uscis adjudications rfe, noit, and noid trends ... - 01 - spring...elizabeth peng - e5 visa backlog...

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USCIS ADJUDICATIONS: RFE, NOIT, AND NOID TRENDS, RESPONSE

STRATEGIES AND IMPLICATIONS FOR INVESTORS by Michele Franchett, Elizabeth Peng, John Pratt, and Rebecca S. Singh

Michele Franchett is a partner at Stone Grzegorek & Gonzalez LLP. She is admitted to the California

Bar, and is a Certified Specialist in the practice of Immigration and Nationality Law. She has over twenty

years of experience in the field and her current practice is focused on investor and entrepreneurial

immigration, with particular emphasis on EB-5 capital group representation. She is a frequent speaker at

EB-5 industry events, and provides counsel to a number of regional centers seeking to obtain or amend

regional center designations and exemplar petition approvals. Ms. Franchett has been a member of the

Invest In the USA (IIUSA) Public Policy Committee since 2015. She is currently serving a third term on

the national EB-5 Committee of the American Immigration Lawyers Association (“AILA”), and is a former

chair of the AILA Southern California Chapter.

Elizabeth Peng is a founding principal of Peng & Weber, PLLC, an East-West legal team of eight

lawyers focusing on business and investor immigration law in the Greater Seattle area since 1992

(currently in Mercer Island, Washington) (www.GreencardLawyers.com). Ms. Peng earned her L.L.B.

degree at China University of Political Science and Law in Beijing, China in 1983 and her J.D. degree

at the University of Kansas in 1988. She previously served on AILA’s na tional EB-5 Committee and

national EB-5 Conference Committee. Among other recognition, Ms. Peng is included via peer review

in the 2016 and 2017 editions of Who’s Who Legal: Corporate Immigration. She has also been

recognized as an EB-5 Investors Magazine Top-25 immigration lawyer and is Editor-in-Chief of the

Chinese-language version of The EB-5 Handbook (EB5investors.com 2014). She has also published

over a dozen professional articles on EB-5 visas and other areas of immigration law in authoritative

and prestigious immigration law books and journals published by AILA and other professional

immigration law publishers.

*********

INTRODUCTION

The July 13, 2018 USCIS Policy Memorandum1 (“Policy”) affirmed “an adjudicator’s discretion to deny

an application, petition, or request without issuing a Request for Evidence (RFE) or Notice of Intent to

Deny (NOID) on statutory/regulatory bases and for frivolous and/or incomplete filings. The Policy will not

apply to submissions filed prior to September 12, 2018, but we have to assume that going forward

practitioners will begin to see more denials rather than RFEs or NOIDs, especially for incomplete or

“placeholder” filings. Perfecting one’s filings prior to submission therefore has never been more important.

On September 6, 2018, during a USCIS Ombudsman Teleconference, USCIS explained the Policy is

intended to encourage applicants and petitioners to be diligent in their submissions, and indicated they

would post checklists as guidance for initial evidence required for a particular immigration benefit. To date

however, no new checklists pertaining to EB-5-related filings have been posted to the authors’ knowledge.

USCIS guidance on “Suggested Order of Documentation” for each form published on the agency’s EB-5

1 See: “Issuance of Certain RFEs and NOIDs; Revisions to Adjudicator’s Field Manual (AFM) Chapter 10.5(a), Chapter 10.5(b)”

PM-602-0163,

www.uscis.gov/sites/default/files/USCIS/Laws/Memoranda/AFM_10_Standards_for_RFEs_and_NOIDs_FINAL2.pdf

2019 NW Regional Immigration Law ConferenceBusiness Track Session 10: Investor/Entrepreneur Options

Elizabeth Peng - E5 Visa Backlog

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http://www.uscis.gov/sites/default/files/USCIS/Laws/Memoranda/AFM_10_Standards_for_RFEs_and_NOIDs_FINAL2.pdf

http://www.uscis.gov/sites/default/files/USCIS/Laws/Memoranda/AFM_10_Standards_for_RFEs_and_NOIDs_FINAL2.pdf

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Resources page2 gives one an idea of the documentation USCIS would welcome, and is perhaps a good

place to start in deciding what required evidence might include.

