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.
Monday, February 27, 2012
Thursday, January 12, 2012
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.
Thursday, December 29, 2011
What are we paying for?
Often I read an article in the mainstream media that screams, "I don't know what I'm writing about!" But every now and then I see something truly accurate written about the much-maligned EB-5 Program.
A San Diego colleague, Brandon Meyer, was allowed a guest editorial on another colleague's blog, so here you go: CLICK HERE.
A San Diego colleague, Brandon Meyer, was allowed a guest editorial on another colleague's blog, so here you go: CLICK HERE.
Sunday, November 6, 2011
What the EB-5 Program hasn't got
I'm going to write about something that the EB-5 Program hasn't got: Certainty or continuity.
Very important words, these. The employees responsible for the EB-5 Program at U.S. Citizenship and Immigration Services HQ and the California Service Center may, in fact, be smart people who understand the EB-5 Program. I don't believe that, but let's say, for the purposes of this blog, that they are and do.
What they don't have is the ability or the motivation to give the EB-5 Program certainty and continuity so that the stakeholders -- regional centers, investment project developers, EB-5 lawyers, EB-5 investors -- can count on anything -- anything at all.
New memos coming out of USCIS show time and again that these employees are intent on making things worse for the EB-5 Program, not better, more complicated, not easier for anyone to navigate. In fact, they often change the rules in the middle of the game.
Because this federal agency makes it possible for an investor to plunk down $500,000 or $ 1 million and apply for a green card, it had better be able to provide some certainty and continuity.
That is not happening today, and it won't until or if the stakeholders turn up the political heat.
Very important words, these. The employees responsible for the EB-5 Program at U.S. Citizenship and Immigration Services HQ and the California Service Center may, in fact, be smart people who understand the EB-5 Program. I don't believe that, but let's say, for the purposes of this blog, that they are and do.
What they don't have is the ability or the motivation to give the EB-5 Program certainty and continuity so that the stakeholders -- regional centers, investment project developers, EB-5 lawyers, EB-5 investors -- can count on anything -- anything at all.
New memos coming out of USCIS show time and again that these employees are intent on making things worse for the EB-5 Program, not better, more complicated, not easier for anyone to navigate. In fact, they often change the rules in the middle of the game.
Because this federal agency makes it possible for an investor to plunk down $500,000 or $ 1 million and apply for a green card, it had better be able to provide some certainty and continuity.
That is not happening today, and it won't until or if the stakeholders turn up the political heat.
Tuesday, September 27, 2011
Country Place Living's EB-5 market success is strong
America's Center for Foreign Investment, my regional center which encompasses the states of Alabama and Tennessee and large areas of Mississippi, Georgia, and the northern tier of Florida from Santa Rosa to Volusia counties, is proud to be associated with Country Place Living and everyone on their team.
I have been thoroughly impressed by the boss, Jack West, and have watched his team from afar working in China. Their assisted living facilities in ACFI's geographic area are being built now and there could be as many as 75 such facilities within several years.
Country Place Living's success has been noted. Please click on the link below:
Country Place Living popular among investors
I have been thoroughly impressed by the boss, Jack West, and have watched his team from afar working in China. Their assisted living facilities in ACFI's geographic area are being built now and there could be as many as 75 such facilities within several years.
Country Place Living's success has been noted. Please click on the link below:
Country Place Living popular among investors
Meeting with the Director
The trip to Washington, D.C., to meet with USCIS Director Alejandro Mayorkas was fine. What wasn't was the resistance I still see and hear to establishing some nurturing management of the EB-5 Program. This is a job-creation program established by Congress in 1990 that has been mismanaged by U.S. Citizenship and Immigration Services for more than 20 years.
If USCIS were a big corporation instead of just a big, bloated government bureaucracy, there would have been a shareholder revolt and the EB-5 Program "management team" would have been fired many years ago. But federal government employees can't be fired. They can, however, be reassigned. Come to think of it, that's not a bad idea at all.
There was an advocate for the EB-5 Program years ago, on the inside, in the same building where I met with Director Mayorkas, working every day to gin up positive activity in the EB-5 Program, but he was bureaucratically assassinated and has retired. The EB-5 community -- those of us out here trying to work this foreign investor immigrant visa program -- didn't know it at the time, but those were the "good old days."
To his credit, Mayorkas seems to know the EB-5 Program is in trouble, but he does not seem to know how to rescue it.
