EB5 Denials (When they happen and why they do) – Episode 5
This is a tough topic. No one wants to talk about it – so we do!
EB5 Denials can happen in various stages of the investor petition and for many reasons. Some are within the control of the developer and others are in the control of the investor. We touch upon them all.
A potential EB-5 recipient must initially file an I-526 petition for classification in the EB-5 category; upon approval, the investor becomes a conditional resident for two years. Similar to those who obtain conditional residence through marriage potential EB-5 recipients must undergo a procedure to remove conditions at the end of this two-year conditional period. The I-829 petition must be accompanied by evidence that the applicant has fulfilled all requirements of the EB-5 program, including that the required capital has been invested and that the investment created or will create ten (10) full-time U.S. jobs. The applicant is obligated to prove that the jobs were created by including payroll records, tax documentation, or other relevant paperwork. The I-829 form must also prove that the applicant has “substantially met” the capital investment requirement and has continuously maintained his or her investment during the conditional two-year period.
The USCIS issued a memorandum in 2013 clarifying the goals of the EB-5 program. All requirements for removal of conditions are tied to the following essential points: the immigrant’s investment of capital; a new commercial enterprise, and creating jobs.
Mona Shah and Rebecca S. Singh are talking about EB-5 denials and the associated removal proceedings. They will discuss what can go wrong in EB-5 applications including the three stages when a denial can occur; kinds of denials; and what an investor should do if they do receive a denial. Job creation is the number one issued encountered in denials, it is important that all employee documentation to ensure that the full-time positions meet the conditions required with EB-5s
- Mona discusses the three stages when an EB-5 denial can occur:
1. When filing the I-526;
2. During Consular proceeding for the investor’s green card; and
3. When filing the I-829
- What are the risks and what could result in a denial during the initial stage when filing form I-526. Denial during this stage is the most common.
- The two most common reason for I-526 denials: denial of the project and denial based on the source of funds.
- Mark and Mona talk about why entrepreneur cases are so difficult to get approved.
- The USCIS usually offers an opportunity and process for correcting any mistakes; there are not straight-out denials.
Source of funds denials
- At this stage documentation is critical and all documents must be presented. Investors must have proof of sale, bank account statements, etc. in order and ready to file.
- It’s important to remember that the validity of a project is on the client. While the USCIS may have questions, they do not go beyond the provided information to prove something is false.
- When denial at the consular stage it means that no green card will be issued and no entry into the United States.
At the consular stage
- A denial at the consular stage falls on the investor. They must ensure all necessary paperwork has been submitted and that they are able to enter the U.S. before making the investment.
- The consular stage does not necessarily review what has been filed with the USCIS but the investors must be able to show that they are knowledgeable about both the project and the source of funds used.
- The I-829 stage. At this point the investor must show that: the investment has been sustained; jobs have been created, and the investor has not done anything illegal or that would be considered “bad behavior”.
- Job creation is the number one reason for denials at the I-829 stage
- Mark and Mona discuss what happens to the family if the investor either dies or get divorced. In both cases, the family will still receive their green card and permanent citizenship.
What happens if you receive a denial?
- The case can either go back to the USCIS or to the Administrative Appeals Office (AAO). Denials are difficult to overturn at this point.
- Once the removal process has begun, the case is moved to an immigration judge. At this point, while status as a conditional resident is terminated, it remains the responsibility of the government to prove why the case was denied.
- Two exceptions to unlawful presence are: battered women and asylum searchers.
- The only exception to filing for an EB-5 if an investor is out of status is under the 245 I exception.