In addition to ensuring all EB-5 filings include appropriate supporting documentation, practitioners should

expect very close scrutiny of any inconsistencies in the forms and submitted documents. For instance, a

common source of investment funds involves the leveraging of real property, and on occasion the purchase

contract and property ownership certificate reflect a different address for the same property. Such a

discrepancy might easily be explained due to it being a new, green-field residential development. But once

USCIS latches onto inconsistencies pertaining to immaterial matters it perceives as impugning the

petitioner’s credibility, it can be an awfully long and uphill battle to regain the confidence of USCIS, and

obtain an approval. Overcoming USCIS suspicions seems at times to require a demonstration of eligibility

beyond a reasonable doubt, rather than the appropriate standard – by a preponderance of the evidence.

Careful review and a second set of eyes on all filings prior to submission is therefore critical.

Despite best efforts to include required evidence and careful attention to consistency across documents,

IPO nevertheless issues various RFEs, NOIDs, and NOITs. Below the authors discuss some common trends

in such notices, and provide specific recommendations for each situation. Some are easily avoided with a

bit of due diligence.

I-526 Petition Issues

Minors as petitioners

2018 saw the issuance of numerous RFEs pertaining to I-526 petitions filed by children under the age of

18. USCIS raised the issue of whether agreements executed by children, or by parents on behalf of their

children, are legally enforceable. If the agreements signed by the petitioner are voidable due to the age of

the petitioner, i.e. not legally enforceable, USCIS will assert the investment funds are not at risk of loss.

Make sure the offering documents use Uniform Transfers to Minor Act (UTMA) language so the

minor can be bound by the agreements under UTMA

If the agreements contain no UTMA language, USCIS typically requests evidence that the minor

is bound under the law of the country where the agreements were executed and where the minor or

minor’s parents reside if the contract is signed outside the United States

Some practitioners advise having both the minor and the minor’s parent(s) execute all document

Investment of Minimum Required Amount

TEA letters

To avoid an adverse notice from USCIS a valid TEA letter for a high unemployment area must be based on

the most recently available unemployment data. A TEA letter must be valid at the time of investment where

there is no escrow, and valid at the time of filing the I-526 petition if there is an escrow. Most states typically

have new unemployment data available every year on or about May 1. Therefore, if the I-526 petition is

2 www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-

5/suggested-order-form-i-526-documentation. (Last visited October 1, 2018).



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filed, e.g., in November 2018, the unemployment data relied upon in the TEA letter must be from 2017 –

not 2016.

Verify TEA letter is valid at the time of filing Form I-526 if there is an escrow

If no escrow, verify TEA letter was valid at the time of the petitioner’s investment in the new

commercial enterprise (NCE)

Funds Derived From a Lawful Source

Currency exchange

Often the petitioner will enlist the assistance of friends or family to exchange foreign currency for US

dollars to make the EB-5 investment. USCIS consistently asks for further information pertaining to the

source of funds of the third party Facilitator of a currency exchange. Failure to explain and document the

exchange transaction will likely prompt the issuance of an RFE questioning whether the investment funds

rightfully belonged to the petitioner, and whether they were derived from a lawful source.

The authors’ experience historically has been the third party currency exchanger’s (Exchanger) source of

funds is not as highly scrutinized as the petitioner’s source of funds, and a denial in this type of case is rare

when the petitioner provides at least some information and supporting documentation about the Exchanger’s

source of funds. It is also our experience that USCIS has typically not inquired about how the Exchanger

converted foreign currency for the US dollars used in the petitioner’s EB-5 investment.

