Immigrant Investor Insider: EB-5 Investments, E Visas, and Other Investor News: May 2013

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1 Immigrant Investor Insider: EB-5 Investments, E Visas, and Other Investor News: May 2013 Information in this newsletter is being provided by the Fredrikson & Byron, P.A. Immigration Law Department. i Headlines: 1. USCIS-SEC Call Highlights Complexities of EB-5 Program SEC subject matter experts discussed securities law compliance in the context of EB-5 regional centers and investments. 2. USCIS Issues Third Draft of Adjudications Policy Memo Several commenters recommended revisions. 3. USCIS Holds EB-5 Stakeholder Call on E-Filing Initiative USCIS is considering integrating EB-5 processes into its electronic filing system. Details USCIS-SEC Call Highlights Complexities of EB-5 Program USCIS and the Securities and Exchange Commission (SEC) invited interested individuals to participate in a stakeholder teleconference on April 3, 2013, to discuss the EB-5 immigrant investor program. During the call, subject matter experts from the SEC s Divisions of Corporate Finance, Trading and Markets, Investment Management, and Enforcement discussed securities law compliance in the context of EB-5 regional centers and investments. Among other things, an SEC representative noted that the definition of a security is broad and includes partnership interests. She said it is likely that an EB-5 investment is a security. Offers and sales of securities must be registered unless an exemption applies. Whether registered or not, federal securities law still applies, especially the antifraud provisions, she noted. Regarding broker-dealer requirements, another SEC representative noted that if a person facilitates EB-5 investments in a U.S. business, he or she is probably engaged in brokerage activities. This means that the person would be subject to the broker-dealer rules, even if the investment is outside the United States. A case-by-case analysis is necessary to determine whether someone needs to register as a broker-dealer. For example, if you solicit the investment or get paid based on the investment, you are a broker-dealer. The same is true for advertising. If you are paid for finding investors, or have a salesman s stake, you might be subject to broker-dealer rules. If you are not a broker-dealer, you might still be an investment advisor if you are providing investment advice for compensation, another SEC representative noted. Depending on how regional centers are structured, they may have to be registered under the Investment Company Act (ICA), which is very broad. Any issuer that invests or trades in securities through pooled investors may be an investment company and be required to register under

2 the ICA. There are exemptions, so the SEC recommended getting good professional advice from a qualified attorney. The SEC did not comment on specific scenarios raised by participants or on particular EB-5 practices to avoid. The SEC advised listeners to seek advice from a securities attorney on specific issues. A recording of the call is available via Dropbox at The USCIS Ombudsman has published an executive summary here. 2. USCIS Issues Third Draft of Adjudications Policy Memo USCIS released the third draft of its foundational EB-5 adjudications policy memorandum in February USCIS first released the memo in November 2011, and released a second draft in January Several commenters recommended revisions. Robert C. Divine, Vice President of IIUSA: Association to Invest in the USA, noted that, among other things, the latest draft of the memo opposes a guaranteed right of an investor s eventual ownership in a particular asset (to be subtracted from capital at risk). He said that USCIS has said this orally in stakeholder meetings and in some adjudications, but never publicly in writing. He also noted that the latest draft clarifies that payment to an investor of a return on an investment (i.e., profit versus redemption of capital) during or after conditional residency is acceptable. The draft also recognizes risk-spreading by a single investment enterprise among multiple projects, but Mr. Divine noted that USCIS has tended to state that the projects must be identified in the I-526 of each investor relying on them. Mr. Divine lamented that the latest draft fails to provide desperately needed guidance and clarification on many topics, which he listed in his comments. He said that USCIS simply is not keeping up with the number of questions that reasonably arise for well-intentioned developers and investors questions that need predictable answers for prospective planning of major enterprises and projects. He said the EB-5 program will not be attractive to developers and investors if they can only find out what the rules might be after they have spent hundreds of thousands or even millions of dollars in project development and marketing and the investors file their I-526 petitions. IIUSA urged USCIS to implement the memo but recommended some revisions before finalizing it. IIUSA advocated: Including language from previous agency interpretation on crediting construction jobs and/or the resulting indirect/induced economic impact to EB-5 investors; Including language from previous agency interpretation on crediting indirect jobs created outside of a regional center s boundaries; Including language from previous agency interpretation on tenant occupancy economic model guidance; Including language from previous agency interpretation on visitors spending economic input; - 2 -

