EB-5 Regional Economic Development Advocacy Conference Handbook

7th Annual

EB-5 REGIONAL ECONOMIC DEVELOPMENT ADVOCACY CONFERENCE May 7-9, 2014 HYATT REGENCY HOTEL CAPITOL HILL • WASHINGTON DC. Conference Handbook

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

Welcome

Welcome

Table of Contents 4 Welcome 5 Map of Capitol Hill 6 Hotel Map 7 Exhibit Hall Map 8-11 Conference Schedule 11 Legal Disclaimers

PANELS 13 Securties Law Perspectives on the EB-5 Program 43 EB-5 Project Due Diligence 49 Best Practices in EB-5 Public Private Partnerships 51 EB-5 as a U.S. Job Creating Source of Foreign Direct Investment 57 EB-5 Advocacy: Educating the Public & Congress About the Growing Economic Contribution of the EB-5 Regional Center Industry to the United States 91 Guests of Honor 107 Update on USCIS Policies & Administrative Procedures 135 Thinking Global: Diversifying the EB-5 Investor Marketplace & Increasing Competition for Immigrant Investors 143 EB-5 Retrogression Predictions (and Consequences) 153 Building International Partnerships in China, the Largest EB-5 Investor Market

Board of Directors PRESIDENT K. David Andersson (2010-Present) Whatcom Opportunities Regional Center

VICE-PRESIDENT Robert C. Divine (2010-Present) Baker Donelson Bearman, Caldwell & Berkowitz, PC

SECRETARY-TREASURER Robert G. Honts (2010-present) Texas Lone Star Enterprises, LLC

DIRECTORS George W. Ekins (2012-present) American Dream Fund, Inc.

William P. Gresser (2010-present) EB-5 NY State Regional Center

Daniel J. Healy (2012-present)

Honorary Members DIRECTOR EMERITUS Henry Liebman Founding Director (2005-2012) American Life, Inc.

PRESIDENT EMERITUS Stephen W. Yale-Loehr Founding President/CEO (2005-2010)

Civitas Capital Management

Miller Mayer, LLP

Patrick F. Hogan (2010-present)

Staff

CMB Regional Centers

Tom Rosenfeld (2011-present)

EXECUTIVE DIRECTOR Peter D. Joseph (2010-present)

CanAm Enterprises, LLC

Ex-Officio

Jay Peak Resort, Inc.

William J. Stenger (2010-present)

Peter D. Joseph, Executive Director

Allen J. Wolff, Marketing and Communications Coordinator Ashley Sanislo Casey, Advocacy/ Research Coordinator

Lee Li, Data Management Intern

President’s Advisory Council

No copyright claim on any U.S. government or proprietary materials included herein with permission from appropriate parties. Email info@iiusa.org for permission to reprint any IIUSA materials herein that are covered by copyright.

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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Welcome

Welcome Letter from K. David Andersson, IIUSA President DEAR CONFERENCE ATTENDEES:

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n behalf of all IIUSA Officers, Directors, and Members, welcome to the 7th Annual IIUSA EB-5 Regional Economic Development Advocacy Conference! We are pleased to be able to bring you this year’s conference in our nation’s capital with the help of our generous sponsors. Thanks to your support, each conference we host continues to be our biggest and best one yet. The agenda has been carefully planned with informative panels and relevant speakers, aimed at empowering you as an advocate for the EB-5 Regional Center industry.

A special thank you to those who made the trip overseas to join us for this important conference. Our industry is truly a global one which requires cooperation on an international scale for suc¬cess. Your attendance at this year’s IIUSA Advocacy Conference reflects that reality, and the will to build the necessary worldwide relationships to see the EB-5 Regional Center industry flourish for the long term. Thank you for making the trip.

As the trade association for an industry that consists of so many different professions, we at IIUSA believe in coming together for in-person collaboration and education, allowing us to as¬sess the state of the industry and how we can cooperate for success. This conference is an opportunity for the industry to have a strong and unified presence in our nation’s capital, demonstrating the positive economic impacts of the Program and warranting permanent authorization through an act of Congress.

Less than sixteen months remain on the current authorization of the EB-5 Regional Center Program, while visa usage inches closer to backlog and USCIS processing times remain un¬reliable.

That is why IIUSA’s four-point advocacy platform is designed to address those issues through permanent au¬thorization of the Program, maximized capacity for econom¬ic impact through augmented annual visa allocation, and standardized processing times – always with an eye towards maintaining Program integrity. Accomplishing these im¬peratives while Congress considers comprehensive reform of the U.S. immigration system will require unprecedented collective effort by the industry to make ensure the Program is made a permanent and success tool of economic development in the 21st century.

Thank you to all of our sponsors, speakers, and attendees for making this year’s conference one to remember. I hope it is a productive and enjoyable event.

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Note from the Editor, Peter D. Joseph, IIUSA Executive Director WELCOME REGIONAL CENTER INDUSTRY!

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hank you for coming to the 7th Annual Regional Economic Development Advocacy Conference. As your industry representative, we at IIUSA consider it our re¬sponsibility to deliver timely, data-driven, and comprehensive industry intelligence that keeps you informed when making decisions in the marketplace. The 2014 IIUSA Advocacy Conference Handbook serves as a resource to do just that and will be your comprehensive guide throughout the Conference.

The collection of information in this Handbook is intended to capture the many moving parts, trends, and developments in the EB-5 Regional Center Program (the “Program”) as of today - and how the industry, through IIUSA, is shaping the Program’s future. Many of the enclosed articles and reports are work of IIUSA members and staff, published in IIUSA’s Regional Center Business Journal. They are based on IIUSA’s work in Regional Center industry advocacy, research, and educa-tion - founded on substantial data collection, much of which is through FOIA requests, and analysis. Also enclosed are several articles provided by speakers as well as industry-specific press releases and government documents.

Like the handbook, the schedule, including panelists and speakers, were carefully designed and selected to deliver the most engaging and educational experience to our guests. We are proud to bring you such a robust and well-rounded program that we are sure you will enjoy.

In addition to the conference handbook, I encourage guests to utilize the IIUSA DC Conference mobile app. Here you can access all event information, including the contents of both the handbook and advocacy toolkit as well as information about Washington, DC and a list of conference attendees.

It is because of you that the Program continues to deliver recordbreaking statistics of capital formation and U.S. job creation. I consider it a privilege to represent an industry that utilizes the opportunities of globalization to address the do¬mestic issue of unemployment. By working together, we can continue to build on your success to make this industry a permanent and successful part of 21st century U.S. econom¬ic development policy. I hope you find both the Handbook, schedule, advocacy toolkit and event-specific mobile app useful in your daily pursuit to cre¬ate U.S. jobs in the Regional Center industry. Your feedback is most welcome on any and all aspects of the Conference!

Sincerely,

Sincerely yours in service,

K. David Andersson IIUSA President

Peter D. Joseph IIUSA Executive Director

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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★★★ WEDNESDAY, MAY 7th, 2014 ★★★ TIME

ACTIVITY

LOCATION

9:00 am - 2:00 pm

EARLY CHECK-IN

Registration/Help Desk

IIUSA COMMITTEE MEETINGS (By Invitation Only):

• Best Practices Committee • Public Relations Committee

9:00 am - 10:15 am

IIUSA COMMITTEE MEETINGS (By Invitation Only):

• Public Policy Committee • Editorial Committee

10:30 am - 11:45 am 12:00 pm - 1:30 pm

NEW/PROSPECTIVE MEMBER LUNCHEON

1:00 pm - 1:30 pm

IIUSA COMMITTEE MEETINGS (By Invitation Only):

• Membership Committee

Bryce Room / YellowStone-Everglades Room Bryce Room / YellowStone-Everglades Room Yellowstone-Everglades Room Bryce Room

conference schedule

MEMBERSHIP MEETING (IIUSA Members Only)

3:00 pm - 6:00 pm SPONSORED BY:

3:00 pm - 3:15 pm

Welcoming Remarks from K. David Andersson, IIUSA President: “State of the Association & Industry”

3:15 pm - 3:30 pm

Historical Perspective from Robert C. Divine, IIUSA Vice President Committee Recommendations for Vote (items currently under consideration by the respective committees are included in italic below)

3:30 pm - 5:00 pm

Bylaws (Chair: Bob Honts, CEO, Lone Star Texas Enterprises; Secretary-Treasurer, IIUSA) • Adding 4 additional Directorships to the Board of Directors • Finding a voice for public interest groups in IIUSA Budget & Finance (Chair: Bob Honts, CEO, Lone Star Texas Enterprises; Secretary-Treasurer, IIUSA) • 2014 Budget Report • 12 month budget Nominations (Chair: Bill Stenger, CEO, Jay Peak Resort; Director, IIUSA) • Directors/Officers elections

Main Room (Regency A)

Guest of Honor: The Honorable Senator Patrick Leahy, Chairman, Senate Judiciary Committee

5:00 pm – 5:30 pm

SPONSORED BY:

5:30 pm – 6:30 pm

5:30 pm - 6:30 pm

•

Committee Reports Best Practices (Chair, Daniel J. Healy, CEO, Civitas Capital Group; Director, IIUSA)

•

Editorial (Chair: Lincoln Stone, Partner, SGG Immigration Law)

•

Membership (Chair: Kyle Walker, CEO, Green Card Fund)

•

Public Policy (Chair: Angelique Bruner, CEO, EB5 Capital)

•

Public Relations (Chair: Ron Rohde, CP Homes)

•

Public Interest Group (Chair, Bob Honts, CEO Texas Lone Star Enterprises; Secretary-Treasurer, IIUSA) EXHIBITOR SETUP

Exhibit Hall (Regency Foyer)

WELCOME RECEPTION

• Hors d’oeuvres • Cocktails (2 tickets/attendee) 6:30 pm - 8:00 pm

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SPONSORED BY:

Foyer/Regency A

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

★★★ THURSDAY, MAY 8th, 2014 ★★★ TIME

ACTIVITY

LOCATION

7:30 am – 8:30 am

PLATED BREAKFAST

Main Room (Regency A)

PANEL ONE:

“Securities Law Perspectives on the EB-5 Program”

8:00 am - 9:00 am

• •

Panelists: Steve Cohen, Associate Director, Division of Enforcement, U.S. Securities and Exchange Commission (SEC)

Main Room (Regency A)

Kavita Jain, Director, Emerging Regulatory Affairs, Financial Industry Regulatory Authority (FINRA) PANEL TWO:

“EB-5 Project Due Diligence”

Panelists: Wiliiam P. Gresser, President, EB-5 New York State Regional Center; Director, IIUSA

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Daniel J. Healy, CEO, Civitas Capital Group; Director, IIUSA

•

Peter D. Joseph, Executive Director, IIUSA

•

Dawn Lurie, Shareholder, Polsinelli

Main Room (Regency A)

conference schedule

9:00 am – 9:50 am

•

PANEL THREE:

“Best Practices in EB-5 Public Private Partnerships”

• 9:55 am – 10:50 am

Panelists: K. David Andersson, President, IIUSA; President, Whatcom Opportunities Regional Center

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Patrick F. Hogan, President, CMB Regional Centers; Director; IIUSA

•

Tom Rosenfeld, President, CanAm Enterprises; Director, IIUSA

•

William J. Stenger, President, Jay Peak Resorts; Director, IIUSA

10:50 am - 11:00 am

BREAK

11:00 am - 11:15 am

“EB-5 as a U.S. Job Creating Source of Foreign Direct Investment”

Main Room (Regency A)

KEYNOTE SPEAKER ADDRESS:

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Aaron Brickman, Deputy Executive Director, SelectUSA

Main Room (Regency A)

PANEL FOUR:

“EB-5 Advocacy: Educating the Public & Congress About the Growing Economic Contribution of the EB-5 Regional Center Industry to the United States” 11:20 am - 12:05 pm

12:05 pm – 1:30 pm 1:30 pm - 3:30 pm

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Panelists: Lisa Atkins, Senior Manager of Immigration Policy, US Chamber of Commerce

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Tom Loeffler, Senior Counsel, Akin Gump Hauer Strauss & Feld, LLP

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Liz Poston, Executive Vice President, Rasky Baerlein | Prism

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Matt Virkstis, Principal, Cartwright & Virkstis PLATED LUNCHEON & PANEL:

“Importance of EB-5 Industry Advocacy” EVENT BREAK/CAPITOL HILL MEETINGS/NETWORKING

(Exhibit Hall Will Be Open)

Main Room (Regency A)

Main Room (Regency A) Capitol Hill (on your own)

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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THURSDAY, MAY 8TH, 2014, CONTINUED ACTIVITY

TIME

LOCATION

“WELCOME BACK MINGLE” & CONGRESSIONAL MEETINGS REPORTS

(with IIUSA Staff)

3:30 pm - 4:00 pm

Main Room (Regency A)

SPONSORED BY:

GUEST OF HONOR:

4:00 pm – 4:45 pm

Nicholas Colucci, Director of Immigrant Investor Program Office,

4:45pm – 5:30 pm

Chris Licht, Vice President of Programming, CBS News, Executive

U.S. Citizenship & Immigration Services

Main Room (Regency A)

GUEST OF HONOR:

conference schedule

Producer, CBS This Morning

Main Room (Regency A)

CONFERENCE RECEPTION

• Hors d’oeuvres • Cocktails (2 tickets/attendee) • Live Band SPONSORED BY:

Foyer/Regency A

5:30 pm - 7:30 pm

★★★ FRIDAY, MAY 9th, 2014 ★★★ TIME

ACTIVITY

LOCATION

7:30 am – 8:30 am

CONTINENTAL BREAKFAST

Main Room (Regency A)

PANEL ONE:

“Update on USCIS Policies & Administrative Procedures”

8:00 am - 9:00 am

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Panelists: Robert C. Divine, Chair of Global Immigration Practice, Baker Donelson, Bearman, Caldwell & Berkowitz, PC; IIUSA Vice President

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H. Ronald Klasko, Partner, Klasko Rulon Stock & Seltzer, LLP

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Carolyn S. Lee, Partner, Miller Mayer, LLP

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Lincoln Stone, Partner, Stone Grzegorek & Gonzales LLP; Chair, IIUSA Editorial Committee

Main Room (Regency A)

PANEL TWO:

“Thinking Global: Diversifying the EB-5 Investor Marketplace & Increasing Competition for Immigrant Investors” 9:05 am – 9:55 am

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Panelists: Angelique Brunner, President, EB5 Capital; Chair, IIUSA Public Policy Committee

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Gonzalo Lopez-Jordan, Managing Partner, American Regional Center Group

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Daniel Perron, Managing Partner, Henley & Partners

10:00 am – 10:10 am

Main Room (Regency A)

BREAK KEYNOTE PANEL:

“EB-5 Retrogression Predictions (and Consequences)”

10:10 am – 10:55 am

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•

Panelists: Charles Oppenheim, Chief, Visa Controls Office, U.S. Department of State

•

Bernard Wolfsdorf, Managing Partner, Wolfsdorf & Rosenthal

Main Room (Regency A)

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

FRIDAY, MAY 9TH, 2014, CONTINUED ACTIVITY

TIME

LOCATION

PANEL THREE:

“Building International Partnerships in China, the Largest EB-5 Investor Market”

•

Panelists: K. David Andersson, President, IIUSA; President, Whatcom

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Cindy Chen, Business Relations Manager, American Chamber of Commerce South China

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Kelvin Ma, Partner, Shanghai Demei Law Firm; Chairman, IIUSA International Membership Sub-committee

The panel will also include a signing ceremony with officials of Provincial Entry-Exit Associations to formalize IIUSA’s association-to-association partnerships in China.

Chinese Delagates: Wenwen Chen, Deputy Chairwoman, Zhejiang Association of Exit & Entry Advisory Service

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Zhaoxu Chen, Shanghai Exit & Entry Association

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Xuguang Guo, Deputy Chairman, Sichuan Personal Exit & Entry Intermediary Association

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Qingbo Lu, Chairman, Fujian Exit & Entry Association

•

Xiaoliang Lu, Translator, Fujian Exit & Entry Association

•

Yu Wang, Chairwoman, Chongqing Self-funded Immigration Service Association

•

Shoulong Zeng, Chairman, Hubei Exit & Entry Association

•

Danhua Zhang, Chairwoman, Liaoning Personal Exit&Entry Intermediary Association

•

Rong Zhang, Deputy Chairwoman, Beijing Entry & Exit Service Association

“Closing Remarks”

12:05 pm – 12:15 pm

Main Room (Regency A)

conference schedule

11:00 am - 12:05 am

•

Main Room (Regency A)

LEADERSHIP LUNCHEON

12:30 pm - 2:30 pm

• • •

Board of Directors, President’s Advisory Council, Government/Public Affairs (By Invitation Only) 12:30-1:00 pm: Lunch 1:00-1:45 pm: Full Leadership Meeting 1:45-2:30 pm: Board of Directors Meeting

Columbia Room

LEGAL DISCLAIMERS •

IIUSA has not reviewed and does not endorse or recommend any materials or exhibits provided by third parties at this event.

•

IIUSA does not undertake, and has no responsibility, to determine whether any such materials or exhibits are in compliance with applicable federal or state securities laws.

•

IIUSA does not endorse or recommend specific Regional centers or capital investment projects.

•

IIUSA does not give professional legal or financial advice of any kind. Contact a properly credentialed professional in these regards.

•

By no means should the enclosed materials be construed as legal or financial advice of any kind. The presentations at the conference, and the associated documents provided to you in this Handbook, or via flash drive/mobile app, are for educational purposes only. If you have specific questions about EB-5 matters, seek experienced and professional advice from a properly credentialed attorney (Hint: There are plenty here at the event!).

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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Welcoming the World as Partners in Regional Economic Development

IIUSA is excited to officially announce our 2014 EB-5 International Investment & Economic Development Forum, to be held Wednesday October 22nd to Friday October 24th at The Westin St. Francis on Union Square in San Francisco. It is the ideal location to welcome our international partners to one of the most beautiful cities in the U.S. to attend the annual event that has become the industry gathering of the year since its inception in 2011.

The three-day forum will include a large EB-5 trade show, expert speakers/panels from across the industry and a bevy of networking opportunities in a relaxed atmosphere.

SAN FRANCISCO | OCTOBER 22-24, 2014 Westin St. Francis | www.westinstfrancis.com 12

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

THURSDAY, MAY 8TH | 8:00AM–9:00AM | MAIN ROOM (REGENCY A)

“Securities Law Perspectives on the EB-5 Program” PANELISTS:

securities law perspectives

Steve Cohen, Associate Director, Division

of Enforcement, U.S. Securities and Exchange Commission (SEC)

Kavita Jain, Director, Emerging Regulatory Issues, Financial Industry Regulatory Authority (FINRA)

PANEL SPONSOR:

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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IIusa Supports Inter-Agency Collaboration to Protect the Integrity of the EB-5 Program

BY PETER D. JOSEPH

IIUSA EXECUTIVE DIRECTOR

T

securities law perspectives

he Association to Invest In the USA (IIUSA), the national membership-based industry association of active EB-5 Regional Centers, supports the recent action of the U.S. Securities and Exchange Commission (SEC) to stop a Regional Center and developer in Chicago from making allegedly misleading claims to investors who sought U.S. permanent residence through their investment and resulting economic impact. (See SEC press release). IIUSA also applauds U.S. Citizenship and Immigration Services (USCIS) for its cooperation with SEC in the matter – to protect the integrity of the EB-5 Program.

“This is exactly how the system should work,” said K. David Andersson, President of IIUSA. “This initial enforcement step by the

SEC shows project developers and Regional Centers that compliance with securities laws is not optional. Of course, investors should perform thorough due diligence in choosing investments, but this shows that our nation’s securities laws have real remedies to stop the few bad actors that can be found in any industry.”

“IIUSA regularly provides education to members on securities law compliance, and being forthright with investors is obviously at the top of the list of the best practices we promote in the area,” said Peter D. Joseph, Executive Director of IIUSA. “We welcomed a former SEC Chairman to discuss best practices in compliance at our most recent industry-wide conference. I expect to see increasing interest in our securities law compliance education seminars going forward.”

In 2011, the Senate Judiciary Committee held a hearing about the EB-5 regional center program. Senators had questioned whether additional legislation is needed to prevent fraud on EB-5 investors. Robert C. Divine,

Vice President of IIUSA and an attorney at Baker Donelson law firm, testified that the temptation of securities issuers to mislead investors is not unique to the EB-5 program, and U.S. law already provides for criminal and civil penalties to prevent, stop and remedy securities fraud. “Now we see it in action,” said Divine. “Let the buyer of securities beware of crooks, but let the crooks beware of the law and its enforcers.”

IIUSA estimates that since 2005, the EB-5 Program has contributed over $4.7 billion of foreign direct investment (“FDI”) into the U.S. economy, creating over 95,000 American jobs and generating over a $1.0 billion in federal/state/local tax revenue. Trends indicate that 2013 will be record-breaking, accounting for over $2.0 billion in FDI, creating over 40,000 American jobs and hundreds of millions of tax revenue. IIUSA welcomes the inter-agency collaboration between the SEC and USCIS in order to allow the Program to continue its growing economic contribution to the U.S. ■

IIUSA Supports Court Order to Begin Returning Funds to Investors in SEC Enforcement Action Against Non-Member Regional Center

BY PETER D. JOSEPH IIUSA EXECUTIVE DIRECTOR

O

n Friday April 19, in the U.S. Securities and Exchange Commission’s (SEC) enforcement action against the Intercontinental Regional Center Trust of Chicago (a non-IIUSA member Regional Ceter), et.

14

al., the Honorable Judge Amy St. Eve issued an order modifying the court’s asset freeze order and directing the escrow agent to return escrowed funds directly to investors. This order follows a motion by the SEC to modify the asset freeze, which was supported by an IIUSA amicus brief and agreed to by the defense. IIUSA fully supports the court’s ac-

tion. It demonstrates that U.S. securities laws protect investors from fraud and breach of contract – efficiently making investors as financially whole as possible, while respecting individual choice, by returning the frozen funds directly to investors. The escrow agent will begin working on returning the funds directly to each investor. ■

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

JOBS ACT RULES PUBLISHED AND IN EFFECT T

he U.S. Securities and Exchange Commission (SEC) has issued regulations implementing a portion of the Jumpstart Our Business Startups Act (JOBS Act) allowing an issuer enjoying exemption from registration under Rule 506 of Regulation D to engage in general solicitation and advertising even in the United States. This rule provides a new opportunity for marketing Reg. D compliant securities, but with it comes new responsibilities.

In a separate final rule, the SEC now disqualifies from the Reg. D exemption any offering that includes a person who is a “bad actor� due to certain criminal convictions, SEC disciplinary actions or other enumerated regulatory violations. Covered persons include the issuer, affiliates, officers, directors and significant owners of the issuer, as well as persons compensated for soliciting investors.

A reminder: The new rule authorizing general solicitation under Reg. D does not excuse issuers from compliance with the rules concerning registered brokers. Many EB-5 issuers who have become accustomed to using foreign sales agents under the Reg. S exemption for purely foreign offerings may be tempted to use those same or other unregistered agents for general solicitation in offerings that are not Reg. S qualified. But such a practice may be prohibited by rules requiring the use of registered brokers. â–

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

securities law perspectives

While the new rule provides the Reg. D compliant issuer another pathway for raising capital, if general solicitation and advertising are used, the issuer will have the added obligation of taking reasonable steps to verify accredited investor status. The SEC opted not to provide a listing of safe harbors or to prescribe a uniform verification method for all circumstances, preferring a flexible approach that allows for innovation and adapting to changing market practices. In its commen-

tary, however, the SEC advised that the determination of what constitute reasonable steps would depend on several interconnected factors, including the type of accredited investor, the amount of information about the investor that is available, the nature of the offering, the manner of solicitation, and the terms of the investment. The SEC cautioned that if solicitation is by means of a publicly available and unrestricted website, for example, the issuer must do more than confirm that the investor has checked a box on a questionnaire.

Also, the investor must in fact be accredited or the issuer must have a reasonable belief that the investor is accredited. The new rule is welcome. But determining how to verify the accredited status of foreign investors, few of whom would have filed tax forms with the U.S. Internal Revenue Service or would be susceptible to a meaningful credit report from a U.S. credit reporting agency, will be one of the most significant challenges for EB-5 issuers.

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U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 22615 / February 8, 2013 Securities and Exchange Commission v. A Chicago Convention Center, LLC, Anshoo Sethi, and Intercontinental Regional Center Trust of Chicago, LLC, Civil Action No. 13-cv-982 SEC HALTS $150 MILLION INVESTMENT SCHEME TO DUPE FOREIGN INVESTORS AND EXPLOIT IMMIGRATION PROGRAM The Securities and Exchange Commission today announced charges and an asset freeze against an individual living in Illinois and two companies behind an investment scheme defrauding foreign investors seeking profitable returns and a legal path to U.S. residency through a federal visa program.

securities law perspectives

The SEC alleges that Anshoo R. Sethi created A Chicago Convention Center (ACCC) and Intercontinental Regional Center Trust of Chicago (IRCTC) and fraudulently sold more than $145 million in securities and collected $11 million in administrative fees from more than 250 investors primarily from China.

Sethi and his companies duped investors into believing that by purchasing interests in ACCC, they would be financing construction of the “World’s First Zero Carbon Emission Platinum LEED certified” hotel and conference center near Chicago’s O’Hare Airport. Investors were misled to believe their investments were simultaneously enhancing their prospects for U.S. citizenship through the EB-5 Immigrant Investor Pilot Program, which provides foreign investors an avenue to U.S. residency by investing in domestic projects that will create or preserve a minimum number of jobs for U.S. workers.

The SEC alleges that Sethi and his companies falsely boasted to investors that they had acquired all the necessary building permits and that several major hotel chains had signed onto the project. They also provided falsified documents to U.S. Citizenship and Immigration Services (USCIS) – the federal agency that administers the EB-5 program – in an attempt to secure the agency’s preliminary approval of the project and investors’ provisional visas. Meanwhile, Sethi and his companies have spent more than 90 percent of the administrative fees collected from investors despite their promise to return this money to investors if their visa applications are denied. More than $2.5 million of these funds were directed to Sethi’s personal bank account in Hong Kong.

Swift coordination between the SEC and USCIS has brought the scheme to a halt in its application stage at USCIS. The SEC filed its complaint under seal earlier this week and obtained an emergency court order to protect the remaining $145 million in investor assets that were at risk of being similarly misappropriated by Sethi and his companies. The case was unsealed this morning.

According to the SEC’s complaint filed in U.S. District Court for the Northern District of Illinois, the EB-5 program enables foreign investors to possibly qualify for a green card if they invest $1 million (or $500,000 in a “Targeted Employment Area” with a high unemployment rate) in a project that creates

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or preserves at least 10 jobs for U.S. workers, excluding the investor and his or her immediate family. Sethi and his companies used the lure of a pathway to U.S. citizenship to convince investors to wire a minimum of $500,000 apiece plus a $41,500 “administrative fee” to U.S. bank accounts. These administrative fees are separate from the investment capital that the EB-5 program requires to be deployed into a job-creating enterprise. More than $11 million in administrative fees were collected with the claim that they were fully refundable to investors if their visa applications are rejected.

Sethi and his companies have instead been spending those funds.

The SEC alleges that Sethi submitted false claims about the project to USCIS. Among the phony documentation that he provided to the agency in seeking preliminary approval for the project under the EB-5 program were a comfort letter from Hyatt Hotels that was not genuine, and a false backup financing letter from the Qatar Investment Authority.

The SEC further alleges that the offering materials falsely stated that construction would begin in summer 2012 and occupancy of the first tower would occur in early spring 2014. A search of the Chicago Building Permits database for the project address shows that the only recent permits are for a tent for a purported groundbreaking ceremony held in November 2012, a demolition permit, construction of a fence, and a minor electrical wiring permit.

securities law perspectives

The SEC’s complaint alleges that Sethi and his companies made a number of misrepresentations about the project to dupe investors. Offering materials stated that investors’ funds would help build “a convention center and hotel complex, including convention and meeting space, five upscale hotels, and amenities including restaurants, lounges, bars, and entertainment facilities.”

Sethi and his companies prominently featured in their marketing materials the purported participation of three major hotel chains in the project: Hyatt, Intercontinental Hotel Group, and Starwood Hotels. However, none of these hotel chains have executed franchise agreements to include a brand hotel in this project as represented to investors in the offering materials. Two of the chains actually terminated prior deals with other Sethi-related entities more than two years before these offering materials were circulated to investors.

According to the SEC’s complaint, the 29-year-old Sethi misrepresented to investors in offering materials that he has “over fifteen years of experience in real estate development and management, specifically in the lodging area.” Offering materials also misleadingly state that the project’s developer Upgrowth LLC has “more than 35 years of experience.” Illinois corporate records show that Upgrowth was just recently organized in 2010.

The SEC’s complaint alleges that Sethi, ACCC, and IRCTC violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. In addition to the temporary restraining order and asset freeze granted by the court, the SEC’s complaint seeks permanent injunctions and other monetary relief.

The SEC’s investigation, which is continuing, has been conducted by Mika M. Donlon and Adam J. Eisner under the supervision of C. Joshua Felker. Patrick M. Bryan will lead the litigation. The SEC acknowledges the substantial assistance of the USCIS. SEC Complaint

http://www.sec.gov/litigation/litreleases/2013/lr22615.htm

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4/24/13

Investors to Receive Their Entire Investments Back After SEC Halted Scheme Exploiting Immigration Program; Release No. 2013-70; April 23, 2013

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Investors to Receive Their Entire Investments Back After SEC Halted Scheme Exploiting Immigration Program FOR IMMEDIATE RELEASE 2013-70 Washington, D.C., April 23, 2013 — The Securities and Exchange Commission today announced that investors in a fraudulent investment scheme that offered foreign investors a path to citizenship will get their money back promptly thanks to the SEC’s recent court action. A federal district court judge has ordered the return of all investors’ principal investment in the fraudulent securities offering.

Additional Materials

securities law perspectives

Court Order Just two months ago, the SEC charged Anshoo R. Sethi and two companies he created in Chicago to sell more than $147 million in securities to purportedly finance the construction of a hotel and conference center near O’Hare Airport. The SEC alleged that Sethi and his companies misled Chinese investors about both the purported investment opportunity and the prospect of gaining legal U.S. residency through the EB-5 Immigrant Investor Pilot Program.

The SEC filed its complaint in federal court in Chicago and obtained an emergency court order to freeze investor assets that were at risk of being misappropriated. Sethi and his companies then terminated the offering and consented to the SEC’s motion to return all of the funds held in escrow to investors.

U.S. District Court Judge Amy St. Eve modified the asset freeze order on April 19 and directed the return of more than $147 million in escrowed funds to investors. The litigation continues as the SEC seeks further monetary relief and permanent injunctions against Sethi and his companies.

“Obtaining the speedy return of investor funds in cases like this is at the core of the SEC’s mission,” said Stephen L. Cohen, Associate Director of the SEC’s Division of Enforcement. “We will continue to work closely with U.S. Citizenship and Immigration Services when questions arise about investments involving the EB-5 Program.” ###

http://www.sec.gov/news/press/2013/2013-70.htm Home | Previous Page

Modified: 04/23/2013

www.sec.gov/news/press/2013/2013-70.htm

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U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 22945 / March 19, 2014 Securities and Exchange Commission v. A Chicago Convention Center, LLC, Anshoo Sethi, and Intercontinental Regional Center Trust of Chicago, LLC, Civil Action No. 13-cv-982(N.D. Ill.) SEC Obtains Settlements in $150 Million EB-5 Immigrant Investor Offering Fraud

joint-and-several liability for over $11.5 million in disgorgement and prejudgment interest, subject to offsets for certain amounts refunded or credited to investors; permanent injunctions against future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; an order enjoining and restraining defendants for twenty years from offering or selling securities issued by any of the defendants or issued by any entity owned or controlled by Sethi; a civil penalty of $1 million against defendant Sethi; civil penalties of up to $1.45 each against ACCC and IRCTC; ACCC and IRCTC agreed to wind up and dissolve after satisfying their payment obligations.

securities law perspectives

On March 17, 2014, the U.S. District Court entered a consent judgment against defendants Anshoo R. Sethi, A Chicago Convention Center, LLC (ACCC) and Intercontinental Regional Center Trust of Chicago, LLC (IRCTC) for their roles in raising approximately $158 million dollars from close to 300 investors as part of a fraudulent offering that targeted foreign nationals who sought to invest in the U.S. economy and gain a legal pathway to citizenship through the EB- 5 Immigrant Investor Program, as alleged in the SEC's February 2013 complaint. The Final Judgment provides the following relief:

The Defendants will satisfy their payment obligations, at least in part, by paying over the funds frozen in certain bank accounts pursuant to the Court's asset freeze order in this case and also by selling property held in ACCC's name.

The Commission filed its case on February 6, 2013, and obtained a temporary restraining order and asset freeze against Sethi, ACCC and IRCTC. On April 19, 2013, the Court granted the Commission's motion to return to investors the entire $147 million of principal that had been frozen pursuant to the SEC's motions. The agreed upon settlement resolves, among other things, the disposition of approximately $11 million in administrative fees paid by investors, which are the only funds remaining to be returned in order to make the investors whole.

Sethi, ACCC and IRCTC neither admitted nor denied the SEC's allegations.

See Also: Litigation Release No. 22615 SEC Complaint

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Case: 1:13-cv-00982 Document #: 61 Filed: 04/04/13 Page 1 of 6 PageID #:2501

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Industry Professionals > Regulation > Guidance > Interpretive Letters

FINRA Rule 2111 – Suitability The suitability rule applies to member recommendations of a security or investment strategy involving a security to foreign nationals in connection with the EB-5 Immigrant Investor Program.

August 26, 2013 Mr. Brian Sweeney Compliance Department Trustmont Financial Group, Inc. 200 Brush Run Road Greensburg, PA 15601 Re: Request for Interpretive Guidance on FINRA Rule 2111 (Suitability) in Relation to EB-5 Program Securities Transactions Dear Mr. Sweeney:

securities law perspectives

By letter dated April 25, 2013, you request guidance on the applicability of FINRA Rules, and in particular Rule 2111 (Suitability), to FINRA members' recommendations of securities transactions in connection with the EB-5 Immigrant Investor Program (EB-5 Program).

