The much-anticipated USCIS EB-5 Stakeholders Engagement took place on April 25th. As expected, there was not a lot of detailed direction provided, although it was acknowledged that to the extent questions were not answered, USCIS would try to otherwise address the questions at a later point in time. The following items of consequence were noted:
- No answer on Policy Manual updates.
- Most of the questions involved the 956K and were addressed as follows:
- For those persons that file the 956K form, they can amend same to report a termination of engagement, the modification of the contract or the addition of a new project.
- Who needs to submit the 956K? It was noted that subagents or their employees who are involved in the selling of the security must file. Accordingly, this would not apply to staff personnel that are merely performing administrative services and not directly dealing with the selling or marketing activities. This would include executives of the sponsoring parties as well as anyone involved in marketing activities. In response to one of the questions, it was noted that this would include those employees or agents that did not have a written agreement nor received compensation for activities related to the support of any marketing activities even if the employee or agent does not deal directly with investors but only agents. As an example, if a particular person abroad assisted in dealing with migration agents and/or investors in connection with the marketing of a security, then they would need to also file a 956K.
- It was noteworthy that in lieu of filing a 956K, if any individual filed a 956H that would negate any requirement that a 956K be filed or that any amendments or modifications be provided as will be noted below. Accordingly, to the extent that U.S. persons may go abroad and otherwise get involved in that activity, it would probably be beneficial to file the 956H rather than the 956K. The USCIS agent who was handling this issue indicated that a written agreement is required even if there is no compensation. Accordingly, in situations where there is no compensation, it is more of an employee providing a general service than the written agreement can so state in the 956H filing. We had advised clients of this position based on our interpretation of the published policy positions taken by USCIS.
- All sponsor agreements must be filed of record.
- All agent agreements must be filed of record with the 956F.
- If there are agreements with subagents, they also have to be filed and the subagents need to be registered. Obviously, it is going to be very difficult to oversee this compliance obligation.
- Response to a specific question about a promoter or agent misrepresentation and the effect on the regional center or the investor as to their status and application, as the case may be. It was generally stated that there should be no prejudice providing that the deficiency was not material and it was not known to the regional center or the investor. However, it was left open as a factual determination as to the materiality and degree of the misrepresentation as to what action USCIS would take. Accordingly, based upon the above, it is highly recommended that all regional centers maintain detailed policy guidelines that are circulated to their sponsored projects requiring compliance with certain provisions so that at least it shows they used reasonable diligence in having the signoffs as to the 956K and 956H requirements as well as the annual certification related to same.
- The Authorized Certifier on a 526E petition can be the individual on behalf of himself or herself and on behalf of the entity itself. Notaries cannot certify nor counsel. That includes the 956H as well.
- USCIS announced that it would not address the issue whether the capital investment term of 2 years applies. USCIS did confirm that the I-829 could not be filed until 90 days prior to 2 years from the time that conditional residency (CPR) status was obtained. The presumption could be that the “at risk” requirements would apply consistent with this statement. It is unclear whether applicant’s at risk requirement could commence at an earlier date. However, it would seem inappropriate that the “at risk” requirement could be different than the traditional 2-year sustainment period. The comment applied to both pre-RIA and post-RIA petitions.
- USCIS cited FACA that confirmed that no preference in adjudication can be given to any individual or organization. This avoids any potential prejudice.
- Biometrics are not required for the 526E petition; although, in certain circumstances, USCIS can ask the investor to file a 526H.
- Confirmed that no upper limit as to the time period when EB-5 proceeds need to be returned to investors.
- Confirmed that if a regional center is terminated the EB-5 applicant will be notified.
- Regarding the registration of promoters, it is unclear if this information will be maintained by Homeland Security or published. There is a right of the government to register it.
- No requirement to register under 956K if pre-RIA investors.
- USCIS indicated that no project information should be contained in the 526E petition in order not to confuse examiners. Only the signature pages on investor documents need to be included.
- USCIS also announced that it would not address whether regional center operations related to those who wish to withdraw from the Program and terminate their status since they do not wish to solicit new investors under the RIA. The USCIS officer confirmed in answer to a question that the integrity fee needs to be paid by all regional centers in order to remain in good standing. This seems logical given the need for all regional centers to pay their share of such fee to fund USCIS costs of maintaining the integrity of the Program.
- When draft Regulations are proposed, they will be published in the Federal Register for receipt of comments. It is noteworthy that the following issues were not addressed:
- The published fee increases.
- The issue of whether an additional fee needs to be paid to file an amendment to the 956F. There could be an exception for minor updates.
- Pooling of one direct investor with a pre-RIA direct investor.
- Adjudication times and a commitment to meet certain time schedules, especially related to priority processing.
- The confirmation as to the term of the sustainment period given the confusion created by the USCIS response to questions related to the I-829 filing.
- The obligation of pre-RIA regional centers to file a Form 956, although it would appear that is a requirement.
These are the major issues that were not addressed. Hopefully USCIS will be more definitive and take a reasoned approach in the future.
By Ronald R. Fieldstone, Esq