3 Establishing clear and commercially reasonable guidelines on the definition of material change/initial business plans; Stating specifically that bridge financing can be an approvable use of EB-5 capital; Barring foreign ownership of regional centers; Allowing North American Industry Classification System (NAICS) codes of two digits and/or longer to be approved for a regional center s particular industry sector; Specifically stating which existing administrative memoranda will be rescinded after the memo is implemented; Limiting the number of requests for evidence issued to one per regional center business plan and/or economic model; and Issuing an I-797 approval notice for I-924 amendment applications for actual projects seeking pre-approval. The draft USCIS EB-5 memo is available here. IIUSA s comments are available at Mr. Divine s comments are available here. 3. USCIS Holds EB-5 Stakeholder Call on E-Filing Initiative USCIS held a stakeholder teleconference on March 28, 2013, concerning its plans to include filing of Form I-526, Immigrant Petition by Alien Entrepreneur, and other forms used in the EB-5 process in USCIS s ELIS (Electronic Immigration System). The Web-based system allows applicants to create an account and file an application online. At the teleconference, a USCIS representative said the agency is integrating EB-5 processes into its electronic system. The I-526 will be the first of four related forms being moved to ELIS. USCIS said the ability to see the status of a case online will also be provided in the future. Detailed notes on the call are available here. More information on USCIS ELIS is available here. A FAQ on USCIS ELIS is available here. PUBLICATIONS AND ITEMS OF INTEREST Laura Danielson and June Cheng spoke and hosted a booth at the Invest in America Summit in Shanghai China in March Featured in the photo are (right to left) Laura Danielson, Mr. Yale-Loehr and Mr. Wolfsdorf. The photo is available at

4 Green Card Voices: Laura Danielson is advising an artistic venture in Minnesota called Green Card Voices, which takes the idea of telling immigrant stories to a whole new level. Utilizing web-based video storytelling, Green Card Voices is traveling the country and listening to those with the courage to share their journey, documenting each story in an authentic and unbiased way. The chronicles of those whose stories they capture are both awe-inspiring and thought provoking, portraying the diversity of the immigrant experience in the United States. The project s mission is to share various stories of our nation s 30 million immigrants and put a human face to the current immigration debate through an interactive website, photographs, and videos. Simply, the goal is to introduce our nation s diverse group of immigrants to their neighbors. Unlike the book Green Card Stories, the project doesn t require that everyone telling his or her story actually has a green card. Green Card Voices is currently filming stories in Minneapolis, Minnesota, and if you would like to participate please contact project manager Tea Rozman-Clark. She can be reached at: (612) or at tearclark@hemgroup.com. EB-5 Government Agency Links USCIS Web Page on EB-5 Immigrant Investors USCIS Policy and Procedural Memoranda on EB-5 Investors Immigrant Investor Regional Centers List Form I-526, Immigrant Petition by Alien Entrepreneur Form I-829, Petition by Entrepreneur to Remove Conditions Form I-924, Application for Regional Center Under the Immigrant Investor Pilot Program Form I-924A, Supplement to Form I-924 Government Agency Links To access current processing times of the USCIS Service Centers and the Department of Labor, or the Department of State's latest Visa Bulletin with the most recent cut-off dates for visa numbers, visit i Fredrikson & Byron's Immigration Department offers complete services in all areas of immigration law, with special emphasis on business, family, and arts-related immigration. The lawyers in the Immigration Group are experienced practitioners who speak frequently at national and international conferences in their areas of expertise as well as volunteer - 4 -

5 their time for various immigrant organizations. All of the individuals working in the Immigration Department share a common philosophy of wanting to provide the best, most personal representation available. Members of the Immigration and International Groups are fluent in written and spoken English, Spanish, French, German, Chinese, and Vietnamese. To contact attorneys Laura Danielson, Loan Huynh, Debra Schneider, Ashley Roth, or June Cheng, please call This newsletter was prepared with the assistance of ABIL, the Alliance of Business Immigration Lawyers ( of which Laura Danielson is an active member. Disclaimer/Reminder This does not constitute direct legal advice and is for informational purposes only