EB5 Investors Magazine "Top 25 Awards Edition" Volume 8 Issue 1 - Page 79

starters, while “cash” is not defined in the regulations, it takes nothing more than common sense to understand that “cash” encompasses the cash proceeds of a loan. As the court readily noted, if a “…person uses the funds to purchase goods, he buys them with cash. Imagine someone wishes to sell a used car for payment “in cash only.” If a buyer offered the cash proceeds of a loan, the seller would happily oblige, for the payment would be “in cash.”” 19 Secondly, “indebtedness,” while not defined in the regulation, has specific legal meanings and generally is understood to mean a promise to pay or a “sum owed;” indeed, as noted above, Matter of Izummi, a precedent decision from USCIS had interpreted promissory notes to be ““indebtedness” under 8 C.F.R. §204.5(e) -- as a promise to pay the new commercial enterprise in the form of a promissory note. 20 Needless to say, the court easily ascer tained that an investment of cash into the new commercial enterprise is not indebtedness or a promise to pay because the new commercial enterprise does not receive “indebtedness,” they receive cash. owed to the new commercial enterprise, and that “capital” was intended to be interpreted broadly. And while a more thorough discussion of the precedent decisions governing the EB-5 visa category would have been warranted, it was encouraging to see the court flatly reject USCIS’ contentions that it’s interpretation of “capital” has been a consistent view held since 1998. 27 As the court noted in a brief footnote, which indicates lack of respect the court had for such arguments, the precedential decisions “suppor t our conclusion that indebtedness under the regulation means a promissor y note as opposed to the cash proceeds of a loan.” 28 "As immigration practitioners have reminded USCIS many times over the years, 8 C.F.R. § 204.6(j)(2) is, on its own face, non- exclusive" In a resounding summation that is a fitting coda to this whole saga, the court stated: “ Tex t , stru ctu re , a nd re gu lato r y context show that the term “cash,” a s u s e d i n 8 C . F. R . § 2 0 4 .6 (e) , unambiguously includes the proceeds of third - par ty loans. Because USCIS’s contrary construction is impermissible, we affirm the district court’s decision to set aside the denial of the plaintiffs’ petitions.” 29 USCIS’ counter arguments did not (and could not) hold water. 21 USCIS has long claimed that if cash is cash, it would no longer have the ability to enforce the restriction contained in 8 C.F.R. § 204.6(e), that for indebtedness to qualify as capital, it cannot be secured with the assets of the enterprise. This argument does not square with the regulatory text, as the court explained in a footnote, o b t a i n i n g c as h i n r e tu r n fo r c o lla te r a l of th e n ew commercial enterprise would violate the definition of “invest” also contained within 8 C.F.R. § 204.6(e). 22 The definition of “invest” was not challenged in this litigation or any of the I-526 petition denials, given that none of the investors had secured their loans with assets of the new commercial enterprise (unlike the facts at issue in Matter of Soffici). Likewise, nothing in this litigation would reduce USCIS’ powers to ensure investments, whether in the form of debt or cash, came from a lawful source. 23 USCIS further claimed that the regulation at 8 C.F.R. § 204.6(j)(2) supports its arguments. 24 This argument does not square with the plain language of the regulation. As the court easily determined, this regulation deals with the evidentiary rules and not with the definition of “capital.” 25 As immigration practitioners have reminded USCIS many times over the years, 8 C.F.R. § 204.6(j)(2) is, on its own face, non-exclusive. 26 In sum, none of these arguments were persuasive to the cour t because the actual tex t of the regulation does not support USCIS’ reading. Indeed, the history of the regulations discussed above makes clear that “indebtedness” is considered a “promise to pay” or a “debt” EB5INVESTORS.COM 79