Part -- just part -- of the problem is that the USCIS employees (called immigration service officers, ISOs) "adjudicating" EB-5 visa cases in Laguna Niguel, California, treat every applicant like a terrorist or drug dealer and their money is considered dirty until proven clean, much like guilty until proven innocent. That's just part of the problem, but it's a really big part. ISOs are "adjudicating" these investor visa petitions using the wrong evidentiary standard.
Statute law, case law, and federal regulations agree: These cases are supposed to be examined using the "preponderance of the evidence" standard, which basically means "more likely than not". Instead requests for additional evidence I have seen clearly show that ISOs are using the "beyond a reasonable doubt" evidentiary standard.
Mayorkas has proposed accelerated and premium processing of "shovel ready" cases. Notice he used the word "cases", not "job-creation projects". I think that's telling.
He has proposed specialized intake teams for I-924 applications with direct customer access. This sets the table for another layer of bureaucracy that is unlikely to be helpful.
He has proposed an "enhanced decision process" for I-924 applications with an option for in-person or telephonic interview. This sounds nice until you realize that the ISOs don't want it. They treasure their anonymity, huddled in their bunker, lobbing shells at the customers in the form of whacky decisions and the ubiquitous "No, you can't have that visa."
I told Mayorkas that regional centers don't want letters approving "amendments" to their designation letters when they submit an EB-5 investment project for "pre-approval". I said we want a Form I-797 approval notice.
"Can we do that?" Myorkas asked the assembled staff. A high-level employee said probably not because the CLAIMS system, which stands for Computer-Linked Application Information Management, can't spit out the form. Garbage in, garbage out, I guess. You see my points?
If USCIS were a big corporation instead of just a big, bloated government bureaucracy, there would have been a shareholder revolt and the EB-5 Program "management team" would have been fired many years ago. But federal government employees can't be fired. They can, however, be reassigned. Come to think of it, that's not a bad idea at all.
There was an advocate for the EB-5 Program years ago, on the inside, in the same building where I met with Director Mayorkas, working every day to gin up positive activity in the EB-5 Program, but he was bureaucratically assassinated and has retired. The EB-5 community -- those of us out here trying to work this foreign investor immigrant visa program -- didn't know it at the time, but those were the "good old days."
To his credit, Mayorkas seems to know the EB-5 Program is in trouble, but he does not seem to know how to rescue it.
Part -- just part -- of the problem is that the USCIS employees (called immigration service officers, ISOs) "adjudicating" EB-5 visa cases in Laguna Niguel, California, treat every applicant like a terrorist or drug dealer and their money is considered dirty until proven clean, much like guilty until proven innocent. That's just part of the problem, but it's a really big part. ISOs are "adjudicating" these investor visa petitions using the wrong evidentiary standard.
Statute law, case law, and federal regulations agree: These cases are supposed to be examined using the "preponderance of the evidence" standard, which basically means "more likely than not". Instead requests for additional evidence I have seen clearly show that ISOs are using the "beyond a reasonable doubt" evidentiary standard.
Mayorkas has proposed accelerated and premium processing of "shovel ready" cases. Notice he used the word "cases", not "job-creation projects". I think that's telling.
He has proposed specialized intake teams for I-924 applications with direct customer access. This sets the table for another layer of bureaucracy that is unlikely to be helpful.
He has proposed an "enhanced decision process" for I-924 applications with an option for in-person or telephonic interview. This sounds nice until you realize that the ISOs don't want it. They treasure their anonymity, huddled in their bunker, lobbing shells at the customers in the form of whacky decisions and the ubiquitous "No, you can't have that visa."
I told Mayorkas that regional centers don't want letters approving "amendments" to their designation letters when they submit an EB-5 investment project for "pre-approval". I said we want a Form I-797 approval notice.
"Can we do that?" Myorkas asked the assembled staff. A high-level employee said probably not because the CLAIMS system, which stands for Computer-Linked Application Information Management, can't spit out the form. Garbage in, garbage out, I guess. You see my points?
Tuesday, August 9, 2011
Meeting in Washington
I am in Washington, D.C., for a meeting with USCIS Director Alejandro Mayorkas. The EB-5 Investors Committee of the American Immigration Lawyers Association is doing its best to lay out a prescription to treat issues created by USCIS itself that have harmed the EB-5 Program and could take the entire investor visa program down.
I will file a report in this blog when I get back to my office.
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