Uncertainty reigns because USCIS takes wrong turns

That's how it happens too often in the bunker that is U.S. Citizenship and Immigration Services.  The "customers" are the enemy.  The permanent party (USCIS employees) are the oracles of all truth and light.  In their bureaucratic world, there can be no bright line tests.  "We handle these issues on a 'case-by-case basis'."
Where do they learn to talk like that?
If their actions and decisions were inconsequential, I wouldn't care, and neither would anyone else, but they're not.  Sometimes their actions and decisions have devastating consequences for law-abiding U.S. citizens, foreign nationals, their families and their businesses.  In the EB-5 arena, their actions and decisions can cost businesses owned by U.S. citizens millions of dollars and cause the layoffs of hundreds of U.S. workers.
During the past three or four years, USCIS has rarely made a decision or pronouncement that led to an improvement in its mismanagement of the EB-5 Program.  In most cases, the opposite was true.
That's why it is so vitally important that the USCIS director hire someone to run the EB-5 Program who has high intelligence, vision, strong leadership skills and the communication skills to explain to immigration service officers occupying the bunker to draw some bright lines for the regional centers, immigration lawyers and various economists and consultants active in the EB-5 Program.
We also need someone who will listen and try to understand why we have so little confidence in USCIS.  Most deputy directors I have seen in Washington conference meeting rooms look like they just want to get our of there, which is probably true.
Personnel is policy.  Remember "Brownie, you're doing a heckuva job"?
The wrong person in the wrong job can get lots of people killed or cause chaos in a little-known immigrant visa program that could create 100,000 or more direct, indirect and induced jobs for U.S. workers every fiscal year!
I caution, however, that this person needs to be appointed to a position that is co-equal with the position of deputy director so he or she cannot be easily canned.  They did it in 2008 and they'll do it again.  If that is not done, the person will have zero clout and get nowhere.  The permanent party deputy directors within USCIS will marginalize the person otherwise.  They have never liked the EB-5 Program -- largely because they don't understand it and because problems (and misinterpretations of regulations and guidance) pop up from time to time -- and they would like to see it go away.
The way to bring this chaos to near normal is to hire a strong leader for the EB-5 Program who understands commerce, the U.S. economy, economic development, job-creation, business realities, banking, and finance.
We've heard a lot of talk out of USCIS in Washington, but very little action other than taking good meetings.  Nothing is accomplished by "taking good meetings."  It's like the TSA show at the airport:  security theater.
More on this subject in part two, when we get down to the nitty-gritty of three hot buttons:  bridge loans, tenant occupancy and "nexus."

Increased use of EB-5 clear in new USCIS report

In a report dated October 26, 2012, USCIS reported greater usage of the EB-5 Program.
For the federal fiscal year ending September 30, 2012, USCIS reported that there were 6,041 I-526 petitions filed for the temporary EB-5 visa.  Of those, 3,667 I-526 petitions were approved and 957 were denied.
For the same period, USCIS reported there were 712 I-829 petitions filed for the permanent green card.  Of the total I-829 petitions then pending, USCIS approved 736, and denied 60.
Contrast this with federal fiscal year 2011, when 3,805 I-526 petitions were filed, 1,571 approved, and 372 denied.  I-829s that year?  2,345 filed, 1,067 approved, and 46 denied.
The agency is not close to the 10,000 visa cap yet, but the Department of State has warned that it may have to allow Chinese applicants to "retrogress", causing delays (not long, but delays) in visa issuance.  Please see the entry below for more about that.

Visa Bulletin contains visa cap advisory for China

The Department of State's Visa Bulletin for November, 2012, contains the following advisory:

"The following advisory is based strictly on the current demand situation.  Since demand patterns can (& sometimes do) change over time, this should be considered a worst case scenario at this point.

"It appears likely that a cut-off date will need to be established for the China Employment Fifth preference category at some point during second half of fiscal year 2013.  Such action would be delayed as long as possible, since while number use may be excessive over a 1 to 5 month period, it could average out to an acceptable level over a longer (e.g., 4 to 9 month) period.  This would be the first time a cut-off date has been established in this category, which is why readers are being provided with maximum amount of advance notice on the possibility.

"The above projections for the Family and Employment categories are for what could happen during each of the next few months based on current applicant demand patterns.  The determination of the actual monthly cut-off dates is subject to fluctuations in applicant demand and a number of other variables which can change at any time.  Those categories with a “Current” projection will remain so for the foreseeable future, with the possible exception of the China Employment Fifth preference category mentioned above."

