Questions & Nonanswers: Orwellian USCIS Engagement Draws EB-5 Stakeholders’ Ire

Questions & Nonanswers: Orwellian USCIS Engagement Draws EB-5 Stakeholders’ Ire

By Mona Shah, Esq. and Rebecca S. Singh, Esq.

After laboring through a long-awaited U.S. Citizenship and Immigration Services (“USCIS”) engagement that promised much but delivered little, irked EB-5 practitioners have arrived at a consensus that may be expressed in just two words: big whoop.

The one-and-a-half-hour virtual event—which USCIS had rescheduled to this past Tuesday from March 20 for an undisclosed reason—aimed to cover three distinct facets of the EB-5 process that have been the topic of much discussion: direct and third-party promoters; the investment period (including sustainment); and regional center operations. In theory, this plan appeared to be a good way to elicit further discussion among stakeholders and agency officials. USCIS even stated that it would entertain “feedback” on other subjects pertaining to EB-5, though the agency’s preference was to stick to the agenda.

Sadly, practitioners’ cautious optimism about the event fizzled out at the start. Less of a townhall and more of a surreal “EB-5 101” seminar, the Orwellian engagement continually frustrated stakeholders’ efforts to garner clarification on pressing issues relating to the aforementioned topics—with pat, seemingly rehearsed responses supplied by a small group of USCIS officials addressing mostly softball questions on video. Some of these officials appeared to be reading directly from other sources when answering inquiries.

“The agency scored an own goal by ignoring the most critical questions pervading the industry.”

“USCIS had an excellent opportunity to augment EB-5 practitioners’ understanding of areas where guidance on confusing mandates had been minimal or nonexistent,” said Mona Shah, Esq., Managing Partner of Mona Shah and Associates Global (“MSA Global”). “Unfortunately, the agency scored an own goal by ignoring the most critical questions pervading the industry. With practitioners left in the dark, USCIS will continue to maintain inefficiencies via mounting delays, requests for evidence, and other problems resulting from unclear requirements.”

An additional irritant was the format: Attendees were not given the chance to speak, as they were during previous sessions, and there was no back-and-forth dialogue among agency staffers and registrants. Furthermore, aside from the “featured question,” inquiries posed in the chat were not visible, so no one could see what had been asked previously. Consequently, registrants could not determine whether their questions were redundant. In addition, it appeared that the agency cherry-picked questions, of which many received disappointingly basic responses. The sophistication of the EB-5 audience did not appear to be a factor with the agency. The disappointment within the industry, on the other hand, was palpable.

The disappointment within the industry was palpable.

Making the discussion more perplexing was the fact that the agency did not address many crucial questions. One such inquiry was about whether USCIS will adjust the two-year sustainment requirement for immigrant investors to more accurately reflect business realities. Specifically, because projects usually take three to five years to become profitable, it is unrealistic to expect redeployment of funds in so short an amount of time. So if the agency provided clarification on this, it would have been extremely helpful.

Yet it didn’t. Instead, USCIS officials—including Alissa Emmel, Chief of the Immigrant Investor Program (“IPO”); Nadine Tushe, Compliance Division, IPO; and Kevin Muck, Division Chief of IPO Division 2, I-526—frequently skirted some of the most burning questions to cover information that already had been answered … including on the agency’s own website.

“Reiterating information that eB-5 practitioners already know aids no one and adds to the confusion,” remarked Shah. “It would have been much more beneficial if USCIS had carefully scrutinized the most important questions from stakeholders beforehand, as well as during the event, to ascertain which ones should be prioritized.”

In keeping their chosen questions and answers simple, USCIS gave no justice to the depth of knowledge and understanding that EB-5 stakeholders have. Real, challenging questions were submitted, but the agency’s apparent unwillingness to field them makes them seem hesitant, if not afraid, to hear what stakeholders have to say.

An Angry Reaction

Some stakeholders were even more critical. Business writer and EB-5 expert Suzanne Lazicki, Owner of Lucid Professional Writing, noted in her blog that the event “managed to fill 1.5 hours with exactly no significant content” and called the speakers “ clueless and incompetent”—adding that they “provided no update on IPO operations or staffing, no update on form processing or procedures, and no estimated delivery dates for the many initiatives.”

Lazicki went further in an open letter to Muck, where she referenced a question on “reporting I-526/I-526E receipt data by TEA category/country, for the purpose of monitoring and avoiding backlogs in the new TEA categories.” Observing that he “responded that stakeholders should consult the Visa Bulletin, and see that the current Visa Bulletin reports TEA categories as ‘current,’” she presented a telling reply.

“Think about it, Kevin,” Lazicki wrote. “Do EB-5 backlogs not exist until they appear at the visa stage/in the visa bulletin? Do you believe that someone filing I-526E today gets visa availability based on the dates in today’s Visa Bulletin?”