Background Trustmont Financial Group, Inc. (Trustmont) is a registered broker-dealer and FINRA member that is considering whether to offer investors securities in connection with the EB-5 Program. The Immigration and Nationality Act of 1990 provides a method for foreign nationals to obtain U.S. residency by investing in domestic projects that will create or preserve a minimum number of jobs for U.S. workers. Known as the EB-5 Program and administered by the U.S. Citizenship and Immigration Services, this program provides that foreign nationals may qualify to obtain U.S. residency if individuals invest $1,000,000 (or at least $500,000 in a "Targeted Employment Area" – i.e., a high unemployment or rural area) in a project that creates or preserves at least 10 jobs for U.S. workers, excluding the investor and his or her immediate family.

You state that "EB-5 programs are typically sold as fractional interests in a pool of investor assets under one of the exemptions from registration such as Regulation D or S" promulgated under the Securities Act of 1933 and that the Securities and Exchange Commission has determined that EB-5 transactions so structured are securities. You suggest that FINRA should not exercise jurisdiction over securities transactions related to the EB-5 Program because "the purpose of an EB-5 project is primarily the creation of jobs, secondarily to provide an alien investor with a right of residence in the United States, and only [thirdly] to achieve investment performance[.]" You also opine that, "[i]f the jobs and visa motivations are wholly discounted or excluded in suitability determinations, Rule 2111 has the capacity to halt all investment in EB-5 projects, as broker-dealers cannot satisfy the substantial and demanding requirements of Rule 2111 in the sale of an EB-5 investment."

Analysis As a FINRA member firm, Trustmont must comply with FINRA rules. EB-5 Program securities transactions that involve pooled investments sold through private placements raise many of the same concerns as those associated with sales of any private-placement securities. In this regard, as you note in your letter, the SEC recently filed a civil action in federal court alleging securities fraud in connection with EB-5 Program securities transactions. 1 You ask about the applicability of FINRA Rule 2111 to EB-5 Program securities transactions. Because your letter focuses on the EB-5 Program, which is designed to allow foreign nationals to obtain U.S. residency through investment in domestic projects, our response is limited to members' recommendations of securities or investment strategies involving securities to foreign nationals seeking, among other things, U.S. residency.

To the extent that a FINRA member recommends a security or investment strategy involving a security to a foreign national in connection with the EB-5 Program, the suitability rule would apply to the recommendation. The safeguards provided by the suitability rule are no less important where the FINRA member's customers are foreign nationals seeking investment returns and a path to U.S. residency.

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Your main concerns center on two suitability obligations: reasonable-basis and customer-specific suitability. Under the reasonable-basis obligation, a broker-dealer must perform reasonable diligence to understand the nature of a recommended security or investment strategy involving a security, including its potential risks and rewards, and then determine whether there is a reasonable basis to believe the recommended security or investment strategy is suitable for at least some investors. See FINRA Rule 2111.05(a).

FINRA provided extensive guidance on this reasonable-basis obligation as it relates to Regulation D offerings in Regulatory Notice 10-22 (Apr. 2010). FINRA stated that, when recommending a privately-placed security, a brokerdealer "should, at a minimum, conduct a reasonable investigation concerning the issuer and its management; the business prospects of the issuer; the assets held by or to be acquired by the issuer; the claims being made; and the intended use of proceeds of the offering." In the context of a private placement related to the EB-5 Program that a broker-dealer intends to recommend to foreign nationals seeking investment returns and U.S. residency, these same issues should be explored, issues that address the legitimacy and viability of the issuer's enterprise. A broker-dealer also should analyze whether the private placement is consistent with the requirements of the EB-5 Program, such as whether it constitutes an investment in a domestic project that will create or preserve at least 10 jobs for U.S. workers.

goals with respect to an investment. 2 For instance, when a customer is a foreign national who discloses to the member that he or she is seeking U.S. residency by investing in an EB-5 Program securities transaction, such information would become part of the customer's investment profile and must be considered when determining whether the recommended investment is suitable for the particular customer. In this situation, among other customer-specific considerations, the member should evaluate the investment in the context of the customer's goal of obtaining U.S. residency through purchasing an investment that is consistent with the requirements of the EB-5 Program.

securities law perspectives

As to the customer-specific obligation, a broker-dealer must have a reasonable basis to believe that a recommended security or investment strategy involving a security is suitable for a particular customer based on the customer's investment profile. See FINRA Rules 2111(a); 2111.05(b). A customer's investment profile includes, but is not limited to, the customer's age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, and risk tolerance. See FINRA Rules 2111(a); 2111.04. In addition to these specific factors, a customer's investment profile also would include any other information the customer may disclose to the member or associated person in connection with a recommendation, such as particular

We trust that this letter is responsive to your request. Please note that the opinions expressed herein are staff opinions only and have not been reviewed or endorsed by the FINRA Board of Governors. This letter responds only to the issues you have raised based on the facts as you have described them and FINRA Rule 2111, and does not address any other rule or interpretation of FINRA, or all the possible regulatory and legal issues involved. In addition, you should be aware that any changes in the facts as you have described them or any amendments to FINRA Rule 2111 will require further consideration and may cause us to reach a different conclusion.

If you have any questions on this matter, please contact Matthew E. Vitek at (202) 728-8156 or me at (202) 728-8270.

Sincerely, James S. Wrona cc: Robert B. Kaplan Vice President and District Director Philadelphia District Office

1 See SEC v. A Chicago Convention Center, et al., No. 13CV982 (N.D. of Ill. Feb. 6, 2013), at http://www.sec.gov/litigation/complaints/2013/comp-pr2013-20.pdf (complaint) and http://www.sec.gov/news/press/2013/2013-70-order.pdf (order modifying asset freeze).

2 See FINRA Rules 2111(a); 2111.04. FINRA recognizes that the "significance of specific types of customer information will depend on the facts and circumstances of the particular case." Regulatory Notice 12-25, at 11 (May 2012); FINRA Rule 2111.04.

Š2014 FINRA. All rights reserved. FINRA is a registered trademark of the Financial Industry Regulatory Authority, Inc.

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10/4/13

Investor Alert—Investment Scams Exploit Immigrant Investor Program

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Investor Alert: Investment Scams Exploit Immigrant Investor Program The U.S. Securities and Exchange Commission's Office of Investor Education and Advocacy and U.S. Citizenship and Immigration Services are jointly issuing this Investor Alert to warn individual investors about fraudulent investment scams that exploit the Immigrant Investor Program, also known as "EB-5."

securities law perspectives

The U.S. Securities and Exchange Commission's ("SEC") Office of Investor Education and Advocacy and U.S. Citizenship and Immigration Services ("USCIS") are aware of investment scams targeting foreign nationals who seek to become permanent lawful U.S. residents through the Immigrant Investor Program ("EB-5"). In close coordination with USCIS, which administers the EB-5 program, the SEC has taken emergency enforcement action to stop allegedly fraudulent securities offerings made through EB-5.

The EB-5 program provides certain foreign investors who can demonstrate that their investments are creating jobs in this country, with a potential avenue to lawful permanent residency in the United States. Business owners apply to USCIS to be designated as "regional centers" for the EB-5 program.

These regional centers offer investment opportunities in "new commercial enterprises" that may involve securities offerings. Through EB-5, a foreign investor who invests a certain amount of money that is placed at risk, and creates or preserves a minimum number of jobs in the United States, is eligible to apply for conditional lawful permanent residency. Toward the end of the two-year period of conditional residency, the foreign investor is eligible to apply to have the conditions on their lawful permanent residency removed, if he or she can establish that the job creation requirements have been met. Foreign investors who invest through EB-5, however, are not guaranteed a visa or to become lawful permanent residents of the United States. For more details, read the EB-5 Immigrant Investor section of USCIS's website at www.uscis.gov.

The fact that a business is designated as a regional center by USCIS does not mean that USCIS, the SEC, or any other government agency has approved the investments offered by the business, or has otherwise expressed a view on the quality of the investment. The SEC and USCIS are aware of attempts to misuse the EB-5 program as a means to carry out fraudulent securities offerings. In a recent case, SEC v. Marco A. Ramirez, et al., the SEC and USCIS worked together to stop an alleged investment scam in which the SEC claims that the defendants, including the USA Now regional center, falsely promised investors a 5% return on their investment and an opportunity to obtain an EB-5 visa. The promoters allegedly started soliciting investors before USCIS had designated the business as a regional center. The SEC alleged that while the defendants told investors their money would be held in escrow until USCIS approved the business as eligible for EB-5, the defendants misused investor funds for personal use such as funding their Cajun-themed restaurant. According to the SEC's complaint, the investors did not obtain even conditional visas as a result of their www.sec.gov/investor/alerts/ia_immigrant.htm

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investments through the USA Now regional center.

In another case, SEC v. A Chicago Convention Center, et al., the SEC and USCIS coordinated to halt an alleged $156 million investment fraud. The SEC alleged that an individual and his companies used false and misleading information to solicit investors in the "World's First Zero Carbon Emission Platinum LEED certified" hotel and conference center in Chicago, including falsely claiming that the business had acquired all necessary building permits and that the project was backed by several major hotel chains. According to the SEC's complaint, the defendants promised investors that they would get back any administrative fees they paid for their investments if their EB-5 visa applications were denied. The defendants allegedly spent more than 90 percent of the administrative fees, including some for personal use, before USCIS adjudicated the visa applications.

As with any investment, it is important to research thoroughly any offering that purports to be affiliated with EB-5. Take these steps:

securities law perspectives

Confirm that the regional center has been designated by USCIS. If you intend to invest through a regional center, check the list of current regional centers on USCIS's website at www.uscis.gov. If the regional center is not on the list, exercise extreme caution. Even if it is on the list, understand that USCIS has not endorsed the regional center or any of the investments it offers.

Obtain copies of documents provided to USCIS. Regional centers must file an initial application (Form I-924) to obtain USCIS approval and designation, and must submit an information collection supplement (Form I-924A) at the end of every calendar year. Ask the regional center for copies of these forms and supporting documentation provided to USCIS. Request investment information in writing. Ask for a copy of the investment offering memorandum or private placement memorandum from the issuer. Examine it carefully and research similar projects in evaluating the proposal. Follow up with any questions you may have.

If you do not understand the information in the document or the issuer is unwilling or unable to answer your questions to your satisfaction, do not invest.

Ask if promoters are being paid. If there are supposedly unaffiliated consultants, lawyers, or agencies recommending or endorsing the investment, ask how much money or what type of benefits they expect to receive in connection with recommending the investment.

Be skeptical of information from promoters that is inconsistent with the investment offering memorandum or private placement memorandum from the issuer.

Seek independent verification. Confirm whether claims made about the investment are true. For example, if the investment involves construction of commercial real estate, check county records to see if the issuer has obtained the proper permits and whether state and local property tax assessments correspond with the values the regional center attributes to the property. If other companies have purportedly signed onto the project, go directly to those companies for confirmation.

Examine structural risk. Understand that you may be investing in a www.sec.gov/investor/alerts/ia_immigrant.htm

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new commercial enterprise that has no assets and has been established to loan funds to a company that will use the funds to develop projects. Carefully examine loan documents and offering statements to determine if the loan is secured by any collateral pledged to investors.

Consider the developer's incentives. EB-5 regional center principals and developers often make capital investments in the projects they manage. Recognize that if principals and developers do not make an equity investment in the project, their financial incentives may not be linked to the success of the project.

Look for warning signs of fraud. Beware if you spot any of these hallmarks of fraud:

securities law perspectives

Promises of a visa or becoming a lawful permanent resident. Investing through EB-5 makes you eligible to apply for a conditional visa, but there is no guarantee that USCIS will grant you a conditional visa or subsequently remove the conditions on your lawful permanent residency. USCIS carefully reviews each case and denies cases where eligibility rules are not met. Guarantees of the receipt or timing of a visa or green card are warning signs of fraud.

Guaranteed investment returns or no investment risk.

Money invested through EB-5 must be at risk for the purpose of generating a return. If you are guaranteed investment returns or told you will get back a portion of the money you invested, be suspicious.

Overly consistent high investment returns. Investments tend to go up and down over time, particularly those that offer high returns. Be suspicious of an investment that claims to provide, or continues to generate, high rates of return regardless of overall market conditions.

Unregistered investments. Even though a regional center may be designated as a regional center by USCIS, most new commercial enterprise investment opportunities offered through regional centers are not registered with the SEC or any state regulator. When an offering is unregistered, the issuer may not provide investors with access to key information about the company's management, products, services, and finances that registration requires. In such circumstances, investors should obtain additional information about the company to help ensure that the investment opportunity is bona fide.

Unlicensed sellers. Federal and state securities laws require investment professionals and their firms who offer and sell investments to be licensed or registered. Designation as a regional center does not satisfy this requirement. Many fraudulent investment schemes involve unlicensed individuals or unregistered firms.

Layers of companies run by the same individuals. Some EB5 regional center investments are structured through layers of different companies that are managed by the same individuals.

In such circumstances, confirm that conflicts of interest have www.sec.gov/investor/alerts/ia_immigrant.htm

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been fully disclosed and are minimized.

If your investment through EB-5 turns out to be in a fraudulent securities offering, you may lose both your money and your path to lawful permanent residency in the United States. Carefully vet any EB-5 offering before investing your money and your hope of becoming a lawful permanent resident of the United States.

USCIS and the SEC have in recent years built a strong partnership with an emphasis on fostering EB-5 program integrity. The two agencies coordinate on issues at the case-specific and programmatic levels, and have participated in joint public engagement events to raise awareness among EB-5 developers and investors as to these issues. This Investor Alert is another example of our coordinated efforts regarding EB-5 program integrity.

Additional Resources

securities law perspectives

View Document in CHINESE (TRADITIONAL), will be available soon.

View Document in KOREAN, will be available soon.

View Document in SPANISH, will be available soon.

SEC Press Release: SEC v. Marco A. Ramirez, et al., available at sec.gov/News/PressRelease/Detail/PressRelease/1370539854731.

SEC Litigation Release: SEC v. A Chicago Convention Center, et al., available at sec.gov/litigation/litreleases/2013/lr22615.htm.

SEC Investor Alert: Social Media and Investing – Avoiding Fraud, available at sec.gov/investor/alerts/socialmediaandfraud.pdf.

SEC Investor Bulletin: Affinity Fraud, available at sec.gov/investor/alerts/affinityfraud.pdf.

SEC Article: Avoiding Fraud, available at Investor.gov/investing-basics/avoiding-fraud.

To report a possible securities fraud, ask a question, or report a problem concerning your investments, your investment account, or a financial professional, please visit http://www.sec.gov/complaint/select.shtml.

To receive the latest Investor Alerts and Bulletins from the SEC's Office of Investor Education and Advocacy, sign up for our RSS feed at sec.gov/rss/investor/alertsandbulletins.xml or for email at sec.gov/news/press/subscribe_updates.htm. You can also follow us on Twitter @SEC_Investor_Ed, or visit Investor.gov, the SEC's website dedicated to individual investors. http://www.sec.gov/investor/alerts/ia_immigrant.htm

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Modified: 10/1/2013

www.sec.gov/investor/alerts/ia_immigrant.htm

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FINRA Form NMA Frequently Asked Questions Table of Contents

1.0 The Application Process ..................................................................................................... 1 2.0 Determining the Application Fee…………………………………………………………3 3.0 Funding the Application ..................................................................................................... 4 3.5 Filing the Hardcopy Documents ........................................................................................ 5 4.0 Entitlement Issues: Accessing the Gateway, CRD and Form NMA ...............................5 5.0 Form NMA ..........................................................................................................................7

1.0 The Application Process Q. Who should I contact with questions concerning the Form NMA? securities law perspectives

A. For substantive inquiries regarding information required in a Form NMA, those questions should be directed to the MAP Group, located in FINRA’s New York District Office, at (212) 858-4000, option 5 – Membership Applications.

For questions concerning technology issues, including difficulties accessing the Form NMA, contact the Gateway Call Center at 301-869-6699.

Q. I’m not familiar with the application process. What do I need to do to get started?

A.

1. Apply for and obtain approval of the applicant’s name.

2. Review Regulatory Notice 12-32 to determine the application fee.

3. Fund the applicant’s general account.

4. Complete and submit required hardcopy forms to FINRA: Form BD, Super Account Administrator Entitlement Form, Email Notification Contact Form, and New Assessment Report.

5. Upon receipt of FINRA Entitlement user ID and password, review the Membership Application section of the Firm Gateway.

6. Access Forms and Filing section of the Firm Gateway and complete and submit Forms U4 and BR. 7. Access Forms and Filing section of the Firm Gateway and complete and submit Form NMA and attach the NMA Application Fee Computation Worksheet.

Q. When does the 180-day new member application review period begin? With the filing of Form BD or Form NMA? A. The 180-day period starts on the date an applicant submits a substantially complete Form NMA. FINRA Rule 1012(a)(4)(E) states: “Filing by an electronic system shall be deemed

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complete on the date specified on the confirmation page generated by the electronic filing system.”

Q. I understand that once I initiate a new Form NMA, if I don’t make some entries to that form at least once every 90 days, it will be deleted from the system. If that happens, will my application fee be refunded?

A. No. The application fee will not be refunded. Therefore, applicants are encouraged to carefully research the application process prior to filing and commence the new member application process only when prepared to see the application through to completion. Note: As an accommodation to prospective applicants, FINRA has extended the 90-day window within which a Form NMA remains active to 120 days. Hence for all NMAs, applicants will be required to update that Form at least once every 120 days. After 120 days, if there have been no updates to the Form NMA, it will be deleted and cannot be restored.

If the applicant has incorporated its procedures into a single, comprehensive WSP document, you indicate that applicants need not attach multiple copies of the same document in response to various questions. Instead, an applicant can attach a statement to those other questions explaining that the requested procedures are included in the applicant’s WSPs. Would that statement be entered into a text box, or in an attachment?

Also, what should this statement say?

securities law perspectives

Q. I understand that applicants are required to provide their Written Supervisory Procedures (WSPs) with their Form NMAs. Additionally, FINRA requests that applicants provide other policies and procedures.

A. The explanation would be provided via an attachment to the question outside of Section VI – Policies and Procedures that is requesting the procedures. The text of the explanation should note that the specific type of procedure requested is encompassed in the applicant’s WSPs and must specifically identify where in the WSPs these procedures are located. For example: “The [Name] procedures are contained in the applicant’s WSPs at section [number]/Page [number].”

Q. Will the centralized NMA group convey all written Information Requests electronically and will this be by email?

A. Yes. The MAP Group will transmit Information Requests to the applicant contact by email.

Q. Will one analyst be my primary contact on my application?

A. One primary analyst will be assigned to the application. However, to ensure responsiveness and efficiency of the process, other analysts may assist the primary analyst.

Q. Often, the applicant’s proposed associated persons are currently employed at member firms and, for a variety of reasons, need to ensure that their employer does not see indications that they are intending to leave. In the past, we’ve sometimes held off filing

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Forms U4 until the Membership Interview. Are we now required to file Forms U4 before we’re entitled on Form NMA? A. The Forms U4 are not required to be filed prior to or concurrent with the filing of Form NMA. However, in order for FINRA staff to properly review the new member application, the applicant must identify its proposed associated persons. Hence, the Forms U4 of the proposed associated persons should be filed as early as possible in the application process in order to avoid delaying that aspect of the review.

Q. In certain documents, I see references to FINRA departments named “Entitlements” and “Registration and Disclosure.” Are these the same department?

A. FINRA Entitlement is a unit within the Registration and Disclosure (RAD) Department.

securities law perspectives

Q. You mentioned that the 180-day application review period commences upon submission of the Form NMA. The Form NMA Participants’ Guide, in Section 2.4 - Getting Started: Obtaining Approval of the Applicant’s Name, states that an approved firm name will be reserved for 120 days with an option for 60 day extension.

If after the applicant files the Form NMA the application review becomes delayed and the 180-day timeframe (i.e., the initial 120 days plus the 60-day extension) for name reservation expires prior to the 180-day time frame of the application review process (i.e., and FINRA’s review of the new member application is still continuing), will the applicant still retain the name or does another extension request showing good cause need to be submitted?

A. The process around the time frames applicable for reserved names still applies. As such, it's probably a good practice to reserve the name shortly before initiating the entitlement process.

However, in the event that delays in the new member application review process necessitate an extension of the name reservation, the applicant should immediately contact FINRA’s Registration and Disclosure Department to request an extension.

2.0 Determining the Application Fee Q. How is the application fee determined?

A. As set forth in Regulatory Notice 12-32, and Schedule A, Section 4 of the By-Laws, FINRA has revised the new member application fee structure to implement a fee structure that assesses fees ranging from $7,500 to $55,000 depending on the size of the new member applicant, as outlined in the table below.

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Number of Registered Persons Associated with Applicant Tier 1 Tier 2 Tier 3

1-10 11-100 101-150

151-300 301-500 N/A

501-1,000 1,001-5,000 >5,000

Application Fee per Tier Tier 1 Tier 2 Tier 3

Small $7,500 $12,500 $20,000

Medium $25,000 $30,000 N/A

Large $35,000 $45,000 $55,000

Small

Medium

Large

3.0 Funding the Application Q. How do I fund the account with the application fee?

A. The applicant will fund the general account by electronically wiring the fees to the general account set up by FINRA for that purpose, using the instructions below. Please note that the Reference Number must include the phrase “New Member” as well as the reserved firm name in order for payment to be posted in a timely manner.

securities law perspectives

In addition, each applicant for membership also will be assessed an additional $5,000 if the applicant will be engaging in any clearing and carrying activity. Applicants must complete and attach to Form NMA the New Member Application Fee Computation Worksheet, found on the FINRA Firm Gateway, when submitting their Form NMA for FINRA review.

Wire Transfer Instructions: Bank Name: Bank of America Transfer funds to: FINRA Wire ABA Number: 026009593 ACH ABA Number: 054001204 Beneficiary: FINRA FINRA Account Number: 226005684771 Reference Number: New Member – [INSERT THE RESERVED FIRM NAME] Important: Only the new member application fee and initial funding (e.g., state registration fees, registered person registration fees, examination fees, as appropriate) are to be submitted to the general account. This must be in the form of a single wire; the piecemeal wiring of the application fee and initial funding should be avoided. Processing of the applicant’s hardcopy documents (see Section 4.0 below) will not be commenced until the entire application fee is received in the general account. All subsequent funding must be submitted to the applicant’s FINRA Flex-Funding Account.

.

Submission of additional funding into the general account instead of the applicant’s FINRA Flex-Funding Account can create processing delays, particularly in processing registrations for an applicant whose FINRA Flex-Funding Account is funds deficient. For additional information on funding the applicant’s FINRA Flex-Funding Account, see FINRA's website at http://www.finra.org/Industry/FeesPaymentOptions/.

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Q. When the funds are wired into the General Account, how will I know that FINRA has received them?

A. When you wire funds into the General Account, your bank should provide you with a wire confirmation number.

3.5 Filing the Hardcopy Documents Q. I submitted the completed Form BD to CRD, but did not submit the SAA Entitlement Form because I was waiting for my client, the applicant, to sign them. Is this a problem?

A. The NMA process requires that all the hardcopy documents be submitted together.

Submission of these items separately would, if allowed, cause delays in the processing and impair the speed with which entitlement is provided to allow the user to access the Form NMA via the Gateway. securities law perspectives

Q. Can the Form BD be completed and submitted electronically?

A. The initial original Form BD must be completed and submitted in hard-copy form along with the SAA Entitlement Form, Email Notification Contact Form; and New Assessment Report.

Amendments to the Form BD are to be submitted electronically via the Gateway.

Q. When and how do I submit Forms U4?

A. Applicants are required to submit Forms U4 electronically via CRD through the Gateway once entitlement has been approved. Note that in order to access CRD, the user must be specifically granted those privileges by the administrator for the applicant. See question 1 above for details on the sequence for filing application forms. Further information on the filing requirements of U4 and other Forms is available on the ‘Current Uniform Registration Forms for Electronic Filing in Web CRD’ page at www.finra.org/RegulatorySystems/CRD/FilingGuidance/p005235.

4.0 Entitlement Issues: Accessing the Firm Gateway, CRD and Form NMA Q. To whom will FINRA direct the email advising that entitlement has been granted?

A. FINRA will send the email to both the person designated as the Super Account Administrator (SAA), as well as the executive officer who signed the SAA Entitlement Form.

For security reasons, the user ID and password will be sent to the SAA in two separate emails.

The SAA will be able to create Account Administrators (AAs) who will then create accounts for other users within the organization.

Q. How will the person receiving the notification of entitlement provide me access to work on the Form NMA? A. Your organization’s administrator will create an account for you and will notify you how to access the Form NMA.

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

Q. Once the applicant files all the hardcopy paperwork (i.e., Form BD, SAA Entitlement Form, Web CRD Notification, New Member Assessment Report), how long does it take to get entitled to Form NMA? A. Processing of hard-copy paperwork takes approximately seven business days, assuming that all forms are complete and accurate and the applicant’s name has been reserved. Applicants are urged to ensure that all forms are complete and accurate, otherwise processing delays may occur.

FINRA staff will notify applicant(s) (or their consultants/law firms) of any missing or unclear information on the forms. Prompt attention by the applicant will help expedite FINRA’s processing.

Once processing is complete, the FINRA Entitlement Group notifies the applicant’s Super Account Administrator via email that access has been granted and provides the Super Account Administrator with a user ID and password. Accounts can be created to provide access to Form NMA to the appropriate individuals. An entitled individual can immediately access and begin updating the Form NMA.

A. The electronic filing system is available and supported from 8 a.m. Eastern Time (ET) to 8 p.m. ET. It is accessible after-hours and on weekends, but technical support is not available during that time.

Q. I have lost my password and I can’t get into the Firm Gateway. What should I do?

securities law perspectives

Q. Is the electronic filing system available after-hours and on weekends?

A. Contact the Entitlements team via the Membership Gateway Call Center at (301) 869-6699 and request a new password.

Q. I can access the Form NMA without a problem, but when I try to get into CRD to submit U4s, the CRD system is not allowing me access. Why is that?

A. You need to ensure that the entitlements that were selected for you include access to CRD, because if they do not, you will be unable to access CRD. To obtain CRD access, contact your administrator. FINRA recommends that in setting up entitlements, Web CRD entitlement privileges and Form NMA entitlement privileges reside with the same person as this will ensure that this individual can access both applications to create and submit all necessary filings during the NMA process. More coordination will be necessary if Account Administrator responsibilities for Web CRD and the Form NMA are assigned to different persons.

Q. I’ve just entered the Firm Gateway and attempted to access the Form NMA, but I get a blank page. What should I do?

A. The issue here is typically one where the user has not been granted entitlements to the Form NMA. Applicants are reminded to ensure that the appropriate persons are identified on the Entitlements forms.

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Q. Do entitlements expire?

A. Per FINRA's Corporate Security Policy, a user account with access to any of the applications offered by the FINRA Entitlement Program that has not been accessed at least once during a consecutive 13-month period following a password change, will be considered a "dormant" account and will be automatically deleted. If this should occur, a Super Account Administrator would need to recreate the Account Administrator’s account and the Account Administrator will need to recreate a user account if the user again needs access to any of these applications.

If a Super Account Administrator’s account is deleted, a new SAA Entitlement Form would need to be submitted to FINRA to recreate the SAA account.

Q. I submitted Form BD, SAA Entitlement Form, Email Notification Contact Form; and New Assessment Report some time ago and still have not received notification that entitlements have been granted. Who should I call?

securities law perspectives

A. As mentioned above, processing of the hard-copy forms takes approximately seven business days. If you have not received notification after seven business days, contact the Membership Gateway Call Center at (301) 869-6699. Note that issues have arisen in the past where the person expecting to receive notifications that the entitlements have been granted (e.g., the consultant handling the Form NMA on behalf of the applicant) is not the person who was identified for that purpose on the Entitlements forms. Applicants are encouraged to ensure that the appropriate person is identified on the SAA Entitlement Form.

5.0 Form NMA Q. Who should I contact with questions concerning the Form NMA? A. For substantive inquiries regarding information required in a Form NMA, those questions should be directed to the MAP Group, located in FINRA’s New York District Office, at (212) 858-4000, option 5 – Membership Applications.

For questions concerning technology issues, including difficulties accessing the Form NMA, contact the Gateway Call Center at 301-869-6699.

Q. Once I submit the Form BD and other hardcopy documents to CRD, how much time do I have to submit the Form NMA? A. The Form NMA must be submitted promptly once entitlement has been granted. Note that the application is not deemed to be filed until the substantially complete Form NMA has been submitted.

Q. I’ve started a Form NMA and have saved it so I can gather some additional documents.

How long will a Form NMA stay active once I’ve saved it?

A. Users are encouraged to promptly complete the Form NMA once they commence the form.

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

However, once you commence a Form NMA and save it, you must access and work on that Form NMA within 120 days otherwise it will be de-activated by the Electronic Filing System and the user will be required to begin a new Form NMA. Q. For my applicant, the FinOp will be registered with multiple firms. I need to attach the notification to the other employing firms pursuant to Rule 3270, but there does not appear to be a place for this in the Form NMA. Where should I attach this information?

A. For the FinOp and any other part-time personnel, in Section III. Personnel, question C.5 must be completed. This question asks: “Will this Associated Person be employed by other entities or by employed part time at the Applicant.” Answering this question ‘Yes’ will ensure that the Part Time page is presented for completion. In Section III. Personnel – Attachments, the Rule 3030 attachment can be included as an attachment to Question 6a.

Q. The applicant’s proposed business is one that does not require securities clearance and settlement arrangements. How do I complete Section I.B-Securities Clearance and Settlement in the Form NMA?

Q. Are the documents to be uploaded into the Form NMA required to be in a certain format?

securities law perspectives

A. In response to question I.B.1, select ”Other” and insert a very brief explanation in the box provided and in response to III.B.3.h, attach a detailed explanation concerning why the applicant’s proposed business model does not require a clearing arrangement.

A. Permissible upload formats are: Portable Document Format (.pdf), Microsoft Word (.doc), Microsoft Excel (.xls), Microsoft PowerPoint (.ppt), rich text format (.rtf) and text format (.txt).

Q. I want to use the .pdf form as a working draft of my application. Can I download the Form and fill it out, then use that as a guide when I complete the Form NMA on Firm Gateway?

A. The .pdf of the Form NMA provided on the “How to Become a Member” page is made available as a guide to applicants in filling out the online Form NMA. Applicants can use that .pdf of the Form NMA for general orientation and to gain an understanding of the contents of the Form. However, in order to access, complete and submit the Form NMA, applicants must first go through the new entitlement process, and use the electronic version of the Form NMA provided on the Firm Gateway. Note also that the .pdf displays all business lines and all questions whereas the electronic Form NMA provided in the Firm Gateway will reflect only those business lines the applicant has selected on Form BD. PDF of Form NMA: www.finra.org/BecomeAMember/SampleNMA Q. If I enter an individual’s CRD number into Form NMA, will that result in a change to their CRD record, or in a notification to their current employer?

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A. No notification to a current employer will take place as a result of entering registered personnel information into Form NMA. Form NMA is able to retrieve information on registered individuals from FINRA’s databases using the individuals’ CRD numbers. When this retrieval occurs, there is no direct interaction between Form NMA and the CRD system and consequently no changes to CRD, or notifications to other current employers of such changes in CRD, can be effected by the Form NMA. Q. When I amend Form NMA, will the information I entered in the rest of the form be deleted?

securities law perspectives

As a general matter, when information is added to or deleted from the Form NMA, previously entered information in other parts of the form will not be altered. The exceptions to this are those questions where the responses provided to them determine other aspects of the application.

For instance, if the applicant initially indicated in Section I – General Information that it will not receive funds or securities and will clear transactions on a fully disclosed basis, the required net capital derived in Section IV.A.1for this applicant would initially reflect the $5,000 statutory minimum. However, if the applicant later amended Form NMA to indicate that it would instead self-clear the transactions, then Section IV.A.1 would be automatically modified to reflect the $250,000 minimum statutory requirement. Other than these types of logical connections, however, changes to one part of Form NMA will not delete or otherwise alter information entered into another part of the NMA. Q. Has FINRA developed guidelines for naming .pdf and other attachments to the Form NMA? A. The technology that supports the Form NMA automatically attaches an identifier, known as ”metadata” to each attached file. This metadata automatically indicates the name of the applicant, the CRD number, the date, and the type of document, based on where the document is attached on the Form NMA. Also, the system automatically attaches a version number to each amended document submitted by the applicant. As such, the applicant may name documents as best serves their purposes for organizing them. However, it is recommended that attachment filenames should allow the user to easily intuit the type of document attached.

Q. Should the electronic documents I attach to Form NMA be submitted as .pdf files? How will FINRA ensure the documents I attach are not modified after submission?

A. There is no requirement to submit the documents in .pdf format, although all attachments to Form NMA are required to be made electronically. The Form NMA will accept Portable Document Format (.pdf), Microsoft Word (.doc), Microsoft Excel (.xls), Microsoft PowerPoint (.ppt), rich text format (.rtf) and text format (.txt). Also, documents submitted through the Form NMA are presented as "read only" to FINRA staff, so they are secure from any accidental modification.

Note: Always be cautious when converting documents to .pdf so that you do not ”scan the documents as images.” This will create a large file that could take a long time to upload to the Form NMA.

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

Q. I noticed that the entire right side of the first page of Section VI – Policies and Procedures where the user would enter the page numbers of the Business Continuity Plan appears to be cut off and, as a result, I cannot enter the page numbers or perform other functions on that page such as "Save" or "Continue." Please let me know how best to proceed on this page.

A. There is a scroll bar at the bottom of the Form NMA page that addresses this issue.

Q. Section V. A – Fidelity Bond Coverage of the Form NMA requires that the applicant attach a copy of the proposed SIPC-3 – Certification of Exclusion from Membership that the applicant proposes to file with SIPC in the event FINRA approves the application. The applicant’s proposed activities would make it eligible for exemption from SIPC registration. However, I will be unable to obtain this form in advance. Will this prevent me from filing the Form NMA?

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

securities law perspectives

A. No. Since the SIPC-3 – Certification of Exclusion from Membership form is not marked with a red asterisk (i.e., it is not a mandatory form), you will be able to submit the Form NMA without it.

