[HOT] What's right and wrong about EB-5 Program -- as of March 24, 2011?


I read several articles addressing the issue of what is wrong with the EB-5 Program, so let me discuss this issue more objectively, by discussing both what is right and wrong about the EB-5 Program, and what issues needs to be resolved before the EB-5 Program can reach its potential.

What is right about the EB-5 Program?

After the Regional Center EB-5 Program has been "revived" from its forced hibernation in 2002, the RC Program has proven itself to be a viable avenue for foreign investors whose primary objective is to obtain green cards (via conditional green card and removal route). Yes, there have been many foreign investors who obtained permanent green cards through the EB-5 Program and even received back their investment amounts. Those who continue to say that the EB-5 RC Program has not shown itself to be a viable means to "permanent" green cards are flat out wrong on this point.

By consenting to meeting with stakeholders and AILA members on a periodically, the USCIS has shown that it is willing to spend time to meet with external stakeholders, such as Regional Center operators, immigration attorneys and other interested persons.

There are no fraudulent Regional Centers, to our knowledge, who willfully violate the EB-5 law, and the USCIS has taken a more active position of letting the public know the Regional Centers that have been designated by the USCIS. There continue to be more and more regional center designation applications being approved, and as I stated in other places, I believe the regional center market is saturated relative to the number of potential EB-5 investors who are willing to immigrate to the United States under the current terms and conditions imposed by the EB-5 Program.

USCIS appears to know and are in tune with some important issues which need to be decided. How they will be decided is at this time not known.

What is wrong with the EB-5 Program?

There appears to be shortage of staff that the EB-5 Program deserves. Adjudication time frames need to be shortened to at maximum 3 months for I-526s and 6 months for I-829s.

Although USCIS has shown itself to be willing to host EB-5 stakeholders meetings, it's hard to rely on what USCIS officials say at this meeting, because often CSC examiners do not actually follow the statements made by "higher" officials, and when the adjudications do not comply with the set EB-5 policies, the higher officials who made these statements are not willing to get their hands dirty and get involved to swiftly remedy the situation. Basically, many EB-5 practitioners have encountered situations where CSC examiners flat out disagree with what USCIS officials say is the EB-5 policy at these EB-5 stakeholders meetings. It also appears that USCIS officials who are present at these EB-5 stakeholders are not the same USCIS officials who actually make EB-5 laws by writing up "Guidance Memos". Because the USCIS officials who actually write up these Guidance Memos do not talk face to face with EB-5 stakeholders, they sometimes do not see new practical problems their Memos generate. Moreover, these Guidance Memos flat out contradict the existing EB-5 statutes and/or regulations, creating further uncertainties. There is a real disconnect here within the EB-5 Unit of USCIS and examiners and between USCIS officials who write these Guidance Memos and EB-5 stakeholders. In short, there is no spirit of cooperation at all.

Many U.S. agencies, including USCIS, USCBP, Field Offices scattered throughout the United States, Application Support Centers and NVC and Embassies do not work together in a seamless manner. Sometimes, they seem to be not following their own rules and are not familiar with the EB-5 law. This gives an impression to both EB-5 practitioners and EB-5 investors that the United States government does not want them to emigrate to the United States but just want their moneys but not them. This is not very smart on the part of U.S. government, as our experiences have shown that these EB-5 investors are usually "self-made" millionaires who are likely to contribute to the United States in various ways, without receiving public aids from the U.S. government. For example, even though USCIS says EB-5 investors can obtain temporary evidence of their CPR status, they are not willing to get involved when a staff at USCIS Field Office refuses to issue these temporary stamps.

There is inconsistency in the adjudication of I-526 and I-829 cases in that the processing times for the cases submitted for the same EB-5 projects differ greatly: Some are approved in 4 months while others are approved in or 7 or 8 months, and the adjudication does not appear to follow the First-in, First-out (FIFO) system. Many EB-5 practitioners have encountered cases where the same petitions have been approved by one examiner, while the same petitions have been denied by another examiner. Basically, the understanding of the EB-5 law varies from one CSC examiner to another.

Adjudication time frame is still too long. Waiting 5 to 10 months for I-526s to be approved does not foster an environment for job-creating projects.

There appears to be no data system at CSC which informs examiners when an underlying project has been "pre-approved", which means if the underlying EB-5 project has been pre-approved after an I-526 petition has been filed, the examiner reviewing this I-526 will not be informed that the underlying EB-5 project has received a "pre-approval". When you think about it, this is incredibly unfair, because USCIS charges a hefty filing fees for "pre-approval" requests, and USCIS also encourages "pre-approval" requests for regional centers.

Although USCIS says it has an economist on its payroll, it might take additional time for USCIS examiners and immigration attorneys to fully understand the basic concepts behind job-creation methodologies, mainly because there are differences between how economists and EB-5 law view "direct" jobs. Also, it appears that many EB-5 projects are using or mis-using job-calculations that violate the basic concepts, not intentionally but due to misunderstandings.

It has not been able to find a reasonable balance between the desire to attract foreign capital and create new jobs and what kinds of evidences are acceptable to show the job-creation, and has not been sensitive to the needs of the most important group -- EB-5 investors' needs to keep residing and working in the United States without interruption. Eventually, the USCIS will have to delve into the issue of what constitutes "reasonable" job-calculation methodologies mentioned in the EB-5 regulations, but this also raises a question about whether USCIS possesses capability to set a practical, working definition of "reasonable" methodology. On one hand, if a liberal approach is taken, economists will come up with all kinds of "creative" methodologies to estimate the number of jobs which will in the real world never be created; on the other hand, if a strict approach is taken, some bona-fide EB-5 projects who may encounter certain hiccups that may arise in the commercial settings along the way will be unable to meet the job-creation requirement within the time-frame imposed by the USCIS.

What needs to be fixed for the EB-5 Program to reach its full potential?

It is our opinion that USCIS should just designate one methodology as the only reasonable methodology, and that methodology should be RIMS II model. It is just too difficult for USCIS examiners to follow and check all the assumptions behind many methodologies.

USCIS, as an organization, needs to take a better charge of, set reasonable guidelines and administer the EB-5 Program. They need to provide real access for external stakeholders discuss with actual USCIS officials and examiners themselves to point out procedural problems, and someone at USCIS needs to be willing to spend time and effort to remedy these problems quickly. There needs to be established a Hotline Grievance Review Person who possesses the real power to discuss and resolve problems with actual cases.

Email communications or even an on-site visits, and face-to-face meetings should be encouraged.

USCIS officials who write Guidance Memos need to sit down with EB-5 practitioners and Regional Centers, so they can write better Memos that comply with the EB-5 law.

In conclusion, the U.S. government is engaging in a Program which does not do what the EB-5 statute says on its face. There are too many holes that no one is willing to fix in practical ways. Our recommendation: improve the EB-5 Program quickly or kill it off quickly, so that potential EB-5 investors will be treated in a fair manner they deserve.