The United States Citizenship and Immigration Services (USCIS) has announced updates to its Policy Manual on immigration regulation, addressing a crucial concern for old and EB-5 investors: What happens to their applications if the immigration authorities sanction the entities they trusted with their petitions?
The update involves clarifications regarding sanctions for Regional Centers, New Commercial Enterprises (NCE), and Job-Creating Entities (JCE) that do not comply with regulation and special considerations for EB-5 investors who applied before Mar. 15, 2022, when the EB-5 Reform and Integrity Act of 2022 (RIA) took effect when these institutions were non-compliant.
In her blog, EB-5 specialist and founder of Lucid Professional Writing Suzanne Lazicki highlights the relevance of the policy update for different EB-5 stakeholders. “I sense the good work of the CIS Ombudsman behind the scenes of this policy update, which is relevant and responsive to live stakeholder questions — not simply regurgitating statue without interpretation or practical application. Regional centers may not be entirely happy with the sanctions policy, but it does go into admirable detail about how USCIS interprets the specific conditions and process for sanctioning Regional Centers, NCEs, and JCEs.”
The guidance comes as the USCIS conducts audits of many Regional Centers to improve control and transparency in the EB-5 investor visa program.
For Ronald Klasko, EB-5 immigration attorney and co-founder of Klasko, Rulon, Stock & Seltzer, the update maintains the language contained in RIA and highlights three critical issues: “In the event of RC termination, the amount that a pre-RIA investor must invest in another project to qualify as a good faith investor is $500,000, not $800,000. USCIS can choose to suspend an RC that has failed to take required action or acted improperly rather than terminating. USCIS has a restrictive view of the grounds for debarment, which leaves many good faith investors in non-terminated RCs without options.”
What happens if an EB-5 entity is non-compliant?
The changes mainly affect Volume 6 of the USCIS Policy Manual, the agency’s centralized online repository for immigration policies. Since the application of RIA, the authorities must update the manual accordingly.
Concerning Regional Centers, the agency has the authority to sanction when these EB-5 entities are noncompliant with regulation, such as not paying their mandatory annual EB-5 Integrity Fund fee; not submitting their yearly statement; providing untrue information; conducting in a manner inconsistent with its designation; involving an individual or entity that does not meet statutory requirements and fails to discontinue this involvement within 14 days of learning about it; and providing false attestation or information on Bona Fides of involved persons.
Sanctions in any of these cases include the suspension or termination of the regional center by the USCIS and its associated parties.
In the case of NCEs and JCEs, the USCIS may temporarily or permanently suspend or debar them and any associated individual or business entity for “knowingly involving an individual or entity who does not meet the statutory bona fides requirements, by failing to take commercially reasonable efforts to discontinue the prohibited individual or entity’s involvement, or provide notice to USCIS within 14 days of acquiring such knowledge,” among other violations, the Policy Manual says.
The updated guidance also covers threats to national interest, fraud, misrepresentation, deceit, and criminal misuse by these entities that will require the USCIS to reject EB-5 petitions, applications, and benefits.
What can a pre-RIA EB-5 investor do if their Regional Center, NE, or JCE is terminated or debarred?
The policy update confirms that these “good faith” pre-RIA investors may remain eligible under the Immigration and Nationality Act in these cases. It also provides the process and factors the USCIS follows when these situations arise in new Chapter 8 within Volume 6 in the Policy Manual, the types of sanctions and discretionary determinations for when it revies on a case-by-case basis and clarifies that although the agency will not sanction individuals or entities for pre-RIA actions, it “may still consider significant or recurring pre-RIA violations for the purpose of evaluating the severity of the sanctionable post-RIA violation.”
Therefore, pre-RIA investors involved in a situation like this may continue to rely on the direct or indirect jobs created by the EB-5 project even if the associated regional center, NCE, or JCE was terminated or debarred. “For example, where an investor’s capital remains invested and at-risk with their [NCE] and the requisite jobs have been or will be created in accordance with their existing business plan, termination of their associated regional center for failure to pay the EB-5 Integrity Fund fee or for reasons related to a different [NCE] generally not, by itself, negatively impact the investor’s eligibility,” the updated Policy Manual states.
In case the USCIS terminates or debars a regional center or an NCE for misappropriating investor capital, “the investor may seek to retain eligibility by reassociating with another [RC] or making an investment in another [NCE].”
In case the pre-RIA EB-5 investors are notified that their RC, NCE, or JCE was terminated or debarred, they can make changes to their application to inform their new investment or the new associated Regional Center by submitting new documentation within 180 days of USCIS notifying them of its decision. For example, a document showing the new regional center affiliation or the subscription agreement, private placement memorandum, business plan, and economic impact analysis of the new EB-5 investment.
Notably, if the EB-5 investor who filed before RIA makes a new qualifying investment in another NCE or Regional Center, the amount they applied is the one they invested when filing their initial form I-526. Before March 2022, the standard minimum investment amount for the EB-5 program was $1 million and $500,000 in the case of a targeted employment area (TEA), compared with the current $1.05 million and $800,000, respectively.
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