EB5 Investors Magazine "Top 25 Awards Edition" Volume 8 Issue 1 - Page 13

Vietnamese EB -5 investors with approved I-526 petitions but whose EB-5 projects might not survive the pandemic. L ATE S TAG E O F E B-5 (I-829 PENDING OR UPCOMING) "If the underlying NCE business cannot survive, but the conditional resident EB-5 investor can keep the NCE entity active and change to another business model, the condition still might be removed" If conditional residency has been granted and the NCE subsequently c l ose s d u r i n g th e s us tai n m e n t period, the conditional resident EB-5 investor may still be able to remove the condition if the NCE created the required jobs, either direct, or indirect in the case of a regional center, within the conditional residency period. 2 There is no requirement that the created jobs must be maintained. At the time of their creation, the jobs needed only to have been fulltime and considered permanent (contemplated to last at least two years). What happens if the investment cannot be sustained, or the jobs have not/cannot be created due to pandemic-related, economic issues with the project? The answer has to do with timing and the reason for not meeting the requirement. If job creation is just delayed, the EB-5 requirements allow for job creation “within a reasonable time” after the conditional period. The USCIS Policy Manual describes this “reasonable time” as being within three years of the grant of conditional residency. “Jobs projected to be created more than 3 years after the immigrant investor’s admission in, or adjustment to, conditional permanent resident status usually will not be considered to be created within a reasonable time unless extreme circumstances [10] are presented.” Footnote 10 to this section gives “force majeure” as an example of “extreme circumstances.” Far more than any hurricane, earthquake, or other natural disaster, one of the greatest force majeure events in the past century has been the COVID-19 pandemic. Therefore, if an EB-5 investor can show how the pandemic prevented or delayed job creation by the NCE and provide probative evidence of when the required jobs likely will be created, it seems that the investor will be given at least one additional year, if not more, to meet the removal of condition requirements. 3 THE MATERIAL CHANGE RULE COULD “SAVE THE DAY” FOR SOME INVESTORS If the underlying NCE business cannot survive, but the conditional resident EB-5 investor can keep the NCE entity active and change to another business model, the condition still might be removed because of USCIS’ definition of material change in the USCIS Policy Manual. Volume 6, Part G, Chapter 5.C discusses “Material Change,” saying that “an investment may be further deployed in a manner not contemplated in the initial Form I-526, as long as the further deployment otherwise satisfies the requirement to sustain the capital at risk.” The initial business plan/ model had to have been filed in good faith, but changes occurring during the conditional residence period, whether caused by the pandemic or not, will not be considered material and therefore, the removal of condition requirements can still be met notwithstanding the change. In conclusion, the full effects of the COVID-19 pandemic are difficult to measure on a worldwide scale, or even with respect to the state of EB-5 as a whole. Each business, whether a regional center project or a direct project, has its own unique set of challenges in dealing with the economic devastation resulting from the pandemic, and each project manager, investor, and immigration lawyer will have to work together to tailor mitigating strategies, allowing for economic recovery and immigration success. Fredrick W. Voigtmann practices law in Ohio and California, where he is a certified specialist in Immigration and Nationality Law. He practiced law in Taipei, Taiwan from 1993 to 1997 and he was mentored by a former INS general counsel from 1997 to 2010 in Los Angeles. He established his own law firm in 2010, focusing on employment-based and investor-based immigration. He is a 1993 class graduate of Capital University Law School in Columbus, Ohio. He is a frequent writer and speaker on EB-5 matters, as well as a mentor to other attorneys. Sources: 1 Granted, direct EB-5 investors are traditionally more entrepreneurial by nature than EB-5 investors in regional center projects, where there is limited capacity to manage and direct the EB-5 project, but many regional center investors contribute to the U.S. economy in additional ways, most often by purchasing real estate, paying school tuition, etc., but in addition, these individuals often create their own businesses in the United States, since being a regional center investor is hardly a full time job in itself. 2 According to 8 C.F.R. §216.6(c)(1)(iii), the investor must have sustained the investment during the entire two-year investment period, but legal counsel could argue that although the business closed, the investor did not receive a return of the investment principal and thus complied with the sustainment requirement. USCIS likely would take the position that if the business closes during the sustainment period, the invested capital was no longer at risk. The USCIS Policy Manual is not clear on this point, but both the manual and the regulation cite good faith and substantial compliance as meeting the requirement. 3 According to the latest USCIS processing time report, see https://egov.uscis.gov/processing- times/, I-829s are taking 37 to 248 months to adjudicate. It is likely that if the required jobs are to be created at all, they certainly would be created by the time USCIS issues an RFE on any given investor’s I-829 petition. EB5INVESTORS.COM 13