More recently however, the Immigrant Investor Program Office has shown greater interest in delving deeper

into the background of the Exchanger, and how this information reflects on the source of funds used in the

exchange. In a very recent RFE, for the first time we saw USCIS cite a discrepancy between the

Exchanger’s employment background claimed in a declaration submitted in support of the I-526 petition,

and the Exchanger’s information provided in a prior DS-160 nonimmigrant visa application. The

discrepancy was cited as derogatory information allegedly impugning the overall credibility of the

Exchanger, with the practical result of effectively increasing the petitioner’s burden of proof in the matter.

In other very recent developments, one author received two NOIDs signaling much greater scrutiny of

issues pertaining to compliance with foreign laws. These particular NOIDs adopted a heightened

requirement to affirmatively establish compliance with foreign laws – especially tax laws. The two recent

NOIDs also reflected a great deal of independent research by USCIS into what would legally be required

under foreign law. In other cases, USCIS requested evidence demonstrating all income was reported and

taxed, and compliance with business registration laws, etc.

Provide third-party Facilitator’s identification and statement regarding the relationship with the

petitioner

If possible document the Facilitator’s source of funds as appropriate, e.g. employment verification

letter, evidence of sale of property, bank statements, etc.

Verify Exchanger’s claimed background is consistent with information provided in Exchanger’s

prior U.S. visa applications

Ask client to obtain a certification from the local tax authority confirming no outstanding back

taxes are owed

Loan proceeds

Loan proceeds present a number of potential issues, and practitioners should verify the following:



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The purpose of the loan stated in loan documents is consistent with making an EB-5 investment

The appraisal in support of a mortgage loan appears reasonable

The Petitioner is personally liable for the loan

The loan is secured by assets of Petitioner the value of which equal or exceed the loan amount

Disclose to clients that previous proposed legislation would have restricted using loan proceeds

from an authorized lending institution

Sale of real estate or loan secured by real estate

USCIS will often inquire into the source of funds used in the first instance to acquire the property to be

leveraged. If the source of funds for the acquisition of the property was employment income, the petitioner

must provide employment verification certificates and corroborating evidence. Depending on the level of

income reflected in the employment verification certificate USCIS may ask how the investor lived on very

little money when he or she would have had to save the majority of documented income to purchase the

property in question.

Provide data on the cost of living during the timeframe leading up to the acquisition of the property

The legal memo should walk USCIS through an analysis of how much income would have been

available for savings each year after deducting the average cost of living for a family the size of

petitioner’s

USCIS will also examine property loan agreements to assess whether the stated purpose of the loan proceeds

is consistent with the EB-5 investment. If not, USCIS will question whether the use of the loan proceeds

for an EB5 investment was lawful. A notation in the loan agreement of “immigration” as the stated purpose

may be insufficient to demonstrate the bank was aware the loan proceeds would be used to make an EB-5

investment.

Issues requiring an analysis under foreign law – e.g. whether “immigration” is sufficient to describe

the purpose of the loan – require an expert opinion from a qualified attorney licensed in the relevant

jurisdiction

Advise the client USCIS may ask for evidence that a mortgage loan was properly registered and

recorded with the relevant administrative authorities

Where the EB-5 funds are derived from a second mortgage loan, USCIS may ask for confirmation

the original lender is aware the property now secures a second loan

Loan secured by equity in a company owned by petitioner

Where the petitioner derives the EB-5 investment funds from a loan secured by equity in his or her

company, USCIS will inquire into the total value of the company/shares/stocks in the company. For

example, if the loan is secured by a 30 percent equity interest in the company, USCIS will request evidence

of the total value of the company so as to determine whether the value of the borrower’s 30 percent equity

interest equals or exceeds the amount of the loan. It is not enough to provide the company’s annual financial

statement.

Provide objective evidence showing the market value of the company/shares/stocks in the company

at the time of the loan, such as an independent report by a CPA firm or business evaluation entity

attesting to the market value of the company

Accumulated savings from employment earnings



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A simple employment verification letter or certificate of employment is often insufficient to prove the

lawful source of employment income, and the petitioner should be advised to provide corroborating

evidence.