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project due d i l i g en c e

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

THURSDAY, MAY 8TH | 9:00AM–9:50AM | MAIN ROOM (REGENCY A)

“EB-5 Project Due Diligence” PANELISTS:

Wiliiam P. Gresser, President, EB-5 New York State Regional Center; Director, IIUSA

Daniel J. Healy, CEO,

Civitas Capital Group; Director, IIUSA

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Peter D. Joseph, Executive Director, IIUSA

Dawn Lurie, Shareholder, Polsinelli

PANEL SPONSOR:

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{

The Institutionalization

}

of the EB-5 Program

BY DANIEL J. HEALY

PRESIDENT/CEO, CIVITAS CAPITAL GROUP; DIRECTOR, IIUSA; CHAIR, BEST PRACTICES COMMITTEE, IIUSA

A

s an industry, we are witnessing the increasingly rapid institutionalization of the EB-5 investor visa program.

When I started in this industry in 2008, very few large investors were focused on EB-5; in those dark days, most were more concerned with their survival. But what a difference a few years makes!

project due d i l i g en c e

Today, EB-5 remains a narrow niche in the world of finance and capital markets, but it is fair to say that EB-5 capital is no longer exotic, especially in the commercial real estate context. Interest in the program among institutional investors and their capital managers is widespread and swelling. Many major companies, such as Lennar Corporation, the Related Companies, and Forest City Enterprises, are using EB-5 capital to create jobs via a diverse range of projects. My firm, Civitas Capital Group, has made EB-5 investments alongside capital from insurance companies, pension funds, and private equity investors, and we are not alone. While the program does face various challenges, there is every indication that the use of EB-5 capital in institutional quality investments will be more and more common.

The numbers tell the story. U.S. Citizenship and Immigration Services (USCIS), the federal agency that administers the program, received approximately 2,000 investor petitions in 2010, compared to over 6,000 in 2012 – a 300% increase. For 2013, IIUSA estimates that more than $2 billion of EB-5 capital will be deployed, all at absolutely zero cost to the taxpayer. And because the return on each foreign investor’s capital is partially in the form of an immigration benefit, EB-5 capital is inexpensive – and will be increasingly valuable when market interest rates rise (someday).

This explosive growth has not been without setbacks of the sort that keep institutional investment managers like me awake at night. In recent weeks and months, the EB-5 program has quite justifiably come un-

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der increased scrutiny from both regulators and the media. Serious questions have been raised about some EB-5 investment sponsors, as well as the effectiveness of the regulatory oversight structure governing the program.

For example, the U.S. Securities and Exchange Commission (SEC) recently teamed up with USCIS to issue an ‘Investor Alert’ linked to a fraudulent EB-5 investment scam in McAllen, Texas. This wasn’t the first such fraud alert.

We’ve seen similar scams before, including one that resulted in a major enforcement action in Chicago in which the SEC – and here I don’t mind mentioning they got a critical assist from IIUSA –helped enable the recovery of $149 million for foreign investors who had been defrauded.

Fortunately, USCIS has responded by aggressively beefing up its capabilities. The agency moved the program’s administrative headquarters from California to Washington, D.C., where it opened an Immigration Investor Program Office with 60 full-time employees and 20 economists in May of this year. They are also coordinating closely with the SEC, recently issuing the first joint USCIS-SEC investor alert. Finally, USCIS is strengthening inter-agency relationships with the Federal Bureau of Investigation and U.S. intelligence agencies – critical steps to ensure the integrity of the program and protect our national security.

Other financial regulators have also taken note, and I can say from personal experience that the EB-5 business is starting to feel like the regulated investment advisory business I have been in for years. For example, the Financial Industry Regulatory Authority (FINRA), the securities industry’s self-regulatory organization, recently issued formal guidance affirming that EB-5 investment offerings are subject to the same suitability requirements as any other offering - an important clarification. IIUSA has been actively collaborating with the North American Securities Administrators Association (NASAA), the umbrella group representing state securities regulators, for the better part of a year to provide state officials responsible for investor protection with accurate information about EB-5. This enhanced regulatory scrutiny, which brings the program into line with the mainstream of private securities offerings, will go a long

way toward institutionalizing the use of EB-5 capital.

Despite many growing pains –processing times for individual investors, for example, remain far too long – progress continues apace, and investor interest in the EB-5 program shows no sign of slowing. Regulators are doing their part to protect the integrity of the program – the recent series of high-profile fraud investigations sent an unmistakable message to would-be bad actors – while ensuring it remains an effective economic development tool. And the robust industry growth has led to the creation of a wide range of new investment options for overseas investors to choose from.

The bottom line: this is all very healthy.

As an investment professional and chairman of IIUSA’s Best Practices Committee, I am pleased that the EB-5 program’s evolution is toward higher quality offerings from Regional Centers and project sponsors, as well as increasingly rigorous due diligence on the part of investors, lenders, and intermediaries. As a former compliance officer for a broker-dealer and having filled out countless due diligence questionnaires for various institutional investors over the years, I smile when a prospective investor or an overseas marketing agent demands to review the legal documentation for a Civitas EB-5 investment or presses one of my salespeople on how we protect confidential customer data.

In the not-too-distant future, Regional Centers and investment sponsors will find it difficult to compete for scarce EB-5 capital if they cannot prove to the satisfaction of both prospective EB-5 investors and the institutional capital providers that the diligence processes – including project evaluation, investor screening, and securities compliance – are up to snuff. It is the right thing to do. Just as importantly, though, it is a rare institution indeed that will tolerate the headline risk associated with the alternative.

Dan Healy is the Chief Executive Officer of Civitas Capital Group, a leading independent specialty asset management and financial services firm with operating divisions focused on Alternative Investments, EB-5 Funds and Wealth Management. More information can be found at civitascapital.com. ■

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

project due d i l i g en c e

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History of Risk In the EB-5 Regional Center Context

BY ROBERT F. LOUGHRAN

T

he Immigrant Investor Program can be a “win-win” for developers, who get access to low-interest capital, and also for the foreign investor who may be principally seeking the non-monetary return of Lawful Permanent Residency in the U.S. However, due to the potentially distorting mix of immigration regulations, there can be situations where the needs of the developer and the needs of the foreign investor do not completely align.

project due d i l i g en c e

For example, in order to be eligible to file an I-526 petition, the foreign national’s investment must be “at-risk” in the commercial sense. Meaning, the investor’s petition will be denied if USCIS determines that the investor’s investment is not at risk. This requirement of risk in turn means there is no guarantee that the applicant will recover their investment made to the commercial enterprise, and it is this “at-risk” requirement which creates the opportunity for a divergence of interests between the project developer and the individual foreign investor. Added to the commercial risk requirement are numerous other risks connected with investments. It may turn out that a high percentage of commercial enterprises, perhaps a majority, will experience some, or total, loss of investment capital due to poor planning, inexperienced management, outright fraud, or generally unfavorable economic conditions.

One of the risks of the EB-5 program is the continuing compliance of the EB-5 regional center. USCIS may approve a regional center, which then sponsors investments for individual investors. But the investor’s removal of conditions requires continuing compliance of the regional center. Experience shows that USCIS may terminate regional center status for non-compliance with EB-5 program requirements.

Those considering the use of an EB-5 regional center as a means of raising capital should be aware of recent regional center terminations in order to better understand the representations that they, or their agents, may be making to foreign investors and the variety of risks and expectations that exist.

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Under current immigration procedures and timelines, investors and regional center developers should expect a relationship of no less than five years. The national economic picture, industry performance and even family relationships can evolve dramatically in half a decade and with USCIS approval needed for significant amendments, regional centers may lack the adaptability of those projects that do not require USCIS ratification. Expectations, rights and legal recourses should be spelled out contractually, understood and memorialized. USCIS has terminated participation of EB-5 regional centers four times in the past three years. The reasons for these terminations were generally based on either a lack of economic growth or determinations of potential fraud. Owners and developers should be aware of the legal authority to terminate regional centers and adjust their practices to document ongoing viability. Not only can careful planning reduce economic loss and litigation for potential investors, it may give developers the opportunity to adjust their practices so as to successfully structure and operate their current or future regional centers. Specific and applicable lessons can be learned from previous regional center failures.

CURRENT IMMIGRATION LAW REGARDING REVOCATION OF CIS DESIGNATION Pursuant to 8 CFR Section 204.6(m)(6), the USCIS may terminate a regional center’s designation for various reasons, including: 1. The regional center fails to submit required information; or 2. The regional center no longer promotes economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment.

If the regional center is issued a Notice of Intent to Terminate (NOIT), then the regional center must be provided 30 days, from receipt of the NOIT, in which to submit evidence in opposition to the grounds alleged in the NOIT. Furthermore, if the USCIS determines that the regional center’s participation in the Program should be terminated, the USCIS shall notify the regional center of the decision and of the reasons for termination.

SUMMARY OF RATIONALE FOR

REVOCATION OF REGIONAL CENTER’S DESIGNATION In review of four revocation cases, the rationale for the revocations has been as follows: 1. USCIS may revoke a regional center’s designation for lack of job creation.

2. USCIS may revoke a regional center’s designation for failure to promote economic growth. USCIS may question: a. How many investors have used the regional center in the last few years? b. Has the regional center or the General Partner of the regional center filed for bankruptcy or otherwise manifested economic weakness? c. Are the representations made in previous filings born out as factual?

3. USCIS may revoke a regional center’s designation if it fails to demonstrate that its projects will create jobs in verifiable detail based upon a business plan and economic analysis that employs reasonable methodologies for estimating jobs.

4. USCIS will revoke a regional center’s designation where it no longer promotes economic growth in the sense that the regional center’s projects are no longer viable and the regional center entity is no longer overseeing the projects and investments that were outlined in the original request for regional center designation.

Among the lessons learned: If USCIS revokes the regional center designation, foreign investors could be stranded if their immigration cases are in progress. There also exists the possibility that cases previously approved could be reopened and denied if it is determined that previous approvals were based on false statements.

Below, we identify each of the four regional center revocation cases, summarize the regional centers’ case history, and detail the reasons for the termination.

VICTORVILLE REGIONAL CENTER In the case of the Regional Center of Victorville Development, Inc. (Victorville RC), USCIS had approved Victorville RC in June 2009, however, USCIS then terminated Victorville RC on October 10, 2010. After Vic-

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

torville RC filed a motion, and responded to a subsequent request for evidence, USCIS issued a Final Notice of Termination on May 24, 2011. The Administrative Appeals Office affirmed the decision on December 21, 2011.

The stated rationale of USCIS for terminating the Victorville RC was the regional center failed to promote economic growth through job creation. According to the decision adjudicated by the Administrative Appeals Office, the Victorville RC sought to invest EB-5 capital only after the jobs in question had already been created. According to the record, Victorville RC undertook an Industrial Waste Water Treatment Facility project (IWWTF) which involved bridge financing. Due to the structure of the bridge financing, the IWWTF began hiring employees and construction of the project reached 90% completion before the investors had contributed and invested their EB-5 capital. Therefore, Victorville RC, according to the USCIS, was improperly claiming immigrant investor job creation credit for jobs that existed before EB-5 capital was invested into the project.

EL MONTE REGIONAL CENTER

El Monte RC submitted annual reports in 2009 and 2010. In the 2009 annual report, El Monte RC identified a single investor, and in the 2010 report, it identified a second investor. In its notice of July 11, 2011, USCIS cited the following factors:

According to USCIS, it terminated LBV RC for failure to establish continuing eligibility and compliance with program requirements of promoting economic growth. In particular, USCIS indicated that a statistically valid job creation analysis had not been submitted. The analysis was plagued by errors in data sources and methodologies. Also, for instance, the market competitor analysis indicated significant excess capacity in accommodation services, jeopardizing the ability of LBV RC to meet the requisite EB-5 job creation requirements based on a claim of increase in visitor spending. USCIS concluded that LBV RC failed to demonstrate its projects would create jobs in verifiable detail, based upon a business plan and economic analysis that employed reasonable methodologies for estimating job creation through EB-5 capital investment.

MAMTEK REGIONAL CENTER USCIS had approved Mamtek Regional Center (Mamtek RC) in August 2011.

Mamtek RC involved a planned sucralose manufacturing facility in Moberly, Missouri.

But within just 3 months of regional center approval, USCIS issued a notice of intent to terminate. USCIS finally terminated Mamtek RC on April 11, 2012. In this case, USCIS had determined upon review of individual investor I-526 petitions filed by Mamtek investors that the proposed capital investment project was not viable.

LAKE BUENA VISTA REGIONAL CENTER

Mamtek RC was a single member LLC with Mamtek, U.S., Inc. According to the initial business plan, Mamtek U.S., Inc. was the operating company and full owner of Mamtek RC. USCIS later discovered that Mamtek RC was no longer overseeing the projects and investments that Mamtek RC had outlined in its original request for regional center designation. Instead, Mamtek RC was controlled by a new company and supervised by the City of Moberly. Therefore, the USCIS determined that the Mamtek RC could no longer claim credit for the estimated job creation related to the future projects.

The Lake Buena Vista Regional Center (LBV RC) was initially approved by USCIS in September 2008. Thereafter, LBV RC filed

In its decision, the USCIS noted that the existence of bankruptcy proceedings against Mamtek U.S., Inc. did not preclude the US-

1. El Monte RC had recruited only 2 investors; 2. El Monte RC had insufficient financial resources to deliver on its representations as evidenced by its bankruptcy proceedings; and, 3. El Monte RC did not have title to the property it purported to own.

CIS from exercising its power to ensure that Mamtek RC had fulfilled its statutory and regulatory obligations as a regional center. USCIS terminated the approval of the Mamtek RC because it determined that the regional center no longer served the purpose of promoting economic growth. Since then, a lengthy parade of legal proceedings has ensued, including enforcement action by the State of Missouri. See e.g, http://www.sos. mo.gov/securities/orders/AP-13-10.pdf

CONCLUSION Developers and other industry stakeholders can learn much from the terminations of Regional Centers. In particular: 1. The financial projections need to make sense independent of the immigration issues; 2. The financial arrangements, identification of all fees and all parties and agents participating and receiving fees should be disclosed and memorialized; 3. Developers cannot sit on a Regional Center designation, they must attract investors, and begin activity or the approval can be revoked; 4. USCIS can gather contradictory or negative financial information from a variety of public, private and intra agency sources which may trigger revocation; 5. The experience and track record of the managers of the regional center and the developers of the projects are relevant to the long term success of the investments;

project due d i l i g en c e

The El Monte Regional Center (El Monte RC) had been approved in June 2008 by USCIS. Three years later in 2011, USCIS issued notices for terminating El Monte RC. After an unsuccessful motion, the Administrative Appeals Office affirmed the decision to terminate the regional center on July 23, 2012.

El Monte RC was terminated because USCIS determined that the regional center could not promote economic growth.

with USCIS and obtained several approvals of amendments to the regional center designation. Nonetheless, USCIS issued a notice to terminate LBV RC in December 2011, conducted an interview in March 2012, and finally terminated LBV RC in a notice dated July 23, 2012.

6. The economic projections need to be realistic, and perhaps conservative to survive the 5-10 years that a developer could be dependent on USCIS review and approval; 7. Just because you can project significant job creation, does not mean you should rely on the most optimistic projections and take in as many investors as that optimistic projection would “support”; 8. Do unto others as you would have them do unto you; 9. Be prepared to exhaustively document every aspect of the regional center and its projects; and, 10. Do not skimp on professional guidance when every investor is a potential litigant. ■

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

THURSDAY, MAY 8TH | 9:55 AM–10:50 AM | MAIN ROOM (REGENCY A)

“Best Practices in EB-5 Public Private Partnerships” PANELISTS:

K. David Andersson, President, IIUSA; President, Whatcom Opportunities Regional Center

Patrick F. Hogan, President,

CMB Regional Centers; Director; IIUSA

b e s t practices

Tom Rosenfeld, President, CanAm Enterprises; Director, IIUSA

William J. Stenger, President, Jay Peak Resorts; Director, IIUSA

PANEL SPONSOR:

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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T

Conference of Mayors Support EB-5

he EB-5 Immigrant Investor Program was hailed as a success at the 81st U.S. Conference of Mayors Annual Meeting this past June. In the meeting’s Adopted Resolutions, the mayors recommend that Congress advance the EB-5 Program within comprehensive immigration reform and that they also allocate more visas towards the Program.

The section on EB-5 details a brief history of the Progam and its impact on the United States economy since it was established by Congress in 1990. The Resolution states that EB-5 has since become a vital source of urban redevelopment funds and that since 2005, over $4.7 billions have been

invested through the Program, generating 95,000 American jobs.

The Resolution articulates that 40 additional Regional Centers have been approved in Fiscal Year 2013 alone, and there are cur-

The EB-5 Immigrant Investor Program section of the Resolution concludes with the following affirmation: “The United States Conference of Mayors urges Congress to include a robust EB5 program in the immigration bill including additional visas, permanent authorization of the regional center program and streamlined approvals for all applications.” ■

b e s t practices

National Association of Counties (NACo) Adopts Resolution in Support of the EB-5 Regional Center Program and IIUSA’s Legislative Agenda

I

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rently 7,000 pending applications for EB-5 related visas, representing $3.5 billion in potential direct investment and 70,000 American jobs. It also states that mayors are working with private parties to use EB-5 foreign direct investment to finance job creating projects and downtown revitalization projects.

n early March, IIUSA earned an important vote of public support as the National Association of Counties (NACo) Community, Economic Development and Work Force Steering Committee unanimously approved a resolution supporting IIUSA, which was subsequently adopted and approved on Monday, March 3, 2014 by the full NACo Board of Directors. These approvals signify NACo’s full support of IIUSA’s EB-5 legislative initiatives as a formal part of NACo Legislative and Program and Policy agenda and set the stage for IIUSA EB-5 working panel presentations in multiple future NACo meetings. NACo represents over 3,500 counties nationwide and counts nearly 35,000 local elected officials among its membership.

This welcome news is a direct result of the efforts of the newly-formed IIUSA Public Interest Group Committee, led by Chairman Bob Honts (who also serves as IIUSA Secretary Treasurer), which devoted significant behind-the-scene efforts to secure the opportunity to present at the NACo Annual Legislative Conference. Honts, along with IIUSA Executive Director Peter D. Joseph, presented on the EB-5 Regional Center Program to the committee. Also lending their support were IIUSA Government Affairs representative Matt Virkstis, Riverside California County Commissioner Tom Freeman, and SelectUSA Deputy Executive Director Aaron Brickman (who also presenting on EB-5 and the general importance of foreign direct investment to

US economic development today).

This engagement is part of IIUSA’s continued coalition building initiative with organizations that have a public mission that overlaps with IIUSA’s interests. Following a 2012 resolution in support of permanent authorization of the EB-5 Regional Center Program, in June 2013 the U.S. Conference of Mayors (USCOM) adopted a resolution in favor the EB-5 Program affirming, “The United States Conference of Mayors urges Congress to include a robust EB5 program in the immigration bill including additional visas, permanent authorization of the regional center program and streamlined approvals for all applications.” ■

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

THURSDAY, MAY 8TH | 11:00AM–11:15AM | MAIN ROOM (REGENCY A) KEYNOTE SPEAKER ADDRESS:

“EB-5 as a U.S. Job Creating Source of Foreign Direct Investment”

Aaron Brickman, Deputy Executive Director, SelectUSA

foreign direct investment

SPONSOR:

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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IIUSA Members: Take Part in SelectUSA Roadshows this May! What is SelectUSA? The SelectUSA Initiative was established through an Executive Order in June 2011 by President Barack Obama to support private sector job creation and enhance economic growth by encouraging and supporting business investment in the United States. Housed in the U.S. Department of Commerce, SelectUSA’s mission is to coordinate outreach and engagement by the Federal Government to promote the United States as the premier location to operate a business.

What are SelectUSA Roadshows?

Criteria for IIUSA Member Participation

SelectUSA Roadshows are designed to bring state Economic Development Organizations (EDOs), regional EDOs and their partners to meet with potential investors and companies. Through these roadshows, participating organizations will gain market insights, learn of existing investment opportunities, make industry and state government contacts, and advance specific projects, with the goal of increasing inbound investment into the U.S.

Roadshow participants are restricted from promoting EB-5 projects unless they are implemented by state, regional or city/county Economic Development Offices. In order to participate in these roadshows, IIUSA Members must be linked with a respective local EDO that is also planning on attending the events. If you need any assistance in connecting with Economic Development Organizations in your region, IIUSA might be able to help so please contact us at info@iiusa.org.

Roadshow Schedule & Pricing SelectUSA Roadshows are designed to bring state Economic Development Organizations (EDOs), regional EDOs and their partners to meet with potential investors and companies. Through these roadshows, participating organizations will gain market insights, learn of existing investment opportunities, make industry and state government contacts, and advance specific projects, with the goal of increasing inbound investment into the U.S.

JAPAN/SOUTH KOREA

MEXICO

DATE/LOCATION: May 19-23, 26: Seoul, South Korea | May 19-23:

DATE: May 21-23

Tokyo, Nagoya and Osaka

LOCATION: Guadalajara and

PRICE: $1,000 silver sponsor (two people) - other sponsorship slots available

DID YOU KNOW? Japan accounted for $15 million in EB-5 investments in FY2013, the seventh most of any country in the world. S. Korea has been the second largest EB-5 investor market, behind China, since FY2009 (prior to that it enjoyed multiple years are the largest EB-5 investor market).

Monterrey

PRICE: $400 per attendee DID YOU KNOW? FY2013 was first time Mexico was in top five for number of EB-5 visas issued.

foreign direct investment

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

SelectUSA’s Foreign Direct Investment Report for 2012 Reveals Strength of U.S. as Destination for Foreign Investment IIUSA MARKETING AND COMMUNICATIONS COORDINATOR

S

electUSA, the U.S. federal initiative to promote and support business investment in the United States, released its report Foreign Direct Invesment (FDI) in the United States: Drivers of U.S. Economic Competitiveness late last month.

Housed in the International Trade Administration of the U.S. Department of Commerce, SelectUSA aims to deepen the United States’ worldwide economic alliances and promote the stability, potential and promise of the American market to overseas investors.

The report, derived from statistics compiled by the U.S. Bureau of Economic Analysis (BEA), highlights several important investment trends for 2012 including the largest country sources of FDI (top 5: U.K., Japan, Germany, Canada and France), the top FDI growth markets (top 5: China, Hungary, Indonesia, Norway and Malaysia) and a breakdown by industry and geographic location.

You can read the full report above or peruse the report’s info graphics figures.

What does this all mean in the context of

EB-5 job creation and sustained investment through the Program? Foreign direct investment creates jobs, increases wealth and living standards, and bolsters innovation that drives U.S. economic competitiveness. In many ways, EB-5 is a microcosm of total FDI in the U.S. The EB-5 Program, which totaled over $2 Billion or 1.2% of total FDI inflow in 2012, is by its very nature a vehicle for job creation and economic development throughout the U.S. What’s more, according to the report, FDI into the United States from China grew at an average annual rate of nearly 71 percent between 2008 and 2012, a statistic that is reflected in the large number of EB-5 applicants from Mainland China (estimated at 81% of total EB-5 applicants). As we have recently reported, based off of the adjudication data obtained in the last few months, much of the EB-5 Program’s growth has occurred since 2008, with the previous six years (2008-2013) accounting for 68.5% of all I-526 receipts and 62.8% of all I-829 receipts since the start of the EB-5 Program in the early 1990s.

IIUSA’s Interaction With SelectUSA Since the Executive Order in June 2011

by President Barack Obama establishing the SelectUSA Initiative to attract and retain investment in the United States, IIUSA has

developed relationships with key SelectUSA staff members in order to promote the EB-5 Regional Center Program as an important component of foreign investment into the U.S. SelectUSA is a staple speaker at IIUSA conferences, and has an ombudsman function for working with other federal agencies when FDI is being frustrated by bureaucratic hurdles – a portfolio that sometimes includes EB-5 processing issues.

In fact, in October-November, IIUSA attended the first annual SelectUSA Summit in Washington, D.C. where IIUSA Vice President Robert C. Divine spoke on a panel exploring capital availability in the U.S. and the challenges faced by global investors in establishing operations in the United States.

IIUSA continues to explore ways in which we can contribute to SelectUSA’s overall mission of driving investment into the U.S. Furthermore, IIUSA has participated (and will continue to) in SelectUSA events abroad to promote inbound FDI. Our collaboration with this effort actually predates the creation of SelectUSA in 2011, when the office of “Invest In America” was in charge of promoting FDI into the US (the office was absorbed by the more robust SelectUSA upon its creation).

We look forward to continuing this essential partnership. ■

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

foreign direct investment

BY ALLEN WOLFF

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Get Em a il Upda t es

Con t a ct Us

Search WhiteHouse.gov

Home • Briefing Room • Presidential Actions • Executive Orders

The White House Office of the Press Secretary For Immediate Release

June 15, 2011

Executive Order 13577--SelectUSA Initiative EXECUTIVE ORDER ESTABLISHMENT OF THE SELECTUSA INITIATIVE By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to support private sector job creation and enhance economic growth by encouraging and supporting business investment in the United States , it is hereby ordered as follows: Section 1. Policy. Business investment in the United States by both domestic and foreign firms, whether in the form of new equipment or facilities or the expansion of existing facilities, is a major engine of economic growth and job creation. In an era of global capital mobility, the United States faces increasing competition for retaining and attracting industries of the future and the jobs they create. My Administration is committed to enhancing the efforts of the United States to win the growing global competition for business investment by leveraging our advantages as the premier business location in the world.

As a place to do business, the United States offers a hardworking, diverse, and educated workforce, strong protection of intellectual property rights, a predictable and transparent legal system, relatively low taxes, highly developed infrastructure, and access to the world's most lucrative consumer market. We welcome both domestic and foreign businesses to invest across the broad spectrum of the U.S. market.

L A T E ST BL OG P OST S March 19, 2014 2:41 PM EDT

We the Geeks: Women Role Models

On Thursday, March 20 at 1:00 p.m. ET, the White House will host another episode of “We the Geeks,” this time focused on “Women Role Models.” Tune in to this Google+ Hangout to hear from women and girl science, technology, engineering, and math leaders.

March 19, 2014 11:07 AM EDT

Ambassador Rice Meets with Governors from Nigeria

The Federal Government lacks the centralized investment promotion infrastructure and resources to attract business investment that is often found in other industrialized countries. Currently, States and cities are competing against foreign governments to attract business investment. Our Nation needs to retain business investment and pursue and win new investment in the United States by better marketing our strengths, providing clear, complete, and consistent information, and removing unnecessary obstacles to investment.

National Security Advisor Susan E. Rice welcomed 12 governors and one deputy-governor from Nigeria to the White House to discuss areas of strategic importance to both the United States and Nigeria.

Sec. 2. SelectUSA Initiative. (a) Establishment. There is established the SelectUSA Initiative (Initiative), a Government wide initiative to attract and retain investment in the American economy. The Initiative is to be housed in the Department of Commerce. The mission of this Initiative shall be to facilitate business investment in the United States in order to create jobs, spur economic growth, and promote American competitiveness. The Initiative will provide enhanced coordination of Federal activities in order to increase the impact of Federal resources that support both domestic and foreign investment in the United States. In providing assistance, the

March 19, 2014 10:50 AM EDT

Initiative shall work to maximize impact on business investment, job creation, and economic growth. The Initiative shall work on behalf of the entire Nation and shall exercise strict neutrality with regard to specific locations within the United States.

President Obama's Bracket for the 2014 NCAA Men's Basketball Tournament

President Obama picked the Michigan State Spartans to beat the Louisville Cardinals in the final game of the 2014 NCAA tournament.

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foreign direct investment

(b) Functions. (i)

The Initiative shall coordinate outreach and engagement by the Federal Government to promote the

United States as the premier location to operate a business.

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(ii) The Initiative shall serve as an ombudsman that facilitates the resolution of issues involving Federal

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programs or activities related to pending investments. (iii) The Initiative shall provide information to domestic and foreign firms on: the investment climate in the United States; Federal programs and incentives available to investors; and State and local economic development organizations. (iv) The Initiative shall report quarterly to the President through the National Economic Council, the Domestic Policy Council, and the National Security Staff, describing its outreach activities, requests for information received, and efforts to resolve issues.

http://www.whitehouse.gov/the-press-office/2011/06/15/executive-order-selectusa-initiative

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Executive Order 13577--SelectUSA Initiative | The White House

(c) Administration. The Department of Commerce shall provide funding and administrative support for the Initiative through resources and staff assigned to work on the Initiative, to the extent permitted by law and within existing appropriations. The Secretary of Commerce shall designate a senior staff member as the Executive Director to lead the Initiative. The Executive Director shall coordinate activities both within the Department of Commerce and with other executive departments and agencies that have activities relating to business investment decisions. (d) Federal Interagency Investment Working Group. (i) There is established the Federal Interagency Investment Working Group (Working Group), which will be convened and chaired by the Initiative's Executive Director, in coordination with the Director of the National Economic Council. (ii) The Working Group shall consist of senior officials from the Departments of State, the Treasury, Defense, Justice, the Interior, Agriculture, Commerce, Labor, Veterans Affairs, Health and Human Services, Housing and Urban Development, Transportation, Energy, Education, and Homeland Security, the Environmental Protection Agency, the Small Business Administration, the Export Import Bank of the United States, the Office of the United States Trade Representative, the Domestic Policy Council, the National Economic Council, the National Security Staff, the Office of Management and Budget, and the Council of Economic Advisers, as well as such additional executive departments, agencies, and offices as the Secretary of Commerce may designate. Senior officials shall be designated by and report to the Deputy Secretary or official at the equivalent level of their respective offices, departments, and agencies. (iii) The Working Group shall coordinate activities to promote business investment and respond to specific issues that affect business investment decisions. (iv) The Department of Commerce shall provide funding and administrative support for the Working Group to the extent permitted by law and within existing appropriations. (e) Department and Agency Participation. All executive departments and agencies that have activities relating to business investment decisions shall cooperate with the Initiative, as requested by the Initiative's Executive Director, to support its objectives.

Sec. 3. General Provisions . (a) Nothing in this order shall be construed to impair or otherwise affect: (i) authority granted by law to an executive department, agency, or the head thereof, or the status of that department or agency within the Federal Government; or (ii) functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals. (b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

foreign direct investment

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

BARACK OBAMA THE WHITE HOUSE, June 15, 2011.

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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3/19/2014

Ombudsman Services

Published on SelectUSA (http://selectusa.commerce.gov)

Ombudsman Services SelectUSA works with firms or economic development organizations on a case-by-case basis to address issues or questions involving federal regulations, programs, or activities related to existing, pending, and potential investments. Working with SelectUSA, investors can develop a better understanding of how to navigate the U.S. regulatory environment.

Who May Use This Service: A request for ombudsman assistance may come from either a company who has questions or concerns about a federal rule or regulation or from an economic development organization working with a company who has such questions or concerns.

How to Request Ombudsman Service: To request assistance, please Contact Us [1] via e-mail or call +1-202-482-6800. A SelectUSA team member will follow up with you, immediately.

What Happens Next: You will be contacted by a member of the SelectUSA team member to obtain detailed information regarding your question or concern, and to discuss suggested steps to assist you. SelectUSA often engages members of the Federal Interagency Investment Working Group (IIWG), which coordinates interagency activities to promote business investment and responds to specific federal regulatory issues that may impact business investment decisions. The IIWG is convened and chaired by the SelectUSA Executive Director, in coordination with the Director of the National Economic Council. foreign direct investment

The SelectUSA ombudsman service is conducted within the standards of practice set forth by the International O mbudsman Association and is cognizant of business sensitive information.

In all interactions, SelectUSA operates in a geographically neutral manner.

Source URL: http://selectusa.commerce.gov/ombudsman-services Links: [1] mailto:SelectUSA_Ombuds@trade.gov?subject=Ombudsman_Request http://selectusa.commerce.gov/print/ombudsman-services

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THURSDAY, MAY 8TH | 11:20 AM–12:05 PM | MAIN ROOM (REGENCY A)

“EB-5 Advocacy: Educating the Public & Congress About the Growing Economic Contribution of the EB-5 Regional Center Industry to the United States” PANELISTS:

US Chamber of Commerce

Liz Poston, Executive Vice

President, Rasky Baerlein | Prism

Ed Pagano, Partner, Akin Gump Strauss

Hans Rickhoff, Senior Policy Counsel, Akin Gump Strauss Hauer & Feld LLP

Hauer & Feld LLP

Matt Virkstis, Principal, Cartwright & Virkstis

PANEL SPONSOR:

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

e b - 5 advocacy

Lisa Atkins, Senior Manager of Immigration Policy,

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Leahy Amendment to S. 744 Passed in Senate Judiciary Committee

II

USA is glad to announce that the amendment to S. 744 proposed by Chairman Patrick Leahy (D-VT) which moves to permanently authorize and improve the EB-5 Program, passed in the Senate Judiciary Committee last month. The amendment is a positive step forward for the Program, now officially included in the comprehensive immigration reform deliberations, but we still have a long way to go in both the Senate and House. In addition to permanency, Leahy’s amendment pushes for maximizing the Program’s visa capacity while protecting Program integrity and potentially putting processes in place that would address USCIS processing issues. In response to the introduction of his amendment, IIUSA sent a letter to Chairman Leahy expressing gratitude and support for his leadership in this issue, as well as his colleagues Judiciary Committee Ranking Member Grassley (R-IA), Immigration Subcommittee Chairman Schumer (D-NY), and Ranking Member Cornyn (R-TX).

In the letter, IIUSA communicated to Chairman Leahy that permanent authorization for the Program is the single most important step for effectuating its full potential of creating jobs for U.S. workers and progressive regional development. Short-term authorizations of three years is not sufficient for the Program because a lingering threat of expiring authorization creates an air of uncertainty surrounding the Program - thereby hindering its ability to induce capital formation and create jobs. IIUSA also stated that the backlog of more than 7,000 unadjudicated I-526 petitions at USCIS represents no less than 70,000

American jobs not created and $3.5 billion in foreign investor capital not invested in communities across the U.S. - even though $11 million in filing fees has been collected by USCIS on these backlogged investor applications.

IIUSA also applauded Chairman Leahy for including in his legislation provisions to enhance Program integrity. Lastly, IIUSA stated its intention of providing substantive comments on the amendment based on member and stakeholder review of the legislation for operational and policy implications. Permanent authorization of the Program, maximizing visa capacity, and addressing USCIS processing issues are the three priorities in IIUSA’s currently approved advocacy platform. The Leahy amendment addresses these issues, and gives the Program the certainty it needs to maximize its economic contribution to the U.S. IIUSA is looking forward to building an active partnership with our cross-sector, bipartisan supporters in Washington (and around the country) and continuing our concerted effort towards supporting the continued success of the Program.

