EB-5 NCE and JCE Debarment and Appeal Rights under INA § 203(b)(5)(P)(1)(IV) and (V)

by Joseph P. Whalen


 I. Introduction

In the EB-5 world there are many players involved. We have of course the EB-5 investor without whom the program would not exist. EB-5 is, of course, the visa category for alien investors seeking immigration to the United States by means of making a large investment into our economy in the hopes of creating jobs for legally authorized workers in the United States and the numerous, associated benefits from their investment activities.  Other key players include the New Commercial Enterprises (NCEs) and Job-Creating Entities (JCEs) as well as third-party promoters who are the subject of another article. These entities and the people associated with them are now specifically recognized under the latest statute authorizing the EB-5 Regional Center Program which encompasses the vast majority of EB-5 alien investors.

With their newly recognized status, these players have privileges and also are subject to penalties for breaking the rules.   The sanctions authorized by statute range from fines to temporary or permanent bars from participating in the EB-5 Immigrant Investor Program. A permanent debarment is the harshest sanction that may be imposed by USCIS in an exercise of the Secretary;s delegated authority. But let us not forget that numerous other law enforcement agencies exist and have their own laws to enforce. The Securities and Exchange Commission (SEC), the FBI, The DOJ, state and local agencies and District Attorneys, are but a few of the other law enforcers that might take an interest depending on the nature of the business being conducted. 

Immediately below are the most relevant provisions of the law on this topic.  Depending on the basis for the sanction, such as national security or public safety concerns, the determination for making such a finding and imposing the sanction might be done under the Secretary’s discretion.  Discretionary decisions themselves are unreviewable in court except for Constitutional claims or questions of law.  However, administrative appellate review is still an exercise of the Secretary’s delegated authority and thus reviewable by the Administrative Appeals Office (AAO) of USCIS. Immediate below are the most relevant statutory provisions. The discussion will pick up again after that in part III. 

II. Statutory Provision Under Discussion.

8 USC § 1153  (INA § 203) 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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(M) Treatment of good faith investors following program noncompliance

(i) Termination or debarment of EB–5 entity

Except as provided in clause (vi), upon the termination or debarment, as applicable, from the program under this paragraph of a regional center, a new commercial enterprise, or a job-creating entity-

(I) an otherwise qualified petition under section 1154(a)(1)(H) of this title or the conditional permanent residence of an alien who has been admitted to the United States pursuant to section 1186b(a)(1) of this title based on an investment in a terminated regional center, new commercial enterprise, or job-creating entity shall remain valid or continue to be authorized, as applicable, consistent with this subparagraph; and

(II) the Secretary of Homeland Security shall notify the alien beneficiaries of such petitions of such termination or debarment.

(ii) New regional center or investment

The petition under section 1154(a)(1)(H) of this title of an alien described in clause (i) and the conditional permanent resident status of an alien described in clause (i) shall be terminated 180 days after notification of the termination from the program under this paragraph of a regional center, a new commercial enterprise, or a job creating entity (but not sooner than 180 days after March 15, 2022) unless-

(I) in the case of the termination of a regional center-

(aa) the new commercial enterprise associates with an approved regional center, regardless of the approved geographical boundaries of such regional center's designation; or

(bb) such alien makes a qualifying investment in another new commercial enterprise; or

 

(II) in the case of the debarment of a new commercial enterprise or job-creating entity, such alien-

(aa) associates with a new commercial enterprise in good standing; and

(bb) invests additional investment capital solely to the extent necessary to satisfy remaining job creation requirements under subparagraph (A)(ii).

(iii) Amendments

(I) Filing requirement

The Secretary shall permit a petition described in clause (i)(I) to be amended to allow such petition to meet the applicable eligibility requirements under clause (ii), or to notify the Secretary that a pending or approved petition continues to meet the eligibility requirements described in clause (ii) notwithstanding termination or debarment described in clause (i) if such amendment is filed not later than 180 days after the Secretary provides notification of termination or debarment of a regional center, a new commercial enterprise, or a job-creating entity, as applicable.