Corroborating evidence might include tax returns, bank statements reflecting regular automatic

deposits of “salary,” employment contracts, employment identification, or letters of promotion

Advise the client USCIS will compare the information in the employment verification certificate

with that included with previous visa applications to look for discrepancies – most commonly found

in prior DS-160 nonimmigrant visa applications

USCIS applies greater scrutiny to employment income if the petitioner is self-employed and

provides employment certificates from a company he or she owns. The authors’ experience is

USCIS will request evidence of how the investor made the funds to invest in the company. In such

cases USCIS also typically requests company financial documents and tax returns to show the

company generated enough income to pay the salaries claimed on the employment certificates

At-Risk of Loss in a New Commercial Enterprise

No guaranteed return of or on capital contribution

Occasionally USCIS will raise concerns about language in the offering documents that appears to constitute

an impermissible redemption clause or debt arrangement. See 8 CFR Section 204.6(e) (definition of

“invest”); see also, Matter of Izummi, 22 I & N Dec. 169 (BIA 1998). For example, the authors have seen

RFEs pointing to – in error – a call option (also known as “buy option”) that creates the right, but not the

obligation, of the issuer or general partner to purchase the EB-5 investor’s interest in the new commercial

enterprise in certain circumstances. In such cases we had to explain or litigate the difference between a

“call” option and a “put” option (also known as “sell option”) – the latter being impermissible but the former

not so. The key distinction is that the foreign investors cannot have the unequivocal right to demand

repayment or seek redemption of their capital contributions. See Chiayu Chang v. USCIS, 2018 WL 746081

(U.S. Dist, Ct . D.C. 2018).

Review or amend offering documents to provide that the investors do not have the “right” to

demand redemption, repayment, or purchase of any portion of their capital contributions or shares.

In other words, the General Partner of the NCE or job-creating-enterprise (JCE) must retain the

unequivocal “right” to choose or determine if and when repayment is allowed and determine the

conditions.

Review the offering documents for any language indicating the Petitioner “shall receive,” “shall be

entitled to,” etc. Where you find such language make sure that whatever it is the petitioner is to

receive is not guaranteed, and is to be distributed only if funds are available from, e.g. net available

cash after the deduction of expenses of the NCE.

If the issuer has not yet gone to market with offering documents that contain troubling language,

suggest they modify it or include clarifying language to allay USCIS concerns. For example, if

there is a call option, they might add: “For the avoidance of doubt, the Company has no obligation

to exercise the option to purchase the Class B Member’s unit, and the Company shall in its sole

discretion determine if and when to exercise the call option.”

A guaranteed refund of the petitioner’s capital contribution is permissible if it is conditioned upon

the denial of the I-526 petition, the DS-260, or the I-485 application (but not the I-829 petition)



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There can be a cap on the potential return on investment but there can be no floor, or minimum

guaranteed return

Corporate structure

Complex corporate structures can sometimes create issues for EB-5 projects, especially with respect to job

creation in direct projects. USCIS carefully examines the relationship between the NCE and the JCE, and

having multiple entities can complicate the EB-5 eligibility analysis.

Include an organizational chart in the legal memo in support of the petition illustrating the flow of

EB-5 funds from the EB-5 investors to the NCE, and then to the JCE

Identify each entity in the chart, its ownership, and its purpose

The Investment entails an opportunity for gain

USCIS will examine management fees and EB-5 loan repayment terms with a view to calculating whether,

at the end of the day, EB-5 investors have any chance to earn a return on their investment. If not, USCIS

may issue an adverse notice asserting the facts point to EB-5 ineligibility.

Even if the chance for gain is very small, and the gain that might be earned is also very small, if it

is more than zero it should suffice for EB-5 eligibility purposes

The investment has or will enable the NCE to create at least ten full-time jobs

The issuance of job creation-related RFEs by USCIS have substantially decreased as many regional center-

affiliated offerings have moved toward a more conservative approach to job creation. Specifically, they

often limit the claim for job creation credit to those jobs related to construction expenditures and ordinary

revenue income expected in the first year or two of operations.

The authors have seen however, RFEs and NOIDs citing the lack of evidence providing independent

validation of the inputs to the job creation methodology.