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THANK YOU MEMBERS FOR YOUR SUPPORT AND EFFORTS DURING THE FIRST PART OF THE LEGISLATIVE PROCESS! WE HAVE A LONG WAYTO GO...

Feedback from membership regarding the Leahy amendment is most welcome! Email info@iiusa.org with any comments on the proposed amendment. ■

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

What People Are Saying About the EB-5 Program

TOBY RITTNER, PRESIDENT & CEO, COUNCIL OF DEVELOPMENT FINANCE AGENCIES

ECONOMIC DEVELOPMENT PROFESSIONALS

“We are excited about the new hotels being built with the help TriCities Investment District’s Regional Center arm. In order to continue to attract tourists, both wine-related and business visitors to our area, we are in need of new hotels and conference facilities. We have a “year around” market, so having a new property helps attract more people here.”

GARY BELLEW, BUSINESS AND ECONOMIC DEVELOPMENT MANAGER, RICHLAND, WA

“We carefully studied the Regional Center marketplace before launching the City of Dallas Regional Center in partnership with Civitas Capital Group. We’re proud to be recognized as a pioneer for this successful public-private partnership and are utilizing EB-5 capital for job-creating enterprises throughout Dallas. This unique structure allows us to align the city’s economic development priorities with the goals of EB-5 investors.”

MAYOR MIKE RAWLINGS, DALLAS, TX

“The Flats East Bank Project was one of the first new, large-scale commercial developments in the City of Cleveland in over a decade, and its construction helped to jump start Cleveland’s renaissance. A key portion of the funding came from Cleveland International Fund and the EB-5 Program -- without which the Project would have never been successful.”

TRACEY NICHOLS, DIRECTOR OF ECONOMIC DEVELOPMENT, CITY OF CLEVELAND

“Given the loss or diminishing of funding sources available to local government, particularly in the state of California, programs such as the EB-5 program serve as a catalyst to encourage investment in our local communities, such as our city of El Centro. A major project that has seen the benefits of the EB-5 Program is the expansion of the El Centro Town Center, which is a commercial shopping area in our city. The El Centro Town Center is generating revenue for our community and, more importantly, is creating new jobs which are very impactful in an area where the unemployment rate is more than 20%.”

MARCELA PIEDRA. DIRECTOR OF ECONOMIC DEVELOPMENT, EL CENTRO, CA

ELECTED OFFICIALS

“The EB-5 program has brought much needed investment to the State of Wisconsin, improving our infrastructure, helping businesses, and most importantly creating jobs.”

FORMER WISCONSIN GOVERNOR JIM DOYLE

“Tri-Cities Investment District’s development of the Horn Rapids Residential Community is an excellent example of a good developer being able to come in, turn around troubled project and make it work for you and your investors as well as the City.

The City of Richland welcomes outside investment in our community and works to encourage new development to diversify and strengthen our economy. The hotel and multi-family projects will encourage and support this diversification.”

MAYOR JOHN FOX, RICHLAND, WA

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

e b - 5 advocacy

“EB-5 capital is becoming one of the most sought after sources of financing for economic development projects nationally. This form of financing is flexible and can support a variety of projects, making it a reliable source of gap financing for project developers. CDFA members in the economic development finance industry are partnering with regional centers across the country to successfully bring projects to completion, create jobs, and support the economic development and sustainability of their communities.”

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What people are saying, cont.

ELECTED OFFICIALS

“Fort Worth has always been an All-American city and one of the fastest growing of its size in the U.S. Through our EB-5 financing partnership with the Fort Worth Chamber and Civitas Capital, we will continue to foster a thriving business environment and create jobs while raising the profile of Fort Worth among international investors.”

MAYOR BETSY PRICE, FORT WORTH, TX

“Here in Washington, we are committed to nurturing new businesses and sustaining established ones through international investment. One way Washington attracts foreign direct investment is through the EB-5 visa program administered by the United States Citizens and Immigration Service (USCIS) and the establishment of ‘Regional Centers’ across the state. Washington State supports the USCIS EB-5 visa program and encourages foreign investors to explore this investment option as they are seeking residence in the United States as part of their investment strategy.”

FORMER WASHINGTON GOVERNOR CHRISTINE GREGOIRE

“I am proud to recognize and support the great commitment from investors around the world that allowed the construction of such great facilities here in Whatcom County. This new community will provide homes for our elders and jobs for the community for years to come.”

“The EB-5 Program is something we had to have for the future prosperity of Delano. The Program has funded a marketplace with new amenities that have been sorely needed for years.

Not only does it put people back to work but also keep professionals living and spending more of their incomes in our community.”

GRACE VALLEJO, COUNCIL MEMBER AND FORMER MAYOR OF DELANO, TX

“We are proud of the Tri-Cities region and the assets it has to offer our residents and visitors. We believe it is a great place for prospective EB-5 Visa Investors to invest and build a future for themselves and their families. Washington State’s 8th district welcomes investment in our infrastructure thus creating economic development which leads to quality jobs for our citizens. The EB-5 Visa Program helps both our citizens and foreign nationals achieve their goals and dreams.”

WASHINGTON STATE SENATOR JEROME DELVIN WASHINGTON STATE REPRESENTATIVES LARRY HALER AND BRAD KLIPPERT

“The work of FirstPathway Partners to bring EB-5 investments to Milwaukee is a welcome and positive element in this community’s economy. You have successfully connected investors with investment opportunities in a way that benefits our city.

We look forward to attracting additional EB-5 investment in Milwaukee.”

MAYOR TOM BARRETT, MILWAUKEE, WI

CONGRESSWOMAN SUZAN DELBENE (WA-1)

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“This project is a state of the art facility designed to bring over three hundred direct and indirect jobs within the medical sector of our economy, while creating numerous construction jobs during its development phase. This is a great investment to the region and I am honored to have this project within the Third District that I serve.”

COUNTY SUPERVISOR JEFF STONE, RIVERSIDE, CA

“USA Continental Regional Center provides high quality projects that allow investors to participate in the Visa programs containing a pathway to permanent residency and citizenship in our country. The leadership of this organization is outstanding and has been instrumental in bringing quality jobs and projects to our area. Renaissance Village in Moreno Valley is a state of the art facility creating jobs in the medical sector along with numerous construction jobs while the Village is under construction.

The County of Riverside is proud to partner in a development that not only brings jobs to the area but provides valuable services to our residents.”

COUNTY SUPERVISOR MARION ASHLEY, RIVERSIDE, CA

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What people are saying, cont.

LOCAL BUSINESS AND UNION LEADERS “The development of Studio 52 Boston was made possible with our partnership with EB-5 Jobs for Massachusetts and their ability to raise investor funds that helped get the project off the ground. The results have been beyond what we ever imagined. The local Allston economy has been jump started by the 300-400 musicians using the facility each week. This has brought thousands dollars and dozens of jobs to area businesses.”

“In the wake of the financial crisis, it was very difficult to find funding for new commercial real estate projects. Working with Cleveland International Fund to include EB-5 as a critical part of our capital stack allowed us to bring our vision of The Flats East Bank Project to fruition.”

SCOTT WOLSTEIN, CHAIRMAN & CEO OF STARWOOD RETAIL PARTNERS

RICH ANTON, GENERAL MANAGER, STUDIO 52

AMBASSADOR JIM OBERWETTER, PRESIDENT AND CEO, DALLAS REGIONAL CHAMBER

“The Tri-Cities Research district is one of eleven designated Innovation Partnership Zones recognized by the State of Washington. Our goals and objectives are in alignment with the State of Washington’s economic development and energy strategies. We strongly support TCID’s EB-5 investment for our region.”

DIAHANN HOWARD, EXECUTIVE DIRECTOR, TRI-CITIES RESEARCH DISTRICT

“The Flats East Bank Project is a catalytic development that not only allows our Region to retain existing companies but also to attract new business and talent to Northeast Ohio. Cleveland International Fund and its EB-5 investment played an important role in making Flats East Bank a success.”

JOSEPH ROMAN, PRESIDENT & CEO, GREATER CLEVELAND PARTNERSHIP

“Economic studies estimate the SLS development will create 8,500 direct or indirect jobs, including construction work, and 2,500 permanent positions once the property opens. In total, SLS Las Vegas is expected to infuse $400 million into the local economy. The EB-5 capital raised by American Dream Fund was a critical piece of the financing structure for the construction of SLS Las Vegas. The utility far exceeded our expectations as it enabled us to pay down the senior note on the property to keep development moving.”

SBE ENTERTAINMENT CEO SAM NAZARIAN (DEVELOPER)

DIANE KAMIONKA, EXECUTIVE DIRECTOR, NWIRC

“In Fort Worth, we deployed the EB-5 program as an alternative way to attract international financial support to advance strategic projects in our city. Foreign capital gives us greater flexibility and opportunities to extend our track record of attracting industry leaders and global companies – in manufacturing, health sciences, aerospace and aviation – to Fort Worth. We’re excited to see what new investment and jobs this platform brings to our dynamic city in the future.”

DAVID BERZINA, EXEC. VICE PRESIDENT/ ECONOMIC DEVELOPMENT FORT WORTH CHAMBER OF COMMERCE “The (Flats East Bank) project came along at a time when not a lot was going on in terms of construction and work for electric union workers. During the two years of construction, we had over 100 workers on sight which accounted for over 300,000 hours for our members.”

DENNIS MEANEY, CLEVELAND ELECTRIC WORKERS UNION

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“Dallas has a unique competitive advantage when it comes to attracting EB-5 capital, the city is decidedly business friendly and it is home to a highly talented and energetic workforce.”

“The Northwest Innovation Resource Center’s partnership with the Whatcom Opportunities Regional Center has been a tremendous boost for Whatcom County. As a direct result of over $34 million in EB-5- funded investments into retirement communities, over 800 direct or indirect jobs have been created since 2010.”

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About IIUSA The Association to Invest in the USA (IIUSA) is a membership organization representing 116 federally designated EB-5 Regional Centers across the country serving 39 states/territories. An integral part of IIUSA’s mission is to stimulate economic development and job growth through continued success of the program as well as advance and maintain industry standards and best practices.

A comprehensive, peer-reviewed economic study found that during fiscal year 2012, investments made through the EB-5 program contributed $3.39 billion to U.S. GDP and supported over 42,000 U.S. jobs. This is more than a 100 percent increase from the average annual impact result reported in 2011.

Even greater economic impact will likely be reported for 2013, with significant growth in EB-5 investor applications seen in the last two years. Currently, there are over 7,000 pending EB-5 investor applications representing $3.5 billion in potential direct investment and 70,000 jobs.

The EB-5 Regional Center Program Congress created the EB-5 program in 1990 to benefit the U.S. economy by attracting investments from qualified foreign investors. In 1992, Congress enhanced the economic impact of the program by permitting the designation of Regional Centers that are eligible to accept and pool EB-5 capital for investments in economic development projects within a defined geographic region.

EB-5 Regional Centers fill a critical need for new funding sources in the aftermath of the 2008 financial crisis, leverage additional capital to enhance the economic impact of EB-5 investments and help local governments and businesses integrate EB-5 investments into their overall economic development strategies.

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Approximately 95 percent of all capital raised through the EB-5 economic development program is raised in affiliation with IIUSA’s members. These include Regional Centers that are publicly owned and operated by state economic development agencies, public-private partnerships, as well as private sector investment companies.

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Capital investments made by IIUSA members have supported successful economic development projects, including: -

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Redevelopment of a closed Air Force base in Southern California into a vital commercial area including a distribution center and regional airport

Development of assisted and retirement living communities in Washington State, creating 800 jobs and serving approximately 130 seniors

The transformation of the closed Navy yard in Philadelphia into a dynamic, multi-use development now home to 130 companies and 10,000 employees

Restoration of the historic “Alaska Club” building in Seattle, creating a modern hotel that employs almost 100 people and serves over 100,000 hotel guests annually

Expansion of a one season ski-resort in Vermont into a thriving four season vacation destination.

Rehabilitation of a 100 year old building into a hotel that created of 161 jobs while kickstarting the revitalization of an historic Dallas neighborhood

Commitment to Transparency and Program Integrity Proper oversight, transparency, compliance with – and enforcement of – all applicable securities, anti-fraud and immigration laws and regulations are essential to maintain the confidence of all stakeholders and ensure that the program continues bring capital and job creation to American communities. IIUSA welcomes engagement with Congress and federal agencies to protect the integrity of the EB-5 program.

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About the EB-5 Program Congress created the EB-5 program in 1990 to benefit the U.S. economy by attracting investments from qualified foreign investors. Under the program, each investor is required to demonstrate that at least 10 new jobs were created or saved as a result of the EB-5 investment, which must be a minimum of $1 million, or $500,000 if the funds are invested in certain highunemployment or rural areas.

A comprehensive peer-reviewed economic study found that during fiscal year 2012, investments made through the EB-5 program contributed contributed $3.39 billion to U.S. GDP and supported over 42,000 U.S. jobs. This is more than a 100 percent increase from the average annual impact result reported in 2011. And, these jobs were created at no cost to taxpayers.

The Congressional Budget Office has scored the program as revenue neutral, with administrative costs paid for by applicant fees.

More than 25 countries, including Australia and the United Kingdom, use similar programs to attract foreign investments. The American program is more stringent than many others, requiring substantial risk for investors in terms of both their financial investment and immigration status.

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Investments made through the U.S. EB-5 program must be “at risk� in the same way that investments in stocks or equity funds carry an inherent risk. There is no guaranteed financial return.

If their application is approved by USCIS, EB-5 investors receive a conditional visa that is valid for two years. In order to receive a permanent visa, these investors must demonstrate that the legally required economic benefits flowing from their investments have been achieved.

Annually, the EB-5 Program accounts for less than 1% of the visas issued by the U.S. Throughout the process, EB-5 investors are subject to the same background checks and national security screenings as applicants in any other visa category, and their ability to eventually apply for citizenship is subject to the same criteria as other visa holders. Like any other investment vehicle, EB-5 investment funds are subject to U.S. securities and anti-fraud laws and regulations.

About the EB-5 Regional Center Program

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In 1992, Congress enhanced the economic impact of the EB-5 program by permitting the designation of Regional Centers to pool EB-5 capital from multiple foreign investors for investment in USCIS-approved economic development projects within a defined geographic region. Today, 95 percent of all EB-5 capital is raised and invested by Regional Centers.

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Regional Centers maximize the program’s job creation benefits by facilitating the investment of significant amounts of capital in large-scale projects often in coordination with regional economic development agencies which use the EB-5 funds to leverage additional capital.

Regional Centers use economic analysis models, including those developed by the U.S. Department of Commerce, to demonstrate that job creation targets required by law have been achieved. For investments made through Regional Centers, at least 10 direct, indirect or induced jobs must be created.

Existing federally-designated Regional Centers include entities that are publicly owned and operated by state economic development agencies as well as public-private partnerships and private sector investment companies. A Regional Center obtains its designation by submitting a detailed application to USCIS. The application must state the kinds of businesses that will receive capital from investors, the jobs that will be created directly or indirectly as a result of the investment of capital, and the other positive economic impacts that will result from the investment of capital.

All investment offerings made by EB-5 Regional Centers are subject to U.S. securities laws, enforced by state securities regulators and the U.S. Securities & Exchange Commission.

Examples of Successful Projects

Capital investments made by EB-5 Regional Centers have supported successful economic development projects, including: − -

Redevelopment of a closed Air Force base in Southern California into a vital commercial area including a distribution center and regional airport

Development of assisted and retirement living communities in Washington State, creating 800 jobs and serving approximately 130 seniors;

The transformation of the a closed Navy yard in Philadelphia into a dynamic, multi-use development now home to 130 companies and 10,000 employees

Restoration of the historic “Alaska Club” building in Seattle, creating a modern hotel that employs almost 100 people and serving over 100,000 hotel guests annually

Expansion of a one season ski-resort in Vermont into a thriving four season vacation destination.

Rehabilitation of a 100 year old building into a hotel that created of 161 jobs while kickstarting the revitalization of an historic Dallas neighborhood

Support for the EB-5 Regional Center Program

The EB-5 Regional Center program is supported by mayors and local economic development officials who see the value of the program first-hand.

-

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The U.S. Conference of Mayors recently endorsed permanent authorization of the regional center program, noting that EB-5 has become a vital source of urban redevelopment funds.

Dallas Mayor Michael Rawlings said, “The EB-5 Program enables regional centers to be a key economic driver in their communities, creating desperately needed jobs in a tough economic environment.”

Mark Jaffe, president of the Greater New York Chamber of Commerce, has called EB-5 “a common sense job creator that is straightforward with no cost to U.S. taxpayers,” and cited the program as “an important ingredient” in the success of “large-scale, public/private real estate projects that create much needed jobs in areas of high unemployment.”

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Frequently Asked Questions about EB-5 Regional Center Investments What is a EB-5 Regional Center?

An EB-5 Regional Center is an organization, designated and regulated by USCIS, which facilitates investment in job-creating economic development projects by pooling capital raised under the EB-5 immigrant investor program. Regional centers can be publicly owned, (e.g. by a city, state, or regional economic development agency), privately owned, or be a public-private partnership.

What do Regional Centers do?

• • •

Identify investment opportunities that will create jobs in local communities, often in partnership with economic development agencies.

Assist in marketing those investment opportunities to investors from around the world.

Ensure that the investment offering complies with federal and state securities laws and SEC regulations as well as specific EB-5 requirements.

How are EB-5 investments affiliated with Regional Centers structured?

EB-5 investments that are affiliated with EB-5 Regional Centers are made through private placements - the sale of securities to a relatively small number of select investors. Like all private placements, which are used by companies to raise capital in a number of contexts, EB-5 private placements are governed by federal and state securities laws and regulations.

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A private placement memorandum is developed that details the investment offering, including detailed explanations of the project that will be funded along with disclosures of risk and material information consistent with all applicable federal and state laws. The economics of the project related to EB-5 specifically – the expected job creation – are also detailed in the memorandum. In some cases, the issuer of the private placement memorandum is an EB-5 Regional Center itself. In other situations, the issuer is business entity that will be receiving the investment funds and is affiliated with a Regional Center.

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What risks do investors face in EB-5 regional center investments?

By law, EB-5 investments must be “at risk” in the same way that any equity, stock or other type of investment carries inherent risk. Regional centers, like other entities that market investment opportunities, cannot guarantee a return on investment. Regional Centers also cannot guarantee return of the investment principal to the investor.

What kind of financial commitment do EB-5 investors make?

By law, an EB-5 investor is required to invest a minimum of $1 million, unless the investment is located in a Targeted Employment Area (TEA) – a rural area or area of highunemployment designated by USCIS. Regional Centers funding projects in TEA’s can accept a minimum of $500,000 from each EB-5 investor.

What risk do companies have in accepting EB-5 investments?

Companies bear no additional risk for EB-5 investment. They interact with the money as any other equity or financing investment, albeit often at a lower cost.

Are EB-5 regional center financing options cheaper for companies than other sources of capital?

Yes. In many instances, EB-5 funding is a lower-cost form of capital than alternatives because investor demand for return on their investment is often lower for EB-5 capital than other sources of capital. In addition, securing EB-5 capital increases the overall liquidity of a business or project which, in turn, reduces the cost of acquiring capital from other sources.

How do EB-5 regional centers help communities?

EB-5 Regional Centers facilitate direct investment in projects that meet the job creation and economic development goals of designated geographic areas. Regional Centers pool investments made by multiple EB-5 investors and deploy that capital to large-scale projects, often in coordination with regional economic development agencies.

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IMMIGRATION AND

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October 24, 2013 Dear Reader, Despite the numerous studies and carefully detailed economic reports outlining the positive effects of immigration, there is a great deal of misinformation about the impact of immigration.

It is critical that policymakers and the public are educated about the facts behind these fallacies.

The U.S. Chamber of Commerce’s Labor, Immigration & Employee Benefits Division last prepared this pamphlet in May 2011 to refute many of the most common myths about immigrants coming to our country. This report updates our 2011 pamphlet and examines new myths and facts that have emerged during the current immigration reform debate. We summarize the facts on the relationship of immigrants to Jobs, Wages, Taxes, Entrepreneurship, Population, Crime, Integration, Welfare, and Border Security.

Our compilation shows that immigrants significantly benefit the U.S. economy by creating new jobs, and complementing the skills of the U.S. native workforce, with a net positive impact on wage rates overall.

Recognizing that legislative solutions are difficult, the U.S. Chamber is also working to promote regulatory and policy reforms at the relevant federal executive agencies. We hope that these administrative reforms along with much needed legislation that overhauls our broken immigration system, will lead to concrete improvements so that our country can reap the full benefits of immigration.

The U.S. Chamber of Commerce will continue to champion common-sense immigration reforms, and we urge you to join us in our efforts.

Randel K. Johnson

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Senior Vice President Labor, Immigration & Employee Benefits 2

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MYTH: Every job filled by an immigrant is a job that could be filled by an unemployed American.

FACT:

Immigrants typically do not compete for jobs with nativeborn workers and immigrants create jobs as entrepreneurs, consumers, and taxpayers.

Employment is not a “zero-sum” game.1 The U.S. economy does not contain a fixed number of jobs for which immigrants and native-born workers compete. For instance, if the eight million undocumented immigrant workers now in the United States2 were removed from the country, there would not be eight million job openings for unemployed Americans.3 The reason for this is two-fold. First, removing eight million undocumented workers from the economy would also remove eight million entrepreneurs, consumers, and taxpayers. This would cause the U.S. economy to lose jobs. Secondly, native-born workers and immigrant workers tend to possess different skills that often complement one another, and are therefore not interchangeable.4 One of the principal ways in which immigrants create jobs is through the businesses they establish.

Immigrants to our country join native-born Americans in being risk takers. According to the Kauffman Index of Entrepreneurial Activity, “immigrants were more than twice as likely to start businesses each month in 2010 than were the native-born.” This reflects an upward trend in immigrant entrepreneurship since 2006.5 Using

census data, the Partnership for a New American Economy estimates that immigrant-owned businesses “generate more than $775 billion in revenue, $125 billion in payroll, and $100 billion in income, employing one out of every 10 workers along the way.” Moreover, “immigrants started 28 percent of all new U.S. businesses in 2011.”6 Immigrants play an important role in job creation in both small and large businesses. A report from the Fiscal Policy Institute found that immigrantowned small businesses employed 4.7 million people and had $776 billion in receipts in 2007, the last year for which data are available. In addition, 18 percent of all small business owners in the United States are immigrants, higher than the immigrant share of the population (13 percent) or labor force (16 percent).7 With respect to large businesses, a report from the Partnership for a New American Economy estimated that Fortune 500 companies founded by immigrants account for 18 percent (or 90) of all Fortune 500 companies, generate $1.7 trillion in annual revenue, and employ 3.7 million workers worldwide. These companies include AT&T, Verizon, Procter & Gamble, Pfizer, Kraft, Comcast, Intel, Merck, DuPont, Google, Cigna, Kohl’s, Colgate-Palmolive, PG&E, Sara Lee, Sun Microsystems, United States Steel, Qualcomm, eBay, Nordstrom, and Yahoo!8 Similarly, a 2008 study found that one-quarter of all engineering and technology-related companies established in the United States between 1995 and 2005 had an immigrant founder or co-founder, and that these companies had $52 billion in sales and 450,000 employees as of 2005.9 Immigrants also create jobs as consumers.

Immigrant workers spend their wages buying food, 3

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JOBS

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clothes, appliances, cars, and other products and services from U.S. businesses.10 Further, businesses respond to the presence of new immigrant workers by investing in new restaurants, stores, and production facilities.11 The end result is more jobs for more workers. For instance, a study by the University of Nebraska, Omaha, estimated that spending by immigrants generated roughly 12,000 jobs for the state of Nebraska in 2006—including more than 8,000 jobs in the Omaha and Lincoln metropolitan areas.12 Leaving aside the role that immigrants play in job creation, the fact remains that most immigrant and native-born workers are not competing with each other, even in times of high unemployment.13 Most foreign-born workers differ from most native-born workers in terms of what occupations they work in, where in the country they live, and how much education they have. Even among less-educated workers, immigrants and native-born workers tend to work in different occupations and industries. If they do work in the same occupation or industry—or even the same business—they usually specialize in different tasks, with native-born workers taking higher-paid jobs that require better English-language skills than many immigrant workers possess. In other words, immigrants and native-born workers usually complement each other rather than compete.14

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This dynamic is illustrated by the fact that cities experiencing high levels of immigration tend to have relatively low or average unemployment rates for African Americans. A 2012 analysis of census data

by Saint Louis University economist Jack Strauss found that cities with greater immigration from Latin America experience lower unemployment rates, lower poverty rates, and higher wages among

African Americans. Latino immigrants and African Americans fill complementary roles in the labor market—they are not simply substitutes for one another. In addition, cities that have suffered the effects of declining population are rejuvenated by an inflow of Latino immigrants.15 Immigrants do not “steal” jobs from American workers. Immigrants come to the United States to fill jobs that are available, or to establish their own businesses. Research has found that there is no correlation between immigration and high unemployment at the regional, state, or county level.16 Nor is there any correlation between immigration and high unemployment among minorities.17 Immigrants go where the jobs are, or they create jobs on their own.

WAGES MYTH: Immigrants drive down the wages of American workers.

FACT: Immigrants give a slight boost to the average wages of Americans by increasing their productivity and stimulating investment.

Immigrant workers increase the wages of nativeborn workers in two ways. First, immigrants and natives tend to differ in the amount of education they have, the occupations in which they work, and the skill sets they possess. The jobs which immigrants and natives perform are often interdependent. This increases the productivity of natives, which increases their wages. Second, the addition of immigrant workers to the labor force

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The average wage increase that native-born workers experience as a result of immigration is measurable.

A 2010 report from the Economic Policy Institute estimated that, from 1994 to 2007, immigration increased the wages of native-born workers by 0.4 percent. The amount of the wage gain varied slightly by the education level of the worker.

College graduates received a boost of 0.4 percent; workers with some college 0.7 percent; high school graduates 0.3 percent; and workers without a high school diploma 0.3 percent.19 Similarly, economist Giovanni Peri has estimated that, from 1990 to 2006, immigration increased the wages of native-born workers by 0.6 percent. College graduates experienced an increase of 0.5 percent, workers with some college 0.9 percent, high school graduates 0.4 percent, and workers without a high school diploma 0.3 percent.20 Local-level studies have reached similar conclusions about the positive impact of immigration on wages. Studies of two communities that experienced a large influx of immigrants over a short time period (Dawson County, Nebraska,21 and Miami, Florida22) found that wages increased—even for lesser-skilled workers who were most likely to be in competition for jobs with new immigrants. Likewise, a study of more than 100 cities by economist David Card found that the wages of natives tend to be higher in cities with large immigrant populations.23

ECONOMY MYTH: The sluggish U.S. economy doesn’t need more immigrant workers.

FACT: Immigrants will replenish the U.S. labor force as millions of Baby Boomers retire.

The U.S. economy is facing a demographic crisis.

Roughly 77 million Baby Boomers (one-quarter of the U.S. population) are now starting to reach retirement age.24 This wave of aging over the next two decades will have a profound economic impact. Our Social Security and Medicare systems will be stretched to the breaking point. Labor-force growth will fall. And a smaller number of workers and taxpayers will support a growing number of retirees. Under these circumstances, immigrants will play a critical role in replenishing the labor force and, therefore, the tax base.25 As the native-born population grows older and the Baby Boomers retire, immigration will prove invaluable in sustaining the U.S. labor force.

Projections by the Bureau of Labor Statistics (BLS) indicate that, between 2010 and 2020, the U.S. population age 55 and older will increase by 21.7 million—reaching 96.3 million, or 36.6 percent of all people in the country.26 As a result, “replacement needs”—primarily retirements—will generate 33.7 million job openings between 2010 and 2020.

On top of that, economic growth is expected to create 21.1 million additional job openings.27 In other words, demand for workers will increase. Yet as more and more older Americans retire, laborforce growth will actually slow, averaging only 0.7 percent between 2010 and 2020 (even with calculating current rates of immigration).28 The 5

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stimulates new investment in the economy, which in turn increases the demand for labor, exerting upward pressure on wages.18

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rate of labor-force growth would be even lower over the coming decade if not for the influx of new immigrants into the labor market.29 Immigrant workers will do more than replace retiring native-born workers in the labor force. They will also look after the retirees themselves. BLS expects that the aging of the U.S. population will generate a high demand for healthcare workers of all kinds, both high-skilled and lesser-skilled.30 Between 2010 and 2020, employment is projected to increase by 34.5 percent in healthcare support occupations, 25.9 percent in healthcare practitioner and technical occupations, and 26.8 percent in personal care and service occupations.31 Many of these healthcare workers will, of necessity, be immigrants.

UNEMPLOYMENT MYTH: At a time of high unemployment, the U.S. economy does not need temporary foreign workers.

FACT: Temporary workers from abroad fill specialized needs in specific sectors of the U.S. economy.

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Although the unemployment rate for the United States as a whole remains relatively high, the demand for specific kinds of workers in particular sectors of the economy remains high as well. For instance, farm workers, nurses, highskilled manufacturing workers, and high-skilled technology workers continue to be in short supply.32 Unemployment for Americans in some of these areas remains remarkably low. For

example, unemployment for the native-born is particularly low in science, technology, engineering, and mathematics (STEM) occupations, such as petroleum engineers (0.1 percent), computer network architects (0.4 percent), nuclear engineers (0.5 percent), environmental scientists and geoscientists (1.2 percent), database administrators (1.3 percent), statisticians (1.6 percent), engineering managers (1.6 percent), and aerospace engineers (1.9 percent).33 Under these circumstances, the U.S. economy would benefit from channels of legal immigration that are flexible enough to respond to labor shortages in particular occupations at a particular time and place. Temporary worker programs provide just the sort of flexibility that is required in many industries.34 Moreover, evidence indicates that expanding the supply of temporary workers from abroad would not undermine wages or job prospects of native-born workers. This is true at both the high-skilled and lesser-skilled ends of the occupational spectrum.

Among the many types of temporary worker visas, the largest category is the “H,� which includes one subcategory for highly skilled workers and two for lesser-skilled workers. The H-1B is for highly educated and skilled professionals and is capped

by Congress at 65,000 per year with an additional 20,000 visas available for immigrants with graduate degrees from U.S. universities. The H-2B program is intended for nonagricultural seasonal, peak load, or intermittent workers (landscaping, forestry, amusement parks, etc.) and is capped at a maximum of 66,000 per year. And the H-2A program is designed for seasonal farm workers.

While this last program is not subject to any numerical cap, it is too cumbersome to respond to the often rapid fluctuations in agricultural labor

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demand and is little used. Given that the kinds of work covered by the H-2A and H-2B programs require jobs that are seasonal or temporary in nature, they most clearly demand a temporary work force. However, in the case of all three programs, demand fluctuates with the condition of the U.S. economy—rising when times are good and falling when they are bad. The caps placed on the H-1B and H-2B programs have proven to be grossly inadequate when economic conditions are favorable.35 For example, this year the H-1B cap was met within the first few days of the filing period preceding the fiscal year, and for several years the H-1B cap has been met before, or early in, the fiscal year.36

offices or administrative support jobs. They’re also twice as likely as immigrants to work in sales. In contrast, low-skilled immigrants are three times more likely than low-skilled Americans to fill farming, fishing and forestry jobs.”37

Regardless of skill level, where U.S. employers first test the labor market to locate qualified and available workers already here, temporary workers from abroad fill gaps in the U.S. labor force and do not harm the employment prospects of native-born workers. In the case of the H-2A and H-2B programs, the lesser-skilled workers who obtain these visas find themselves in direct competition with few native-born Americans. A 2013 study by the American Enterprise Institute and ImmigrationWorks USA notes that the rising educational attainment of native-born workers suggests that few of them are in the market for the kinds of less-skilled seasonal jobs filled by H-2A and H-2B visa holders. According to this study, “in 1950, more than half of U.S.-born workers had not completed high school. Today the figure is less than 5 percent—compared to nearly one-quarter of immigrant workers.” In addition, less-skilled immigrant workers tend to work in different fields than less-skilled native-born workers. The study observes that “low-skilled Americans are twice as likely as low-skilled immigrants to work in

At the other end of the spectrum, the high-skilled recipients of H-1B visas fill available jobs in STEM occupations without “crowding out” or reducing wages for their native-born counterparts.40 According to a 2013 report by researchers from The Brookings Institution, “evidence suggests that the H-1B program does help fill a shortage in labor supply for the occupations most frequently requested by employers. Most of these are for STEM occupations.” The report also found that for “occupations with the most H-1B requests, recent wage growth has been much higher than the national average.” On average, in the 100 largest metropolitan areas in the United States, 46 percent of job openings requiring significant STEM knowledge go unfilled for one month or longer.

In San Jose, California, for example, two-thirds of job vacancies that remain unfilled after one month, despite advertising the positions, are for STEM occupations. In many other metropolitan areas, that share remains close to half.41 Significantly, the American Enterprise Institute has found that 7

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Moreover, BLS projects that 29.5 percent of job openings from 2010 to 2020 will not require a high-school diploma, while an additional 39.7 percent will require no more than a high school education.38 In other words, there will be too few less-educated native-born workers willing and able to fill all of the lesser-skilled jobs the U.S. economy creates. Lesser-skilled immigrant workers will fill this gap.39

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MYTHS FACTS each approved H-1B worker is associated with an additional 1.83 jobs among native-born American workers.42

A 2013 report from Regional Economic Models, Inc. (REMI) explores the outcomes of an expansion of high-skilled (H-1B) and lesserskilled (H-2A and H-2B) visas.43 The report finds that overall economic effects of the policy changes would be positive, increasing gross domestic product (GDP) for the entire country and gross state product (GSP) for each state, as well as increasing net new jobs across industries.

Specifically, employment and GSP is estimated to increase for all states and in all years as a result of an H-1B high-skilled program expansion.

