EB5 Investor Must Satisfy All Legal Requirements
Posted Mar 14, 2008
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With the backlog in processing employment-based second and third preference cases (EB2 and EB3, respectively), particularly for nationals of India and China, other options like the employment-based first preference (EB1), employment-based fourth preference (EB4) and the employment-based fifth preference (EB5), all become more important for consideration by those who wish to obtain lawful permanent residence (the "green card"), more quickly. The Administrative Appeals Office (AAO) recently dismissed the appeal of a petition for an investor / entrepreneur, finding that the EB5 petition failed to demonstrate the lawful source of her funds, that she would be actively involved in the management of a new commercial enterprise, and that the new company would be an employment generating entity creating the number of jobs required by law for an EB5 approval. The Murthy Law Firm was not involved with this case, either for the initial filing or the AAO appeal, but this useful summary is based on information available to the public. It may help those in planning to file in the EB5 category. 
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USCIS Revoked the Previously-Approved Petition
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In this case, the USCIS California Service Center (CSC) initially approved the foreign national's EB5 petition. Once the CSC received the I-485, it issued a Notice of Intent to Revoke (NOIR) the previously approved I-526 immigrant petition. The CSC deemed the response to the NOIR as unsatisfactory due to the evidence provided and issued a Notice of Revocation for the previously-approved petition.
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The foreign national petitioner appealed this decision and submitted new evidence to the AAO. The AAO stated that some of this new evidence was inconsistent or contradicted the documentation filed with the EB5 petition.
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Requirements for an EB5 Petition Approval
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Long-time readers of MurthyDotCom and the MurthyBulletin may recall our May 25, 2001 article INS Must Consider Impact of Policy Changes in EB5 Cases, explaining that an investment of $1,000,000 (or $500,000 in some targeted employment areas) is required for approval of an EB5 petition. This investment must be in a new commercial enterprise, defined to include certain purchases and expansions of existing businesses that will create at least ten full-time U.S. jobs. It is mandatory that the foreign national petitioner prove the legitimacy of all funds invested in the new business. This means that the funds must have been obtained through lawful means and the USCIS requires complete documentation on this point.
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Documentation Failed to Prove Lawful Source of Investment Funds
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The AAO emphasized that an EB5 petitioner cannot meet this requirement simply by submitting bank letters or statements showing the deposit of funds. Without documentation of the source and path of the funds, the USCIS will not approve an EB5 petition.
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The AAO rejected proof that the foreign national's investment funds came from wire transfers from an account in New York that was created by her father. The investor's escrow account received transfers from her spouse, father, and attorney. A second bank account received transfers from her father, a private company and several 'unidentified sources.'
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The AAO stated that the investor submitted 120 pages of foreign language documents without translations. While the investor's attorney argued that these documents were family and business tax returns, the AAO did not consider them because they were not translated. The AAO also said that there was no connection between these documents and the $1,000,000+ that was transferred to the investor's escrow account.
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Evidence that Investor will Manage Company
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On her EB5 petition, the foreign national listed her position with the new company as president. Evidence submitted to the USCIS and the AAO showed that her spouse and sister were both president and secretary of the company at different times between 1997 and 1999. The AAO stated that these contradictions had not been resolved and it prevented the approval of the EB5 petition.
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Transfers to Two Companies Create Legal Issue
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The financial records supplied to the USCIS and AAO showed that funds were transferred to two different companies that were related to the foreign national. The investor argued that each company was the alter ego of the other, but the AAO found that both were completely distinct corporations. Neither company was a wholly-owned subsidiary of the other. Any investment made in one company would automatically reduce the investment to the second company, preventing it from meeting the $1,000,000 requirement for an EB5 petition approval.
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Ten Full-Time U.S. Employees for each Employer
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The AAO stated that, because funds were transferred to two different corporations, each company would have to create ten full-time U.S. jobs. The foreign national did not prove that she created twenty full-time positions, and the AAO used this as another reason to deny the petition.
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Conclusion
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This non-precedent AAO decision emphasizes that the USCIS looks closely at the source of EB5 investor petition funds, as well as the other requirements, to satisfy that one is eligible for approval of the green card under this category. Any EB5 applicant should consider carefully what documentation is required before filing an EB5 petition. We at Murthy Law Firm appreciate the AAO's publication of this decision and its guidance to foreign investors seeking permanent residence in the United States.