EB-5 & Other Investor News from the Alliance of Business Immigration Lawyers Vol. 3, No. 1 • April 01, 2013

Headlines:

1. USCIS-SEC Call Highlights Complexities of EB-5 Program – SEC subject matter experts discussed securities law compliance in the context of EB-5 regional centers and investments.

2. USCIS Issues Third Draft of Adjudications Policy Memo – Several commenters recommended revisions.3. USCIS Holds EB-5 Stakeholder Call on E-Filing Initiative – USCIS is considering integrating EB-5 processes into its electronic filing system.4. New Publications and Items of Interest – New Publications and Items of Interest5. Member News – Member News6. EB-5 Government Agency Links – EB-5 Government Agency Links

Details:

1. USCIS-SEC Call Highlights Complexities of EB-5 Program

U.S. Citizenship and Immigration Services (USCIS) and the Securities and Exchange Commission (SEC) invited interested individuals to participate in a stakeholder teleconference on April 3, 2013, to discuss the EB-5 immigrant investor program. During the call, subject matter experts from the SEC’s Divisions of Corporate Finance, Trading and Markets, Investment Management, and Enforcement discussed securities law compliance in the context of EB-5 regional centers and investments.

Among other things, an SEC representative noted that the definition of a “security” is broad and includes partnership interests. She said it is likely that an EB-5 investment is a security. Offers and sales of securities must be registered unless an exemption applies. Whether registered or not, federal securities law still applies, especially the antifraud provisions, she noted.

Regarding broker-dealer requirements, another SEC representative noted that if a person facilitates EB-5 investments in a U.S. business, he or she is probably engaged in brokerage activities. This means that the person would be subject to the broker-dealer rules, even if the investment is outside the United States. A case-by-case analysis is necessary to determine whether someone needs to register as a broker-dealer. For example, if you solicit the investment or get paid based on the investment, you are a broker-dealer. The same is true for advertising. If you are paid for finding investors, or have a “salesman’s stake,” you might be subject to broker-dealer rules.

If you are not a broker-dealer, you might still be an investment advisor if you are providing investment advice for compensation, another SEC representative noted. Depending on how regional centers are structured, they may have to be registered under the Investment Company Act (ICA), which is very broad. Any issuer that invests or trades in securities through pooled investors may be an investment company and be required to register under the ICA. There are exemptions, so the SEC recommended getting good professional advice from a qualified attorney.

The SEC did not comment on specific scenarios raised by participants or on particular EB-5 practices to avoid. The SEC advised listeners to seek advice from a securities attorney on specific issues.

RECORDING OF CALL (DROPBOX)

USCIS OMBUDSMAN’S EXECUTIVE SUMMARY

2. USCIS Issues Third Draft of Adjudications Policy Memo

U.S. Citizenship and Immigration Services (USCIS) released the third draft of its foundational EB-5 adjudications policy memorandum in February 2013. USCIS first released the memo in November 2011, and released a second draft in January 2012.

Several commenters recommended revisions. Robert C. Divine, Vice President of IIUSA: Association to Invest in the USA, noted that, among other things, the latest draft of the memo opposes a guaranteed right of an investor’s eventual ownership in a particular asset (to be subtracted from capital at risk). He said that USCIS has said this orally in stakeholder meetings and in some adjudications, but never publicly in writing. He also noted that the latest draft clarifies that payment to an investor of a return on an investment (i.e., profit versus redemption of capital) during or after conditional residency is acceptable. The draft also recognizes risk-spreading by a single investment enterprise among multiple projects, but Mr. Divine noted that USCIS has tended to state that the projects must be identified in the I-526 of each investor relying on them. Mr. Divine lamented that the latest draft “fails to provide desperately needed guidance and clarification on many topics,” which he listed in his comments. He said that USCIS “simply is not keeping up with the number of questions that reasonably arise for well-intentioned developers and investors – questions that need predictable answers for prospective planning of major enterprises and projects.” He said the EB-5 program will not be attractive to developers and investors if they can only find out what the rules might be after they have spent “hundreds of thousands or even millions of dollars in project development and marketing and the investors file their I-526 petitions.”