Immigrant visas for China may retrogress

Visa office predicts possible retrogression of EB-5 visas for China in second half of FY 2012

Charles Oppenheim, Chief, Visa Control and Reporting at the Department of State's Visa Office, spoke at the Invest in the USA (IIUSA) EB-5 conference held on October 15-16, 2012, in Washington, DC. Among other things, he noted that 7,641 EB-5 visas were issued in fiscal year 2012, a record high. Of that total, 80 percent went to EB-5 investors from China. EB-5 visa numbers may be just as high in FY 2013, he said, adding that EB-5 numbers for China in the second half of FY 2012 may need to be retrogressed because of country cap limits.

Why so long?

USCIS processing times were released, and the California Service Center reported that it takes eight months to process an I-526 petition by an EB-5 alien investor.  Eight months!  I know for a fact it is taking CSC longer -- in many cases more than a year -- to process I-526 petitions.
Eight months or more is disgraceful!
CSC reported that it takes one month to process an L-1 (intracompany transferee) visa cases and two months to process an E-2 (treaty investor) case.
There is $500,000 minimum behind each I-526 petition that could be invested in an American business and create jobs, but USCIS seems quite comfortable to drag its feet.
A former USCIS employee told me that the more employees USCIS trains and devotes to a given type of visa case, the longer the processing time.  That's counter-intuitive, but it is so true.

OFAC licenses no longer required for Iranian EB-5 investors

When they are published Monday, Oct. 22, new federal Iranian Transaction and Sanctions Regulations will no longer require licenses from the Office of Foreign Assets Control (OFAC) giving permission for Iranian investors to transfer funds to the United States from Iran.
I am still studying the new regulations, but they do say, in pertinent part:
"U.S. persons are authorized to engage in all transactions necessary to export financial services to Iran in connection with an individual's application for a non-immigrant visa under category E-2 (treaty investor) or an immigrant visa under category EB-5 (immigrant investor), provided that any transfer of funds pursuant to the authorization set forth in this paragraph is effected in accordance with [section] 560.516.
"In the event services are exported under [the] paragraph [above] ... in connection with an application for an E-2 or EB-5 visa that is denied, withdrawn, or otherwise does not result in the issuance of such visa, U.S. persons are authorized to transfer, in a lump sum back to Iran or to a third country, any funds belonging to the applicant that are held in an escrow account during the pendency of, and in connection with, said visa application, provided that any transfer of funds pursuant to the authorization set forth in this paragraph is effected in accordance with [section] 560.516."
Section 560.516 states:
"United States depository institutions are authorized to process transfers of funds to or from Iran, or for the direct or indirect benefit of persons in Iran or the Government of Iran, if the transfer arises from, and is ordinarily incident and necessary to give effect to, an underlying transaction that has been authorized by a specific or general license issued pursuant to, or set forth in, this part and does not involve debiting or crediting an Iranian account.
"U.S. registered brokers or dealers in securities are authorized to process transfers of funds to or from Iran, or for the direct or indirect benefit of persons in Iran or the Government of Iran, if the transfer arises from, and is ordinarily incident and necessary to give effect to, an underlying transaction that has been authorized by a specific or general license issued pursuant to, or set forth in, this part and does not involve debiting or crediting an Iranian account."
I am still studying these new regulations (which run to 193 pages, by the way) but they appear to allow an EB-5 investment project to obtain a general license, which would obviate the need for specific OFAC licenses for Iranian EB-5 investors.
I will write more about this startling event later after I have digested all of the regulations.  If the regulations are evidence of a policy shift on Iranian sanctions, it appears that the federal government wants to extend a friendly hand to private investors (most of whom love America) while getting tougher on the Iranian government.  Another factor is that OFAC licenses are taking more than six months to get from Treasury.  When I got my first one in 2009, it took two weeks.

Pilot program extended for 3 years

I guess that's okay and the EB-5 Immigrant Investor Pilot Program has been "extended" -- miraculously -- for another three years is considered a big deal.  I don't.
The Immigrant Investor Pilot Program is the longest lasting federal pilot program in history.
It is good for America.  It is good for America's economy.  Why the immigrant investor program has not been made permanent by Congress is an unadulterated mystery.

