‘(E) REGIONAL CENTER PROGRAM.— 

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‘‘(v) PARAMETERS FOR CAPITAL REDEPLOYMENT.— 

‘‘(I) IN GENERAL.—The Secretary of Homeland Security shall prescribe regulations, in accordance with subchapter II of chapter 5 and chapter 7 of title 5, United States Code (commonly known as the "Administrative Procedure Act"), that allow a new commercial enterprise to redeploy investment funds anywhere within the United States or its territories for the purpose of maintaining the investors’ capital at risk if—

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SEC. 106. TIMELY PROCESSING.

(e) RULE OF CONSTRUCTION REGARDING ADJUDICATION DELAYS.—Nothing in this division may be construed to limit the authority of the Secretary of Homeland Security to suspend the adjudication of any application or petition under section 203(b)(5) or 216A of the Immigration and Nationality Act (8 U.S.C. 1153(b)(5) and 1186b) pending the completion of a national security or law enforcement investigation relating to such application or petition.

(f) RULE OF CONSTRUCTION REGARDING MODIFICATION OF FEES.—Nothing in this section may be construed to require any modification of fees before the completion of— 

(1) the fee study described in subsection (a); or 

(2) regulations promulgated by the Secretary of Homeland Security, in accordance with subchapter II of chapter 5 and chapter 7 of title 5, United States Code (commonly known as the "Administrative Procedure Act"), to carry out subsections (b) and (c).

The above paragraph (f) was copied just as found in 136 STAT. 1081 and is specifically annotated in the margins as relating to “regulations.” Extrapolating from that is not very hard to justify. This is especially true since the APA has been on the books since June 11, 1946. 

VI. Excerpts from the Administrative Procedures Act. 

5 USC §551. Definitions

For the purpose of this subchapter-

(1) "agency" means each authority of the Government of the United States, whether or not it is within or subject to review by another agency, but does not include-

(A) the Congress;

(B) the courts of the United States;

(C) the governments of the territories or possessions of the United States;

(D) the government of the District of Columbia;

or except as to the requirements of section 552 of this title-

(E) agencies composed of representatives of the parties or of representatives of organizations of the parties to the disputes determined by them;

(F) courts martial and military commissions;

(G) military authority exercised in the field in time of war or in occupied territory; or

(H) functions conferred by sections 1738, 1739, 1743, and 1744 of title 12; subchapter II of chapter 471 of title 49; or sections 1884, 1891–1902, and former section 1641(b)(2), of title 50, appendix; 1

(2) "person" includes an individual, partnership, corporation, association, or public or private organization other than an agency;

(3) "party" includes a person or agency named or admitted as a party, or properly seeking and entitled as of right to be admitted as a party, in an agency proceeding, and a person or agency admitted by an agency as a party for limited purposes;

(4) "rule" means the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency and includes the approval or prescription for the future of rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, appliances, services or allowances therefor or of valuations, costs, or accounting, or practices bearing on any of the foregoing;

(5) "rule making" means agency process for formulating, amending, or repealing a rule;

(6) "order" means the whole or a part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rule making but including licensing;

(7) "adjudication" means agency process for the formulation of an order;

(8) "license" includes the whole or a part of an agency permit, certificate, approval, registration, charter, membership, statutory exemption or other form of permission;

(9) "licensing" includes agency process respecting the grant, renewal, denial, revocation, suspension, annulment, withdrawal, limitation, amendment, modification, or conditioning of a license;

(10) "sanction" includes the whole or a part of an agency-

(A) prohibition, requirement, limitation, or other condition affecting the freedom of a person;

(B) withholding of relief;

(C) imposition of penalty or fine;

(D) destruction, taking, seizure, or withholding of property;

(E) assessment of damages, reimbursement, restitution, compensation, costs, charges, or fees;

(F) requirement, revocation, or suspension of a license; or

(G) taking other compulsory or restrictive action;

(11) "relief" includes the whole or a part of an agency-

(A) grant of money, assistance, license, authority, exemption, exception, privilege, or remedy;

(B) recognition of a claim, right, immunity, privilege, exemption, or exception; or

(C) taking of other action on the application or petition of, and beneficial to, a person;

(12) "agency proceeding" means an agency process as define by paragraphs (5), (7), and (9) of this section;

(13) "agency action" includes the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act; and

(14) "ex parte communication" means an oral or written communication not on the public record with respect to which reasonable prior notice to all parties is not given, but it shall not include requests for status reports on any matter or proceeding covered by this subchapter.

5 USC §555. Ancillary matters

(a) This section applies, according to the provisions thereof, except as otherwise provided by this subchapter.

(b) A person compelled to appear in person before an agency or representative thereof is entitled to be accompanied, represented, and advised by counsel or, if permitted by the agency, by other qualified representative. A party is entitled to appear in person or by or with counsel or other duly qualified representative in an agency proceeding. So far as the orderly conduct of public business permits, an interested person may appear before an agency or its responsible employees for the presentation, adjustment, or determination of an issue, request, or controversy in a proceeding, whether interlocutory, summary, or otherwise, or in connection with an agency function. With due regard for the convenience and necessity of the parties or their representatives and within a reasonable time, each agency shall proceed to conclude a matter presented to it. This subsection does not grant or deny a person who is not a lawyer the right to appear for or represent others before an agency or in an agency proceeding.

(c) Process, requirement of a report, inspection, or other investigative act or demand may not be issued, made, or enforced except as authorized by law. A person compelled to submit data or evidence is entitled to retain or, on payment of lawfully prescribed costs, procure a copy or transcript thereof, except that in a nonpublic investigatory proceeding the witness may for good cause be limited to inspection of the official transcript of his testimony.

(d) Agency subpoenas authorized by law shall be issued to a party on request and, when required by rules of procedure, on a statement or showing of general relevance and reasonable scope of the evidence sought. On contest, the court shall sustain the subpoena or similar process or demand to the extent that it is found to be in accordance with law. In a proceeding for enforcement, the court shall issue an order requiring the appearance of the witness or the production of the evidence or data within a reasonable time under penalty of punishment for contempt in case of contumacious failure to comply.

(e) Prompt notice shall be given of the denial in whole or in part of a written application, petition, or other request of an interested person made in connection with any agency proceeding. Except in affirming a prior denial or when the denial is self-explanatory, the notice shall be accompanied by a brief statement of the grounds for denial.

( Pub. L. 89–554, Sept. 6, 1966, 80 Stat. 385 .)

That’s my two-cents, for now!


About The Author


Joseph P. Whalen is an independent EB-5 consultant, advocate, trainer and advisor.


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