About the EB5 Immigrant Investor Visa Classification. The EB5 Visa Regional Center and the Immigrant Investor

Transcription

1 About the EB5 Immigrant Investor Visa Classification The EB5 Visa Regional Center and the Immigrant Investor

2 The Fifth Employment-Based Visa Preference ( EB-5 ) was enacted by Congress in 1991 and is administered by the United States Citizenship and Immigration Service, ( USCIS ). Its goal is to encourage foreign nationals to invest in the US economy and create jobs for US workers. Section 203(b)(5) of the Immigration & Nationality Act (INA) allows for the admission to permanent residence on a two-year conditional basis to qualified aliens who will contribute to the economic growth of the U.S. by investing in U.S. businesses and creating employment opportunities. The goal is to provide a motivation for foreign nationals who have access to adequate capital ($1,000,000 or $500,000 in Targeted Employment Areas ) to invest in American businesses and assets that will create at least 10 full-time jobs, in exchange for a path to a US lawful permanent residence, or Green Card for the investor and qualified members of the investor s family. The investment can be made in: new businesses, expanding businesses with a minimum of expansion required troubled businesses, defined as having lost 20 percent of net worth over the past 12 or 24 months (in which case jobs preserved can be counted toward the Job Creation requirement). Introduction to the EB5 Visa Program The EB5 Program was initially received with great interest but little use. As a result, in 1992, USCIS created a Pilot Program known as the Regional Center Pilot Program (RC). The Pilot Program sought to increase interest in the EB5 category by making the job creation requirement less restrictive. In particular, it permitted that the ten jobs per investor requirement be proven not only through direct full time jobs, but also through indirect or induced jobs, as long as such indirect or induced job creation was demonstrated through the use of reasonable methodologies. In 2002, Congress passed the 21st Century Department of Justice Appropriations and Authorization Act, which extended and simplified the EB-5 visa category by removing several political and legal hurdles created by Legacy INS and various subsequent court decisions. A year later, Congress reauthorized the Regional Center Pilot Program, in the Basic Pilot Program Extension and Expansion Act of 2003, in which indirect job creation statutes were simplified further. Specifically, investments made by way of a Regional Center from that point forward would only need to employ reasonable methodologies to prove indirect job creation. Perhaps most critical in the early years of the program, the U.S. government had not truly established the appropriate oversight mechanisms to effectively monitor the Regional Centers themselves, which unfortunately exposed the system to some instances of mismanagement or impropriety among select RC managing firms. The Extension and Expansion Act of 2003 aggressively tackled this overall failing by mandating that all Regional Centers would have to be reviewed, approved and actively monitored by a new Investor and Regional Center Unit within the USCIS. The IRCU, officially established in 2005, has continued to provide oversight for EB-5 policy and regulatory development, field guidance, and training.