USCIS releases EB-5 statistics

Statistics are in for the third quarter of this federal fiscal year.
USCIS has approved 3,002 I-526 petitions (for the conditional green card) and has 1,154 pending.  The approval rate is 79 percent.
The agency has approved 639 I-829 petitions (for the permanent green card) for an approval rate of 84 percent.

New EB-5 Program office to be created

A new office will be created to oversee the EB-5 Program, according to an announcement on July 19 by USCIS Director Alejandro Mayokas.
Also, a review board will be created by the end of July, consisting of two supervisory immigration service officers and an economist, to examine regional center applications recommended for denial, with applicants having the opportunity to meet with the board members in person.
These are major positive developments for the EB-5 Program, which has lurched from crisis to crisis over the past few years.
The new, dedicated EB-5 Program office will be led by a Chief of Immigrant Investor Programs.  Mayorkas said the job was posted July 19, and that he's looking for someone who has "significant experience in the business world and will assume responsibility for ensuring that the program is administered efficiently, with integrity, with predictability, and with an understanding of today's business realities."
"We understand," he wrote in the announcement to EB-5 stakeholders, "that more work needs to be done to further improve our administration of the EB-5 Program."
This is all good, but we'll see.  As my father used to say, "Don't listen to what people say; watch what they do."
The EB-5 Program enjoyed a brief period of clarity and certainty in 2005 when it was led for almost four years by a former Commerce Department employee.  Let us pray that USCIS hires someone who can understand the EB-5 Program.  Stakeholder meetings, conferences, conference calls, and requests for additional evidence make it abundantly clear that there are wide gulfs in levels of understanding of the EB-5
Program generally, and regional centers and regional center investment projects specifically, among USCIS employees at the California Service Center.

Senators should support permanent EB-5 Program

Please encourage your U.S. senators to vote for S. 3245, which was introduced by Judiciary Committee Chairman Senator Patrick Leahy and ranking member Senator Charles Grassley.  Cosponsors include Senators Conrad, Hatch, Kohl, Lee, Rubio, and Schumer.

The bill would make permanent four existing visa programs due to "sunset" on September 30 -- the EB-5 Regional Center Program, CONRAD30, E-Verify, and religious workers.

This will have the very positive effect of eliminating uncertainty that Congress supports these important visa programs.

USCIS economists drop a bomb on EB-5 stakeholders

It was supposed to be a conference call to bring newly hired EB-5 economists from the California Service Center to USCIS HQ in Washington for a forum.  On June 22, Director Alejandro Mayorkas and the economists went first, and then in-person and on-the-phone participants could ask questions or make comments.
It was near the end of their presentation when the USCIS economists dropped their bomb on EB-5 stakeholders.  The USCIS economists said that land acquisition costs cannot be used in I/O models (methodologies) to show the creation of indirect and induced jobs.  I understand the reasoning, but this is another change in policy -- another example of "moving the goalposts", just like the now-infamous "tenant occupancy" memo of February 17, which was sprung on EB-5 stakeholders without warning.
There was very little utility in the information provided by the USCIS economists.  The call was not a total waste of time, but almost.  USCIS employees generally demonstrate that the less said and the more vague the better.  That approach serves the agency's interests well, but does nothing to help its customers.

