Comment: Pooled Direct Is Alive

Note: We submit the material below with the hope of spurring inquiry, fostering analysis, and (especially) encouraging criticism of our thoughts.

Whether Congress intended to forbid pooled investments in EB5 or not is irrelevant unless and until the statute is ambiguous. Examination of the meaning of a statute always begins with the plain language of the statute. If the plain language of the statute, using the ordinary tools of construction of the English language, leaves us with an unambiguous meaning of any part of the statute, then ordinarily one can conclude that that meaning is the meaning of that part of the statute.

In order to know whether pooled direct is permitted after the enactment of the EB5 Reform and Integrity Act, we have to look at all the conjugations of pool: pool, pools, pooled, pooling etc, in the language enacted and ascertain if there is an unambiguous meaning in each instance, and if so, what that meaning is.

[Please Note: The page numbers and line numbers in the table below are from the version of the bill accompanying the House Rule (this was the version voted on by the House). You are welcome to cross-check this version with the enrolled version of the bill (which is the controlling language of the Act). Between the versions, page and line numbers may have changed, but there is no change in the text other than the cleanup done when a bill is enrolled.]

There are 7 instances of the conjugation of the word “pool” in the language, as below: 

We submit that the information above is dispositive in determining whether the new statute permits Pooled Direct or not, please see our analysis below.

1.  If immigrants are pooling their funds in a NCE so that that NCE can, in turn, make a loan to a JCE–that kind of pooling is possible only through a RC under the new statute. This is no change to the state of the law as it existed before this statute.
2.  However if pooling is done by the project that is putting together its capital stack in equity and debt from a variety of sources, such pooling appears to be permissible under the plain language of the statute. This is especially true if the alien and/or aliens involved did not know, or could not have known, that their money may be pooled. (Such pooling may be similar to a concept in structured securities law called a “programmatic joint venture” though we are not sure about this nomenclature).

It is clear from plain language of the statute that it is the intent of the alien which is controlling as to whether pooling is permissible for EB5 benefits outside of a RC or not, according to the newly enacted EB5 Reform Act. Based on our analysis above, it is our tentative conclusion that pooled directs continue to be a viable option to obtain EB5 benefits under the EB5 Reform and Integrity Act, provided that the alien investor involved did not intend to pool, nor subsequently executed the intent of pooling. Finally, if USCIS adopts a meaning of pooling other than the above, USCIS would be adopting a meaning contrary to the plain language of the statute.

We want to once again emphasize that all of us in the EB5 community are all learning together what the Act says, and what it means. Frequently, Congress is inartful in adopting language for statutes–that is quite common. Nevertheless, regardless of Congressional intent, and regardless of the artful or inartful delivery of such intent, everyone (emphatically including USCIS) is bound by the plain language of the statute.

Again, we submit the material above with the hope of spurring inquiry, fostering analysis, and (especially) encouraging criticism of our analysis. We particularly invite any commentaries and criticisms of our interpretation of the plain language of the statute as stated above. We commit to issuing a public retraction of our analysis above if someone can show us that we are incorrect in our interpretation above of the plain language of the statute.

Please direct your comments and critiques to editor@ilw.com.

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