(II) Determination of eligibility

For purposes of determining eligibility under subclause (I)-

(aa) the Secretary shall permit amendments to the business plan, without such facts underlying the amendment being deemed a material change; and

(bb) may deem any funds obtained or recovered by an alien investor, directly or indirectly, from claims against third parties, including insurance proceeds, or any additional investment capital provided by the alien, to be such alien's investment capital for the purposes of subparagraph (A) if such investment otherwise complies with the requirements under this paragraph and section 1186b of this title.

(iv) Removal of conditions

Aliens described in subclauses (I)(bb) and (II) of clause (ii) shall be eligible to have their conditions removed pursuant to section 1186b of this title beginning on the date that is 2 years after the date of the subsequent investment.

(v) Remedies

For petitions approved under clause (ii), including following an amendment filed under clause (iii), the Secretary-

(I) shall retain the immigrant visa priority date related to the original petition and prevent age-out of derivative beneficiaries; and

(II) may hold such petition in abeyance and extend any applicable deadlines under this paragraph.

(vi) Exception

If the Secretary has reason to believe that an alien was a knowing participant in the conduct that led to the termination of a regional center, new commercial enterprise, or job-creating entity described in clause (i)-

(I) the alien shall not be accorded any benefit under this subparagraph; and

(II) the Secretary shall-

(aa) notify the alien of such belief; and

(bb) subject to section 1186b(b)(2) of this title, shall deny or initiate proceedings to revoke the approval of such alien's petition, application, or benefit (and that of any spouse or child, if applicable) described in this paragraph.

 

(N) Threats to the national interest

(i) Denial or revocation

The Secretary of Homeland Security shall deny or revoke the approval of a petition, application, or benefit described in this paragraph, including the documents described in clause (ii), if the Secretary determines, in the Secretary's discretion, that the approval of such petition, application, or benefit is contrary to the national interest of the United States for reasons relating to threats to public safety or national security.

(ii) Documents

The documents described in this clause are-

(I) a certification, designation, or amendment to the designation of a regional center;

(II) a petition seeking classification of an alien as an alien investor under this paragraph;

(III) a petition to remove conditions under section 1186b of this title;

(IV) an application for approval of a business plan in a new commercial enterprise under subparagraph (F); or

(V) a document evidencing conditional permanent resident status that was issued to an alien pursuant to section 1186b of this title.

(iii) Debarment

If a regional center, new commercial enterprise, or job-creating entity has its designation or participation in the program under this paragraph terminated for reasons relating to public safety or national security, any person associated with such regional center, new commercial enterprise, or job-creating entity, including an alien investor, shall be permanently barred from future participation in the program under this paragraph if the Secretary of Homeland Security, in the Secretary's discretion, determines, by a preponderance of the evidence, that such person was a knowing participant in the conduct that led to the termination.

(iv) Notice

If the Secretary of Homeland Security determines that the approval of a petition, application, or benefit described in this paragraph should be denied or revoked pursuant to clause (i), the Secretary shall-

(I) notify the relevant individual, regional center, or commercial entity of such determination;

(II) deny or revoke such petition, application, or benefit or terminate the permanent resident status of the alien (and the alien spouse and alien children of such immigrant), as of the date of such determination; and

(III) provide any United States-owned regional center, new commercial enterprise, or job creating entity an explanation for such determination unless the relevant information is classified or disclosure is otherwise prohibited under law.

(v) Judicial review

Notwithstanding any other provision of law (statutory or nonstatutory), including section 2241 of title 28 or any other habeas corpus provision, and sections 1361 and 1651 of such title, no court shall have jurisdiction to review a denial or revocation under this subparagraph. Nothing in this clause may be construed as precluding review of constitutional claims or questions of law raised upon a petition for review filed with an appropriate court of appeals in accordance with section 1252 of this title.