Sad to sing my swan song

     I just rotated off the EB-5 Investors Committee of the American Immigration Lawyers Association.  For four long years I battled to improve, along with my hard-working colleagues, the management and function of the EB-5 Program and the Immigrant Investor Pilot Program.
     Sadly, if I were asked, "Is the EB-5 Program better off today than when you took office?", I would have to say no.  While the numbers are greater, i.e., there are more I-526 petitions (for the conditional green card) and I-829 petitions (for the permanent green card) being approved by U.S. Citizenship and Immigration Services (USCIS) today, there are also wrenching changes in adjudications and federal policy, without lawfully required rulemaking procedures, and failure even to implement what the headquarters staff tells immigration service officers at the California Service Center (CSC) to do, or how to approach particular problem areas in adjudications.
     My disappointment in USCIS knows no bounds.  I am actually relieved to be away from the fray for awhile.
     On May 1, 2012, during an EB-5 stakeholders meeting at the CSC in Laguna Niguel, CA, it was bad enough listening to a USCIS CSC employee deride stakeholders, who traveled thousands of miles. over an open mike.
     So the AILA committee's parting shot was a 10-Point Program, to-wit:
     1.  Provide a forum whereby USCIS representatives on a quarterly basis can advise regional center stakeholders of the issues it is seeing in applications that are producing the largest numbers of RFEs and denials.  At the same forum, allow regional center stakeholders to provide lists of adjudicatory issues on which there is a lack of clarity.
     2.  When new standards are going to be implemented that will affect large numbers of applications (whether it involves the methodology for the counting of jobs that will be created, or the structure of bridge financing, or any other aspect of an EB-5 transaction), provide notice to stakeholders in advance rather than issuing large numbers of RFEs on issues that were not issues at the time of filing.
     3.  Implement USCIS Director Mayorkas’ idea of a Decision Board as promptly as possible.  This Decision Board would be made up of economists and business analysts and would meet or conference with regional center applicants to discuss any issues that need to be resolved before a project can be approved.
     4.  Hire a sufficient number of examiners to bring processing times to levels that make some sense in a time-sensitive, job-creating program such as EB-5.
     5.  Instruct examiners that, except in rare instances, multiple RFEs should not be issued.
     6.  Publish meaningful guidelines on what adjudicators want to see when adjudicating a regional center application.  Most denials and RFEs are based on often-changing policies that are not contained in any regulation or even any government-issued memorandum.
     7.  Make the regional center amendment process workable.  Regional Centers are approved for specific geographical areas, specific industry codes and specific economic methodologies for counting job creation.  Right now, if a regional center wants to amend its geography, economic methodology or industry code, the published processing time is 8 months – longer than filing a new regional center application.  This is unworkable.
     8.  USCIS has created a process – the exemplar I-526 – that enables a regional center to have a project approved for EB-5 investment prior to receiving investments.  The problem is that, despite a $6,230 fee and an 8-month processing time, USCIS does not consider itself bound by any approval.  USCIS must make this process meaningful as a way of saving time and adjudicatory resources.  If it is not meaningful, stakeholders should not be expected to pay large filing fees and wait long periods of time; and the process should be eliminated.
     9.  Provide substantive responses to inquiries sent to USCIS’s EB-5 mailbox.
     10.  Last, but by no means least, increase the monitoring of approved regional centers.  We all agree that if there are any non-compliant regional centers or project developers, they do harm to the program and should be eliminated.
     Even though I was proud to serve AILA on the EB-5 Investors Committee, I was sorry to leave my fellow committee members with so many daunting challenges.  It should go without saying that the EB-5 immigrant visa investor program should be a win-win for everybody, but according to USCIS, it's just another visa program full of fraud and abuse.  More's the pity.

EB-5 Program statistics released

     The EB-5 immigrant investor visa program is still woefully underutilized, if newly released statistics are any guide.  The Office of Performance and Quality of U.S. Citizenship and Immigration Services shows that 1,563 I-526 petitions (for the conditional immigrant visa) were approved in federal fiscal year 2011, up from 1,369 in FY 2010.
     But based upon preliminary data from the first two quarters of FY 2012, 2,101 I-526 petitions were approved.  That's better, but still nothing for USCIS to crow about considering Congress makes available 10,000 visas each federal fiscal year.
     On the backside of the process, USCIS approved 1,067 I-829 petitions to remove conditions on residence, and there were 522 approvals during the first two quarters of FY 2012.
     The approval percentage for I-526 petitions in FY 2011 was 81 percent, and for the first two quarters of FY 2012, it was 85 percent.

New York EB-5 summit

I will speak to this group on April 27 at the Hilton in New York City.

EB-5 New York Summit

I invite you to sign up and attend if you want to learn more about the EB-5 Program.

