Litigation Updates & Mandamus Results with John Pratt – Episode 106
What can we do if USCIS issues a denial on an EB-5 petition that is arbitrary and capricious or perhaps even in violation of the law? On this episode, Mona and Mark are joined by John Pratt to discuss the litigation against USCIS making its way through the court system. Listen in for updates on cases involving the Child Status Protection Act, the termination of Regional Centers, loan proceeds and mandamus.
The decision to litigate the denial of an EB-5 petition is a complex, expensive process. And yet, in the current climate at USCIS, taking a case to court is often the only way to ensure that the agency does not make arbitrary and capricious or even unlawful decisions. So, what can we do ensure that investors and Regional Centers have the evidence necessary to get their denials or terminations overturned?
John Patrick Pratt is a Partner at Kurzban, Kurzban, Tetzeli & Pratt in Coral Gables, Florida. He specializes in all areas of immigration and nationality law and currently serves on the AILA EB-5 Committee. On this episode of the podcast, John joins Mona and Mark to share the EB-5 litigation he is currently involved in, starting with a case arguing the incorrect application of the Child Status Protection Act.
John goes on to discuss the details of a case his firm won regarding the termination of a Regional Center and explains another successful suit (currently in appeals) around loan proceeds. Listen in for John’s insight on what to consider before you file a mandamus and learn how to address USCIS’s disregard of the preponderance of evidence standard.
The Child Status Protection Act
· When a dependent child turns 21, they no longer qualify to be part of their parent’s EB-5 application. However, under the rules of the Child Status Protection Act, once an EB-5 applicant files the I-526, the age of their dependent children is frozen until the petition is approved.
· This becomes a problem for child dependents of EB-5 investors from countries in backlog such as China, Vietnam and India who are at risk of aging out. John is currently in litigation challenging a denial based on what he believes is an incorrect application of the Child Status Protection Act.
· The Department of State devised a policy that the visa becomes available only when the priority date is reached, not when Part B is available. This results in a number of dependent children aging out, which violates the most basic tenant of the Child Status Protection Act—to protect the children and maintain family unity.
The Termination of Regional Centers
· John’s firm has also been involved in litigation regarding the termination of a Regional Center in the State of Washington cited by the SEC for fraud and diversion of funds. In this case, the bad actors controlled the Regional Center.
· In conjunction with the SEC, the receiver devised a restructuring plan to save the Regional Center’s EB-5 investors. Under the plan, proper operators (with clean hands and a good record) took over the Regional Center.
· USCIS terminated the Regional Center anyway, arguing that the bad actor’s poor oversight could not be overcome. John’s firm challenged this termination and won.
· The district court stated that USCIS had “weighed the former principal’s misdeeds over the Regional Center’s post-restructuring economic growth.” Since then, the Regional Center has been reinstated, and USCIS will begin to readjudicate its I-526 petitions.
Preparing to File a Mandamus
· John stresses that filing a mandamus almost never results in an outright approval. Rather, USCIS issues an RFE or a NOID, and the investor’s attorney should make sure that the Regional Center has the evidence necessary to respond.
· John also reminds us that litigation is restricted to the record, which includes the I-526, the I-829 and any response to an RFE or NOID. Before filing a mandamus, be sure that any RFE or NOID can be overcome based on the record.
· If you receive a denial based on incorrect assumptions, the next step is to file an APA action challenging the basis of that denial. If USCIS has incorrectly applied the law, you have a strong basis for litigating and overturning the denial.
Loan Proceeds Litigation
· John’s firm has also been involved with litigation around loan proceeds issues. In this case, USCIS issued a denial because the applicant’s parents got a loan (secured by the parents’ assets) and gave the loan proceeds to their child to make an EB-5 investment.
· The court ruled in favor of John’s client, agreeing that cash is cash, regardless of how that cash is obtained. (The government has filed an appeal, and John is hopeful to get another precedent decision in circuit course around this case.)
The Preponderance of the Evidence Standard
· Both John and Mona have noticed a disregard for the preponderance of evidence standard which requires a 51% or more likelihood that, for example, an investor’s money is legitimate. John’s firm is currently litigating a case in which the investor’s documentation went above and beyond to prove lawful source of funds but was still denied by USCIS.
· USCIS is also issuing RFEs that are simply unreasonable. Mona cites the case of an investor who sold their jewelry through an auction house and received an RFE for the records of the auction house in question.
· John suggests doing everything we can to make a better record and corroborate that record when possible. For instance, in cash-based countries, a balance sheet prepared by an outside accounting firm is stronger evidence than a balance sheet submitted by the investor themselves. The better the quality of the evidence, the stronger your basis to challenge a denial in court.