USCIS’s Murky Instructions May Increase Requests for Evidence

The year 2020 has been an unexpected rollercoaster of events for U.S. green card hopefuls who are participating in EB-5 investments. From extensive I-526 petition processing wait times and widespread termination of EB-5 regional centers to the apparent crescendo of financial instability for United States Citizenship and Immigration Services (USCIS) in Q3 and Q4, EB-5 program participants have certainly been charting unpredictable waters.

For this reason, news of a September 2020 release of May 2019 “reset training” materials has spurred on an additional flurry of concern. Specifically, there are issues surrounding adjudicators’ understanding of some unclear instructions for the I-526 petition that seem to leave space for broad interpretation. These are exactly the kind of issues that could further delay I-526 petition processing – just another hurdle EB-5 investors have to clear should USCIS choose not to provide any clarification to its staffers.

USCIS Releases Materials from 2019 I-526 Reset Training

Adjudicator reset trainings aren’t really as foreboding as the term might seem. These events are simply meant to be an opportunity for adjudicators to stay abreast of USCIS program updates so that they can properly evaluate the petitions that cross their desks. In fact, most of the time, only a small portion of the new training materials contain updates at all. “So, what’s the big deal?” some investors might ask. While these periodic training events are not news, what has made waves in the EB-5 community is the secrecy the USCIS seems to have tried to maintain surrounding them.

These I-526 training documents help program participants ensure proper filings for their EB5 investments. They provide important insights into how adjudicators make decisions and the EB-5 investment process overall. It only makes sense for those preparing the documents to have access to information regarding how those documents will be evaluated. One key industry player, Invest in the USA (IIUSA), agreed it was time for USCIS to open its training books to the public. Following a refusal to comply with a Freedom of Information Act request for the materials, IIUSA filed suit against them… and won. However, USCIS was only required to release the documents to IIUSA directly, and IIUSA has decided to offer them as an exclusive member benefit.

EB-5 Community Concerns of Misinterpreting Fund Sourcing Guideline

After some review of the newly released materials, EB-5 investment document preparers have called attention to a segment of the adjudication guidelines that seems to be less than clear. When adjudicators do not have a clear-cut path forward on evaluating petitions, it is easy to see how processing could quickly become inconsistent and confusing for both the Immigration Investor Program Office (IPO) and everyone else involved in the EB5 investment process.

What the I-526 Reset Training Documents on Source of Funds Say

The section in question, 8 CFR 204.6 (g)(1), reads as follows:

“The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur even though there are several owners of the enterprise, including persons who are not seeking classification under section 203 (b) (5) of the Act and non-natural persons, both foreign and domestic, provided that the source(s) of all capital invested is identified and all invested capital has been derived by lawful means.”

To the untrained eye, this verbiage may seem straightforward enough. It is common knowledge that capital for every EB5 investment must be sourced lawfully and that each EB-5 investor is required to provide evidence of their lawful fund sources. However, the updated wording here could suggest to an adjudicator that the documentation for all capital invested into a single project – including that from both other EB-5 participants and non-EB-5 investors – must be provided with each individual investor’s paperwork.

Common Sense Dictates That Project Capital Should Be Evaluated One Investor at a Time

Common sense would dictate that a single investor should never be held responsible for the EB-5 investment capital of other project investors. More often than not, EB5 investments come from investors who don’t even know each other, after all. Past interpretations of the process were generally that each investor is charged with documenting the lawful sources of funds for their own EB-5 investment contributions. This way, USCIS can investigate capital suspected to have been acquired illegitimately in a more targeted manner.

Furthermore, it doesn’t make any sense for all investors to be penalized for any discovered wrongdoings of a separate and unrelated investor in the same project – both ethically and for the sake of project continuation. Additionally, capital from any investors who are not involved in the EB-5 Immigrant Investor Program shouldn’t be lumped in with USCIS EB5 investment adjudications at all.

Requests for Evidence on Capital Unrelated to Individual Investors Seems to Be on the Rise

Regardless of the common-sense approach, however, it seems more EB-5 investors are receiving requests for evidence (RFEs) based on a broader interpretation of the updated training materials. Some examples of this happening include the following:

  • One EB-5 program participant was sent an RFE for government ID or business registration documentation for each of the other NCE owners in his project.
  • Another received an RFE for the ID and past tax returns of the other NCE owners in his project.
  • A third got an RFE for ID and comprehensive descriptions of business activities and bank statements for each of his NCE co-owners.

While EB-5 investors do not technically have to respond to these RFEs with documentation on the source-of-funds evidence for capital unrelated to their personal EB5 investment, it is easy to see why this would concern an individual foreign investor. Broad adjudicator interpretations of this paragraph could end in significant processing delays for investors (not to mention added stress). Vague instructions open the adjudication process to inconsistencies and unfair practices toward EB5 investment evaluations. As industry advocates continue to call attention to these issues, we can only hope USCIS clarifies these instructions for their adjudicators. Until then, EB-5 investors beware!