Nationwide, this would amount to 1.3 million jobs and a GDP increase of more than $158 billion by 2045. An increase in H-2A agricultural visas would result in total employment increases of around 39,600 by 2045. Fully utilizing the H-2B seasonal worker visas up to the cap would increase total U.S. employment by around 24,000–25,000 over the next 30 years. The creation of a lesserskilled, nonseasonal temporary worker program would lead to a total gain of about 365,000 jobs by 2045, and a rise in GDP of $31 billion.

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HIGH-TECH WORKERS MYTH: There is no shortfall of nativeborn Americans for open positions in the natural sciences, engineering, and computer science and thus no need for foreign-born high-tech workers.

FACTS: Job openings are expanding at educational levels where demographic data show too few native-born students, so we can expect these shortfalls to persist in the future.

Moreover, relative to other economic indicators, wages are increasing in STEM jobs requiring higher education.

Some claim that job creation in STEM fields cannot properly be viewed as outstripping the supply of qualified Americans since higher than desirable unemployment persists for American workers in some STEM occupations, and plenty of STEM grads work in non-STEM positions.

Three critical facts belie this approach. First of all, this outlook ignores the fact that over 35 percent of STEM jobs are those that require less than a Bachelor’s degree, while immigration reform efforts target, in particular, the approximately 20 percent of STEM jobs that require a Master’s degree or higher. Secondly, job growth in positions requiring graduate level STEM training is exploding, far outpacing the American STEM training pipeline.

Currently, the number of American students pursuing STEM fields is growing at less than one percent per year, and by 2018 there will be more than 230,000 advanced degree STEM jobs that will not be filled even if every new American STEM grad finds a job.44 Thirdly, data shows that wages are increasing in STEM jobs requiring

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First, in assessing which job openings in STEM areas have sufficient numbers of qualified Americans and where there is a shortfall, it is important to be specific about what types of jobs, requiring what type of skills and education, employers are having difficulty filling with sufficient numbers of Americans. For example, in the computer science and mathematical occupations, more than 35 percent of jobs, and some of the STEM job growth, including many production manufacturing jobs, is in jobs that require less than a bachelor’s degree. The job distribution in computer science and mathematical jobs is: 6.9 percent of jobs are filled by workers with high school diploma–level skills or less, 18.7 percent with skills based on some college, 10.5 percent with associate-level skills, 43.8 percent with bachelor-level skills, 17.7 percent with master-level skills, 0.8 percent professional degree–level skills, and 1.7 percent doctorate-level skills.45 Furthermore, the Bureau of Labor Statistics has projected that 22 percent of new job openings through 2020 will require a master’s degree or higher.46 At the same time that one-fifth of new jobs will require individuals with graduate degrees, there are one-quarter more foreign-born graduate degree holders in the U.S. than native-born. In order to fill these job openings in our economy, employers will be faced with a situation where 10.6 percent of the foreign born in the U.S. age 25 to 34 have earned master’s, professional, or doctoral degrees, while 8.5 percent of the native-born population of the same age have the same credentials.47 Moreover, to the extent job

duties are best filled by individuals with STEM degrees, more than 40 percent of master’s and doctoral degrees in STEM fields awarded by U.S. universities go the foreign born.48 With respect to bachelor-level STEM degrees, a notable disparity is displayed among the native-born as compared to foreign-born degree holders. About 19 percent of the native-born pursue bachelor’s degrees in STEM fields, while about 35 percent of the foreign born residing in the United States possess a STEM bachelor’s, most often earned abroad.49 Lastly, wages reflect the existence of a shortfall with regard to the supply of qualified professionals to fill STEM jobs requiring higher education.

Engineer wages have risen by seven percent relative to all other occupations since 2003 and by three percent since 2008.50 Longer-term trends suggest a similar point. For example, from 1999 to 2011, wages grew by 54 percent for computer and information research scientists, 38 percent for computer programmers, 40 percent for software applications engineers, 52 percent for systems software engineers, 31 percent for computer support specialists, and 47 percent for database administrators.51 Meaningfully, from 1999 to 2011, the consumer price index increased by 36 percent while the average wage for computer and mathematical occupations increased 44 percent.52

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higher education, with wage increases an accepted indicator that the number of qualified Americans is insufficient to fill jobs being created.

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COMMUNITY IMPACT MYTH: Immigrants hurt communities that are struggling economically.

FACT: Immigrants have economically revitalized many communities throughout the country.

In addition to boosting the national economy and strengthening America’s global competitiveness, immigrants and immigrant entrepreneurs are important for metropolitan regional economies.53 This is true not only in San Jose and Silicon Valley, but in many regions across the country. In Texas, San Antonio and Austin have built knowledge economies around the universities and research industries located there. Houston attracts highskilled workers for the area’s oil industry. In South Carolina, Greenville and Spartanburg have attracted industries that need high-skilled workers.

In Boise, Idaho, knowledge-based employment has spurred the local economy and population growth.

The universities and research organizations of the North Carolina piedmont, in Raleigh, Greensboro, and the Research Triangle area, create a high demand for high-skilled workers.

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Long-term research shows that in addition to bringing more jobs and higher salaries to communities where they cluster, the impact of innovative industries has a profound multiplier effect on localities.54 Jobs in the innovation economy generate a disproportionate number of local jobs in other industries. An analysis of 11 million American workers in 320 metropolitan areas shows that each new high-tech job in a metropolitan area creates five additional longterm local jobs outside of the high-tech sector.55

Furthermore, the five new jobs created for each new high-tech job benefits a diverse group of workers: two new jobs for professional workers such as attorneys and doctors, and three new positions in nonprofessional occupations such as service industry jobs.56 In many U.S. metropolitan areas, the innovation economy, and the highskilled jobs related to it, drive prosperity for a broader base of workers living in the region.57 Beyond the Silicon Valleys and Research Triangles of the United States, immigrants and immigrant entrepreneurs are making significant contributions to local economies and communities across America’s heartland. In many places, the need for foreign talent is critical. For decades, large numbers of U.S. workers have been migrating from “Rustbelt” cities to the “Sunbelt.” The cities and towns experiencing a decline in native-born populations must find ways to maintain a viable workforce. As a result, an increasing number of local communities are recognizing the need to be receptive to immigrants and are officially becoming places of welcome that encourage openness to immigration and support immigrant integration.

In Michigan, for example, while only six percent of the state’s population is foreign-born, immigrants founded about one-third of the high-tech companies in the state over the past decade.58 The state, through its “Welcoming Michigan” campaign of building immigrant-friendly communities, clearly sees the need to attract immigrants to the area.59 Detroit also recognizes this need. In 2010, the city released the “Global Detroit” report, which documents a start-up rate for immigrant-founded high-tech firms in Michigan that is six times the rate for the native-born population.60

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TAXES MYTH: Undocumented immigrants do not pay taxes.

FACT: Undocumented immigrants pay billions of dollars in taxes each year.

Undocumented immigrants pay sales taxes, just like every other consumer in the United States.

Undocumented immigrants also pay property taxes—even if they rent housing. More than half of undocumented immigrants have federal and state income, Social Security, and Medicare taxes automatically deducted from their paychecks.

However, undocumented immigrants working “on the books” are not eligible for any of the federal or state benefits that their tax dollars help to fund.64 As a result, undocumented immigrants provide an enormous subsidy to the Social Security system in particular. Each year, Social Security taxes are

withheld from billions of dollars in wages earned by workers whose names and Social Security numbers do not match the records of the Social Security Administration (SSA). According to the SSA, undocumented immigrants paid $13 billion in payroll taxes into the Social Security Trust Fund in 2010 alone.65 Tax payments by undocumented immigrants and their families are also sizable at the state and local levels. The Institute for Taxation and Economic Policy (ITEP) estimates that households headed by undocumented immigrants paid $10.6 billion in state and local taxes in 2010. That included $1.2 billion in personal income taxes, $1.2 billion in property taxes, and $8.1 billion in sales taxes.

The states receiving the most tax revenue from households headed by undocumented immigrants were California ($2.2 billion), Texas ($1.6 billion), New York ($744.3 million), Florida ($706.3 million), and Illinois ($562.1 million).66 Other studies have yielded similar findings.

The Texas State Comptroller estimated that undocumented immigrants in Texas generate $1.6 billion per year in state tax revenue.67 In Georgia, the annual tax contributions of undocumented immigrants are estimated at $215.6 million to $252.5 million.68 In Colorado, undocumented immigrants pay between $159 million and $194 million.69 In Oregon, they pay between $134 million and $187 million—plus, employers in Oregon pay between $97 million and $136 million in taxes on behalf of undocumented workers.70 In Iowa, undocumented immigrants pay $40 million to $62 million—and their employers contribute $50 million to $77.8 million on their behalf.71 The tax payments of now-undocumented 11

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Additionally, cities such as Dayton, Ohio61 have passed “welcoming resolutions”—formal proclamations by local elected leaders expressing their recognition of the importance of immigration to their local economy, and their openness to the continued contributions of immigrants.62 In Minnesota, local leaders also acknowledge the positive contributions of immigrants. As a member of the Minnesota Chamber of Commerce stated, “Immigrants aren’t just an asset because they numerically increase the workforce. They are also playing a key role as entrepreneurs in Minnesota and have transformed neighborhoods in both Minneapolis and St. Paul while helping revitalize downtowns in several regional centers around our state.”63

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immigrants would be significantly greater if they had legal status. According to ITEP, if undocumented immigrants were allowed to work legally in the United States, they would pay $12.7 billion in state and local taxes—an increase of $2.1 billion over what they pay now. This would amount to $2.8 billion in income taxes (an increase of $1.6 billion), $1.3 billion in property taxes (an increase of $76.1 million), and $8.5 billion in sales taxes (an increase of $420.5 million).72

WELFARE MYTH: Immigrants come to the United States for welfare benefits.

FACT: Undocumented immigrants are not eligible for federal public benefit programs, and even legal immigrants face stringent eligibility restrictions.

Undocumented immigrants are not eligible for federal public benefits such as Social Security, Supplemental Security Income, Temporary Assistance for Needy Families, Medicaid, Medicare, and food stamps. Even most legal immigrants cannot receive these benefits until they have been in the United States for five years or longer, regardless of how much they have worked or paid in taxes.73 Given these restrictions, it is not surprising that U.S. citizens are more likely to receive public benefits than are noncitizens.74

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state’s immigrants generate $2.4 billion in tax revenue per year, which more than offsets the $1.4 billion worth of educational, healthcare, and law enforcement resources they utilize.75 A study in Florida estimated that, on a per capita basis, immigrants in the state pay nearly $1,500 more in taxes than they receive in public benefits.76 Nonetheless, some studies have sought to demonstrate that households headed by immigrants make costly use of public-benefits programs. Invariably, most of the “costs” calculated by such studies are for programs utilized by the native-born, U.S.-citizen children of immigrants. These children are counted as a “cost” of immigration if they are under 18, but as part of the native-born population if they are working, taxpaying adults. Yet all people are “costly” as children who are still in school and have not yet entered the workforce. Economists view expenditures on healthcare and education for children as investments that pay off later, when those children become workers and taxpayers.

Healthy, well-educated children are more productive, earn higher wages, and pay more in taxes as adults.77

A number of state studies have demonstrated that, on average, immigrants pay more in taxes than they receive in government services and benefits.

For instance, a study in Arizona found that the 12

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MYTH: Today’s immigrants are not assimilating into U.S. society.

the “low-income” level rose from 35 percent to 66 percent. The share who were U.S. citizens grew from seven percent to 56 percent.79

Throughout U.S. history, each new wave of immigrants has been accused of not “assimilating” into U.S. society. The Italian, Polish, and Eastern European immigrants who came here at the end of the nineteenth century faced this accusation, and subsequently proved it wrong as they and their children learned English, bought homes, got better jobs, became U.S. citizens, and integrated into their communities in many other ways. The Latin American and Asian immigrants who have come here more recently now face the same accusation. As with their predecessors, they are proving that accusation to be false and are integrating into U.S. society and climbing the socioeconomic ladder over time.78

Likewise, data from the Office of Immigration Statistics at the Department of Homeland Security (DHS) reveal that the number of immigrants applying for U.S. citizenship has been growing for decades. A DHS report found that the average number of immigrants naturalizing each year increased from fewer than 120,000 during the 1950s and 1960s, to 210,000 during the 1980s, 500,000 during the 1990s, and 680,000 between 2000 and 2009. The number of naturalizations grew from 619,913 in 2010, to 694,193 in 2011, to 757,434 in 2012.80 Moreover, immigrants today are naturalizing at a faster rate than in the past.81 According to a 2008 DHS report, “approximately one third of immigrants who obtained LPR [legal permanent resident] status from the mid-1970s through the mid-1980s naturalized within 10 years, whereas nearly half the immigrants who obtained status in the mid-to-late-1990s did so.”82

A study by demographer Dowell Myers demonstrates the integration and socioeconomic progress of immigrants over the course of two decades. Myers focuses on those immigrants who came to the United States between 1985 and 1989. He uses census data to take a socioeconomic snapshot of these long-term immigrants in 1990 and again in 2008—after they had lived in the United States for 18 years. The data indicate that, since coming here, a growing number of longterm immigrants have bought homes, earned higher wages, and become U.S. citizens. Between 1990 and 2008, the share of these immigrants who owned homes jumped from 16 percent to 62 percent. The share who earned incomes above

The economic and social integration of immigrants is an ongoing process that will continue over the decades to come. In a 2011 report, Myers concludes that the share of immigrants who own homes is projected to increase from 25.5 percent in 2000 to 72 percent in 2030. The share that speak English “well” or “very well” is projected to grow from 57.5 percent to 70.3 percent over the same period. And the share living in poverty is projected to decrease from 22.8 percent to 13.4 percent.83 In other words, immigrants are not settling into “ethnic enclaves” that exist apart from mainstream America. Rather, they are becoming progressively more “American” in every sense of the word.

FACT: Today’s immigrants are buying homes, becoming U.S. citizens, and learning English.

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Integration and upward mobility are most apparent among the children of immigrants.

For instance, according to surveys by the Pew Research Center, “adults in the second generation are doing better than those in the first generation in median household income ($58,000 versus $46,000); college degrees (36 percent versus 29 percent); and homeownership (64 percent versus 51 percent). They are less likely to be in poverty (11 percent versus 18 percent) and less likely to have not finished high school (10 percent versus 28 percent).”84 A study by economist James P. Smith found that the wages and educational attainment of Latino men increase significantly from generation to generation, with wages increasing 15 percent from the first generation and in between the second and third generations, an additional 5.6 percent.85

CRIME MYTH: Immigrants are more likely to commit crimes than native-born Americans.

FACT: Immigration does not cause crime rates to rise, and immigrants are actually less likely to commit crimes or be behind bars than native-born Americans.

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High levels of immigration are not associated with more crime. Between 1990 and 2010, the foreign-born share of the U.S. population grew from 7.9 percent to 12.9 percent86 and the number of unauthorized immigrants tripled from 3.5 million to 11.2 million.87 During the same period, FBI data indicates that the violent crime

rate declined 45 percent and the property crime rate fell 42 percent.88 Likewise, a report from the conservative Americas Majority Foundation found that crime rates are lowest in states with the highest immigration growth rates. In 2006, the 10 states with the most pronounced, recent increases in immigration had the lowest rates of crime in general and violent crime in particular.89 Moreover, immigrants are much less likely to be behind bars than native-born Americans. A study by sociologist Rubén Rumbaut found that, among young men, incarceration rates are lowest for immigrants. This holds true regardless of ethnicity or educational attainment, even for Mexicans, Salvadorans, and Guatemalans who comprise a majority of the undocumented population. In 2000, the incarceration rate for young immigrant men was only 0.7 percent—five times lower than the 3.5 percent incarceration rate among young native-born men.90 A study by the Public Policy Institute of California yielded similar results. The study found that, in 2005, the incarceration rate for foreign-born adults in California was 297 per 100,000—compared to 813 per 100,000 for native-born adults. Moreover, immigrants made up 35 percent of California’s adult population, but only 17 percent of the state prison population.91 Similarly, economists Kristin Butcher and Anne Morrison Piehl used data from the 1980, 1990, and 2000 censuses to demonstrate that, during the 1990s, “those immigrants who chose to come to the United States were less likely to be involved in criminal activity than earlier immigrants and the native born.”

The analysis by Butcher and Piehl established that the lower incarceration rate for immigrants could not be explained away with the argument that there are fewer immigrants in prison because so many of

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These studies are only the most recent in a very long line of research demonstrating that immigrants are less likely than native-born Americans to commit crimes or to be incarcerated.93

BORDER SECURITY MYTH: Reforming the legal immigration system will not help secure the border.

FACT: Immigration reform is an integral part of any effective border security strategy.

Since 1986, after passage of the Immigration Reform and Control Act, the federal government has spent an estimated $186.8 billion on immigration enforcement.94 Yet during that time, the unauthorized population has tripled in size to 11 million.95 This did not occur because $186.6 billion was not enough to get the job done. It occurred because this money was spent trying to enforce immigration laws that have consistently failed to match either the U.S. economy’s demand for workers or the natural desire of immigrants to be reunited with their families. Therefore, enforcement coupled with commonsense reforms to our legal immigration system is one of the most effective ways to enhance national security.

Immigration reform that includes a pathway to legal status for undocumented immigrants

already living in the country, with the creation of flexible avenues for future immigration (through temporary worker programs), and mandatory employment verification, would enhance border security and reduce illegal immigration.

Broad immigration reform in the 113th Congress would enhance border security in multiple ways.

To begin with, reform would reduce the flow of undocumented immigrants by providing a mechanism for them to legally come and work in the United States by creating more flexible legal limits on employment-based immigration.

Workers admitted under employment-based visa programs would be screened against law enforcement databases prior to entering the country. Paired with a workable employment verification system, once their visas expire, these new temporary workers would be unable to work in the United States.

Further, an earned lawful status program for the undocumented would also have a comparable impact on national security as the undocumented come out of the shadows, register with the federal government, and undergo background checks. Additionally, an earned lawful status program for the undocumented would reduce the lucrative fraudulent document and smuggling industry that currently persists as well as “shrink the haystack,� allowing law enforcement to concentrate on removing individuals with criminal backgrounds rather than those entering the country legitimately to work.96

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them are deported. Nor could it be dismissed on the grounds that harsher immigration laws are deterring immigrants from committing crimes because they are afraid of getting deported.92

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1. See Madeline Zavodny, Immigration and American Jobs (Washington, DC: American Enterprise Institute for Public Policy Research and the Partnership for a New American Economy, 2011), <http://www.aei.org/ files/2011/12/14/-immigration-and-american-jobs_144002688962.pdf>.

2. Jeffrey S. Passel and D’Vera Cohn, Unauthorized Immigrant Population: National and State Trends, 2010 (Washington, DC: Pew Hispanic Center, February 1, 2011), p. 17, <http://pewhispanic.org/files/reports/133. pdf#page=18>.

3. See testimony of Daniel Griswold, Director, Center for Trade Policy Studies, Cato Institute, before the U.S. House of Representatives, Committee on the Judiciary, Subcommittee on Immigration Policy and Enforcement, January 26, 2011, p. 4, <http://judiciary.house.gov/hearings/pdf/Griswold01262011.pdf#page=4>.

4. See Raúl Hinojosa-Ojeda, Raising the Floor for American Workers: The Economic Benefits of Comprehensive Immigration Reform (Washington, DC: Immigration Policy Center of the American Immigration Council and the Center for American Progress, January 2010), <http://www. immigrationpolicy.org/sites/default/files/docs/Hinojosa%20-%20Raising%20the%20Floor%20for%20American%20Workers%20010710. pdf#page=14>; The Perryman Group, An Essential Resource: An Analysis of the Economic Impact of Undocumented Workers on Business Activity in the U.S. with Estimated Effects by State and by Industry (Waco, TX: April 2008), <http://www.immigrationpolicy.org/sites/default/files/ docs/ipc/Impact%20of%20the%20Undocumented%20Workforce%20 April%2015%202008.pdf>.

5. Robert W. Fairlie, Kauffman Index of Entrepreneurial Activity, 1996–2010 (Kansas City, MO: Ewing Marion Kauffman Foundation, March 2011), p. 9, <http://www.kauffman.org/uploadedFiles/KIEA_2011_report. pdf#page=11>.

6. Robert W. Fairlie, Open for Business: How Immigrants Are Driving Small Business Creation in the United States (New York, NY: Partnership for a New American Economy, August 2012), p. 3, <http://www. renewoureconomy.org/wp-content/uploads/2013/07/openforbusiness. pdf#page=5>.

7. David Dyssegaard Kallick, Immigrant Small Business Owners: A Significant and Growing Part of the Economy (New York, NY: Fiscal Policy Institute, June 2012), p. 1, <http://www.fiscalpolicy.org/immigrant-small-business-owners-FPI-20120614.pdf#page=5>.

8. Partnership for a New American Economy, The “New American” Fortune 500 (New York, NY: June 2011), pp. 1–3, <http://www.renewoureconomy.org/sites/all/themes/pnae/img/new-american-fortune-500-june-2011. pdf>; see also Stuart Anderson, American Made 2.0: How Immigrant Entrepreneurs Continue to Contribute to the U.S. Economy (Arlington, VA: National Venture Capital Association, 2013), <http://www.nvca.org/ index.php?option=com_content&view=article&id=254&Itemid=103>; David Bier, America Still Needs a True Entrepreneurship Visa: Senate and House Immigration Bills Fall Short in Attracting Entrepreneurs to America (Washington, DC: Competitive Enterprise Institute, 2013), <http://cei. org/sites/default/files/David%20Bier%20-%20America%20Needs%20 a%20True%20Entrepreneurship%20Visa.pdf>.

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9. Wadhwa, et al., “Skilled Immigration and Economic Growth,” Applied Research in Economic Development 5, no. 1 (May 2008), pp.6–14, <http://

www.soc.duke.edu/globalengineering/papers_skilledimmigrants.php>.

10. Heidi Shierholz, Immigration and Wages: Methodological Advancements Confirm Modest Gains for Native Workers (Washington, DC: Economic Policy Institute, February 4, 2010), p. 22, <http://epi.3cdn.net/7de74ee0cd834d87d4_a3m6ba9j0.pdf#page=22>.

11. Michael Greenstone and Adam Looney, Ten Economic Facts about Immigration (Washington, DC: The Hamilton Project, Brookings Institution, September 2010), p. 5, <http://www.brookings.edu/~/media/Files/rc/ reports/2010/09_immigration_greenstone_looney/09_immigration. pdf#page=7>.

12. Christopher S. Decker, Nebraska’s Immigrant Population: Economic and Fiscal Impacts (Omaha, NE: Office of Latino/Latin American Studies, University of Nebraska at Omaha, October 2008), p. 1, <http://www. unomaha.edu/ollas/Econ%20Im%20Report/EconImpact.pdf#page=9>.

13. See Madeline Zavodny, Immigration and American Jobs (Washington, DC: American Enterprise Institute for Public Policy Research and the Partnership for a New American Economy, 2011), <http://www.aei.org/ files/2011/12/14/-immigration-and-american-jobs_144002688962. pdf>; Madeline Zavodny and Tamar Jacoby, Filling the Gap: Less-Skilled Immigration in a Changing Economy (Washington, DC: American Enterprise Institute and ImmigrationWorks USA, 2013), <http://www. aei.org/files/2013/06/10/-zavodny-filling-the-gap-immigration-report_140631709214.pdf>; Demetrios G. Papademetriou and Madeleine Sumption, The Role of Immigration in Fostering Competitiveness in the United States (Washington, DC: Migration Policy Institute, 2011), <http://www.migrationpolicy.org/pubs/competitiveness-us. pdf>; Giovanni Peri, “The Effect of Immigrants on U.S. Employment and Productivity,” FRBSF Economic Letter 2010-26 (San Francisco, CA: Federal Reserve Bank of San Francisco, August 30, 2010), <http:// www.frbsf.org/economic-research/publications/economic-letter/2010/ august/effect-immigrants-us-employment-productivity/>; Michael Fix, Demetrios G. Papademetriou, and Madeleine Sumption, Immigrants in a Changing Labor Market: Responding to Economic Needs (Washington, DC: Migration Policy Institute, 2013), <http://www.migrationpolicy.org/ bookstore/labormarkets.php>.

14. Michael Greenstone and Adam Looney, Ten Economic Facts about Immigration (Washington, DC: The Hamilton Project, Brookings Institution, September 2010), p. 5, <http://www.brookings.edu/~/media/Files/rc/ reports/2010/09_immigration_greenstone_looney/09_immigration. pdf#page=7>.

15. Jack Strauss, Does Immigration, Particularly Increases in Latinos, Affect African American Wages, Unemployment and Incarceration Rates? (Social Science Research Network, December 8, 2012), <http://papers.ssrn.com/ sol3/papers.cfm?abstract_id=2186978>.

16. Rob Paral & Associates, The Unemployment and Immigration Disconnect: Untying the Knot, Part I of III (Washington, DC: Immigration Policy Center, American Immigration Law Foundation, May 2009), pp. 4–6, <http://www.immigrationpolicy.org/sites/default/files/docs/Part%20 1%20-%20Unemployment%20Disconnect%20%2005-19-09.pdf>.

17. Rob Paral & Associates, Immigration and Native-Born Unemployment across Racial/Ethnic Groups: Untying the Knot, Part II of III (Washington, DC: Immigration Policy Center, American Immigration Law Foundation, May 2009), p. 7, <http://www.immigrationpolicy.org/sites/default/ files/docs/Part%202%20-%20Unemployment%20Race%20Disconnect%2005-19-09.pdf>.

18. Giovanni Peri, Rethinking the Effects of Immigration on Wages: New Data

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19. Heidi Shierholz, Immigration and Wages: Methodological Advancements Confirm Modest Gains for Native Workers (Washington, DC: Economic Policy Institute, February 4, 2010), p. 12, <http://epi.3cdn.net/7de74ee0cd834d87d4_a3m6ba9j0.pdf#page=12>.

20. Gianmarco I. P. Ottaviano and Giovanni Peri, Immigration and National Wages: Clarifying the Theory and the Empirics, NBER Working Paper No. 14188 (Cambridge, MA: National Bureau of Economic Research, July 2008), p.58, <http://www.nber.org/papers/w14188>. See Giovanni Peri, The Impact of Immigrants in Recession and Economic Expansion, MPI Immigrants in a Changing Labor Market (Washington, DC: Migration Policy Institute, March 2013).

21. Örn Bodvarsson and Hendrik Van den Berg, “The Impact of Immigration on a Local Economy: The Case of Dawson County, Nebraska,” Great Plains Research 13, no. 2 (Fall 2003), pp.291–309, <http://digitalcommons.unl. edu/cgi/viewcontent.cgi?article=1663&context=greatplainsresearch>.

22. Örn B. Bodvarsson, Joshua J. Lewer, and Hendrik F. Van den Berg, Measuring Immigration’s Effects on Labor Demand: A Reexamination of the Mariel Boatlift, IZA Discussion Paper No. 2919 (Bonn, Germany: IZA-Institute for the Study of Labor, July 21, 2007), <http://papers.ssrn. com/sol3/papers.cfm?abstract_id=1001215>.

23. David Card, How Immigration Affects U.S. Cities, CReAM Discussion Paper No 11/07 (London, England: Center for Research and Analysis of Migration, June 2007), <http://www.econ.ucl.ac.uk/cream/pages/CDP/ CDP_11_07.pdf>.

24. Dixie Sommers and James C. Franklin, “Overview of Projections to 2020,” Monthly Labor Review, January 2012, p. 10, <http://www.bls.gov/ opub/mlr/2012/01/art1full.pdf#page=8>.

25. See Dowell Myers, Immigrants and Boomers: Forging a New Social Contract for the Future of America (New York, NY: Russell Sage Foundation, 2007), <https://www.russellsage.org/publications/immigrants-and-boomers-0>; John Pitkin and Dowell Myers, Projections of the U.S. Population, 2010–2040, by Immigrant Generation and Foreign-Born Duration in the U.S. (Los Angeles, CA: Population Dynamics Research Group, School of Policy, Planning, and Development, University of Southern California, 2011), <http://www.usc.edu/schools/price/futures/pdf/2011_Pitkin-Myers_Projections-Immigrant-Generations-and-Foreign-Born.pdf>.

26. Mitra Toossi, “Labor Force Projections to 2020: A More Slowly Growing Workforce,” Monthly Labor Review, January 2012, p. 47, <http://www. bls.gov/opub/mlr/2012/01/art3full.pdf#page=5>.

27. C. Brett Lockard and Michael Wolf, “Occupational Employment Projections to 2020,” Monthly Labor Review, January 2012, p. 102, <http:// www.bls.gov/opub/mlr/2012/01/art5full.pdf#page=19>.

28. Mitra Toossi, “Labor Force Projections to 2020: A More Slowly Growing Workforce,” Monthly Labor Review, January 2012, p. 56, <http://www. bls.gov/opub/mlr/2012/01/art3full.pdf#page=14>.

29. Mitra Toossi, “Labor Force Projections to 2020: A More Slowly Growing Workforce,” Monthly Labor Review, January 2012, p. 63, <http://www. bls.gov/opub/mlr/2012/01/art3full.pdf#page=21>.

30. C. Brett Lockard and Michael Wolf, “Occupational Employment Projections to 2020,” Monthly Labor Review, January 2012, p. 85, 90,<http://

www.bls.gov/opub/mlr/2012/01/art5full.pdf#page=2>.

31. C. Brett Lockard and Michael Wolf, “Occupational Employment Projections to 2020,” Monthly Labor Review, January 2012, p. 89, <http://www. bls.gov/opub/mlr/2012/01/art5full.pdf#page=6>.

32. Darrell M. West, The Paradox of Worker Shortages at a Time of High National Unemployment (Washington, DC: The Brookings Institution, April 2013), p. 2, <http://www.brookings.edu/~/media/research/files/ papers/2013/04/10%20worker%20shortage%20immigration%20west/ west_paradox%20of%20worker%20shortages.pdf#page=2>.

33. Census/Bureau of Labor Statistics, Current Population Survey (Washington, DC: Department of Labor, pooled January through December 2011 data).

34. Alexander Nowrasteh, How to Make Guestworker Visas Work (Washington, DC: Cato Institute, 2013), <http://object.cato.org/sites/cato.org/files/ pubs/pdf/pa719_1.pdf>.

35. Demand for the H-1B and H-2B programs are not driven by the cap, instead demand for these programs are based on employer new hiring and the inability of employers to find American workers in sufficient numbers. For example, in 2001 through 2003, the H-1B cap of 195,000 visas was never reached. Jill H. Wilson, Immigration Facts: Temporary Foreign Workers (Washington, DC: The Brookings Institution, June 18, 2013), <http://www.brookings.edu/research/reports/2013/06/18-temporary-workers-wilson>.

36. See U.S. Citizenship and Immigration Services, “H-1B Fiscal Year (FY) 2014 Cap Season,” April 15, 2013, <http://www.uscis.gov/portal/site/ uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=4b7cdd1d5fd37210VgnVCM100000082ca60aRCRD&vgnextchannel=73566811264a3210VgnVCM100000b92ca60aRCRD>.

37. Madeline Zavodny and Tamar Jacoby, Filling the Gap: Less-Skilled Immigration in a Changing Economy (Washington, DC: American Enterprise Institute and ImmigrationWorks USA, June 2013), pp. 1–3, <http:// www.aei.org/files/2013/06/10/-zavodny-filling-the-gap-immigration-report_140631709214.pdf >.

38. C. Brett Lockard and Michael Wolf, “Occupational Employment Projections to 2020,” Monthly Labor Review, January 2012, p. 106, <http:// www.bls.gov/opub/mlr/2012/01/art5full.pdf#page=23>.

39. Madeline Zavodny and Tamar Jacoby, Filling the Gap: Less-Skilled Immigration in a Changing Economy (Washington, DC: American Enterprise Institute and ImmigrationWorks USA, 2013), <http://www. aei.org/files/2013/06/10/-zavodny-filling-the-gap-immigration-report_140631709214.pdf>; Demetrios G. Papademetriou and Madeleine Sumption, The Role of Immigration in Fostering Competitiveness in the United States (Washington, DC: Migration Policy Institute, 2011), <http://www.migrationpolicy.org/pubs/competitiveness-us.pdf>.

40. Stuart Anderson, H-1B Visas Essential to Attracting and Retaining Talent in America (Arlington, VA: National Foundation for American Policy, 2013), <http://www.nfap.com/pdf/NFAP%20Policy%20Brief%20 H-1B%20Visas%20May%202013.pdf>.

41. Jonathan T. Rothwell and Neil G. Ruiz, H-1B Visas and the STEM Shortage: A Research Brief (Washington, DC: The Brookings Institution, 2013), pp. 1–3, <http://papers.ssrn.com/sol3/papers.cfm?abstract_ id=2262872>; see also Giovanni Peri, Kevin Shih, and Chad Sparber, “STEM Workers, H-1B Visas and Productivity in U.S. Cities,” Norface Migration Discussion Paper No. 2013-09 (London: Norface Research Programme on Migration, 2013), <http://www.norface-migration.org/ publ_uploads/NDP_09_13.pdf>.

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and Analysis from 1990–2004 (Washington, DC: Immigration Policy Center, American Immigration Law Foundation, October 2006), p. 1, <http://www.immigrationpolicy.org/sites/default/files/docs/IPC%20Rethinking%20Wages,%2011-2006.pdf>.

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IMMIGRATION AND

MYTHS FACTS

42. Madeline Zavodny, Immigration and American Jobs (Washington, DC: American Enterprise Institute for Public Policy Research and the Partnership for a New American Economy, 2011), p.11. <http://www.aei.org/ files/2011/12/14/-immigration-and-american-jobs_144002688962.pdf>.

43. Frederick R. Treyz, Corey Stottlemyer, and Rod Motamedi, Key Components of Immigration Reform: An Analysis of the Economic Effects of Creating a Pathway to Legal Status, Expanding High-Skilled Visas, and Reforming Lesser-Skilled Visas (Amherst, MA: Regional Economic Models, Inc., 2013), <http://www.remi.com/immigration-report>.

44. McKinsey Global Institute, An Economy that Works: Job Creation and America’s Future, (June 2011), http://www.mckinsey.com/Insights/MGI/ Research/Labor_Markets/An_economy_that_works_for_US_job_creation 45. American Community Survey, data from 2008. <www.census.gove/acs>.

46. Bureau of Labor Statistics Employment Projections 2010-2020 (Washington, DC: Department of Labor, February 1, 2012), table 9.