 

(O) Fraud, misrepresentation, and criminal misuse

(i) Denial or revocation

Subject to subparagraph (M), the Secretary of Homeland Security shall deny or revoke the approval of a petition, application, or benefit described in this paragraph, including the documents described in subparagraph (N)(ii), if the Secretary determines, in the Secretary's discretion, that such petition, application, or benefit was predicated on or involved fraud, deceit, intentional material misrepresentation, or criminal misuse.

(ii) Debarment

If a regional center, new commercial enterprise, or job-creating entity has its designation or participation in the program under this paragraph terminated for reasons relating to fraud, intentional material misrepresentation, or criminal misuse, any person associated with such regional center, new commercial enterprise, or job-creating entity, including an alien investor, shall be permanently barred from future participation in the program if the Secretary determines, in the Secretary's discretion, by a preponderance of the evidence, that such person was a knowing participant in the conduct that led to the termination.

(iii) Notice

If the Secretary determines that the approval of a petition, application, or benefit described in this paragraph should be denied or revoked pursuant to clause (i), the Secretary shall-

(I) notify the relevant individual, regional center, or commercial entity of such determination; and

(II) deny or revoke such petition, application, or benefit or terminate the permanent resident status of the alien (and the alien spouse and alien children of such immigrant), in accordance with clause (i), as of the date of such determination.

 

(P) Administrative appellate review

(i) In general

The Director of U.S. Citizenship and Immigration Services shall provide an opportunity for an administrative appellate review by the Administrative Appeals Office of U.S. Citizenship and Immigration Services of any determination made under this paragraph, including-

(I) an application for regional center designation or regional center amendment; 

(II) an application for approval of a business plan filed under subparagraph (F);

(III) a petition by an alien investor for status as an immigrant under this paragraph;

(IV) the termination or suspension of any benefit accorded under this paragraph; and

(V) any sanction imposed by the Secretary under this paragraph.

(ii) Judicial review

Subject to subparagraph (N)(v) and section 1252(a)(2) of this title, and notwithstanding any other provision of law (statutory or nonstatutory), including section 2241 of title 28 or any other habeas corpus provision, and sections 1361 and 1651 of such title, no court shall have jurisdiction to review a determination under this paragraph until the regional center, its associated entities, or the alien investor has exhausted all administrative appeals.

III. Exercising the Authority of the Secretary of Homeland Security?

The EB-5 Program and all its bits and pieces belong to USCIS. The Administrative Appeals Office is the sole appellate body for USCIS and still helps out ICE with cases involving bonds, primarily breaches of voluntary departure and delivery bonds. There is still a category for maintenance bonds but the last decisions posted on the website are from 2011 and those are misfiled delivery and voluntary departure cases. 

The statute is pretty clear that all benefits and sanctions under paragraph (e) Employment Creation visa category, including subparagraph (E) Regional Center Program, and beyond are all under the delegated statutory authority of the Secretary of Homeland save for those few cases that eventually get sent to Immigration Court and then shift to the authority of the Attorney General who has delegated that authority to the Immigration Courts and the Board of Immigration Appeals (BIA) within the Executive Office of Immigration Review (EOIR) within the Department of Justice (DOJ). I cannot stress enough that any such EB-5 cases that reach Immgration Court have been pawed over by USCIS ad nauseam

IV. Suggested Course of Action for EB-5 “Customers” and “Participants”.

The best advice I can give is to do your homework, be honest, and steer clear of any suspicious characters. Perform solid due diligence and seek professional help in order to avoid any trouble down the road.  That advice goes out to everyone from the potential EB-5 investors, Regional Centers, NCEs, JCEs, third-party promoters, broker-dealers, immigration and securities attorneys, and all associates thereof.