IIUSA urged USCIS to implement the memo but recommended some revisions before finalizing it. IIUSA advocated:

Including language from previous agency interpretation on crediting construction jobs and/or the resulting indirect/induced economic impact to EB-5 investors;
Including language from previous agency interpretation on crediting indirect jobs created outside of a regional center’s boundaries;
Including language from previous agency interpretation on “tenant occupancy” economic model guidance;
Including language from previous agency interpretation on “visitors’ spending” economic input;
Establishing clear and commercially reasonable guidelines on the definition of material change/initial business plans;
Stating specifically that bridge financing can be an approvable use of EB-5 capital;
Barring foreign ownership of regional centers;
Allowing North American Industry Classification System (NAICS) codes of two digits and/or longer to be approved for a regional center’s particular industry sector;
Specifically stating which existing administrative memoranda will be rescinded after the memo is implemented;
Limiting the number of requests for evidence issued to one per regional center business plan and/or economic model; and
Issuing an I-797 approval notice for I-924 amendment applications for “actual” projects seeking pre-approval.

DRAFT USCIS EB-5 MEMO
IIUSA’S COMMENTS
MR. DEVINE’S COMMENTS

3. USCIS Holds EB-5 Stakeholder Call on E-Filing Initiative

U.S. Citizenship and Immigration Services (USCIS) held a stakeholder teleconference on March 28, 2013, concerning its plans to include filing of Form I-526, Immigrant Petition by Alien Entrepreneur, and other forms used in the EB-5 process in USCIS’s “ELIS” (Electronic Immigration System). The Web-based system allows applicants to create an account and file an application online. At the teleconference, a USCIS representative said the agency is integrating EB-5 processes into its electronic system. The I-526 will be the first of four related forms being moved to ELIS. USCIS said the ability to see the status of a case online will also be provided in the future.

DETAILED NOTES ON THE CALL

MORE INFORMATION ON USCIS ELIS

FAQ ON USCIS ELIS

4. New Publications and Items of Interest

Investment-for-visa schemes. An article in Forbes notes, among other things, that investors should beware of false claims that an investment in a venture is safer or guaranteed due to an influx of foreign cash.

Several ABIL members co-authored and edited the Global Business Immigration Practice Guide, released by LexisNexis. The Practice Guide is a one-stop resource for dealing with questions related to business immigration issues in immigration hotspots around the world.

This comprehensive guide is designed to be used by:

Human resources professionals and in-house attorneys who need to instruct, understand, and liaise with immigration lawyers licensed in other countries;
Business immigration attorneys who regularly work with multinational corporations and their employees and HR professionals; and
Attorneys interested in expanding their practice to include global business immigration services.

This publication provides:

An overview of the immigration law requirements and procedures for over 20 countries;
Practical information and tips for obtaining visas, work permits, resident status, naturalization, and other nonimmigrant and immigrant pathways to conducting business, investing, and working in those countries;
A general overview of the appropriate options for a particular employee; and
Information on how an employee can obtain and maintain authorization to work in a target country.

Each chapter follows a similar format, making it easy to compare practices and procedures from country to country. Useful links to additional resources and forms are included. Collected in this Practice Guide, the expertise of ABIL’s attorney members across the globe will serve as an ideal starting point in your research into global business immigration issues.

Order HERE. International customers who do not want to order through the bookstore can order through Nicole Hahn at (518) 487-3004 or [email protected].

Green Card Stories. The immigration debate is boiling over. Americans are losing the ability to understand and talk to one another about immigration. We must find a way to connect on a human level. Green Card Stories does just that. The book depicts 50 recent immigrants with permanent residence or citizenship in dramatic narratives, accompanied by artistic photos. If the book’s profilees share a common trait, it’s a mixture of talent and steely determination. Each of them overcame great challenges to come and stay in America. Green Card Stories reminds Americans of who we are: a nation of immigrants, from all walks of life and all corners of the earth, who have fueled America’s success. It tells the true story of our nation: E pluribus unum–out of many, one.

Green Card Stories has won five national awards. It was named a Nautilus book award silver medal winner, and won a silver medal in the Independent Book Publishers Association’s Benjamin Franklin Award in the multicultural category. The book also won a Bronze Medal in the Independent Publisher’s “IPPY” Awards and an honorable mention for the 2012 Eric Hoffer Book Award. Ariana Lindquist, the photographer, won a first-place award in the National Press Photographers Association’s Best of Photojournalism 2012 and was a finalist for the International Photography Awards. The writer, Saundra Amrhein, was nominated as a finalist on the short list for the 2011 Santa Fe Writers Project Literary Awards. Green Card Stories is also featured on National Public Radio’s photo blog.