In addition, Lazicki brought up a scenario seemingly opened up by USCIS: that the investment incentives touted by the agency might be deemed fraud. “When the U.S. government offers an investor visa incentive, at the same time making it impossible for the investor or issuers to estimate visa availability at the time of investment, I’d call that fraud by the government,” she wrote. “It rests on IPO to keep the U.S. government out of such embarrassment by reporting on the I-526 filings that drive EB-5 visa demand and availability.”

Such a situation could conceivably lead to litigation against USCIS. So why hasn’t the office taken steps to provide the necessary clarification?

Cursory Conversations

Considering USCIS’ opaque approach to public communication, that question likely will not be answered any time soon. Nor will the existing confusion over USCIS’s vague guidance on direct and third-party promoters be alleviated following the purported insights conveyed during the engagement, though the agency did shine a light on certain issues relating to forms I-956 (which the agency introduced last year for regional centers), I-956K, and I-956F.

“USCIS did confirm the comments made in the USCIS response matrix regarding the I-956K form as it relates to regional centers, NCEs, affiliated JCEs, and issuers,” explained Lulu Gordon, Esq., General Counsel at EB5 Capital. “A regional center, new commercial enterprise, job-creating entity, or issuer of securities is not exempt from being considered a promoter for purposes of INA 203(b)(5)(K) to the extent such entities engage in promotional activities of EB-5-related securities under INA 203(b)(5)(K).”

She continued with some positive insights: “However, because regional centers, new commercial enterprises, and job-creating entities will already be captured on the Form I-956, Application for Regional Center Designation, and Form I-956F, Application for Approval of an Investment in a Commercial Enterprise, USCIS will not require that they separately register as a promoter using Form I-956K to the extent that they promote securities already covered by a related form. The Form I-956K instructions have been revised accordingly.”

Still, many practitioners were aghast by the agency’s lackluster guidance at the event—particularly vis-à-vis USCIS’s inattention to concerns surrounding the mandated windows of sustainment and redeployment. “A year and 10 days later, we still don’t know the sustainment period?” wondered Daniel B. Lundy, Esq., who heads the EB-5 Developer & Regional Center, and Compliance practices at Klasko Immigration Law Partners, LLP.

“A year and 10 days later, we still don’t know the sustainment period?”

—Dan Lundy

“In today’s stakeholder call, USCIS did not provide guidance on the post-RIA sustainment period, because they are continuing to consider ‘all the important feedback they got on this complex issue,’” Gordon pointed out. “Unfortunately, there are regional centers and NCEs in the market telling investors that the sustainment period is two years—as if it is a certainty—when at this point, we really don’t know where USCIS will land on this issue.”

Gordon continued: “These ‘two-year’ projects may be structured in such a way as to create additional immigration risk for investors. As always, investors need to do their due diligence on the regional center’s track record and on all aspects of a project, not just the repayment timeline.”

Overall, officials’ comments on regional centers—especially on withdrawing from the program and terminating their status, as well as deciding not to solicit investments for new projects under the RIA—offered few revelations. “Regional centers have enough to deal with as it is,” said Shah, alluding to challenges such as juggling cash inflows, submitting the right forms, and staying afloat. “By failing to provide the requisite information, USCIS has made it harder to discern what it wants, thereby creating a hazard-filled course for RCs and the projects they support.”

Prior Precedents

In the past, USCIS has held quarterly engagements, which were criticized by some industry pundits for their lackluster content, though they generally were appreciated for at least giving the EB-5 community a chance to interact with the agency. Disappointingly, those days seem to be over. Indeed, following passage of the Reform and Integrity Act (“RIA”)—which in part was supposed to make the EB-5 process clearer and easier while mitigating inefficiencies—such events have been relatively few and far between.

Recent USCIS stakeholder events raised more questions than answers. During the January 11 listening session, for example, the agency allowed participants to voice their opinions on its proposed fee hikes, among other subjects, but did not respond to specific questions. As such, many issues remain unclarified, such as whether a regional center wishing to recertify or make a simple amendment to structure or geography would be compelled to pay the new, $47,695 I-956 fee.

Other sessions followed guidance that gave practitioners more puzzles to ponder. On the heels of an update by USCIS to its Questions and Answers section that included the directive that all regional centers (including previously designated centers) not be allowed to file any new petitions until recertification has been approved, the agency’s April 30, 2022 installment provided stakeholders with little time to gather their bearings. Despite inquiries from attendees about the future of the program and requests for more clarification on various issues, USCIS did not respond with specifics.

USCIS also used to hold in-person engagements where practitioners could visit officials. These were held around the country, including in Washington, D.C., New York City, and Los Angeles. This, however, also seems to be a thing of the past: The last in-person engagement occurred in 2017 when the IPO participated in a panel discussion at an EB-5 conference at Baruch College in NYC (organized by MSA Global).

In light of this, it does not seem likely that the agency will change its communication ways .. at least for the foreseeable future. Does that mean practitioners must temper their enthusiasm at the prospect of more such engagements should USCIS decide to hold them?

Unless the EB-5 set wishes to be disappointed on a regular basis, the answer is a resounding, abysmal yes.

Aaron Muller and Simon Butler contributed to this article.