V. Suggested Course of Action for USCIS.

According to the statute, AAO must review any adverse determination under paragraph (e) for which review is sought.  Even though the regulations have not yet been updated, the statute makes this proposition clear.  Maybe it is time for USCIS to issue a direct final rule to account for statutorily imposed mandates for administrative appellate review of every conceivable benefit denial or revocation, or imposition of any sanctions, including fines, terminations and debarments.

The new authority to impose sanctions needs rulemaking ASAP.  It should probably be combined with the new third-party promoter registration system that has been mandated by Congress because those people can be debarred as well and will also have appeal rights so, appellate review exhaustion should be lumped in as well.  New forms could probably precede the final rulemaking or at least be issued concurrently. As an example, USCIS created Supplement J to Form I-485 for adjustment of status applicants who have ported or wish to port to new jobs that are the same as or are similar to the one on the original I-140 Immigrant Petition for Alien Workers. That was done in conjunction with the issuance of Matter of V-S-G- Inc. (PDF, 363.71 KB), Adopted Decision 2017-06 (AAO Nov. 11, 2017). The next paragraph further details that effort.

AAO has already acknowledged that changed statutes cannot be ignored and that outdated regulations cannot take precedence over a clear and unambiguous change in the governing statutory law.  For example, 8 CFR §103.3(a)(1)(iii), especially subclause (B) defining an “affected party” who is eligible to file an appeal has been reinterpreted in an AAO Adopted Decision designated as such by the USCIS Director under cover of a Policy Memorandum. 

The scope of the latest statutory changes are far too big to be handled the same way. However, the methods to be employed should ensure that it is done as swiftly as humanly possible. Interim Final and Direct Final Rules are far more effective than USCIS has been willing to acknowledge.  Using this type of rulemaking should be quite easy because Congress did USCIS a favor by being very explicit and quite frankly went “into the weeds” in their precision. You can love what they wrote or hate it but there is little ambiguity to be found. Here is the rule that was reinterpreted in 2017 after soliciting amicus briefs in 2015 and remains unchanged in 2022.  What can they blame it on? Lack of resources? Shifting priorities? I’m not buying it.

8 CFR §103.3(a)(1):

(iii) Appeal -

(A) Jurisdiction. When an unfavorable decision may be appealed, the official making the decision shall state the appellate jurisdiction and shall furnish the appropriate appeal form.

(B) Meaning of affected party. For purposes of this section and §§ 103.4 and 103.5 of this part, affected party (in addition to the Service) means the person or entity with legal standing in a proceeding. It does not include the beneficiary of a visa petition. An affected party may be represented by an attorney or representative in accordance with part 292 of this chapter.

(C) Record of proceeding. An appeal and any cross-appeal or briefs become part of the record of proceeding.

(D) Appeal filed by Service officer in case within jurisdiction of Board. If an appeal is filed by a Service officer, a copy must be served on the affected party.

(iv) Function of Administrative Appeals Unit (AAU). The AAU is the appellate body which considers cases under the appellate jurisdiction of the Associate Commissioner, Examinations.

(v) Summary dismissal. An officer to whom an appeal is taken shall summarily dismiss any appeal when the party concerned fails to identify specifically any erroneous conclusion of law or statement of fact for the appeal. The filing by an attorney or representative accredited under 8 CFR 292.2(d) of an appeal which is summarily dismissed under this section may constitute frivolous behavior as defined in 8 CFR 292.3(a)(15). Summary dismissal of an appeal under § 103.3(a)(1)(v) in no way limits the other grounds and procedures for disciplinary action against attorneys or representatives provided in 8 CFR 292.2 or in any other statute or regulation

VI. Conclusion.

I see a bumpy road ahead with plenty of naysayers putting up roadblocks. I see zealots on both sides of the EB-5 world, those who love it and those who hate it making ridiculous demands for either severe penalties and harsh treatment, or  such saccharine sweet leniency for wrongdoers as to waive all penalties and even fee waivers for alleged millionaires.  That is, unfortunately, the world we live in. Chock-full-o'nuts from all walks of life imaginable.

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.