3 According to the memo, the IRCU s primary mission would be to strengthen and protect the integrity of the EB-5 program while promoting the intent of Congress to encourage investment and increase employment within the United States. Signaling a vital step forward in the consolidation and reform of EB-5 policy, the effective creation and implementation of the IRCU and other phases in the evolution of the federal government s approach to the EB-5 model have clearly resulted in a more accessible and flexible process, especially in terms of processing times and responsiveness to investors concerns. These actions, in conjunction with a host of measures employed by the federal government in the three years since, have effectively set a much higher standard for Regional Centers throughout the U.S. The program now boasts many of the attributes necessary to begin fulfilling its original mission, which has the EB-5 program in general, and the Regional Center Pilot Program in particular, generating an increasing level of enthusiasm and interest with foreign investors. This unique program presents endless possibilities for the creation of U.S. jobs, especially in a challenged economy. Acquiring a Green Card Through The Regional Center Unlike the process associated with many other visa designations, applying under the EB5 classification and especially through an RC provides the opportunity to obtain status as a lawful permanent resident (initially as a conditional resident). When immigrating to the US, the foreign investor can rely on the fact that both he and his immediate family will be offered a track to permanent residency status (initially conditional and then after two years with conditions removed). Investors may eventually reside anywhere in the US they desire, and provides families (parents and children under 21 years of age) with immigration security, eliminating the need and anxiety of reapplying, as with most other visa categories. It also provides the flexibility to live anywhere, take any job, own and operate any business and to change employment without restrictions. The relatively straightforward process of filing for an EB-5 Investor Green Card through the RC consists of certain elements: petitioning for the EB-5 2-year temporary visa; achieving status as a conditional permanent resident; removing conditions on residency and graduation to the standard, permanent visa; making the Qualifying Investment, whether $500,000 or $1,000,000; and the filing of Form I-526, Immigration Petition by Alien Entrepreneur. To begin the procedure of applying for an EB-5-based immigrant visa, an investor must first make a qualifying investment in a project or commercial enterprise, authorized by or through the RC. Immediately on receipt of the investment by the business or payment into escrow under an appropriate escrow agreement, the immigrant investor will then file Form I-526, Immigration Petition by Alien Entrepreneur, and supporting documents with USCIS. The USCIS then adjudicates both the applicant and the investment as eligible for EB-5 status. The First Step: Hiring an Immigration Attorney The Investor must hire an independent attorney for immigration processing and other legal matters. The investor shall be responsible for payment of all legal fees and costs including United States Citizenship and Immigration Services application fees. The EB5 project was reserved a portion of the administrative fee as a legal fee for the immigration lawyer who will represent the investor in the I-526 process. We have negotiated with certain lawyers who have agreed to defer receipt of this fee until such time as the I-526 has been approved.

4 Investment Amount & Job Creation The EB-5 program generally requires a minimum investment of $1,000, (though it should be pointed out that in a Targeted Employment Area (TEA), the minimum investment amount is $500,000). TEA s are areas that are either rural or high unemployment. High unemployment areas are those sectors that each state designates as having at least an unemployment rate that is 150% above the national average from the prior year. In order to qualify as an EB-5 investor, the investor must either preserve (in the case of troubled businesses) or create a minimum of 10 full-time, year-round jobs for: US Citizens, lawful permanent residents and certain other lawful workers such as asylees. The investor and the investor s spouse and children cannot be included in the job count. A full-time job is defined as one that provides at least 35 hours per week. Being paid by the business directly is normally required (although indirect jobs can be included where appropriate); independent contractors are not generally counted. Any EB5 petition that is pursued through an RC will be able to use indirect job creation to satisfy the 10 jobs per investor rule (see below). Indirect Jobs within the Regional Center The requirement to create 10 jobs is altered when the business is located within a regional center created under a pilot program. An investor is permitted to demonstrate that the jobs created on account of the investment in the business will be indirect jobs, not on the direct payroll of the business. This is done through an economic analysis that demonstrates the creation of indirect jobs for which the EB5 investor will get credit toward the 10-job requirement. At Risk Requirement of the Investment and Source Of Funds The EB5 investor must demonstrate that the entire minimum amount required is truly invested i.e., irrevocably at risk or (in some circumstances in the process of being invested) in the job-creating enterprise. Funds used to pay administrative costs or other obligations undertaken to promote the investment in the enterprise are not deemed "at risk". The funds must be lawfully acquired. This is the socalled source of funds rule, which requires that each investor document the provenance of the invested amount. In most cases this will require that the investor provide substantial documentation so that the adjudicating officer is able to determine that the funds are from a lawful source. This usually requires that the investor will have to provide, tax returns, business records, financial statements (personal and business), sale of property records, gift or inheritance and the like. In some cases, it will be necessary to prepare a source of funds report from a respected and experienced auditor or accounting firm.

