1 Requests For Evidence I-526 Petition RFEs □ Source of Funds □ Tracing of Funds □ Job Creation Issues 2 ½ year Rule Inconsistency between econ report and business plan Economic Report RFEs □ Issues in the Offering I-829 Petition RFEs □ Distributions to Investors □ Operating Losses □ Direct Job Creation Documentation □ Indirect Job Creation □ Reasonable Time □ Material Change
2 I-526 Source Of Funds Lack of 5 years of tax returns Sale of Property as SOF □ Purchased more than 7 years ago □ Purchased less than 7 years ago Home Equity Loans as SOF □ Proof Investor can make payments on loan from a lawful source Loans from Petitioner’s Business □ Proof of payments on loan □ Approval by Board Salary as SOF □ Lack of Accurate Records of ongoing salary □ Proof of yearly expenses and savings
3 I-526 SOF Continued Retained Earnings from Investor’s Business □ Proof that Investor was allowed to access the funds and distribute them to himself Gift Issues □ Same issues, but with Giftor’s source of funds □ Proof of payment of applicable gift tax □ Intent to repay the gift?
4 Tracing Of Funds Issues Investment funds from Investor to new commercial enterprise Lack of documentation in certain countries Investor Salary Savings □ Lack of deposit history Investment monies passing through an intermediary person or entity for a currency exchange – money goes “off the radar”
5 China Specific Trading Issues Chinese currency laws restrict exchange of Chinese Yuan Renminbi to $50,000 per year “Friends and Family” tactic Use of a 3 rd Party in Hong Kong What is the investor’s burden of proof in tracing? □ Trace each transaction to 10 friends and family members □ Trace each transaction from 10 friends and family members □ Trace from Investor to the new commercial enterprise
6 Other Countries With Currency Restrictions Argentina Brazil Egypt India Pakistan Russia Venezuela
7 Job Creation RFEs Jobs must be created within 2 ½ years of I-526 approval Direct job creation – realistic business plan for the number of employees needed Indirect job creation foundational facts listed in economic report but not in business plan Basis for foundational facts in business plan and economic report – what is reasonable? Tenant occupancy and job displacement
8 Issues In The Offering Guaranteed Interest Payments □ Does it negate the “at risk” requirement? Guaranteed rates of return for preferred equity investments □ Where can the return come from? Operating/Investing profits Guaranteed Redemptions of Capital □ No guarantee to repurchase at a predetermined rate if I-829 petition denied □ Fair market rate acceptable provision Involvement of the Investor □ LP Agreement or Operating Agreement give the investor all the rights and responsibility under the ULPA or the Uniform LLC Act
9 Resolved I-526 RFE Issues, For Now State TEA Designations □ Geographic scope of the TEA □ No deference to the math used to calculate the RFE Bridge Financing □ Bridge funds in anticipation of Eb-5 funds □ Where should the language appear?
10 I-829 RFE Issues Sustaining the Investment □ Return of Investment v. Return on Investment □ Distributions on Schedule K-1s □ Operating Losses on Schedule K-1s Job Creation Issues □ Documenting Foundation facts in the economic report □ Documenting Direct Jobs □ Material changes to the business plan
11 Sustaining The Investment What is the real period of conditional permanent residence? □ From Entrance into the U.S. on an IV or approval of adjustment of status □ Through approval of I-829 petition Returns of investment during conditional residence impermissible; returns on investments permissible □ Distributions to investors on K-1 – be prepared to explain returns on investment □ Operating losses or NOL Carryovers – be prepared to explain losses vs. return of capital via accounting reports
12 RFEs On Job Creation Issues A good economic report will list the foundational facts that must come true for the jobs in the report to be “deemed created” Documentation of the foundational facts occurring □ Construction expenditures, revenues from ongoing operations, direct employees, tenant occupancy, visitor occupancy Documenting Direct Jobs (either in a direct investment or RC case that relies on direct jobs) □ W-2s, payroll records, IRS 941s, Forms I-9, proof of USC or LPR status Reasonable time issues
13 RFEs On Material Change What is a “material change?” □ Change in job creating entity? □ Change to important facts in the business plan? □ Expanding of project size or scale down of project size, but the same project? Old policy on material change v. new policy articulated in the draft USCIS Eb-5 policy memorandum dated January 2012 □ What is USCIS doing with material change cases now? Investor relations issues with material change
14 Questions? Disclaimer: This presentation outline and the presentation itself are for general educational purposes only and are not intended to provide specific guidance or legal advice about what to do or not to do in any particular case. You should not rely on this general information to make decisions about specific immigration matters. If you are not yourself a lawyer, you should seek the assistance of an immigration lawyer to help you resolve these issues. Thank you.