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Four AAO "precedent" decisions
There are four "precedent" decisions rendered by the Administrative Appeals Office (AAO) long time ago regarding EB-5 issues: Matter of Soffici, (A76 472 614 June 30, 1998); Matter of Izumii, (A76 426 873 July 13, 1998); Matter of Ho, (WAC-98-072-50493 July 31, 1998); and Matter of Hsiung, (A76 854 232 July 31, 1998). AAO stands for Administrative Appeals Office, formerly known as Administrative Appeals Unit, which acts as an administrative appellate review office for USCIS' decisions (some would argue "rubber stamping" agency for USCIS decisions) on EB-5 related applications. "Precedent" signifies that these AAO decisions are binding, but it should be noted that some aspects of these "precedent" administrative decisions have been revised by statutes and/or regulations, while some aspects are still binding.
Believe it or not CSC and AAO will quote these AAO cases when they are advantageous to them. These four (4) precedent AAO cases set hazy parameters of EB-5 law and the requirements that must be met, such as the need to show:
(1) that he had invested, or was in the process of investing, the qualifying amount of capital;
(2) that he had established a “new” commercial enterprise;
(3) that his business had engaged in the employment maintenance or employment creation of 10 full-time jobs for U.S. workers;
(4) what activities the new commercial enterprise can engage in, i.e., allowing lending activity to qualify;
(5) what portion of the fund need to be spent in what activity;
(6) what constitutes the lawful source requirement;
(7) what constitutes the putting personal funds "at risk" requirement; and
(8) what evidences must be submitted to satisfy the employment-creation requirement.
These AAO decisions took place over 10 years ago, and some of the holdings were impractical and did not reflect certain commercial realities; but they will be relied upon to deny your EB-5 cases.
We soon expect various USCIS guidances (note these guidances are not controlling in litigation) to clarify many of the outstanding issues. One thing is for sure: EB-5 law is not 100% established by any means. Hopefully, USCIS will not allow time-consuming litigation to set the parameters of EB-5 law, and will be reasonable to recognize when EB-5 law does not address certain issues.