EB5 Investors Magazine Top 25 edition | Page 9

The investor , lender , or the giftor does not have to “ trace every penny .”

funds . Therefore , the issue in a money exchanger case should be first , proving a lawful source of the investor ’ s funds ( no change there ) and second , proving by a preponderance of the evidence – not by tracing every penny – that the amount going from the money exchanger to the EB-5 project ultimately came from the investor .

If the equivalent of $ 800,000 in foreign currency went from an investor to a money exchanger on Monday and $ 800,000 in US dollars went from the money exchanger to an EB-5 project referencing the name of the same investor on Thursday , it would be hard to argue that the preponderance of evidence standard has not been met .

We must keep in mind that the Battineni decision is a decision of one federal district court judge in DC — a well-respected Senior Judge . However , since it raises an issue that has not been raised previously , and since it is based on very solid legal principles , hopefully it will be adopted and applied in many federal court decisions and , hopefully , by USCIS .

It remains to be seen how the USCIS and the courts will apply the language and principles of the Battineni case to cases involving money exchangers .

How Could This Case Impact EB-5 ?

It remains to be seen how the USCIS and the courts will apply the language and principles of the Battineni case to cases involving money exchangers . Especially in recent adjudications , USCIS has applied its version of the path of funds requirement to deny investors ’ EB-5 petitions when investors used a money exchanger to comply with a foreign country ’ s currency restrictions . The issue is whether it is necessary to trace the money from the investor to the money exchanger to the EB-5 project . In the process , the money is changed from foreign currency to US dollars . USCIS uses the path of funds requirement to deny petitions because the investor cannot trace the money going from the investor to the money exchanger , sometimes from the money exchanger to a private company and then to the EB-5 project .

Arguably , the Battineni decision would not condone the requirement of “ tracing every penny ” from the investor to the money exchanger to the private company to the EB-5 project as necessary to meet a path of funds requirement . Rather , using the language and foundation of the Battineni decision , once the investor has proven the lawful source of their funds , the only issue is whether the investment came from

H . RONALD KLASKO

Ronald Klasko leads the E-2 and EB-5 Investors Team at Klasko Immigration Law Partners , which has represented thousands of investors , over 50 regional centers , and many developers . Klasko is currently a member of AILA ’ s EB-5 Investor Committee , previously chaired AILA ’ s Administrative Litigation Task Force , and served five terms as chair of AILA ’ s EB-5 Committee . He is also a former national president and general counsel of AILA . He is the only person twice honored with the AILA Founders Award for his contributions to immigration law . For over two decades , he has been selected for inclusion in Best Lawyers in America ©.