47. U.S. Census Educational Attainment for the Population 25 Years and Over (Washington, DC: Department of Commerce, December 10, 2012), Table 1.

48. Help Wanted (Washington, DC: the Information Technology Industry Council, the Partnership for a New American Economy, the U.S. Chamber of Commerce, November 2012), <http://www.immigrationresearch-info.org/report/us-chamber-commerce/help-wanted-role-foreign-workers-innovation-economy>.

49. American Community Survey, data from 2009-2011. <www.census.gov/ acs>. See also Gordon Hanson (UC San Diego) and Matthew Slaughter (Dartmouth), Talent, Immigration, and U.S. Economic Competitiveness (Washington, DC: National Bureau of Economic Research, May 2013), <http://irps.ucsd.edu/assets/001/504703.pdf>.

50. Bureau of Labor Statistics, Occupational Employment Statistics (Washington, DC: Department of Labor), <http://www.bls.gov/oes/current/ oes_nat.htm>.

58. The Chicago Council, U.S. Economic Competitiveness at Risk: A Midwest Call to Action on Immigration Reform (Chicago, IL: The Chicago Council on Global Affairs, February 2013), <http://www.thechicagocouncil. org/UserFiles/File/Task%20Force%20Reports/2013_ImmigrationTaskForce_Final.pdf>.

59. Welcoming Michigan, <http://www.welcomingmichigan.org/content/ learn-more>.

60. Global Detroit, Global Detroit: Final Report (Detroit, MI: 2010), <http:// www.globaldetroit.com/wp-content/files_mf/1327697728Global_Detroit_Study.full_report.pdf >.

61. Welcome Dayton, <http://www.welcomedayton.org/>.

62. Welcoming America: Building a Nation of Neighbors, <http://www. welcomingamerica.org/about-us/accomplishments/>.

63. Bill Blazar, Senior Vice President of Public Affairs and Business Development, Minnesota Chamber of Commerce, quoted in The Chicago Council, U.S. Economic Competitiveness at Risk: A Midwest Call to Action on Immigration Reform (Chicago, IL: The Chicago Council on Global Affairs, February 2013), <http://www.thechicagocouncil.org/UserFiles/File/ Task%20Force%20Reports/2013_ImmigrationTaskForce_Final.pdf>.

64. The White House, Economic Report of the President, February 2005, p.

107, <http://www.gpoaccess.gov/eop/2005/2005_erp.pdf>.

65. Stephen Goss, et al., “Effects of Unauthorized Immigration on the Actuarial Status of the Social Security Trust Funds,” Actuarial Note no. 151 (Baltimore, MD: Office of the Chief Actuary, Social Security Administration, April 2013), p. 3, <http://www.socialsecurity.gov/OACT/NOTES/ pdf_notes/note151.pdf#page=3>.

51. Id.

66. Institute on Taxation and Economic Policy, Undocumented Immigrants’ State and Local Tax Contribution (Washington, DC: July 2013), <http:// www.itep.org/immigration/>.

52. See, Gordon Hanson (UC San Diego) and Matthew Slaughter (Dartmouth), Talent, Immigration, and U.S. Economic Competitiveness ((Washington, DC: National Bureau of Economic Research, May 2013), at p.

31-32 and See section 3 footnotes for methodology, <http://irps.ucsd. edu/assets/001/504703.pdf>.

67. Carole Keeton Strayhorn, Texas Comptroller, Special Report: Undocumented Immigrants in Texas: A Financial Analysis of the Impact to the State Budget and Economy (Austin, TX: December 2006), p. 1, <http:// www.window.state.tx.us/specialrpt/undocumented/undocumented. pdf#page=3>.

53. Jacob L. Vigdor, Immigration and the Revival of American Cities: From Preserving Manufacturing Jobs to Strengthening the Housing Market (Washington, DC: Americas Society/Council of the Americas and Partnership for a New American Economy, 2013), <http://www.as-coa.org/sites/default/files/ImmigrationUSRevivalReport.pdf>; see also Tamar Jacoby, U.S. Economic Competitiveness at Risk: A Midwest Call to Action on Immigration Reform (Chicago, IL: The Chicago Council on Global Affairs, 2013), <http://www.thechicagocouncil.org/UserFiles/File/Task%20Force%20 Reports/2013_ImmigrationTaskForce_Final.pdf>.

68. Sarah Beth Coffey, Undocumented Immigrants in Georgia: Tax Contribution and Fiscal Concerns (Atlanta, GA: Georgia Budget and Policy Institute, January 2006), p. 1, <http://www.gbpi.org/pubs/garevenue/20060119.pdf>.

54. Mark Muro, Multiplier Effects: Connecting the Innovation and Opportunity Agendas (Washington, DC: The Brookings Institution, August 23, 2012), <http://www.brookings.edu/blogs/the-avenue/posts/2012/08/23-multiplier-effects-muro>.

70. Oregon Center for Public Policy, Undocumented Workers Are Taxpayers, Too (Silverton, OR: April 10, 2007), p. 4 <http://www.ocpp.org/cgi-bin/ display.cgi?page=issue070410immig>.

55. Enrico Moretti, The New Geography of Jobs (New York, NY: Houghton Mifflin, 2012), <http://tinyurl.com/mplov9k>.

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57. Jonathan Rothwell, Regional Inequality and ‘The New Geography of Jobs’ (Washington, DC: The Brookings Institution, August 7, 2012), <http://www.brookings.edu/blogs/the-avenue/posts/2012/08/07-regional-inequality-rothwell>.

56. Id.

69. Robin Baker and Rich Jones, State and Local Taxes Paid in Colorado by Undocumented Immigrants (Denver, CO: The Bell Policy Center, June 30, 2006), p. 1, <http://www.thebell.org/PUBS/IssBrf/2006/06ImmigTaxes. pdf#page=2>.

71. Beth Pearson and Michael F. Sheehan, Undocumented Immigrants in Iowa: Estimated Tax Contributions and Fiscal Impact (Mount Vernon, IA: Iowa Policy Project, October 2007), pp. 30–31, <http://www.iowafiscal. org/2007docs/071025-undoc.pdf#page=30>.

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73. National Immigration Law Center, Overview of Immigrant Eligibility for Federal Programs (Washington, DC: October 2010), <http://www.nilc. org/pubs/guideupdates/tbl1_ovrvw-fed-pgms-rev-2010-10-07.pdf>.

74. National Immigration Law Center, Facts about Immigrants’ Low Use of Health Services and Public Benefits (Washington, DC: September 2006), p. 2 <http://www.nilc.org/immspbs/research/imms&publicservices_2006-9-12.pdf#page=2>.

75. Judith Gans, Immigrants in Arizona: Fiscal and Economic Impacts (Tucson, AZ: Udall Center for Studies in Public Policy, University of Arizona, 2007), p. 3, <http://udallcenter.arizona.edu/immigration/publications/ impactofimmigrants08.pdf#page=10>.

76. Emily Eisenhauer, et al., Immigrants in Florida: Characteristics and Contributions (Miami, FL: Research Institute for Social and Economic Policy, Florida International University, May 2007), pp. 7, 34, <http://www. risep-fiu.org/wp-content/uploads/2009/03/immigrants_spring_2007_reduced.pdf>.

85. James P. Smith, “Assimilation across the Latino Generations,” American Economic Review 93, no. 2 (Washington, DC, May 2003), pp.315–319, <http://econpapers.repec.org/article/aeaaecrev/v_3a93_3ay_3a2003_3ai_ 3a2_3ap_3a315-319.htm>.

86. Elizabeth M. Grieco, et al., The Size, Place of Birth, and Geographic Distribution of the Foreign-Born Population in the United States: 1960 to 2010 (Washington, DC: U.S. Census Bureau, October 2012), p. 19, <http:// www.census.gov/population/foreign/files/WorkingPaper96.pdf#page=19>.

87. Jeffrey S. Passel and D’Vera Cohn, Unauthorized Immigrant Population: National and State Trends, 2010 (Washington, DC: Pew Hispanic Center, February 1, 2011), p. 23, <http://www.pewhispanic.org/files/reports/133. pdf#page=24>.

88. FBI, Uniform Crime Reports, prepared by the National Archive of Criminal Justice Data, Date of download: July 16, 2013, <http://www. ucrdatatool.gov/>.

89. Richard Nadler, Immigration and the Wealth of States (Overland Park, KS: Americas Majority Foundation: January 2008), p. 9, <http://immigrationworksusa.org/uploaded/file/ImmigrationandWealth.pdf#page=11>.

77. Michael Greenstone and Adam Looney, Ten Economic Facts about Immigration (Washington, DC: The Hamilton Project, Brookings Institution, September 2010), p. 6, <http://www.brookings.edu/~/media/Files/rc/ reports/2010/09_immigration_greenstone_looney/09_immigration. pdf#page=8>.

90. Rubén G. Rumbaut and Walter A. Ewing, The Myth of Immigrant Criminality and the Paradox of Assimilation: Incarceration Rates among Native and Foreign-Born Men (Washington: DC: Immigration Policy Center, American Immigration Law Foundation, Spring 2007), pp. 6–10, <http://www.immigrationpolicy.org/sites/default/files/docs/Imm%20 Criminality%20(IPC).pdf#page=8>.

78. Tomás R. Jiménez, Immigrants in the United States: How Well Are They Integrating into Society? (Washington, DC: Migration Policy Institute, May 2011), <http://www.migrationpolicy.org/pubs/integration-jimenez.pdf >.

91. Immigrants and Crime (San Francisco, CA: Public Policy Institute of California, June 2008), <http://www.ppic.org/content/pubs/jtf/JTF_ImmigrantsCrimeJTF.pdf>.

79. Dowell Myers and John Pitkin, Assimilation Today: New Evidence Shows the Latest Immigrants to America Are Following in Our History’s Footsteps (Washington, DC: Center for American Progress, September 1, 2010), p.

16, <http://www.americanprogress.org/issues/2010/09/pdf/immigrant_ assimilation.pdf#page=19>.

92. Kristin F. Butcher and Anne Morrison Piehl, Why Are Immigrants’ Incarceration Rates So Low? Evidence on Selective Immigration, Deterrence, and Deportation, Working Paper 2005-19 (Chicago, IL: Federal Reserve Bank of Chicago, November 2005), p. 2, <http://www.chicagofed.org/digital_ assets/publications/working_papers/2005/wp2005_19.pdf#page=5>.

80. James Lee, U.S. Naturalizations: 2012 (Washington, DC: Department of Homeland Security, Office of Immigration Statistics, March 2013), p. 2, <http://www.dhs.gov/sites/default/files/publications/ois_natz_fr_2012. pdf#page=2>.

93. During the last period of large-scale immigration at the beginning of the twentieth century, three federal commissions reached this conclusion along with the U.S. Commission on Immigration Reform in a 1994 report. And so have academic researchers using data from the 1980, 1990, and 2000 Census; the National Longitudinal Study of Adolescent Health; and community studies in Chicago, San Diego, El Paso, and Miami. See Rubén G. Rumbaut and Walter A. Ewing, The Myth of Immigrant Criminality and the Paradox of Assimilation: Incarceration Rates among Native and Foreign-Born Men (Washington: DC: Immigration Policy Center, American Immigration Law Foundation, Spring 2007), pp. 13–14, <http://www.immigrationpolicy.org/sites/default/files/docs/Imm%20 Criminality%20(IPC).pdf#page=15>.

81. Tomás R. Jiménez, Immigrants in the United States: How Well Are They Integrating into Society? (Washington, DC: Migration Policy Institute, May 2011), p. 12, <http://www.migrationpolicy.org/pubs/integration-jimenez.pdf >.

82. Bryan C. Baker, Trends in Naturalization Rates: 2008 Update (Washington, DC: U.S. Department of Homeland Security, Office of Immigration Statistics, June 2009), p. 2, <http://www.dhs.gov/xlibrary/assets/statistics/ publications/ois_natztrends_fs_2008.pdf>.

83. Dowell Myers and John Pitkin, Assimilation Tomorrow: How America’s Immigrants Will Integrate by 2030 (Washington, DC: Center for American Progress, November 2011), p. 2, <http://www.americanprogress. org/wp-content/uploads/issues/2011/11/pdf/dowell_assimilation_report. pdf#page=5>.

84. Pew Research Center, Second-Generation Americans: A Portrait of the Adult Children of Immigrants (Washington, DC: February 7, 2013), p. 9, <http://www.pewsocialtrends.org/files/2013/02/FINAL_immigrant_generations_report_2-7-13.pdf#page=9>.

94. Doris Meissner, Donald M. Kerwin, Muzaffar Chishti, and Claire Bergeron, Immigration Enforcement in the United States: The Rise of a Formidable Machinery (Washington, DC: Migration Policy Institute, January 2013), p. 3, <http://www.migrationpolicy.org/pubs/enforcementpillars.pdf#page=9>.

95. Jeffrey S. Passel and D’Vera Cohn, Unauthorized Immigrant Population: National and State Trends, 2010 (Washington, DC: Pew Hispanic Center, February 1, 2011), p. 23, <http://pewhispanic.org/files/reports/133.pdf#page=24>.

96. Terry Goddard, How to Fix a Broken Border: A Three Part Series (Washington, DC: Immigration Policy Center, American Immigration Council, September 2011, February 2012, and May 2012), <http://www.immigrationpolicy.org/perspectives/how-fix-broken-border-three-part-series>.

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72. Institute on Taxation and Economic Policy, Undocumented Immigrants’ State and Local Tax Contribution (Washington, DC: July 2013), <http:// www.itep.org/immigration/>.

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Fixing our Broken Immigration System

House Legislation Addresses Businessâ&#x20AC;&#x2122;s Immigration Priorities U.S. CHAMBER GOAL

Enacting legislation that transforms our broken immigration system into one that drives job creation and economic growth. The current system is indefensible and unacceptable.

SOLUTION

Immigration reform should include: 1) reforming our legal immigration system, including both green card reform and implementing workable temporary worker programs for high-skilled and lesser-skilled workers as well as the agriculture industry; 2) a federal employment verification system that is workable for employers; 3) a legal status for the estimated eleven million undocumented people here, allowing them to emerge from the shadows, creating a stable workforce; and 4) improving enforcement to protect our borders while facilitating the flow of trade and travel. The U.S. Chamber supports legislation that takes meaningful steps towards addressing all four critical immigration priorities.

LEGAL IMMIGRATION Issue: Green Card Reform. Our current immigration system hinders the ability of U.S. companies to compete for the talented workers they need to thrive. Of the approximately one million new lawful permanent residents each year, only about 59,000 are issued green cards based on their skills.

Solution: Reform the legal immigration system so the workforce needs of employers are better met when

sufficient numbers of qualified American workers are not located. Making our green card system open and attractive to talented foreign workers will boost American competitiveness as well as economic and job growth. Approved by the House Judiciary Committee on June 27, H.R. 2131, the SKILLS Visa Act, establishes a new annual pool of 55,000 green cards for foreign nationals earning U.S. PhDs and Masters in STEM fields, phases out certain family-based green card categories, and eliminates the per country caps that have resulted in lengthy wait times for many employment-based immigrants. Further steps should be taken to expand green card access by those with skills needed by our nationâ&#x20AC;&#x2122;s economy, such as having Congress set numerical limits for sponsored workers but not the spouses and minor children of those workers.

Issue: Temporary Work Visa Reform. Existing temporary worker programs are very limited, especially the H-1B for high-skilled workers and the H-2B for seasonal or temporary need workers, and difficult to use, such as the H-2A for agriculture. Further, currently no temporary worker program exists for non-seasonal lesser-skilled jobs, even where an employer cannot find American workers.

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Solution: Create workable temporary worker programs that allow employers to hire immigrants for jobs in the U.S. in accordance with the demands of the economy. Workable temporary worker programs will promote job and economic growth â&#x20AC;&#x201C; along with reducing the pressure of illegal migration. Workable lesser-skilled and agriculture work visa programs are perhaps the only real-world alternative to unauthorized migration and, therefore, are key to border control and protecting our national security. High-skilled: H.R. 2131, the SKILLS Visa Act, increases the number of H-1B visas from 65,000, with an additional 20,000 set aside for U.S. graduate degree holders, to 155,000 plus 40,000 for Masters and PhD graduates of U.S. universities in STEM fields. The House approach tightens the required wage rules for hiring foreign workers to ensure Americans get the first crack at jobs, but ensures employers have access to private surveys to identify the required wages. Lesser-skilled: There must be a means to lawfully hire foreign lesser-skilled workers when Americans are not available in sufficient numbers, because the highest number and percentage of job growth in the U.S. through 2020 is expected in low and moderate skill jobs that cannot be mechanized

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or outsourced. Agriculture: Approved by the House Judiciary Committee on June 19, H.R. 1773, the Agricultural Guestworker Act, proposes a new temporary foreign worker program in agriculture, redefining agriculture to include dairy as well as meat and chicken processing; however, further related issues must be tackled to address mutual concerns of growers and workers.

ENHANCED EMPLOYMENT VERIFICATION SYSTEM (E-VERIFY) Issue: There is no national mandate to use the E-Verify system, which many think is the best way to verify

that employers are hiring lawful workers. However, some states and locales have begun to establish their own employment verification schemes, creating a patchwork of inconsistent and unclear mandates for employers.

This is burdensome for employers doing business in more than one state or locality and for small businesses that do not have the resources to monitor varying requirements.

Solution: Create clarity and consistency for employers in a workable employment verification

system. Doing so would both turn off the “job magnet” by discouraging immigrants from coming and/or staying here illegally, and promote respect for the rule of law. Approved by the House Judiciary Committee on June 26, H.R. 1772, the Legal Workforce Act, creates a uniform, national, and modernized policy regarding employment verification, including a mandate for all of the nation’s employers to use EVerify for new hires, on a phased-in basis. Critically, the bill includes strong preemption language of state and local laws that currently mandate the use of E-Verify or establish state or local investigation or enforcement schemes. It also creates a clear safe harbor for good faith efforts by employers and requires private employers to only verify new hires (not reverify their entire workforce). The House bill ensures that employers will no longer be investigated or fined when they act in good faith. In addition to redefining the good faith defense, H.R. 1772 also establishes a good faith compliance standard, ensures there are no obligations beyond the direct employer-employee relationship, establishes that the government must provide an integrated single employment verification obligation (integrating the I-9 process into E-Verify) available fully electronically as well as telephonically, recognizes that further work must be done regarding identity authentication, and avoids any new obligations for federal contractors.

EARNED LAWFUL STATUS Issue: More than 11 million undocumented immigrants are estimated to be residing in the U.S. Neither

deportation nor self-deportation of these folks is realistic, and ignoring this issue will not make it go away.

Solution: There must be a workable means for people who are currently undocumented to come out of the shadows, without creating a permanent underclass of people prohibited from earning citizenship. Providing an opportunity for the undocumented to earn legal status, after paying a fine, learning English, and complying with other strict criteria, is important for employers to ensure a stable workforce, in light of estimates that in excess of seven million undocumented workers are interwoven into the nation’s workforce. Moreover, an earned legalization program – including a requirement that all undocumented persons successfully complete criminal background checks – will “shrink the haystack” and allow law enforcement to be more strategic, and effective, in looking for dangerous foreign nationals who should be removed, thus enhancing national security.

BORDER CONTROL Issue: Consensus on how to control our nation’s borders and how to measure the achievement of sufficient border security has been elusive. Clearly, our national security requires we take further steps toward border security but we can neither adopt an “enforcement only” approach nor can we support a tactic of using “enforcement first” before considering any other immigration reforms.

Homeland Security Committee on May 15 by voice vote, builds upon past improvements at the border by addressing metrics for measuring control and issues related to surveillance, technology, and personnel.

© US Chamber of Commerce July 15, 2013

http://immigration.uschamber.com

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Solution: H.R. 1417, the Border Security Results Act, bipartisan legislation reported out of the House

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Our Dysfunction Dysfunctional Immigration System…

By The Numbers Our dysfunctional immigration system is indefensible and frustrates employers and workers alike. Instead of promoting job creation and economic growth, the current immigration system puts American companies and workers at a distinct competitive disadvantage in our global economy. The Chamber support supports immigration reform because America cannot compete and win in a global economy without attracting and retaining the world’s most talented and hardest workers.

6%...of ...of all green cards go specifically to workers Less than 6% (about 59,000) of the approximately 1 million new lawful permanent residents we welcome each year are workers, selected based on their skill sets and jobs they will perform in the U.S. 10…Year wait for a green card for talented workers A professional worker born in India ia with a U.S. Bachelor’s degree must wait 10 years for a green card to be available after a sponsoring employer documents that U.S. workers are not available in sufficient numbers. During the ten year wait, wait this worker cannot be promoted until processing is completed. Facing these bleak prospects, many of these talented workers take their skills to other countries, where they create new products and jobs for America’s competitors.

5…Days to fill the yearly H-1B high-skilled skilled visa allotment In the first 5 days of April 2013 all of the H-1B 1B visa numbers for foreign professional hires for fiscal year 2014 were allocated, 6 months before the start of the fiscal year. In 5 of the years since Congress last considered immigration reform, the there were zero H-1B visa numbers during the fiscal year – all of the H H-1B visa numbers were awarded prior to the beginning of the government’s fiscal year (meaning no businesses during the fiscal year could sponsor a single new H H-1B 1B worker).

7.5%...of all employers use E-Verify % currently participate in the voluntary E-Verify employment verification Of the nation’s 6.05 million employers, about 7.5% system.. Without a uniform, national, mandatory employment verification system that is workable for employers and used by all businesses, the country will continue to be a job magnet for illegal immigrants.

4.64…additional U.S. jobs created for each H H-2B seasonal worker Every 100 lesser-skilled skilled seasonal workers admitted in H H-2B status is associated with an additional 464 jobs for U.S.-born U.S. workers, because lesser-skilled immigrants generally complement, and do not compete with, the existing American workforce.

70%...illegal workforce in agriculture About 70% % of the workers in our agricultural sector are illegal, despite the fact that the H-2A 2A visa category for seasonal agriculture workers is unlimited,, due to the fact that the visa process for this category is unworkable for most employers. employers 0…temporary workers to fill lesser-skilled skilled opening where Americans not interested Current law provides for 0 (zero) lesser skilled workers to legally enter on temporary worker visas to o perform in year-round positions after an employer tests the local labor market market. The highest number and percentage of job growth in the U.S. through 2020 is expected in low and moderate skill jobs that cannot be mechanized or outsourced outsourced, many of which, like home health care, have insufficient numbers of interested American workers.

11 Million…encountering …encountering de facto amnesty Current law creates de facto amnesty for 11 million illegal immigrants living and working in our communities who are unable to pay their full share of federal, state and local taxes. An earned lawful status process,, without a bar to citizenship, would allow the undocumented to get right with the law.

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© US Chamber of Commerce August 5, 2013

http://immigration.uschamber.com

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

THURSDAY, MAY 8TH | 12:05 PM–1:30 PM | MAIN ROOM (REGENCY A) PLATED LUNCHEON & PANEL:

“Importance of EB-5 Industry Advocacy” PANELISTS:

Congresswoman Zoe Lofgren

e b - 5 advocacy

SPONSOR:

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

guest of honor

THURSDAY, MAY 8TH | 4:00 PMâ&#x20AC;&#x201C;4:45 PM | MAIN ROOM (REGENCY A) GUEST OF HONOR:

Nicholas Colucci, Director of Immigrant Investor Program Office, U.S. Citizenship & Immigration Services

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Adjuctations Officer Adjuctations Officer

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CUSTOMER SERVICE BRANCH

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Acting Deputy Chief

Chief, Immigrant Investor Program Nicholas Colucci

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8 CFR Ch. I (1–1–01 Edition)

(viii) As directed by the statute, the information contained in the application and supporting documents shall not be released without a court order or the written consent of the applicant; or, in the case of a child, the written consent of the parent or legal guardian who filed the waiver application on the child’s behalf. Information may be released only to the applicant, his or her authorized representative, an officer of the Department of Justice, or any federal or State law enforcement agency.

Any information provided under this part may be used for the purposes of enforcement of the Act or in any criminal proceeding. (f) Decision. The director shall provide the alien with written notice of the decision on the application for waiver. If the decision is adverse, the director shall advise the alien of the reasons therefor, notify the alien of the termination of his or her permanent residence status, instruct the alien to surrender any Permanent Resident Card issued by the Service and issue a notice to appear placing the alien in removal proceedings. No appeal shall lie from the decision of the director; however, the alien may seek review of such decision in removal proceedings.

[53 FR 30018, Aug. 10, 1988, as amended at 56 FR 22637, May 16, 1991; 59 FR 26591, May 23, 1994; 62 FR 10350, Mar. 6, 1997; 63 FR 70315, Dec. 21, 1998]

§ 216.6 Petition by entrepreneur to remove conditional basis of lawful permanent resident status. (a) Filing the petition—(1) General procedures. A petition to remove the conditional basis of the permanent resident status of an alien accorded conditional permanent residence pursuant to section 203(b)(5) of the Act must be filed by the alien entrepreneur on Form I–829, Petition by Entrepreneur to Remove Conditions. The alien entrepreneur must file Form I–829 within the 90-day period preceding the second anniversary of his or her admission to the United States as a conditional permanent resident. Before Form I–829 may be considered as properly filed, it must be accompanied by the fee required under § 103.7(b)(1) of this chapter, and by documentation as described in paragraph (a)(4) of this section, and

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§ 216.6

it must be properly signed by the alien.

Upon receipt of a properly filed Form I–829, the alien’s conditional permanent resident status shall be extended automatically, if necessary, until such time as the director has adjudicated the petition. The entrepreneur’s spouse and children should be included in the petition to remove conditions. Children who have reached the age of twentyone or who have married during the period of conditional permanent residence and the former spouse of an entrepreneur, who was divorced from the entrepreneur during the period of conditional permanent residence, may be included in the alien entrepreneur’s petition or may file a separate petition.

(2) Jurisdiction. Form I–829 must be filed with the regional service center having jurisdiction over the location of the alien entrepreneur’s commercial enterprise in the United States.

(3) Physical presence at time of filing. A petition may be filed regardless of whether the alien is physically present in the United States. However, if the alien is outside the United States at the time of filing, he or she must return to the United States, with his or her spouse and children, if necessary, to comply with the interview requirements contained in the Act. Once the petition has been properly filed, the alien may travel outside the United States and return if in possession of documentation as set forth in § 211.1(b)(1) of this chapter, provided the alien complies with the interview requirements described in paragraph (b) of this section. An alien who is not physically present in the United States during the filing period but subsequently applies for admission to the United States shall be processed in accordance with § 235.11 of this chapter.

(4) Documentation. The petition for removal of conditions must be accompanied by the following evidence: (i) Evidence that a commercial enterprise was established by the alien.

Such evidence may include, but is not limited to, Federal income tax returns; (ii) Evidence that the alien invested or was actively in the process of investing the requisite capital. Such evidence may include, but is not limited to, an audited financial statement or other probative evidence; and

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guest of honor Immigration and Naturalization Service, Justice (iii) Evidence that the alien sustained the actions described in paragraph (a)(4)(i) and (a)(4)(ii) of this section throughout the period of the alien’s residence in the United States.

The alien will be considered to have sustained the actions required for removal of conditions if he or she has, in good faith, substantially met the capital investment requirement of the statute and continuously maintained his or her capital investment over the two years of conditional residence.

Such evidence may include, but is not limited to, bank statements, invoices, receipts, contracts, business licenses, Federal or State income tax returns, and Federal or State quarterly tax statements. (iv) Evidence that the alien created or can be expected to create within a reasonable time ten full-time jobs for qualifying employees. In the case of a ‘‘troubled business’’ as defined in 8 CFR 204.6(j)(4)(ii), the alien entrepreneur must submit evidence that the commercial enterprise maintained the number of existing employees at no less than the pre-investment level for the period following his or her admission as a conditional permanent resident. Such evidence may include payroll records, relevant tax documents, and Forms I–9.

(5) Termination of status for failure to file petition. Failure to properly file Form I–829 within the 90-day period immediately preceding the second anniversary of the date on which the alien obtained lawful permanent residence on a conditional basis shall result in the automatic termination of the alien’s permanent resident status and the initiation of deportation proceedings. The director shall send a written notice of termination and an order to show cause to an alien entrepreneur who fails to timely file a petition for removal of conditions. No appeal shall lie from this decision; however, the alien may request a review of the determination during deportation proceedings.

In deportation proceedings, the burden of proof shall rest with the alien to show by a preponderance of the evidence that he or she complied with the requirement to file the petition within the designated period. The director may deem the peti-

§ 216.6

tion to have been filed prior to the second anniversary of the alien’s obtaining conditional permanent resident status and accept and consider a late petition if the alien demonstrates to the director’s satisfaction that failure to file a timely petition was for good cause and due to extenuating circumstances. If the late petition is filed prior to jurisdiction vesting with the immigration judge in deportation proceedings and the director excuses the late filing and approves the petition, he or she shall restore the alien’s permanent resident status, remove the conditional basis of such status, and cancel any outstanding order to show cause in accordance with § 242.7 of this chapter.

If the petition is not filed until after jurisdiction vests with the immigration judge, the immigration judge may terminate the matter upon joint motion by the alien and the Service.

(6) Death of entrepreneur and effect on spouse and children. If an entrepreneur dies during the prescribed two-year period of conditional permanent residence, the spouse and children of the entrepreneur will be eligible for removal of conditions if it can be demonstrated that the conditions set forth in paragraph (a)(4) of this section have been met. (b) Petition review—(1) Authority to waive interview. The director of the service center shall review the Form I– 829 and the supporting documents to determine whether to waive the interview required by the Act. If satisfied that the requirements set forth in paragraph (c)(1) of this section have been met, the service center director may waive the interview and approve the petition. If not so satisfied, then the service center director shall forward the petition to the district director having jurisdiction over the location of the alien entrepreneur’s commercial enterprise in the United States so that an interview of the alien entrepreneur may be conducted. The director must either waive the requirement for an interview and adjudicate the petition or arrange for an interview within 90 days of the date on which the petition was properly filed.

(2) Location of interview. Unless waived, an interview relating to the Form I–829 shall be conducted by an

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8 CFR Ch. I (1–1–01 Edition)

immigration examiner or other officer so designated by the district director at the district office that has jurisdiction over the location of the alien entrepreneur’s commercial enterprise in the United States.

(3) Termination of status for failure to appear for interview. If the alien fails to appear for an interview in connection with the petition when requested by the Service, the alien’s permanent resident status will be automatically terminated as of the second anniversary of the date on which the alien obtained permanent residence. The alien will be provided with written notification of the termination and the reasons therefore, and an order to show cause shall be issued placing the alien under deportation proceedings. The alien may seek review of the decision to terminate his or her status in such proceedings, but the burden shall be on the alien to establish by a preponderance of the evidence that he or she complied with the interview requirements. If the alien has failed to appear for a scheduled interview, he or she may submit a written request to the district director asking that the interview be rescheduled or that the interview be waived. That request should explain his or her failure to appear for the scheduled interview, and if a request for waiver of the interview, the reasons such waiver should be granted. If the district director determines that there is good cause for granting the request, the interview may be rescheduled or waived, as appropriate. If the district director waives the interview, he or she shall restore the alien’s conditional permanent resident status, cancel any outstanding order to show cause in accordance with § 242.7 of this chapter, and proceed to adjudicate the alien’s petition. If the district director reschedules that alien’s interview, he or she shall restore the alien’s conditional permanent resident status, and cancel any outstanding order to show cause in accordance with § 242.7 of this chapter.

If the interview is rescheduled at the request of the alien, the Service shall not be required to conduct the interview within the 90-day period following the filing of the petition. (c) Adjudication of petition. (1) The decision on the petition shall be made

within 90 days of the date of filing or within 90 days of the interview, whichever is later. In adjudicating the petition, the director shall determine whether: (i) A commercial enterprise was established by the alien; (ii) The alien invested or was actively in the process of investing the requisite capital; and (iii) The alien sustained the actions described in paragraphs (c)(1)(i) and (c)(1)(ii) of this section throughout the period of the alien’s residence in the United States. The alien will be considered to have sustained the actions required for removal of conditions if he or she has, in good faith, substantially met the capital investment requirement of the statute and continuously maintained his or her capital investment over the two years of conditional residence. (iv) The alien created or can be expected to create within a reasonable period of time ten full-time jobs to qualifying employees. In the case of a ‘‘troubled business’’ as defined in 8 CFR 204.6(j)(4)(ii), the alien maintained the number of existing employees at no less than the pre-investment level for the previous two years.

(2) If derogatory information is determined regarding any of these issues or it becomes known to the government that the entrepreneur obtained his or her investment funds through other than legal means (such as through the sale of illegal drugs), the director shall offer the alien entrepreneur the opportunity to rebut such information. If the alien entrepreneur fails to overcome such derogatory information or evidence the investment funds were obtained through other than legal means, the director may deny the petition, terminate the alien’s permanent resident status, and issue an order to show cause. If derogatory information not relating to any of these issues is determined during the course of the interview, such information shall be forwarded to the investigations unit for appropriate action. If no unresolved derogatory information is determined relating to these issues, the petition shall be approved and the conditional basis of the alien’s permanent resident

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guest of honor Immigration and Naturalization Service, Justice status removed, regardless of any action taken or contemplated regarding other possible grounds for deportation. (d) Decision—(1) Approval. If, after initial review or after the interview, the director approves the petition, he or she will remove the conditional basis of the alien’s permanent resident status as of the second anniversary of the alien’s entry as a conditional permanent resident. He or she shall provide written notice of the decision to the alien and shall require the alien to report to the appropriate district office for processing for a new Permanent Resident Card, Form I–551, at which time the alien shall surrender any Permanent Resident Card previously issued.

(2) Denial. If, after initial review or after the interview, the director denies the petition, he or she shall provide written notice to the alien of the decision and the reason(s) therefor, and shall issue an order to show cause why the alien should not be deported from the United States. The alien’s lawful permanent resident status and that of his or her spouse and any children shall be terminated as of the date of the director’s written decision. The alien shall also be instructed to surrender any Permanent Resident Card previously issued by the Service. No appeal shall lie from this decision; however, the alien may seek review of the decision in deportation proceedings. In deportation proceedings, the burden shall rest with the Service to establish by a preponderance of the evidence that the facts and information in the alien’s petition for removal of conditions are not true and that the petition was properly denied.