A careful review of the methodology used to project job creation must be performed to understand

the “inputs” used, and whether the inputs are supported by independent validation at the I-526

petition stage, and documentation verifying the inputs were actually achieved at the I-829 petition

stage. See: USCIS Policy Manual, Volume G, Part G, Section 5, Subsection A2. For example, on-

site jobs, construction expenditures, and/or revenues must be supported with objective, verifiable

evidence at the I-829 petition stage. Id.

Particular attention must be paid to the number of jobs expected to be created and how to determine

priority for allocating job creation credit. In the absence of a job allocation schedule in the project

offering documents, USCIS will deem credit to be allocated according to the date of the I-829

petition filing. Id.

Note that an NCE not associated with a regional center must directly create (or preserve if a troubled

business) full-time positions for qualifying employees on its payroll or on the payroll of its wholly-

owned subsidiaries



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Ensure the direct NCE and its wholly-owned subsidiaries are principally doing business in a TEA,

if seeking to invest less than $1 million per EB-5 investor

Job creation by non-regional center “direct” investment project

USCIS evaluates all of the aforementioned issues in the direct investment context just as it does in the

regional center context – except for the job creation analysis. Direct EB-5 investors can expect USCIS to

require a greater level of specificity and substantiating evidence to establish the credibility of job creation

projections than in the regional center context.

Direct EB-5 I-526 business plans should include details concerning the anticipated full-time

employment positions, hiring timeline, organizational chart, and an explanation as to why each

position will be required by the business

Provide documentation to evidence any current employees are “qualified employees”. See: 8 CFR

Section 204.6 (definition of “Qualifying Employee”)

To avoid any problems at the I-829 petition stage the company should enroll in E-Verify to ensure

all employees are qualified. Otherwise it is possible a company that fully complied with I-9

requirements could later be informed USCIS is denying the I-829 petition because it determined

some of the employees were not in fact qualified

I-829 Petition Issues

Sustainment of investment

In addition to evidence of the investment of capital and job creation, the I-829 petition must include

evidence the investment has been sustained – that no reimbursement of the capital contribution was

received. The most common issue the authors have encountered is K-1 forms issued to the petitioner

indicating the capital account dropped below $500,000. This raises USCIS concerns the petitioner has

received a return of investment. The most common explanation for the capital account dipping below

$500,000 is the result of tax accounting methods wherein business losses – such as those due to the

depreciation of assets – are attributed to the EB-5 investors, diminishing the book value of their investment.

In most cases the petitioner has not received any return of investment, and what is required is an explanation

of sometimes complicated tax accounting matters.

Review block L on Schedule K-1. If the “Current year” reflects the capital account decreased by

an amount matching the ordinary business loss in Part III Item 1, this indicates a business loss, not

a return of capital

If an amount is listed in block L under “withdrawals & distributions,” advise the client they need

to ask the NCE to confirm in writing whether this was a return of capital, or merely a distribution

of profits. The client should request that the NCE or regional center provide a written explanation

of the capital account calculation and the reason it dropped below the minimum investment amount

If for some reason there was a return of capital, hope for the client’s sake it was prior to the

acquisition of conditional permanent residence and has since risen to the minimum investment

amount. Current policy requires the investment to be sustained for the initial two years of

conditional residence



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Consider interfiling K-1 forms issued to the petitioner after the filing of the I-829 petition that

pertain to the first two years of conditional permanent residence status

Delay in job creation

Where the business plan has not yet been completed at the time of filing the I-829 petition, USCIS may

issue an RFE questioning the reason for the delay and request evidence the project will be completed and

jobs created within a reasonable timeframe.

Going forward practitioners may see more RFEs related to re-deployment of funds in cases where the

initial investment failed. For any number of reasons the business plan may not be realized and could fail

to create the requisite number of jobs. Assume for example, the original business plan described a

regional center-affiliated NCE that would fund Project A pursuant to a so-called loan model (by loaning

the EB-5 capital to a separate JCE project owner), but the JCE could never quite get Project A off the

ground, and the NCE eventually obtained partial repayment of the loan. Assume further that the NCE

invested the balance of the EB-5 investor capital in a different regional center-affiliated project, Project B.

