This article was published for the first time by eb5investors.com
The employment based fifth preference immigrant investor visa, or EB-5 as it is commonly known, is generally codified in § 203(b)(5) of the Immigration and Nationality Act (“INA”) under Title 8 of the United States Code (i.e. 8 U.S.C. § 1153(b)(5)). The associated regulations are found in Chapter 8 of the Code of Federal Regulations in sections 204.6 and 216.6. Given the complexity of the area and the burgeoning interest in EB-5, our role as EB-5 attorneys is to guide our clients through the process.
The role of an EB-5 attorney as it relates to the immigrant investors themselves is of vital importance. The Form I-526, Immigrant Petition by Alien Entrepreneur, and the accompanying documents are multifaceted in that the petition represents several things. This petition is an investment coupled with the intent to be part of a business in a managerial capacity that will create at least 10 full-time positions, all while seeking an immigration benefit. With respect to the establishment and management of the new commercial enterprise, it is vital that this business continues the operations outlined in the business plan throughout the process so as to ensure that neither the immigrant investor nor the business incur any problems.
It is important to keep in mind the series of adjudicative “checkpoints” within the EB-5 process for the immigrant investor. The checkpoints, in chronological order, are as follows:
When the Form I-526 is filed, the United States Citizenship and Immigration Services (“USCIS”) first sees the business plan for the new commercial enterprise containing a description of the intended business activities. Other evidence may be scant, possibly including no more than the establishment of the business entity. Subsequent checkpoints are designed to ensure that the activities in the business plan are carried out such that at least 10 full time jobs are created per investor pursuant to INA § 203(b)(5)(A)(ii) and 8 CFR § 204.6(j).
If USCIS were to issue a Request for Evidence (RFE) on the business activities, it is crucial that the evidence illustrates that the business plan is currently being implemented. For instance, USCIS routinely requests that business licenses, permits, bank statements, invoices and bills be submitted.
If the immigrant investor undergoes consular processing, he or she should expect to be questioned by the consular officer about the new commercial enterprise, particularly as it relates to what would fall under the purview of his or her managerial position. For example, it is common to be asked what the business is engaged in.
At the end of the 2-year conditional residence period, the Form I-829, Petition by Entrepreneur to Remove Conditions, is arguably the most important checkpoint in the EB-5 process. At this stage, the job creation is verified as being completed, or evidence is presented to show that at least 10 jobs will be created “within a reasonable time” under 8 CFR § 216.6(a)(4)(iv).
There may be a final checkpoint in that a RFE could be issued based on the Form I-829. For example, USCIS may request information that relates to the employees currently employed, or may ask for evidence that all the employees have been hired if they were not hired upon the filing of the Form I-829.
At each of the aforementioned checkpoints, the adjudicator is trying to ascertain whether the blueprint laid out in the business plan is being followed. However, there are a myriad of issues that can arise due to not following the business plan. These issues can emerge given that after each checkpoint, the new commercial enterprise may fail to adhere to the prescribed plan.
Moreover, it is important that all the corporate regulatory requirements at every level (i.e. federal, state, county and even municipal) are satisfied. There are potential pitfalls that may arise when certain requirements are overlooked, which may be particularly true if there are affiliated businesses, especially if they have the same address as and/or overlapping employees with the new commercial enterprise.
Correcting any issues by trying to modify the business plan may be impermissible given that deviating too much from the originally-filed business plan could be considered a material change pursuant to Matter of Izummi and Matter of Katigbak. Furthermore, as indicated in these cases, an investor may not make material changes to a petition that has already been filed as an effort to cure it.
As such, it is vital that the immigrant investor possess a thorough understanding of his or her responsibilities as part of the management of the new commercial enterprise and the documents being signed, e.g. Limited Partnership Agreement if the new commercial enterprise is a limited partnership. Not only should the documents be in a language that he or she understands, but any cultural barriers to comprehension should be taken into consideration in explaining the investor’s managerial responsibilities within the new commercial enterprise. Ensuring adequate comprehension helps to ensure that the proper steps are taken and helps to reduce or eliminate the potential exposure of the business, and even the investor, to liability and possible criminal sanctions.
As part of our role, attorneys should always ask themselves what our obligations are to our clients regarding the aforementioned issues after the scope of the retainer has been completed. The immigrant investor may see the EB-5 attorney, retained solely to file the Form I-526, as responsible for all stages up to obtaining the physical green card. This potential source of confusion with respect to the role of the EB-5 attorney can and should be clarified with an appropriately-drafted retainer agreement.
In summary, one of the most important roles an EB-5 attorney has in filing immigrant investor petitions is to ensure that the investor is fully aware of his or her managerial responsibilities within the new commercial enterprise. As such, the new commercial enterprise, with the investor’s participation, should pass muster at each adjudicative checkpoint.