5 The EB5 Investor s Active Involvement The investor is expected to be actively involved in the enterprise by having a role in management by assisting in the formulation of the enterprise's business policy, by participating in one or more of the activities permitted in the Uniform Limited Partnership Act ("ULPA"), if a partnership, and if not must have direct responsibility for the business activities of the enterprise. No Guarantee Of I-526 Petition Approval USCIS determines whether the I-526 Petition for Alien Entrepreneur will be approved. All decisions in this regard are within the discretion of USCIS. Consequently, compliance with the foregoing criteria, supported by appropriate documentation, may or may not lead to I-526 approval. In the event of denial, the EB5 Investor should consult with his immigration attorney and the Regional Center to determine whether he wants to appeal the denial. Consular Processing or Adjustment Of Status Approval of the I-526 petition is merely a first step for the EB5 investor and his family. Its approval means that the investment qualifies the investor as an alien entrepreneur. Investor and family may now apply for admission as Conditional Lawful Permanent Residents (CLPR). This application is now subject to all the issues and considerations common to all alien applicants for residency rights in the US. The next step is to proceed in one of two ways: consular processing designed for aliens who live outside the US and choose to process through a consular post in their last country of residence or country of nationality, or Adjustment of Status (AOS) is designed for aliens who are residing in the US already under some non-immigrant status.

6 Consular Processing Consular processing is for aliens living outside the US, or who are ineligible to use AOS. The norm is to process the immigrant visas through the consular post in the country of last residence. Consulates issue visas for an immigration status for which the consul believes the applicant qualifies. With EB5, the visa may be sought only after the investor's I-526 petition is approved. The US Consulate will generally speaking approve conditional lawful permanent resident (CLPR) based on the I-526. At the same time, the consular post must determine if each alien is admissible to the U.S. Approval of the I-526 petition does not automatically determine this, but generally speaking does. No grounds of inadmissibility may exist and the alien must have proper travel documents. Waivers of any requirements are granted in the discretion of the government. Waivers can result in lengthy adjudication delays. Immigration attorneys should be consulted as to the existence of inadmissibility factors and the availability of waivers. Visa Issuance is NOT Guaranteed Consul decisions are not only issued within the consul s discretion, but are unreviewable (in most cases). Therefore, changes in the applicant s residency, schooling or other family matters should not generally be made in their country of residence before they are issued a CLPR visa based upon an approved I-526 petition. Each member of the family must separately satisfy admissibility criteria, in order for each to obtain a CLPR. Approval of one member, including the investor will not necessarily result in approval of all members (although the main applicant must be approved for all of the derivative beneficiaries to be approved). Consular posts fall under the jurisdiction of the U.S. Department of State (DOS), which is not Admission after Investing, I-526 Filing or During Processing. Investors should consult with competent counsel to determine the effect on temporary (non-immigrant) admission to the United States subsequent to making the EB5 investment or the filing of an I This admission status may be affected and entry could be denied until the CPLR is issued. related to the Department of Homeland Security (DHS) and US CIS. Consular decisions are not appealable. If new information comes to the attention of the consular officer, which information was not available to USICS that affects admissibility, the consul may return the case to USCIS for readjudication of the I-526. Upon USCIS reaffirmation of approval, the consul can then issue a CLPR visa, but this reaffirmation process is a low priority and can lead to lengthy delays.