USCIS policy permits affected investors in conditional permanent resident status to nevertheless file I-

829 petitions based on Project B. But note well – USCIS might still issue an RFE asking for accounting

records related to Project A to confirm the full amount of EB-5 capital had previously been made

available to Project A for job creation as required by Matter of Izummi (even if not all used). If Project B

has not yet created all of the requisite jobs, USCIS might also request evidence that the jobs are likely to

be created within a reasonable time.

Consider whether redeploying EB-5 capital into a more mature project would be safer from a job

creation perspective

USCIS policy generally permits affected investors to seek the removal of conditions on LPR status based

on Project B. But USCIS might still issue an RFE asking for accounting records related to Project A to

confirm the full amount of EB-5 capital had previously been made available to Project A for job creation

(even if not all used), as required under Matter of Izummi (22 I & N Dec. 169, Assoc. Comm’r,

Examinations 1998).

Whether and how much say EB-5 investors have in the redeployment decision will depend on the terms

of the relevant NCE’s operating/partnership agreement. Investors would like those documents to provide

the right to review proposed redeployment plans prior to implementation by the manager/general partner,

whereas the issuers may seek to retain greater control over redeployment decisions.

As applicable, explain and document any delay, e.g. due to unexpected circumstances that ideally

have now been overcome. Emphasize the strongest points of the project. Ideally provide supporting

documentation to evidence the irreversible progress made to date, submit a statement from NCE

principals explaining whether obstacles causing delay have been overcome, and job creating

activities will result in job creation within a certain time frame

When responding to an RFE in the case of project delay, be sure to provide a compelling business

plan and a considerable amount of supporting evidence concerning progress made

In preparing the I-829 petition, immigration counsel should include evidence verifying 100 percent

of the investor’s capital investment was released by the NCE to the JCE, and was used or made

available for Project A prior to being transferred to Project B

If Project B has not yet created all of the requisite jobs, provide a compelling business plan and

considerable supporting evidence to show the jobs are likely to be created within a reasonable

period of time



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Immigration counsel should ensure information about the new investment target contains enough

detail about job creation and objective validating data to support a finding that the requisite jobs

will actually be created. Such a showing would be much easier if the EB-5 capital were redeployed

into a relatively mature project already in the active operations phase as opposed to a project that

has not yet commenced operations (assuming a nexus between the EB-5 capital and job creation

can be shown).

Arrest of petitioner during conditional residence period

Arrest records are routinely shared with USCIS (and the Department of State). If the petitioner has been

arrested following admission as a conditional resident adjudication of the I-829 petition will be held up

pending clarification of whether the petitioner has become subject to removal due to criminal conduct.

Always ask the client whether any family member to be included in the I-829 petition has been

arrested.

Immigration counsel should collaborate with criminal defense counsel at the earliest opportunity

to mitigate potential immigration consequences of criminal charges.

I-924 Regional Center Application Issues

For I-924 applications seeking an initial regional center designation, USCIS has been known to request

evidence of not only the amount of funds available to support the operation of a regional center, but they

have also requested evidence of the source of funds committed to operate the regional center.

Sufficient funding for regional center operations

Sometimes the applicant does not want to or is not able to tie up a large sum of money sufficient to cover

the initial operating budget of the proposed regional center pending approval of the I-924. Thus, the I-924

is submitted with a statement of funding commitment but without a bank statement showing funds in the

regional center’s account sufficient to cover the initial operating budget and sourcing details. USCIS will

typically issue an RFE in such cases. While this may have been a viable approach in the past, one wonders

how the new Policy on issuing denials instead of RFEs or NOIDs will be applied in such cases.

Criminal history of principal

Even a misdemeanor conviction of a principal of the proposed regional center could trigger questions from

USCIS, and IPO might point to it as evidence indicating the applicant will be unable to carry out

administrative oversight or comply with EB-5 program requirements in connection with promoting

economic growth.