[59 FR 26591, May 23, 1994, as amended at 63 FR 70315, Dec. 21, 1998]

PART 217—VISA WAIVER PILOT PROGRAM Sec. 217.1 Scope.

217.2 Eligibility.

217.3 Maintenance of status.

217.4 Inadmissibility and deportability.

217.5 [Reserved] 217.6 Carrier agreements.

AUTHORITY: 8 U.S.C. 1103, 1187; 8 CFR part 2.

§ 217.2

SOURCE: 53 FR 24901, June 30, 1988, unless otherwise noted.

§ 217.1 Scope.

The Visa Waiver Pilot Program (VWPP) described in this section is established pursuant to the provisions of section 217 of the Act. [62 FR 10351, Mar. 6, 1997]

§ 217.2 Eligibility. (a) Definitions. As used in this part, the term: Carrier refers to the owner, charterer, lessee, or authorized agent of any commercial vessel or commercial aircraft engaged in transporting passengers to the United States from a foreign place.

Designated country refers to Andorra, Argentina, Australia, Austria, Belgium, Brunei, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Monaco, the Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovenia, Spain, Sweden, Switzerland, the United Kingdom, and Uruguay. The United Kingdom refers only to British citizens who have the unrestricted right of permanent abode in the United kingdom (England, Scotland, Wales, Northern Ireland, the Channel Islands and the Isle of Man); it does not refer to British overseas citizens, British dependent territories’ citizens, or citizens of British Commonwealth countries.

Round trip ticket means any return trip transportation ticket in the name of an arriving Visa Waiver Pilot Program applicant on a participating carrier valid for at least 1 year, electronic ticket record, airline employee passes indicating return passage, individual vouchers for return passage, group vouchers for return passage for charter flights, and military travel orders which include military dependents for return to duty stations outside the United States on U.S. military flights.

A period of validity of 1 year need not be reflected on the ticket itself, provided that the carrier agrees that it will honor the return portion of the ticket at any time, as provided in Form I–775, Visa Waiver Pilot Program Agreement. (b) Special program requirements—(1) General. In addition to meeting all of

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8 CFR Ch. I (1–1–12 Edition)

(o) Denial of petitions under section 204 of the Act based on a finding by the Department of Labor. Upon debarment by the Department of Labor pursuant to 20 CFR 655.31, USCIS may deny any employment-based immigrant petition filed by that petitioner for a period of at least 1 year but not more than 5 years. The time period of such bar to petition approval shall be based on the severity of the violation or violations.

The decision to deny petitions, the time period for the bar to petitions, and the reasons for the time period will be explained in a written notice to the petitioner.

[56 FR 60905, Nov. 29, 1991, as amended at 59 FR 502, Jan. 5, 1994; 59 FR 27229, May 26, 1994; 60 FR 29753, June 6, 1995; 61 FR 33305, June 27, 1996; 67 FR 49563, July 31, 2002; 73 FR 72291, Nov. 26, 2008; 73 FR 78127, Dec. 19, 2008; 74 FR 26936, June 5, 2009]

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§ 204.6 Petitions for employment creation aliens. (a) General. A petition to classify an alien under section 203(b)(5) of the Act must be filed on Form I–526, Immigrant Petition by Alien Entrepreneur. The petition must be accompanied by the appropriate fee. Before a petition is considered properly filed, the petition must be signed by the petitioner, and the initial supporting documentation required by this section must be attached. Legible photocopies of supporting documents will ordinarily be acceptable for initial filing and approval. However, at the discretion of the director, original documents may be required. (b) [Reserved] (c) Eligibility to file. A petition for classification as an alien entrepreneur may only be filed by any alien on his or her own behalf. (d) Priority date. The priority date of a petition for classification as an alien entrepreneur is the date the petition is properly filed with the Service or, if filed prior to the effective date of these regulations, the date the Form I–526 was received at the appropriate Service Center. (e) Definitions. As used in this section: Capital means cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured

by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness. All capital shall be valued at fair market value in United States dollars. Assets acquired, directly or indirectly, by unlawful means (such as criminal activities) shall not be considered capital for the purposes of section 203(b)(5) of the Act. Commercial enterprise means any forprofit activity formed for the ongoing conduct of lawful business including, but not limited to, a sole proprietorship, partnership (whether limited or general), holding company, joint venture, corporation, business trust, or other entity which may be publicly or privately owned. This definition includes a commercial enterprise consisting of a holding company and its wholly-owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business.

This definition shall not include a noncommercial activity such as owning and operating a personal residence.

Employee means an individual who provides services or labor for the new commercial enterprise and who receives wages or other remuneration directly from the new commercial enterprise. In the case of the Immigrant Investor Pilot Program, ‘‘employee’’ also means an individual who provides services or labor in a job which has been created indirectly through investment in the new commercial enterprise. This definition shall not include independent contractors.

Full-time employment means employment of a qualifying employee by the new commercial enterprise in a position that requires a minimum of 35 working hours per week. In the case of the Immigrant Investor Pilot Program, ‘‘full-time employment’’ also means employment of a qualifying employee in a position that has been created indirectly through revenues generated from increased exports resulting from the Pilot Program that requires a minimum of 35 working hours per week. A job-sharing arrangement whereby two or more qualifying employees share a

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Department of Homeland Security

§ 204.6

full-time position shall count as fulltime employment provided the hourly requirement per week is met. This definition shall not include combinations of part-time positions even if, when combined, such positions meet the hourly requirement per week.

High employment area means a part of a metropolitan statistical area that at the time of investment: (i) Is not a targeted employment area; and (ii) Is an area with an unemployment rate significantly below the national average unemployment rates.

Invest means to contribute capital. A contribution of capital in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the alien entrepreneur and the new commercial enterprise does not constitute a contribution of capital for the purposes of this part.

New means established after November 29, 1990.

Qualifying employee means a United States citizen, a lawfully admitted permanent resident, or other immigrant lawfully authorized to be employed in the United States including, but not limited to, a conditional resident, a temporary resident, an asylee, a refugee, or an alien remaining in the United States under suspension of deportation. This definition does not include the alien entrepreneur, the alien entrepreneur’s spouse, sons, or daughters, or any nonimmigrant alien.

Regional center means any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment.

Rural area means any area not within either a metropolitan statistical area (as designated by the Office of Management and Budget) or the outer boundary of any city or town having a population of 20,000 or more.

Targeted employment area means an area which, at the time of investment, is a rural area or an area which has experienced unemployment of at least 150 percent of the national average rate.

Troubled business means a business that has been in existence for at least two years, has incurred a net loss for

accounting purposes (determined on the basis of generally accepted accounting principles) during the twelveor twenty-four month period prior to the priority date on the alien entrepreneur’s Form I–526, and the loss for such period is at least equal to twenty percent of the troubled business’s net worth prior to such loss. For purposes of determining whether or not the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded. (f) Required amounts of capital—(1) General. Unless otherwise specified, the amount of capital necessary to make a qualifying investment in the United States is one million United States dollars ($1,000,000).

(2) Targeted employment area. The amount of capital necessary to make a qualifying investment in a targeted employment area within the United States is five hundred thousand United States dollars ($500,000).

(3) High employment area. The amount of capital necessary to make a qualifying investment in a high employment area within the United States, as defined in section 203(b)(5)(C)(iii) of the Act, is one million United States dollars ($1,000,000). (g) Multiple investors—(1) General. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur by more than one investor, provided each petitioning investor has invested or is actively in the process of investing the required amount for the area in which the new commercial enterprise is principally doing business, and provided each individual investment results in the creation of at least ten full-time positions for qualifying employees. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur even though there are several owners of the enterprise, including persons who are not seeking classification under section 203(b)(5) of the Act and non-natural persons, both foreign and domestic, provided that the source(s) of all

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§ 204.6

8 CFR Ch. I (1–1–12 Edition)

capital invested is identified and all invested capital has been derived by lawful means.

(2) Employment creation allocation. The total number of full-time positions created for qualifying employees shall be allocated solely to those alien entrepreneurs who have used the establishment of the new commercial enterprise as the basis of a petition on Form I–526.

No allocation need be made among persons not seeking classification under section 203(b)(5) of the Act or among non-natural persons, either foreign or domestic. The Service shall recognize any reasonable agreement made among the alien entrepreneurs in regard to the identification and allocation of such qualifying positions. (h) Establishment of a new commercial enterprise. The establishment of a new commercial enterprise may consist of: (1) The creation of an original business; (2) The purchase of an existing business and simultaneous or subsequent restructuring or reorganization such that a new commercial enterprise results; or (3) The expansion of an existing business through the investment of the required amount, so that a substantial change in the net worth or number of employees results from the investment of capital. Substantial change means a 40 percent increase either in the net worth, or in the number of employees, so that the new net worth, or number of employees amounts to at least 140 percent of the pre-expansion net worth or number of employees. Establishment of a new commercial enterprise in this manner does not exempt the petitioner from the requirements of 8 CFR 204.6(j) (2) and (3) relating to the required amount of capital investment and the creation of full-time employment for ten qualifying employees. In the case of a capital investment in a troubled business, employment creation may meet the criteria set forth in 8 CFR 204.6(j)(4)(ii). (i) State designation of a high unemployment area. The state government of any state of the United States may designate a particular geographic or political subdivision located within a metropolitan statistical area or within a city or town having a population of

20,000 or more within such state as an area of high unemployment (at least 150 percent of the national average rate). Evidence of such designation, including a description of the boundaries of the geographic or political subdivision and the method or methods by which the unemployment statistics were obtained, may be provided to a prospective alien entrepreneur for submission with Form I–526. Before any such designation is made, an official of the state must notify the Associate Commissioner for Examinations of the agency, board, or other appropriate governmental body of the state which shall be delegated the authority to certify that the geographic or political subdivision is a high unemployment area. (j) Initial evidence to accompany petition. A petition submitted for classification as an alien entrepreneur must be accompanied by evidence that the alien has invested or is actively in the process of investing lawfully obtained capital in a new commercial enterprise in the United States which will create full-time positions for not fewer than 10 qualifying employees. In the case of petitions submitted under the Immigrant Investor Pilot Program, a petition must be accompanied by evidence that the alien has invested, or is actively in the process of investing, capital obtained through lawful means within a regional center designated by the Service in accordance with paragraph (m)(4) of this section. The petitioner may be required to submit information or documentation that the Service deems appropriate in addition to that listed below.

(1) To show that a new commercial enterprise has been established by the petitioner in the United States, the petition must be accompanied by: (i) As applicable, articles of incorporation, certificate of merger or consolidation, partnership agreement, certificate of limited partnership, joint venture agreement, business trust agreement, or other similar organizational document for the new commercial enterprise; (ii) A certificate evidencing authority to do business in a state or municipality or, if the form of the business does not require any such certificate or

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the State or municipality does not issue such a certificate, a statement to that effect; or (iii) Evidence that, as of a date certain after November 29, 1990, the required amount of capital for the area in which an enterprise is located has been transferred to an existing business, and that the investment has resulted in a substantial increase in the net worth or number of employees of the business to which the capital was transferred. This evidence must be in the form of stock purchase agreements, investment agreements, certified financial reports, payroll records, or any similar instruments, agreements, or documents evidencing the investment in the commercial enterprise and the resulting substantial change in the net worth, number of employees.

(2) To show that the petitioner has invested or is actively in the process of investing the required amount of capital, the petition must be accompanied by evidence that the petitioner has placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk.

Evidence of mere intent to invest, or of prospective investment arrangements entailing no present commitment, will not suffice to show that the petitioner is actively in the process of investing.

The alien must show actual commitment of the required amount of capital.

Such evidence may include, but need not be limited to: (i) Bank statement(s) showing amount(s) deposited in United States business account(s) for the enterprise; (ii) Evidence of assets which have been purchased for use in the United States enterprise, including invoices, sales receipts, and purchase contracts containing sufficient information to identify such assets, their purchase costs, date of purchase, and purchasing entity; (iii) Evidence of property transferred from abroad for use in the United States enterprise, including United States Customs Service commercial entry documents, bills of lading, and transit insurance policies containing ownership information and sufficient information to identify the property and to indicate the fair market value of such property;

(iv) Evidence of monies transferred or committed to be transferred to the new commercial enterprise in exchange for shares of stock (voting or nonvoting, common or preferred). Such stock may not include terms requiring the new commercial enterprise to redeem it at the holder’s request; or (v) Evidence of any loan or mortgage agreement, promissory note, security agreement, or other evidence of borrowing which is secured by assets of the petitioner, other than those of the new commercial enterprise, and for which the petitioner is personally and primarily liable.

(3) To show that the petitioner has invested, or is actively in the process of investing, capital obtained through lawful means, the petition must be accompanied, as applicable, by: (i) Foreign business registration records; (ii) Corporate, partnership (or any other entity in any form which has filed in any country or subdivision thereof any return described in this subpart), and personal tax returns including income, franchise, property (whether real, personal, or intangible), or any other tax returns of any kind filed within five years, with any taxing jurisdiction in or outside the United States by or on behalf of the petitioner; (iii) Evidence identifying any other source(s) of capital; or (iv) Certified copies of any judgments or evidence of all pending governmental civil or criminal actions, governmental administrative proceedings, and any private civil actions (pending or otherwise) involving monetary judgments against the petitioner from any court in or outside the United States within the past fifteen years.

(4) Job creation—(i) General. To show that a new commercial enterprise will create not fewer than ten (10) full-time positions for qualifying employees, the petition must be accompanied by: (A) Documentation consisting of photocopies of relevant tax records, Form I–9, or other similar documents for ten (10) qualifying employees, if such employees have already been hired following the establishment of the new commercial enterprise; or

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(B) A copy of a comprehensive business plan showing that, due to the nature and projected size of the new commercial enterprise, the need for not fewer than ten (10) qualifying employees will result, including approximate dates, within the next two years, and when such employees will be hired. (ii) Troubled business. To show that a new commercial enterprise which has been established through a capital investment in a troubled business meets the statutory employment creation requirement, the petition must be accompanied by evidence that the number of existing employees is being or will be maintained at no less than the pre-investment level for a period of at least two years. Photocopies of tax records, Forms I–9, or other relevant documents for the qualifying employees and a comprehensive business plan shall be submitted in support of the petition. (iii) Immigrant Investor Pilot Program.

To show that the new commercial enterprise located within a regional center approved for participation in the Immigrant Investor Pilot Program meets the statutory employment creation requirement, the petition must be accompanied by evidence that the investment will create full-time positions for not fewer than 10 persons either directly or indirectly through revenues generated from increased exports resulting from the Pilot Program. Such evidence may be demonstrated by reasonable methodologies including those set forth in paragraph (m)(3) of this section.

(5) To show that the petitioner is or will be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation, as opposed to maintaining a purely passive role in regard to the investment, the petition must be accompanied by: (i) A statement of the position title that the petitioner has or will have in the new enterprise and a complete description of the position’s duties; (ii) Evidence that the petitioner is a corporate officer or a member of the corporate board of directors; or (iii) If the new enterprise is a partnership, either limited or general, evi-

dence that the petitioner is engaged in either direct management or policy making activities. For purposes of this section, if the petitioner is a limited partner and the limited partnership agreement provides the petitioner with certain rights, powers, and duties normally granted to limited partners under the Uniform Limited Partnership Act, the petitioner will be considered sufficiently engaged in the management of the new commercial enterprise.

(6) If applicable, to show that the new commercial enterprise has created or will create employment in a targeted employment area, the petition must be accompanied by: (i) In the case of a rural area, evidence that the new commercial enterprise is principally doing business within a civil jurisdiction not located within any standard metropolitan statistical area as designated by the Office of Management and Budget, or within any city or town having a population of 20,000 or more as based on the most recent decennial census of the United States; or (ii) In the case of a high unemployment area: (A) Evidence that the metropolitan statistical area, the specific county within a metropolitan statistical area, or the county in which a city or town with a population of 20,000 or more is located, in which the new commercial enterprise is principally doing business has experienced an average unemployment rate of 150 percent of the national average rate; or (B) A letter from an authorized body of the government of the state in which the new commercial enterprise is located which certifies that the geographic or political subdivision of the metropolitan statistical area or of the city or town with a population of 20,000 or more in which the enterprise is principally doing business has been designated a high unemployment area.

The letter must meet the requirements of 8 CFR 204.6(i). (k) Decision. The petitioner will be notified of the decision, and, if the petition is denied, of the reasons for the denial and of the petitioner’s right of appeal to the Associate Commissioner for Examinations in accordance with

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the provisions of part 103 of this chapter. The decision must specify whether or not the new commercial enterprise is principally doing business within a targeted employment area. (l) [Reserved] (m) Immigrant Investor Pilot Programâ&#x20AC;&#x201D; (1) Scope. The Immigrant Investor Pilot Program is established solely pursuant to the provisions of section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriation Act, and subject to all conditions and restrictions stipulated in that section. Except as provided herein, aliens seeking to obtain immigration benefits under this paragraph continue to be subject to all conditions and restrictions set forth in section 203(b)(5) of the Act and this section.

(2) Number of immigrant visas allocated.

The annual allocation of the visas available under the Immigrant Investor Pilot Program is set at 300 for each of the five fiscal years commencing on October 1, 1993.

(3) Requirements for regional centers.

Each regional center wishing to participate in the Immigrant Investor Pilot Program shall submit a proposal to the Assistant Commissioner for Adjudications, which: (i) Clearly describes how the regional center focuses on a geographical region of the United States, and how it will promote economic growth through increased export sales, improved regional productivity, job creation, and increased domestic capital investment; (ii) Provides in verifiable detail how jobs will be created indirectly through increased exports; (iii) Provides a detailed statement regarding the amount and source of capital which has been committed to the regional center, as well as a description of the promotional efforts taken and planned by the sponsors of the regional center; (iv) Contains a detailed prediction regarding the manner in which the regional center will have a positive impact on the regional or national economy in general as reflected by such factors as increased household earnings, greater demand for business services, utilities, maintenance and repair, and

construction both within and without the regional center; and (v) Is supported by economically or statistically valid forecasting tools, including, but not limited to, feasibility studies, analyses of foreign and domestic markets for the goods or services to be exported, and/or multiplier tables.

(4) Submission of proposals to participate in the Immigrant Investor Pilot Program. On August 24, 1993, the Service will accept proposals from regional centers seeking approval to participate in the Immigrant Investor Pilot Program. Regional centers that have been approved by the Assistant Commissioner for Adjudications will be eligible to participate in the Immigrant Investor Pilot Program.

(5) Decision to participate in the Immigrant Investor Pilot Program. The Assistant Commissioner for Adjudications shall notify the regional center of his or her decision on the request for approval to participate in the Immigrant Investor Pilot Program, and, if the petition is denied, of the reasons for the denial and of the regional centerâ&#x20AC;&#x2122;s right of appeal to the Associate Commissioner for Examinations. Notification of denial and appeal rights, and the procedure for appeal shall be the same as those contained in 8 CFR 103.3.

(6) Termination of participation of regional centers. To ensure that regional centers continue to meet the requirements of section 610(a) of the Appropriations Act, a regional center must provide USCIS with updated information to demonstrate the regional center is continuing to promote economic growth, improved regional productivity, job creation, or increased domestic capital investment in the approved geographic area. Such information must be submitted to USCIS on an annual basis, on a cumulative basis, and/or as otherwise requested by USCIS, using a form designated for this purpose. USCIS will issue a notice of intent to terminate the participation of a regional center in the pilot program if a regional center fails to submit the required information or upon a determination that the regional center no longer serves the purpose of promoting economic growth, including increased export sales, improved regional

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productivity, job creation, and increased domestic capital investment.

The notice of intent to terminate shall be made upon notice to the regional center and shall set forth the reasons for termination. The regional center must be provided 30 days from receipt of the notice of intent to terminate to offer evidence in opposition to the ground or grounds alleged in the notice of intent to terminate. If USCIS determines that the regional center’s participation in the Pilot Program should be terminated, USCIS shall notify the regional center of the decision and of the reasons for termination. As provided in 8 CFR 103.3, the regional center may appeal the decision to USCIS within 30 days after the service of notice.

(7) Requirements for alien entrepreneurs. An alien seeking an immigrant visa as an alien entrepreneur under the Immigrant Investor Pilot Program must demonstrate that his or her qualifying investment is within a regional center approved pursuant to paragraph (m)(4) of this section and that such investment will create jobs indirectly through revenues generated from increased exports resulting from the new commercial enterprise. (i) Exports. For purposes of paragraph (m) of this section, the term ‘‘exports’’ means services or goods which are produced directly or indirectly through revenues generated from a new commercial enterprise and which are transported out of the United States; (ii) Indirect job creation. To show that 10 or more jobs are actually created indirectly by the business, reasonable methodologies may be used. Such methodologies may include multiplier tables, feasibility studies, analyses of foreign and domestic markets for the goods or services to be exported, and other economically or statistically valid forecasting devices which indicate the likelihood that the business will result in increased employment.

(8) Time for submission of petitions for classification as an alien entrepreneur under the Immigrant Investor Pilot Program. Commencing on October 1, 1993, petitions will be accepted for filing and adjudicated in accordance with the provisions of this section if the alien entrepreneur has invested or is actively

in the process of investing within a regional center which has been approved by the Service for participation in the Pilot Program.

(9) Effect of termination of approval of regional center to participate in the Immigrant Investor Pilot Program. Upon termination of approval of a regional center to participate in the Immigrant Investor Pilot Program, the director shall send a formal written notice to any alien within the regional center who has been granted lawful permanent residence on a conditional basis under the Pilot Program, and who has not yet removed the conditional basis of such lawful permanent residence, of the termination of the alien’s permanent resident status, unless the alien can establish continued eligibility for alien entrepreneur classification under section 203(b)(5) of the Act. [56 FR 60910, Nov. 29, 1991, as amended at 57 FR 1860, Jan. 16, 1992; 58 FR 44608, 44609, Aug. 24, 1993; 74 FR 26937, June 5, 2009; 75 FR 58990, Sept. 24, 2010; 76 FR 53782, Aug. 29, 2011]

§ 204.7 Preservation of benefits contained in savings clause of Immigration and Nationality Act Amendments of 1976.

In order to be considered eligible for the benefits of the savings clause contained in section 9 of the Immigration and Nationality Act Amendments of 1976, an alien must show that the facts established prior to January 1, 1977 upon which the entitlement to such benefits was based continue to exist.

[41 FR 55849, Dec. 23, 1976]

§ 204.8

[Reserved]

§ 204.9 Special immigrant status for certain aliens who have served honorably (or are enlisted to serve) in the Armed Forces of the United States for at least 12 years. (a) Petition for Armed Forces special immigrant. An alien may not be classified as an Armed Forces special immigrant unless the alien is the beneficiary of an approved petition to classify such an alien as a special immigrant under section 101(a)(27)(K) of the Act. The petition must be filed on Form I–360, Petition for Amerasian, Widow or Special Immigrant.

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Teleconference Invitation

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 

EB-5 Immigrant Investor Program: Regulatory Changes Listening Session Wednesday, April, 23, 2014 2:30 p.m. – 4 p.m. (Eastern)

U.S. Citizenship and Immigration Services (USCIS) invites you to participate in a stakeholder teleconference on Wednesday, April 23, 2014, from 2:30 p.m. to 4 p.m. (Eastern) to discuss future regulatory changes for the EB-5 Immigrant Investor Program.

USCIS is beginning work on revised EB-5 regulations. Regulatory revision has been identified as an important step for the future of the EB-5 Program and is an agency priority. We invite EB-5 stakeholders to provide feedback on EB-5 regulations as we work toward making regulatory improvements to strengthen the efficiency, predictability, and integrity of the EB-5 program.

During this engagement, USCIS officials will listen to your feedback and input on changes to the EB-5 regulations. Feedback and input can be related to: • • • •

Methods to combat fraud and abuse How to improve upon current regulations Substantive eligibility requirements Procedural filing requirements

For those unable to attend, we will hold a follow-up discussion in the USCIS Idea Community. We encourage you to become a part of the discussion starting on April 24, 2014.

To register for this session, please follow the steps below: • • • • • •

Visit our registration page to confirm your participation Enter your email address and select “Submit” Select “Subscriber Preferences” Select the “Event Registration” tab Be sure to provide your full name and organization Complete the questions and select “Submit”

Once your registration is processed, you will receive a confirmation email with additional details.

If you have any questions regarding the registration process, or if you have not received a confirmation email within two business days, please email us at Public.Engagement@uscis.dhs.gov.

We look forward to engaging with you!

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THURSDAY, MAY 8TH | 4:45 PM–5:30 PM | MAIN ROOM (REGENCY A) GUEST OF HONOR:

Chris Licht, Vice President of Programming, CBS News, Executive Producer, CBS This Morning

C

hris Licht was named Executive Producer of CBS News’ new morning broadcast, “CBS This Morning,” in November 2011.

He also serves as Vice President of Programming for CBS News.

For his work at CBS This Morning, Licht and his team received an Emmy, a Peabody and a duPont award.

Licht joined CBS News in May 2011 with a wealth of experience in television news and an inventive style evidenced throughout his remarkable career. The co-creator and original executive producer of MSNBC’s “Morning Joe,” Licht was at the helm as the show garnered critical acclaim for its refreshing interviews with newsmakers and unique perspective on the top news stories. In addition to covering nearly every important news event in recent history, he led the show’s comprehensive on-location coverage of the 2008 election.

Before “Morning Joe,” Licht partnered with Joe Scarborough on MSNBC’s “Scarborough Country” as senior producer, and then was el-

evated to the position of executive producer.

Licht has worked at various levels of the electronic news business. He began his career at KNBC in Los Angeles, distinguishing himself early on during the O.J. Simpson trial. Over the next seven years at KNBC, he moved up to special projects producer, coordinated the station’s Olympics coverage, and then produced the Channel 4 News at 11. In 2001, NBC moved Licht to the San Francisco Bay Area, where he played an integral role on the transition team during the network’s purchase of KNTV. Following the transition, he remained as executive producer.

Licht’s first book, What I Learned When I Almost Died, was published by Simon & Schuster in May 2011.

Licht graduated from Syracuse University’s S.I. Newhouse School of Public Communication with a bachelor’s in broadcast journalism and political science. He lives in Manhattan with his wife and their two sons.

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2014 Fragomen EB5 IIUSA DC Advocacy - 1st Proof.pdf 1 3/24/2014 6:58:52 PM

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“Update on USCIS Policies & Administrative Procedures”

uscis update

FRIDAY, MAY 9TH | 8:00 AM–9:00 AM | MAIN ROOM (REGENCY A)

PANELISTS:

Robert C. Divine, Chair of Global Immigration Practice, Baker Donelson, Bearman, Caldwell & Berkowitz, PC; IIUSA Vice President

Carolyn S. Lee, Partner, Miller Mayer, LLP

H. Ronald Klasko, Partner, Klasko Rulon Stock & Seltzer, LLP

Lincoln Stone, Partner,

Stone Grzegorek & Gonzales LLP; Chair, IIUSA Editorial Committee

PANEL SPONSORS:

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1800 REPUBLIC CENTRE 633 CHESTNUT STREET

CHATTANOOGA, TENNESSEE 37450

uscis update

PHONE: FAX:

423.756.2010 423.756.3447

www.bakerdonelson.com

ROBERT C. DIVINE Direct Dial: (423) 752-4416 Direct Fax: (423) 752-9533 E-Mail Address:rdivine@bakerdonelson.com

February 28, 2014

EB-5: JUST OVER THE HORIZON

by Robert C. Divine 1 Š

of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. On February 26, 2014, USCIS staged a long overdue meeting with EB-5 stakeholders by telephone only. The discussion of data and a range of issues gives me an excuse to prepare this assessment of the EB-5 program at present. I place my own editorial comments in [brackets] to distinguish from my summary of what the USCIS leaders said (as I heard it).

USCIS Leadership. The new chief of the USCIS EB-5 Program Office is Nichols Colucci, who moved over to USCIS from the Department of Treasury, where he was a director in the FinCEN program (http://www.fincen.gov/) that investigates, regulates and prosecutes money laundering and before that held leadership roles in the Bureau of Alcohol, Tobacco and Firearms (http://www.atf.gov/) -- law enforcement agencies. He was described on the call as someone who has managed people well in working together with other federal agencies. On the call, he articulated goals not only about integrity (enforcement) but also efficiency, transparency, customer service, and even predictability. [Those are good words, and from someone with an MBA. His selection seems to reflect an Administration preference at this point for serious accountability toward program integrity, avoiding use of the program by money launderers, and coordination with other agencies that enforce laws associated with money laundering, securities, 1

Robert C. Divine is the Chairman of the Immigration Group of Baker, Donelson, Bearman, Caldwell, & Berkowitz, P.C., a law firm of 650 lawyers and public policy advisors with offices in 17 cities from Washington, D.C. to Orlando, FL to Houston, TX. Mr. Divine served from July 2004 until November 2006 as Chief Counsel and for a time Acting Director of U.S. Citizenship & Immigration Services (USCIS). He is the author of Immigration Practice, a 1,600 page practical treatise on all aspects of U.S. immigration law now in its Fourteenth Edition. He has practiced immigration law since 1986 and has served as Chair of various committees of the American Immigration Lawyers Association, currently serving on the EB-5 and USCIS Transformation committees. Mr. Divine is extremely involved in EB-5 advocacy. He has served four years as Vice President of the Association to Invest in the USA (IIUSA), an association for EB-5 regional centers, he is on the EB-5 Committee of the American Immigration Lawyers Association, and he frequently speaks on immigration topics and leads stakeholder discussions on EB-5.

Under his leadership, Baker Donelson serves a wide range of legal needs for regional centers, developers, and investors, including immigration, securities, business, real estate, tax, and international. His full biography, contacts, and substantive web pages can be found at www.bakerdonelson.com/robert-c-divine.

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etc. Stakeholders should appreciate the program's leadership by someone who understands enforcement and particularly money laundering, which can help diffuse recently rampant innuendo that the program is fraught with investments by terrorists and money launderers.]

The Deputy Chief of the EB-5 Program Office is Robert Cox, who moved to that role from the Office of Chief Counsel (which I once oversaw). [By all accounts and from personal interaction, Mr. Cox is very bright, and from his discussion of the more substantive legal policy issues he conveys a meaningful awareness of the most important issues, even if he sidestepped some aspects of the trickiest pressing questions for which the agency probably has not made policy decisions.]

uscis update

EB-5: Just Over the Horizon, Feb. 27, 2014 Page 2 of 7

Dan Renaud is the Deputy Associate Director of Field Operations for USCIS and is the boss of Mr. Colucci. [Mr. Renaud previously was the interim Chief of the EB-5 program and the spearhead (with former Director Mayorkas) for the May 30, 2013 policy memo that began to address longstanding issues and made some very sensible policy changes and clarifications. (For my assessment of that memo, go to http://iiusablog.org/government-affairs/key-points-uscis-eb5policy-memo-published-30-2013-robert-divine-iiusa-vp/.) Mr. Renaud is as business savvy as well as any government official I know, and stakeholders should take comfort that the EB-5 program has landed under his care.]

Personnel and Processing. In February 2014 USCIS completed the transfer of all pending I526 filings to the new Washington, D.C. area EB-5 adjudication team, which now employs 53 people, including 20 economists and 25 adjudicators, with plans for continued growth to 75 by September 2014 and 100 by several months later.

USCIS took I-526 cases away from 35 trained adjudicators who remain in California. I-526 petitions grew from 5,000 in October 2012 to 7,131 in October 2013. [Given the backlog, it is staggering to think that USCIS consciously took away so many adjudicators who could be whacking away at the backlog.] California adjudicators continue to work on I-829 filings, whose backlog reduced from 1,300 to just over 1,000 during this same period. The average I-526 processing times are about 11 months [a figure that must really annoy investors and their developers with petitions pending over two years with no action at all]. Average I-829 processing times are about the same: 11 months. Average I-924 regional center applications are taking 12 months on average. Mr. Colucci promised to correct the posted processing times reports as to EB-5 filings. [We have heard this many times before.]

The USCIS leaders stated that they are "taking steps" to implement more consistently a "first infirst out" approach to I-526 adjudication [perhaps a nod to the pending allegations that USCIS gave favor to politically connected regional centers and projects], but they stated they intend to keep "balancing" this goal with the efficiency that can be gained, for instance, with a practice of adjudicating together the petitions of investors in a particular project. They also expressed their sense of "urgency" about long-pending petitions but provided no specific steps being taken in that regard.

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EB-5: Just Over the Horizon, Feb. 27, 2014 Page 3 of 7 uscis update

Electronic Filing. Mr. Colucci announced that USCIS had implemented the use of the online case filing system, ELIS, for the intake of I-526 petitions. [No one I know had heard of this before Mr. Colucci stated this. I looked at www.uscis.gov/i-526, and indeed the option to "File Online" was present, with no explanation about whether the voluminous documents for an I-526 can be filed electronically in the process and how they will be organized in doing so. Mr. Colucci announced that some other accomplishment has been made to allow the filing of project documents that I-526 petitioners can share, but he did not explain any details, and the page at www.uscis.gov/I-924 contains no reference to this.]

Mr. Colucci stated that further details will come in some further stakeholder interaction, with no dates or details. [About a year ago, Dan Renaud (then interim EB-5 Chief) and the people running the USCIS Transformation Program (which Renaud previously directed) met with stakeholders about the parameters for online filing. That meeting contained very encouraging discussions about the prospect of filing project documents once and having I-526 petitioners link to such repository in a way that reflected that they had read and agreed to the exact same documents, thus eliminating the need for each investor to file the project documents. The idea makes complete sense for efficiency and ecology, but the mechanics are maddeningly challenging, and implementation will inject important new dynamics into the relationships between investors, agents, new commercial enterprises, and regional centers. Without this functionality, the electronic filing of I-526 petitions seems less than elegant.]

Mr. Colucci hinted that those who try the electronic filing might receive faster adjudication during the experimental stage that seems to have begun without fanfare. [So far, very few immigration lawyers have used the ELIS online system, because it was only available for a very small array of case types in which few lawyers file volumes of applications. EB-5 lawyers now will be scrambling to establish their ELIS online accounts and scouring the system, seeing what I-526 client wants to try it.]

Substantitive Issues Mr. Cox addressed a significant number of questions, most of which were posed by IIUSA and written by yours truly. USCIS had received volumes of questions and had chosen some of the more frequently asked questions. [Some of the most important aspects of a few issues seemed consciously avoided, as discussed below.]