USCIS throws EB-5 Program another curveball

I always enjoy talking with Jeffrey B. Carr. He is one of the most creative thinkers about EB-5 issues, particularly when it comes to economics and job creation.
Jeff is president and economist at Economic Policy Resources of Williston, Vermont (eb5economics.com).  I spoke with him Monday, March 5, when I addressed a special EB-5 seminar for Immigration Lawyers on the Web (ILW) in Orlando, Florida.
Jeff and I discussed a new "jobs displacement" issue that has popped up in who knows how many requests for additional evidence.  USCIS recently papered the country with requests that applicants show their investment project will not "displace" existing U.S. workers.
He said there is disagreement now between how USCIS defines a "direct job" and how EB-5 economists, generally, define a "direct job".  He said EB-5 economists can produce a rationale for counting tenant jobs as direct jobs.
The "tenant jobs" issue came up within the past couple of weeks after USCIS issued a memo declaring that "tenant jobs" are not "direct jobs".  Then we started seeing the RFEs referring to "jobs displacement".  I think this is going to get much worse for all of the stakeholders in the EB-5 Program, including -- most importantly -- foreign investors.
As a practical (real world) matter, the "jobs displacement" issue is never a consideration because the economy -- locally, regionally, nationally -- is constantly changing and evolving.  Some sectors of the economy and companies or industries do well; others don't.  Competition is a big part of this.  Businesses that compete effectively and adapt succeed; others fail.  A new hotel is built in a locale; an older hotel loses occupancy and closes.  That's life.

Another serious problem created by USCIS

I didn't want to blog about this matter before I decided what I really wanted to say about it.  This action on the part of USCIS is so serious, in fact, that it could spark lawsuits by investors and invalidate securities offerings, putting EB-5 project developers and regional center principals in danger of federal and state criminal prosecution.
On February 17, 2012, USCIS issued a memorandum on "Tenant Occupancy".  This was the "mystery issue" that was holding up I-924 applications for new regional centers.  To boil it down, the newly hired USCIS economists say they don't see the job-creation connection between office space or shopping centers and "tenant jobs."  The memo said RFEs were coming and it didn't take long.
"After reviewing the tenant-occupancy methodology presented thus far," one RFE said, "USCIS observes that the nexus between the investment and the job creation is either too attenuated or too incomplete to constitute a reasonable economic methodology.  Consequently, the existing record presents USCIS with a justification to recognize only those employment impacts that could be attributed to [the project] such as those resulting indirectly from the construction activity and, if applicable, the ongoing building management activities that will be required to maintain the building."
Most regional centers -- certainly a majority, probably a lot more than that -- are built precisely around creation of tenant jobs and this economic methodology.  Because USCIS -- your federal government -- has taken this astounding position, I predict there will be a rash of lawsuits due to invalidation of securities offerings, and possible federal criminal charges brought against EB-5 project developers and regional centers by the federal and state securities commissions.  The EB-5 business plan and the economic methodology are part of the securities offerings.
This is your federal government making big trouble for this job-creation program.  I do see that in order to successfully navigate this minefield, EB-5 economists are going to have to go to school about how to put together a report that satisfies whoever this is inside USCIS.

Conversation With the Director

I participated in a conversation with USCIS Director Alejandro Mayorkas on Thursday, January 12.  He apparently called the meeting to roll out a [nearly] final draft of his EB-5 memo and to discuss a variety of other issues.
The one on my plate -- readjudication of "pre-approved" EB-5 investment projects at the I-526 petition stage -- he apparently doesn't get yet.  He referred to situations in which a "general" I-924 is filed with EB-5 project specific documents, including the business plan, and other or different documents are filed with the I-526 petition.  I can assure the director that none of the I-924s filed by my regional centers can be fairly called "general" in nature.  The docmentation is voluminous and very specific, and is the same as the documents filed with the I-526.
But the director did recognize the readjudication issue as "a core issue for us to get right."
The main issue from the director's point of view was to develop and provide accurate guidance to his immigration service officers.  The main issues from my point of view were elimination of readjudication and establishing predictability and certainty in the adjudication process.
"We're moving as fast as possible  to implement [15-day] premium processing," Mayorkas declared.
While that's good to hear, most insiders don't think they will see premium processing for at least another six months or more.
Other news concerned embrace of the "fund" concept.  In the regional center context, Mayorkas said, as long as the new commercial enterprise is a holding company, it can invest in a variety of businesses such that if one or more fail, investors may still be successful in removal of conditions if one or two businesses are successful.
Mayorkas confirmed that bridge loans are permitted where they are referred to in the business plan and are necessary to get an new commercial enterprise started.  He and his lawyer also confirmed that census tracts may be used to identify a targeted employment area, and that unemployment data may come from reliable sources other than local area unemployment statistics produced by a government agency, U.S. Census Bureau data, and data from the American Community Survey.
Mayorkas also referred to three new hires -- economists, I think -- and said USCIS is conducting interviews in a move to hire "entrepreneurs in residence".
The meeting was more then three hours long.