7 Adjustment Of Status The adjustment of status (AOS) procedure is for aliens who have been admitted to the United States as non-immigrants or who have been paroled into the country to apply for admission as permanent residents. These non-immigrants must establish that they are admissible under the same standards as aliens who use the Consular processing method. Aliens seeking AOS must also comply with specific requirements under the AOS process. Consular processing will be required of aliens who do not meet these requirements. This will normally require that the aliens leave the US. Aliens admitted in certain non-immigrant statuses may encounter difficulties. This issue should be discussed with immigration counsel before filing the I-526. An alien investor or otherwise qualified family members who are eligible for CLPR may not be eligible for AOS if they: (1) are or were employed in the U.S. without authorization; (2) were not in lawful status on the date their AOS application was filed or if they failed to maintain lawful status thereafter; (3) were ever out of status during earlier admissions to the U.S.; (4) are admitted in certain nonimmigrant statuses, such as "A", "G", "E" or "J" (unless the two-year foreign residency requirement does not apply or a waiver of the requirement has been obtained); (5) have been in removal proceedings in the ten years prior to seeking AOS; (6) were admitted under the visa waiver program at the time AOS is sought; (7) obtained CLPR as the spouse of a U.S. citizen or as the son or daughter of a spouse of a U.S. citizen and have not abandoned this CLPR prior to seeking AOS; or (8) obtained admission to enter the U.S. as a nonimmigrant (temporarily) by misrepresenting that they would depart the U.S. when their temporary period of admission expired. Unless the adjustment applicant is admitted to the U.S. in H-1B, L-1 or O-1 non-immigrant status, this misrepresentation is deemed to have occurred if the alien investor, admitted as a non-immigrant, demonstrates immigrant intent within 60 days after admission. Making the investment, filing the I-526 or applying for AOS within this 60 day period may be viewed by CIS as evidence of immigrant intent and may result in the denial of AOS. In such an event, the investor will be required to depart the U.S. and will need to seek a CLPR visa through consular processing. In this process, the consul may require the investor to seek a waiver of exclusion for having misrepresented the purpose of entry upon the admission as a non-immigrant. Waivers are granted in the unreviewable discretion of the CIS, and the processing time can be lengthy. Investors should consult with immigration counsel to determine if they, their spouse and their children are eligible for AOS. AOS procedure generally requires medical examinations, biometric data collection and an interview, although the interview may be waived. Interviews require attendance by the investor, spouse and qualified children. The CIS service center currently has jurisdiction of the AOS process for investors in this Regional Center. It schedules the interview time and location, and can take months. CLPR is generally conferred on the AOS applicants at the conclusion of a successful interview. Despite this many such cases under the EB5 category are have personal interviews waived. Travel Issues During AOS Procedure It is crucial that the EB5 investor not do anything to damage his AOS application while it is pending. If, without prior permission, he leaves the United States during the AOS process, he is deemed as having abandoned that application, unless he has been admitted through and holds valid H or L non-immigrant status. Prior permission is routinely granted (advance parole). Moreover, non-traveling family members status may be put at risk. No decision on travel outside the US should be considered without first consulting with an immigration attorney.

8 Employment During The Adjustment Of Status Processing AOS applicants may work in the US, but only if they have obtained employment authorization, e.g., they are in the US through a non-immigrant status that authorizes employment during the AOS process. Self-employment requires employment authorization. Applications for employment authorization typically take a few months to be reviewed, and can generally be obtained during the AOS process. To avoid a lapse in employment authorization re-applications should be made in advance of expiration. Employment without authorization in the U.S. is a violation of immigration status and could put the AOS in jeopardy. Adjustment Of Status Discretionary The granting of AOS is within the discretion of USCIS. Generally, if aliens originally admitted to the US under non-immigrant status are denied AOS to CLPR they can stay in the US as well as seek to extend or change that status. However, once their status expires, both they and their family members will be expected to leave the US. Failure to depart as required is a violation of US law, can potentially affect qualifying for immigration benefits in the future. As with Consular proceedings, we urge that the AOS applicants not make permanent living, employment, and schooling etc., arrangements before they are issued AOS as a result of the I-526. Adjustment Of Status Discretionary Successful AOS and EB-5 visa followed by entry into the U.S. offers the investor and qualified family members the right to conditional lawful permanent residence (CLPR) for two years. The "conditions" must then be removed in order for the family to remain in the US indefinitely. Removal of the conditions can currently be sought between the 21 st and 24 th month after the granting of the CLPR status. This window the period in which the following must be demonstrated: full investment in the enterprise was made and maintained, the creation of 10 jobs (direct and indirect), uninterrupted investment of the capital since the CLPR was approved. The project company will generally maintain all of the documentation required to prove the existence of the points mentioned above. The USCIS service center rules upon the request to remove the conditions. It can approve the petition, deny it or seek additional information. It can also refer it to a local office for the purposes of conducting an interview with the applicant, and the application can be decided there. Throughout the petition process, aliens admitted in CLPR status may continue to have conditional residence status even if the petition is not decided before the expiration of the initial two years. CLPR is extended in one-year increments until the petition to remove conditions is adjudicated. That extension of status permits the applicants to work and travel pending the outcome of the application. Contact: David J. Hart at