For more information, e-mail Lauren Anderson at [email protected] or see the Green Card Stories website.

ABIL on Twitter. The Alliance of Business Immigration Lawyers is now available on Twitter: @ABILImmigration. Recent ABIL member blogs are available on the ABIL blog.

5. Member News

Several ABIL members and firms were listed in Chambers Global 2013:

FosterQuan, LLP (Robert Loughran)
Ivener & Fullmer LLP (Mark Ivener)
Klasko Rulon Stock & Seltzer (H. Ronald Klasko)
Pearl Law Group (Julie Pearl)
Seyfarth Shaw LLP (Angelo Paparelli)
Wolfsdorf Immigration Law Group (Bernard Wolfsdorf)

Other Notable Practitioners:
Francis Chin
Charles Kuck
Cyrus Mehta
Stephen Yale-Loehr

Mark Ivener gave a presentation on an EB-5 panel on April 19, 2013, at the EB-5 Investment Visa Match-Making Forum in the City of Industry, California. Mr. Ivener’s speech was “EB-5 for Investors.”

Klasko, Rulon, Stock & Seltzer, LLP held its Annual Spring Seminar on April 23, 2013, at the Radisson Plaza-Warwick Hotel in Philadelphia, Pennsylvania. Topics will include legislation, USCIS policies and practices, CBP programs, J-1 waivers, university/hospital roundtable, corporate roundtable, employment eligibility verification, travel issues, prevailing wage issues, and more. H. Ronald Klasko spoke at the seminar. MORE INFORMATION

Charles Kuck has published several new blog entries. “Three Ways To Get Ready for Immigration Reform” “USCIS and Why You Need an Immigration Attorney”

Robert Loughran organized and moderated a full-day EB-5 Immigrant Investor Summit for Attorneys and Developers in Dallas, Texas, on March 15, 2013. The event was sponsored by ILW. Mr. Loughran independently presented on “source of funds issues” in Form I-526, Immigrant Petition by Alien Entrepreneur.

Cyrus Mehta has published a new blog entry. “212(k) Waiver Victory Teaches That It’s Not Worth Manipulating the Immigration System To Settle Personal Disputes“.

Angelo Paparelli has published several new blog entries. “The Xenophobes Can’t Kill Immigration Reform – But What Should CIR Supporters Do Now?” “Rethinking Immigration: If America Will Welcome More Entrepreneurs, Why Not More Creatives?” “Will the New Labor-Business Accord Produce an Immigration Death Panel?”

Mr. Paparelli was quoted in Law360 on April 18, 2013, in “Immigration Reform Bill Offers Employers A Mixed Bag.” He said, “I think the fact that the U.S. Chamber [of Commerce] and the AFL-CIO reached a consensus on a lesser-skilled worker visa is wonderful, but the numbers make the program illusory,” and noted that the cap on W visas was too low to fill the positions employers need.

Bernard Wolfsdorf has published a blog entry. “Update on Wait Lines for Chinese EB-5 Investors – Is It Really Good News?”

Stephen Yale-Loehr was quoted on CNN.com on April 18, 2013, in “Immigration Reformers Seek To Avoid Déjà Vu.” Among other things, he noted that “[t]he chances of getting something enacted this year are less than 50% because of the short number of legislative days, and the House Republicans may not feel the same sense of urgency to enact immigration reform legislation.”

Mr. Yale-Loehr was quoted on WBEZ in a transcript of a radio interview. He said he thinks the E-2 visa “is a good example of a true entrepreneurial visa. We should try to make it easier for people who want to do that to come to the United States more easily in the future, and to be able to get a permanent green card.”

Mr. Yale-Loehr was quoted by ABC online on April 16, 2013, in “How Unlimited Visas Could Affect Immigration.” He noted that green cards for spouses and children of permanent residents are in demand and backlogged.

ABIL members participated in the Invest in America Summit in Shanghai. At the Invest in America Summit in Shanghai from March 15-18, 2013, Mr. Klasko, Mr. Wolfsdorf, and Mr. Yale-Loehr were featured as VIP speakers. ABIL also hosted a booth to offer resources to attendees of the summit. Featured in the photo are (left to right) Mr. Wolfsdorf, Mr. Yale-Loehr, and Laura Danielson.