A criminal history does not necessarily preclude approval of the regional center application, but

must be explained to sufficiently allay USCIS concerns about the ability to operate and oversee

administration of a compliant regional center, and one that will promote economic growth

I-924 Exemplar I-526 Petition Filings

Many business plans contemplate a capital stack comprised of a combination of EB-5 funding, a

construction loan, and a nominal amount of developer equity. USICS routinely requests evidence of the

developer having all non-EB-5 sources of project funding in place to ensure the project will go forward. A



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letter of intent/interest from a bank will not suffice, whereas the authors have experienced USCIS accepting

as sufficient an executed Term Sheet Agreement for the construction loan.

Provide an executed term sheet agreement for the construction loan if a formal loan agreement is

not yet available

Provide evidence of availability of funds for developer’s contribution to project funding

Regional Center Terminations

Notice of Intent to Terminate (NOIT)

A NOIT is issued when USCIS determines a regional center “no longer serves the purpose of promoting

economic growth” or when a regional center “fails to submit the required information” to USCIS (e.g. Form

I-924A Annual Certification of Regional Center). See 8 CFR Section 204.6(m)(6); see also, USCIS Policy

Manual, Volume G, Part G, Section 3, Subsection E.

USCIS has issued numerous Notices of Termination to regional centers over the past year, primarily for

inactivity and “failure to promote economic growth.” The list of terminated regional centers now has 286

entries3. A review of USCIS termination notices indicates IPO does not award credit for diligent efforts at

promoting investment in the regional center – the message conveyed by the agency is a regional center must

actually succeed in securing EB-5 investments, or after a few years the agency will terminate the regional

center.

In addition, due to increasing actions by the Securities and Exchange Commission (SEC), and other

regulatory authorities, USCIS periodically issues NOITs seeking to terminate regional centers, citing lack

of oversight, diversion of funds, and fraudulent or criminal activities.

There is precious little formal guidance available to regional centers seeking to clarify the scope of their

responsibilities, and how to avoid termination. In Matter of P-A-S, LLC4, the Administrative Appeals Office

(AAO) shed some light on the issue. AAO determined the reach of the regional center termination

regulation includes the following types of activities: (1) failure to submit required evidence; (2) improper

use or diversion of funds by the NCE or JCE; (3) failure on the part of the regional center in failing to

exercise due diligence to oversee the operations of NCEs or JCEs; and (4) fraud or criminal activity on the

part of the regional center. Id. Matter of P-A-S, also developed a “balancing test” to guide the determination

of whether the regional center should ultimately be terminated. The test requires the balancing of both

positive factors (e.g., the extent of job creation, amount of investment, overall economic impact) and

negative factors (e.g., inaction, mismanagement, theft, fraud by the regional center or related entities). Id.

Mitigating factors must be present to overcome negative factors identified in a NOIT.

A proper response to a NOIT must include sufficient supporting documentation to highlight the

positive factors outweighing the negative. The response must include sufficient evidence of

mitigating factors in order to overcome the NOIT and tip the scale in the direction of preserving

the regional center.

3 https://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/eb-5-immigrant-investor-process/regional-center-terminations, (last visited October 3, 2018). 4 Matter of P-A-S-, LLC, ID# 513109 (AAO Dec. 21, 2017)



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CONCLUSION

Effective, zealous representation of EB-5 investors and capital-raising groups requires one to be alert to

eligibility issues that might relate to the EB-5 investor, the new commercial enterprise, or the regional

center. In addition, and as to the substance of EB-5 filings, how the evidence of eligibility is presented to

USCIS is also important. A disjointed or inconsistent presentation of any facet of EB-5 eligibility can lead

to misunderstanding and significantly impact the client’s credibility in the eyes of USCIS. Credibility is

fundamental to avoiding the issuance of an RFE, NOID, NOIT, or denial, and ultimately meeting the burden

of proof for a successful adjudication.



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