Hypothetical Detail. Mr. Cox stated that a regional center application always needs to include a project with an economic analysis predicting indirect job creation supported by "verifiable detail" 2 but for a hypothetical project the range of assumptions can be broader for hypotheticals, and while the application must verify how the jobs will be created, there can be less verification and less detail than for an "exemplar" project that will receive deference in future I-526 petitions.

Mr. Cox did not describe how or how much the verifiable detail can be relaxed. [Thus, 2

The current regulations about regional centers at 8 CFR 204.6(m) mention "verifiable detail," but they were promulgated before amendments to the law allowing "general plans" and "general predictions" that should trump prior regulations. The relaxed approach to hypotheticals conforms to some recent decisions of the Administrative Appeals Office overturning regional center denials that had more general information.

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applicants seeking the "low bar" for regional center applications still will have to find it by the "trial and error" method.]

Sale of Regional Centers. Mr. Cox confirmed that sale of the entity operating an approved regional center is not prohibited. [This seems consistent with previous stakeholder meeting statements that a regional center designation is not an asset that can be sold separate from the entity that received approval and with statements inserted into recent regional center approvals that the designation is "not transferrable."] Mr. Cox said that after a transfer of ownership, a regional center entity must notify USCIS within 30 days by email in keeping with the following statement on page 4 of the I-924 instructions:

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Designated Regional Centers must notify USCIS within 30 days of a change of address, contact information, regional center principal(s), contracting agents or similar changes in the operation or administration of the Regional Center.

Notification can be made by sending an e-mail to the EB-5 Program mailbox at: USCIS.ImmigrantInvestorProgram@dhs.gov.

Mr. Cox said that in response to the email, USCIS may require an I-924A. [See www.uscis.gov/i-924a. 8 CFR 204.6(m)(6) requires regional centers to "provide USCIS with updated information â&#x20AC;Ś" and provides that "such information must be submitted to USCIS on an annual basis, on a cumulative basis, and/or as otherwise requested by USCIS, using a form designated for this purpose." Ostensibly, the I-924A is now deemed the form for this purpose, but the form does not seem well-suited for it.]

Mr. Cox stated that, also in keeping with the instructions to Form I-924 (see www.uscis.gov/i924, page 1, item 2.A.2.), a regional center may also file I-924 reflecting the transfer, but importantly, he did not state that USCIS can or will require such filing. [There is a huge difference between filing I-924A, which is a reporting mechanism, and I-924, which is an application seeking USCIS approval. In the past some regional centers whose ownership has changed have reported it to USCIS by email with varying responses. Some responses have stated to the effect: "Thanks, we will put this in the file," and others have responded to the effect: "Thanks. You need to file an I-924 (not I-924A)." With hope, USCIS leadership has provided guidance to those manning the USCIS EB-5 email inbox with the same guidance Mr. Cox gave stakeholders.] Mr. Cox gave no indication of any standard by which USCIS might reject a change of ownership or even the considerations. [New owners might be well-advised to tell USCIS about themselves and their plans for using the regional center to grow the regional economy when they give the email notice in order to avoid requirements to file more and in order to receive some response that sounds like acceptance.]

Targeted Employment Areas. Mr. Cox addressed several questions about this critical topic.

Collections of TEAs. Mr. Cox confirmed that an investor can use the $500,000 level if the new commercial enterprise is principally doing business in a collection of TEAs, and not necessarily just one TEA. This means that the job creating enterprises receiving the EB-5 funds must be principally located in and creating jobs in the collection of targeted employment areas. It means 4 C RCD 687683 v 1 0-0 02/27/2014

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that there may be locations and existing or new jobs outside of the TEAs, and there does not need to be one TEA in which the predominant location and most of the jobs are created. Given that the regulations refer to "a targeted employment area" in the singular, this is a very helpful policy clarification, and it needs to be the subject of a USCIS writing.

High Unemployment TEAs. Mr. Cox fielded a question frequently asked for a long time: whether a high unemployment area that is not a county or MSA as a whole, but instead is some collection of census tracts or other type of area can be presented with current data using proper DOL/BLS methodology without official designation by a state. Mr. Cox referred to the regulations [8 CFR 204.6(j)(6)(ii)] and the May 30, 2013 policy memo [page 8] to confirm that such a designation must be established by a letter from an agency of a state to which such authority is designated by the governor. [This throws into question some projects that may have used "private" designations (typically a letter from an economist with supporting data). Investors in such projects will need to think about whether and how a corrective action or interfiling can be made before a debacle at the I-829 stage. Some states are becoming a little more self-conscious with their designations, and developers will need to advocate their TEA requests carefully.]

TEA Timing. Mr. Cox fielded a few questions from the floor about the point at which TEAs are assessed. He acknowledged that USCIS might adjudicate a TEA claim in an I-924 exemplar project filing, but he confirmed that the individual investor still needs to establish TEA qualification as of the time of the investment (or, if escrow is used, the time of I-526 filing).

[USCIS has been issuing RFEs to investors whose TEA designation letter was based on data that was not the most current at the time the I-526 was filed. It is not clear whether USCIS will accept a responsive filing of a TEA designation using more recent data but issued after the I-526 was filed.]

RC Geography Standard. The biggest game changer in the May 30, 2013 policy memo was USCIS' recognition that regional centers can sponsor projects beyond the industry and geography for which they already have been approved. This gave rise to two related questions: how far away from the approved area can a new project be, and what is the standard upon which a request for expansion will be adjudicated? Mr. Cox stated that the standard is the same for initial RC applications for expansion: the areas sought must be contiguous (and thus a new area must be contiguous to the approved area), and the "proposed economic activity" must be shown to promote economic growth in the proposed area. As stated in the May 30, 2013 policy memo [page 14], this does not require a county-by-county analysis, and the focus tends to be on the supply chain and labor pool associated with proposed projects. Mr. Cox declined to provide further clarifying detail, but he did say that a California regional center cannot sponsor a New York project. [Especially given some recent regional center designations of multi-state areas based on proposed sets of projects that do not seem likely to have predicted impact to every corner of all the states, the exact standard appears unclear.] Mr. Cox stated that predictability can be obtained by filing and waiting for an approval on a I-924 to expand a regional center's territory, and he repeated the USCIS goal to continue improving those processing times.

Public Works Projects. Mr. Cox confirmed that as long as the EB-5 investors make an investment in a "new commercial enterprise" for profit, using regional center sponsorship, the 5

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NCE may invest or loan the money to a separate job creating enterprise which may be not-forprofit and could include a public works project if it meets the job creation parameters for the EB5 investors. [Holding in my hand my client's long-approved exemplar designations of such projects, I resumed breathing.]

Redemption/Call Options. Mr. Cox was less than clear about the nagging question whether or not it is a prohibited "redemption" if a new commercial enterprise agreement gives the enterprise the option to buy back the investor's interests after the end of conditional residence. The question Mr. Cox addressed posed an option to pay a set price. [We might have hoped that the question had included the alternative of an option to pay what would be deemed at the time (ostensibly by some objective means) a fair market value for the EB-5 investor's interest.] Mr. Cox stated that the arrangement would be scrutinized not only for whether there was a promise to buy the investor's interest (clearly prohibited) but also whether the investor had a risk of loss and a chance for gain. [USCIS' theory for denial may be that by having the option to buy out the EB5 investor at or near his investment price in the event that the company does well, the enterprise has the contractual opportunity to eliminate the investor's chance for gain. That theory, carried to extremes, could wreak havoc in the industry.]

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Bridge Financing. Mr. Cox read only a small part of an important question that was posed about any temporal requirements that may be associated with the opportunity to use EB-5 funds to replace bridge financing. Mr. Cox simply repeated that the plan to replace the bridge financing with EB-5 capital must be shown to have existed before the original financing was injected, and that EB-5 funds cannot be used to refinance longer term debt that was not really contemplated to be used temporarily. [He avoided two questions that had been posed: First, can be bridge financing be advanced well before any I-924 or I-526 is filed? Ostensibly, the answer is yes, but the longer the period that the bridge financing lasted before any immigration filing may effect USCIS' assessment of temporariness. Second, can an I-526 be filed even after a project has been completed using bridge financing? It seems clear enough that it should be acceptable for an I-526 to be approved, and thus funds held in approval to be released for repayment of bridge financing, even after the project was completed, because USCIS adjudication times have been exceeding the period of some projects, and a stricter rule would eviscerate the whole idea of bridge financing. But it is a different situation for investors to file their I-526 (and ostensibly to have made the investment) after the project was completed. We have seen in the market projects being openly advertised to EB-5 investors stating that they are safe from developmental risks because they are already completed. USCIS has stated in its response to the recent report of the DHS Office of Inspector General that "USCIS has denied and will continue to deny cases where a project is already completed and circumstances do not warrant attribution of jobs to a proposed late-stage investment." Such a temporal limitation was not stated in the May 30, 2013 policy memo, and I was surprised to see Mr. Cox avoid articulating some temporal backstop consistent with USCIS' statement to the OIG.] Guest Expenditures. Mr. Cox stated that EB-5 investors could possibly count the jobs created by the expenditures of guests in a hotel built with EB-5 funds if a market study and economic analysis demonstrated one or more of three things he articulated: (1) unmet aggregate demand (high occupancy rate -- he did not say how high); (2) differentiated product for a market segment 6 C RCD 687683 v 1 0-0 02/27/2014

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(no comparable facility exists); or (3) response to the demand generated by another establishment such as a sports arena. [We know of a few projects that have been credited with jobs from guest expenditures after USCIS began attacking such arrangements in 2012, but the bar seems fairly high.]

Job Creation Evidence at I-829. Mr. Cox confirmed that investors, whose I-526 predicted direct jobs or predicted indirect jobs based on the number of direct jobs, must demonstrate at I829 stage the actual employment of full time workers through payroll, tax, I-9 and other documents. Importantly, however, he stated that if jobs had been predicted based on operational revenues or on the amount of space to be occupied by certain industries, then investors at I-829 stage may show the jobs by presenting evidence of the revenues or the requisite occupancy.

[This seemed to validate the modern practice of economists in using operational revenues or occupancy square footage to derive not only indirect and induced jobs but also what an economist would consider direct jobs in relation to the project. (Remember, in a technical immigration sense, a direct job is only an employee of the new commercial enterprise or its 100% subsidiary.) This seems to reflect a USCIS strategic decision to allow everyone to avoid the drudgery of submitting job-by-job evidence in larger projects, even when parties associated with the new commercial enterprise may have some level of control over the operation of the job creating enterprise. This all sounded good, particularly for developers and investors who wonder whether the direct jobs that could be shown with real people in a job creating enterprise would amount to as many jobs as the "direct" jobs predicted from revenues or square footage based on a model, but parties should be cautious. The May 30, 2013 policy memo at page 7, after accepting the practice of predicting "indirect jobs" through economic models without regard to whether they are full time or permanent, added "USCIS may, however, request additional evidence to verify that the direct jobs will be or are full-time and permanent, which may include a review of W-2s or similar evidence at the form I-829 stage." Mr. Cox did not state in the stakeholder meeting that he was refuting any aspect of the May 30, 2013 memo.

Sustaining Investment. Mr. Cox explicitly withheld any policy pronouncement about the critical question of what it means to "maintain" or "sustain" the investment as required for removal of conditions on permanent residence at the I-829 stage. [The problem is that projects may be successfully developed with the requisite job creation but then sold or refinanced before the end of conditional residence. Does an investor fail to "maintain the investment" if the job creating enterprise repays the loan or returns capital to a new commercial enterprise before the end of conditional residence even if the jobs were created? Is it enough if the new commercial enterprise holds the money in a bank account without distributing to investors before the end of their conditional residence? Would it be enough if the NCE received the payout from the JCE and reinvested it in another kind of project, and if so would there be specific job creation, TEA/RC area, or other requirements associated with that re-deployment of capital? All of these questions are exacerbated by the time it takes USCIS to adjudicate I-526 petitions, as mentioned in the question posed to Mr. Cox.] Mr. Cox demonstrated his awareness of the issue when he brought up on his own the further problematic implications of the visa retrogression we can expect as soon as USCIS starts working off the I-526 backlog. So he said USCIS is thinking about this question. [A great deal rides on it.]

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Trends in Approvals of Regional Centers in the EB-5 Investor Visa Program

BY LINCOLN STONE IIUSA EDITORIAL COMMITTEE CHAIR, STONE GREZGOREK & GONZALES, LLP

D

uring July 2012, in response to a request made by the nonprofit association Invest in the USA (“IIUSA”) under the Freedom of Information Act (“FOIA”), U.S. Citizenship and Immigration Services (“USCIS”) produced 248 letters2 authored by USCIS and legacy U.S. Immigration & Naturalization Service (“INS”), approving applicants for designation as a regional center under the Immigrant Investor Pilot Program. Some 186 of the letters – the vast majority -- are for original regional center designation, whereas the balance of theletters provide for amendment to existing regional center designations.

The FOIA production covers USCIS and INS regional center work product ranging from 1994 to May 2012. While USCIS has yet to release information that it is systematically collecting about regional center applicants and their investment enterprises, the objectives of this paper are to provide a general and highlevel overview of the USCIS work product, and to identify a few trends that may lead to further investigation.

Trends in Volume What is most striking about the first graph is how it clearly depicts the spike in regional center approvals, numbering 75 approvals in total, during the six-month period of May 2011 to October 2011. This productivity accounts for approximately 30% of all regional center approval letters issued throughout the 20-year history of the Pilot Program.

Of those approval letters issued during this time period, 75% (56/75) were tied to regional center proposals submitted to USCIS after it had imposed the requirement beginning in November 2010 to submit such proposals on Form I-924.

The heightened activity in issuing regional center approvals in mid-2011 is starkly contrasted with the most recent four-month

period from February to May 2012 when according to the FOIA production USCIS issued only 3 regional center approvals in total.6 This paltry output in the latter case is curious in light of the public statements by USCIS indicating it has a much larger workforce available in the EB-5 adjudications unit at the California Service Center, and it has more than 100 pending regional center applications.7 Of course, one missing piece here is that the FOIA production does not cover INS/ UCSCIS denials of regional center proposals.

(The July 2012 statistics issued by USCIS indicate it denied 143 proposals submitted on Form I-924, beginning with fiscal year 2010.)

Setting aside for now the USCIS work product on regional center denials, what is obvious from the plot below is that processing times in approved cases have trended upward since the start of 2011.

Geographic Distribution The next visual is a simple chart indicating by state the geographic distribution of regional center designations. What is clear is that nearly every state in the United States is

tied to at least one regional center designation. The territory of Guam also is covered by a regional center. Based solely on the FOIA production, we observe that only the states of Alaska, Arkansas, Delaware, Massachusetts, Nebraska, New Mexico, Rhode Island, West Virginia, and Wyoming are not presently involved in the Pilot Program. However, based on the author’s personal knowledge as well as the USCIS website listing of one regional center each for Massachusetts and Wyoming, we know a comprehensive, reliable list of uninvolved states would be shorter than that suggested by the initial FOIA production.8 Another indication of the fact that the initial FOIA production does not include every regional center approval letter ever issued by INS and USCIS is that there are nine “orphan amendments” – amendment letters without a corresponding original regional center approval letter. A supplemental IIUSA request under FOIA is directed at filling in the holes of the initial production.

The map of the United States colorfully shows the distribution of original regional

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center approvals,9 which are heavily concentrated in certain states, most prominently in California (55), Florida (18), Texas (16), and New York (13). As we would expect, the activity is most focused in states with the largest economies.10

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Regional Center Boundaries The next chart examines the regional center approvals by boundaries. We reviewed the approval letters for indications of boundaries by state, county, city, and alternative boundaries. We made no effort to measure actual size of the regional center territory, as the size of counties and cities can vary widely from state to state.

A majority of the approved regional centers are for boundaries ranging from 5 to 9 counties. Although USCIS has stated in numerous iterations that a regional center area must be contiguous,11 we made no effort to confirm that the approved regional center boundaries consist solely of contiguous areas.

An estimated 31 of the regional center approval letters are for geographic areas including entire states, with a proportionally larger share occurring over time. We did not attempt to reconcile these outcomes with the statutory limitation on regional center boundaries to “a limited geographic area” and “consistent with the purpose of concentrating pooled investment in defined economic zones.”12 A smattering of the regional center approval letters include boundaries defined by cities, Metropolitan Statistical Areas, enterprise zones within cities, and even census tracts.

Input-Output Models Insofar as the approval letters constitute the government’s authorization to operate as a regional center under the Pilot Program, we refer to the approval letter as the “Charter” or the “RC Charter letter”. The FOIA production reveals a definite trend toward identifying in RC Charter letters the specific input-output model that the regional center applicant proposes to use for estimating job creation. Prior to implementation of Form I-924, the RC Charter letter did not mention the proposed input-output model in at least two-thirds of the observed cases. But postimplementation of Form I-924, almost uniformly the RC Charter letter specifies a par-

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ticular input-output model. A description of the various input-output models is not within the scope of this paper,13 but we did observe that a majority of the RC Charter letters identify IMPLAN, and the next in frequency was RIMS II. A dozen RC Charter letters indicate REDYN, and a few RC Charter letters refer to REMI and the State of Washington inputoutput model.

Clusters, Industry Sectors, and Business Activities The final topic covered in the presentation is perhaps a preview to the problem of mixed language in RC Charter letters. The confusion in language used by USCIS in these letters is troubling, but full consideration of the practical, negative consequences of this confusion of language is beyond the scope of this paper. Nevertheless, the FOIA production does reveal that from the beginning of the Pilot Program, first legacy INS and later USCIS has confused and alternated the terms “clusters” with “industry sectors” and then again with “business activities”. These terms have different meanings, and thus, the interest in logging their appearance in the history of regional center approval letters.

The language of “clusters”14 surfaces in 102 – easily a majority (102/178)-- of the RC Charter letters from 2007 to the present.

The language of “industry sector” was not uniformly included in the RC Charter letters from 2006 and earlier. But by 2011, and now in 2012, RC Charter letters always refer to the approved industry sectors. Furthermore, in 2011 and 2012, the RC Charter letters almost always include NAICS code references. By contrast, in the period 2009 and earlier, involving more than 80 regional center approvals, only 3 RC Charter letters – or less than 2% -- included NAICS code references. Lastly, approval notices also seem to interchange the terms “sector” and “cluster” when referring to industries that are delineated with NAICS codes.

With respect to NAICS codes appearing in RC Charter letters, there is a trend toward more specificity as indicated in the next chart.15 Whereas in the past USCIS had identified broad two-digit NAICS codes, more

and more RC Charter letters in 2011 and 2012 include specific six-digit NAICS codes.16 A discussion of the legal issues and the practical, negative consequences of this trend is not within the narrow scope and objectives of this paper.

The reference to “business activities” in RC Charter letters appears to relate to general economic/business activities rather than specific clusters of economic activity or industries. There were five discernable main categories and one sub-category of business activities listed in RC Charter letters. The main categories of business activities include loans, equity investments, management/operations, real estate, and construction. The notable sub-category that we observed was for startup equity investments. Interestingly, though, the author’s practice experience suggests that this sub-category is not presently a significant factor in terms of frequency of occurrence as a business activity in the Pilot Program.

Conclusion Our review of the FOIA materials provided

by USCIS reveals significant trends in the USCIS administration of the Pilot Program for regional centers, namely, increased volume of regional center proposals handled by USCIS, longer processing times for adjudication of regional center proposals, expansion of the Pilot Program to include nearly every state in the country, a prevalence of county-based regional center boundaries, and the evergrowing significance of specific NAICS codes for identifying permissible regional center business activities and/or industry sectors.

While a supplemental FOIA request should be helpful in terms of compiling a comprehensive repository of the entire INS/USCIS work product on RC Charter letters, the added substantive information to be gleaned from a supplemental production by USCIS, amounting to an estimated dozen approval letters, would not alter the basic findings in this analysis. ■

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FOIA Efforts Reveal USCIS Adjudications and Behindthe-Curtain Work on “Tenant Occupancy” Job Creation

BY LINCOLN STONE STONE GREZGOREK & GONZALES IIUSA EDITORIAL COMMITTEE CHAIR

I

n search of vital answers to critical questions about USCIS adjudications, IIUSA continues to lodge a flurry of FOIA requests. The materials produced through the FOIA process allow IIUSA to serve its diverse membership with an array of information concerning the USCIS adjudications process that is not otherwise available to stakeholders. See, e.g., S. Sujanani, S. Yale-Loehr & R. Divine, “A Cumulative Analysis of What USCIS Looks For in EB-5 I-829 RFEs and Denials”, IIUSA Regional Center Business Journal, October 2013. The latest fruits of IIUSA’s labor include more than one hundred RFE and NOID adjudications of I-526 petitions, as well as USCIS training materials.

The RFE and NOID adjudications range from August 2012 to March 2013. Viewed in terms of broad categories, these adjudications cover I-526 petition adjudication standards for investment of capital and job creation.

The following is a summary of these adjudications.

Investment of Capital Adjudications teach important lessons on the ordinary – such as, the claim to doing business in a TEA cannot be based on old unemployment data – as well as on the more exotic – for instance, a deposit of $100,000 against an installment plan for investment of $500,000, is held by USCIS to be not sufficient as an investment of the required amount of capital.

Lawful source of capital is a recurring focus of adjudications. In one case, USCIS stressed that the petitioner must prove the lawful source of capital used to acquire the property that has been used as security for the loan proceeds that he used to invest in the new commercial enterprise.

In numerous cases, USCIS pushed for further documentation of completed agreements for construction (i.e., construction contracts)

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and for operations of businesses in completed facilities (e.g., management agreements). Absent such agreements, USCIS would conclude the petitioner’s capital is not sufficiently at risk.

USCIS also would conclude the investor’s capital is not at risk if the limited partnership agreement authorized the general partner to exercise a repurchase option, at the general partner’s discretion, if the agreement set a specific price. USCIS deemed the provision an impermissible redemption.

Job Creation USCIS adjudications continue to raise vexing questions about reasonable methodologies for estimating job creation. In one case involving a skilled nursing facility that reveals a pervasive adjudications theme, USCIS concluded the job creation analysis lacked foundation where the construction costs and operating revenue estimates were not supported by reliable, objective third party data.

In another adjudication USCIS objected to the job creation analysis that sought to capture jobs occurring beyond 2.5 years. USCIS offered the rationale that 2.5 years is a necessary cut-off for considering job creation because in its view the purpose of the later I-829 petition is to measure completed job creation.

In another case, adjudicated in August 2012, USCIS objected to the tenant occupancy-based analysis of job creation, finding that the nexus of EB-5 capital to the claimed jobs was too attenuated. To succeed with a tenant occupancy-based theory, USCIS would require proof of “excess demand” of specific kinds of tenants for the particular type of space under construction.

USCIS Training Materials IIUSA efforts also uncovered USCIS training materials dated October 30, 2012. Under the title, “EB-5 Economics Cell: Implementation of Tenant-Occupancy Methodology”, these materials shed some light on the considerations USCIS examiners would deem rele-

vant to an adjudication of tenant occupancybased job creation.

The “Summary” page of the training materials begins with the statement: “If applicants provide an cogent argument supported by reasonable and verifiable evidence that benefits generated by a commercial space development/renovation project financed

by EB-5 capital will be a significant factor in the decision of a business to start operations and locate in the specific commercial space, then USCIS will allow the EB-5 investment group to take credit for the employees of the tenant.”

It refers to the required adjudication standard as “but for” job creation – that is, “the tenant jobs would not have been created but for the construction/renovation of the commercial space.”

The training materials cover the “core analytical and methodological focus areas” in a slide titled “Analytical Focus”. The highlighted factors include – interaction of local commercial space and product markets; incentive factors for the tenant startup/location decision; startup job estimation methods and metrics used; and industry specificity for prospective tenants.

The training materials confirm that tenant jobs can be credited if the supply of space relevant to the development will “generate economic benefits that factor significantly into the decision calculus of a new tenant business.” These benefits would stem from two general sources – the new space “removes a market based constraint on the realization of demand for a tenant specific products/services”; or the new space provides “direct or imputed cost savings.”

In instructing examiners on what to look for, the slide “Demonstrating Facilitation” stresses that “USCIS will focus its evaluation on the presentation of the supply and demand conditions for specific space and specific products/services.” USCIS is looking for

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In order to show “incentives” provided by the developer that might entice startup tenants, evidence of “direct or imputed cost savings” should be presented. Evidence might include rental subsidies, energy and utility incentives, maintenance and operational costs, tax subsidies, and possibly other factors.

When it comes to crunching the numbers to estimate the job creation, the training materials emphasize that estimates must be based on acceptable

methods and verifiable data sources relevant to specific industries and space parameters. Accepted techniques include capital-labor ratios, production functions, revenue per employee, square feet per employee, sales per square feet, and possibly others.

A final slide highlights the need for tenant industry specificity in business plans. Given that “tenant industry specificity drives the estimation of direct tenant jobs, which drive indirect and induced jobs,” the training materials caution that “incorrect direct job estimates create highly inaccurate total job estimates.” The same slide warns that petitioners must indicate the type of tenant that will occupy the space, otherwise “they can gerrymander job creation estimates by cherry-picking industries with the highest square feet per employee and calculating an average.”

Epilogue The subject FOIA productions yield valued information about USCIS adjudications and the tenant occupancy problem in particular. As to the latter, it would appear USCIS thinking continues to evolve. See, e.g., L. Stone, The Economics of EB-5 Job Creation: Overcoming “Tenant Occupancy” and “Guest Expenditures” Objections, Immigration Daily, Dec. 10, 2013. Meanwhile, IIUSA presses ahead with yet another round of FOIA requests, aiming to fill-in the gaps in our understanding of how USCIS goes about its business of adjudications. In a time of little or no public dialog with USCIS about the EB-5 program, this is indeed yeoman’s work. ■

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evidence that the new or renovated commercial space “will cause new businesses to start/expand operations that were otherwise constrained in startup/expansion.” USCIS examiners would consider supply and demand metrics such as space absorption, vacancy rates, rental rates, “externalities associated with tight markets (such as search costs)”, as well as product/service market and competitor analysis.

New York City Regional Center proudly supports IIUSA

®

Spurring Economic Development Through Foreign Investment

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FOIA EFFORTS SHED FURTHER LIGHT ON REVIEW BOARD PROCESS

BY LINCOLN STONE uscis update

IIUSA EDITORIAL COMMITTEE CHAIR, STONE GREZGOREK & GONZALES, LLP

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USA persistence in seeking information by way of FOIA requests continues to pay dividends. The latest haul includes a few important pages concerning the Review Board installed by USCIS to hear in-person presentations by applicants who are facing denial of an I-924 application for regional center authority.

Former USCIS Director Alejandro Mayorkas had announced the Review Board would be inaugurated by the end of July 2012. See http://www.aila.org/content/default. aspx?docid=40574. The Review Board now is in full swing. The standard Notice of Intent to Deny (“NOID”) the I-924 application issued

by USCIS includes a section entitled “Review Board Option” that advises the applicant of the option to request an in-person or telephonic hearing before a final decision is made by USCIS. The NOID advises further that the applicant will be required to submit arguments and supporting documents in advance of the Review Board hearing; however, it does not indicate much more about the process. Very few stakeholders have appeared before the Review Board, so scant information about it is publicly available.

The materials obtained via FOIA include instructions on how USCIS is to conduct the “I-924 Interview”, which is to be directed by a USCIS panel consisting of the supervising ad-

judications officer (“SISO”), an economist, and a lawyer from the Office of Chief Counsel. An accompanying diagram of the decision-making process highlights the integral roles that the government economist and counsel have in reviewing the record, formulating questions, and helping USCIS get to final decisions. According to the instructions, the SISO opens the interview with welcoming remarks and administers an oath to the principal representative of the applicant (“excluding the attorneys”), and then explains that the interview will not be recorded by either party but it will be a flexible format consisting of questions from the SISO and/or the economist to the principal and his accompanying team. The instructions allow for alternative formats, such as a presentation by the applicant (“interviewee”). The SISO is expected to provide closing remarks at the conclusion of the interview which is not to exceed 60 minutes. USCIS commits to supplementing the record of the proceedings with the additional information provided at the interview, and also allows for further supplementing of the record with any additional information that is provided within 7 days after the interview is concluded. USCIS commits to issuing a written decision within 30 days.

As testament to how the Review Board process can dramatically enhance an applicant’s fortunes, one successful regional center applicant shared copious notes of its experience before the Review Board. And why not – after having fought through three separate Requests for Evidence (“RFE”) and a NOID, the pres-

NOTICES

Review recommended decision

Document as needed

Govt Econ

SISO

DECISION

Approval?

Prepare Questions for interview

Raise Questions to Counsel

Prepare Questions for interview

Raise Questions to Counsel

Calendar Interview if requested

Interview

Discuss Interview as needed

Interview

Discuss Interview as needed

No Further Action...

Jump to Decision

GOVT ECONOMIST

Yes

Prepare ITO or ITT if needed

Govt Econ

Review record

Document as needed

Counsel

COUNSEL

Counsel

INTERVIEW

Interview notice (telephone or in person)

Govt Econ Case rendered for decision

Certainly, the opportunity to have in-person dialog with USCIS about an important (usually long-pending) application ranks far superior to the time-consuming and expensive adjudication routine of RFE#1-RFE#1 response-RFE#2-RFE#2 response-NOID-NOID response. It remains to be seen whether this critical adjudications tool will be a mainstay of the investor program in Washington DC. ■

SISO

Review record

Document as needed

SISO

Interview

Discuss Interview as needed

SCOPS

SUPERVISOR ISO

DATE REVIEW

entation before the Review Board garnered a USCIS-issued approval notice dated 27 days after the hearing. Prior to the Review Board interview, and following the submission of a response to the NOID, the applicant received from USCIS certain informal “Requests for Clarification” that, ultimately, served to narrow the remaining open issues. Apparently, though, the I-924 application still could not be approved based on the then-existing record and USCIS therefore issued a “Notice of Interview” that includes interview instructions as well as a list of discussion items. At the interview, the applicant was represented by a team of five, including an economist, an industry expert, a regional economic development official, and an immigration lawyer. The government economists, in particular, demonstrated deep familiarity with the issues in the case and peppered the applicant with questions about NAICS industry codes, IMPLAN sector codes, the foundations for the estimated revenues of the business, whether the estimated job creation represents “new jobs”, and the rationale for the expansive geographic scope of the proposed regional center.

SISO

Review record as needed

Document as needed

SISO

Interview

Discuss Interview as needed

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Prepare Final Desicion

FINAL DECISION SENT

BY CAROLYN S. LEE PARTNER, MILLER MAYER, LLP

M

isconceptions about targeted employment area (TEA) designations continue to cloud the views about certain EB-5 immigrant investor projects. These misconceptions appear to be grounded in fundamental misunderstandings of the rules governing TEAs. The TEAs discussed here are high unemployment TEAs as certified by authorized state agencies, qualifying investments in these areas for EB-5 investment at the $500,000 level, due to “high unemployment” of at least 150% of the national average unemployment rate. Other types of TEAs are not controversial. Rural TEAs are published by the Office of Management and Budget, are static and politically uncontroversial. Similarly, high unemployment in an area already measured by the U.S. Bureau of Labor Statics (BLS), Local Area Unemployment Statistics (LAUS) program, such as Metropolitan Statistical Areas (MSAs), counties and certain large cities, requires no state certification because LAUS publishes unemployment data for these areas.

If an EB-5 project is in an MSA, or a county is a TEA, no state designation is required because LAUS publishes high unemployment data for these areas. Many non-rural projects are within MSAs and counties that as a whole do not meet the high unemployment threshold, so the project sponsors use the second form of evidence – state TEA designation letters for smaller geographic areas.

The state government of any state of the United States may designate “a particular geographic or political subdivision located within a metropolitan statistical area or within a city or town having a population of 20,000 or more” as a high unemployment TEA. Before a state makes any TEA designation, it

must notify USCIS which state agency will be delegated the authority to certify TEAs. Typically, a state’s labor department is the designated state agency. USCIS regulations delegate to states the task of designating high unemployment TEAs for smaller areas within MSAs and counties for which no federal data are publicly available. Current USCIS policy, consistent with USCIS regulations, affords state designations robust deference. USCIS, however, does not abdicate all review. It reviews a state’s determination for compliance with the EB-5 program definition of high unemployment and ensures the use of the most recent federal statistics.

While USCIS has oversight authority over TEA designations, the U.S. Department of Labor (DOL) provides substantive guidance and standards for state TEA designations.

The DOL has issued at least four technical memoranda instructing state departments of labor on the proper methodology for determining EB-5 TEAs, most recently in July 21, 2010 (“DOL Technical Memorandum”).

These technical memoranda make clear that in designating areas for which BLS does not produce employment estimates, states must use “the standard LAUS estimating methodology” including specified disaggregation methods. Therefore, as long as states follow these DOL guidelines, USCIS defers to state TEA determinations.

Is Gerrymandering “Rules Stretching”?

Some have suggested that rules have been “stretched” to qualify certain sites as within TEAs. These sources point to selective uses of census tracts resulting in irregular shaped maps evocative of gerrymandered districts.

Others contend that census data are “manipulated” in violation of the EB-5 program rules. It may be true that state designated TEA maps are rarely geometric and some are odd shapes. But this is not necessarily a sign of rule stretching.

uscis update

State Designations of EB-5 Targeted Employment Areas U.S. Department of Labor Standards Department of Labor guidance on state TEAs permit states to draw their own boundaries: “States may create geographic boundaries of any size and/or limit the size of these areas.”

States’ discretion to draw similar boundaries is not limited to the EB-5 program. The DOL TEA guidance allows states to find high unemployment for other federal programs: “a State may choose to apply an ASU-type approach and identify very small areas that meet the unemployment rate minimum, but, if they find this process too time-consuming, they may decide to limit labor force estimates to areas with some minimum population size.”

Areas of Substantial Unemployment (“ASUs”) are areas having among other factors an unemployment rate of at least 6.5% and are used to determine areas qualifying for federal funding programs targeting unemployment and worker displacement. This process is very similar to the process states use to designate EB-5 TEAs, as it also prescribes using LAUS methodology for calculating unemployment in sub-LAUS areas. Under DOL guidance, ASUs may be comprised of “any combination of LAUS areas and/or census-shared areas (for example, census tracts within counties, functional minor civil division (MCD) parts of census tracts, place parts of census tracts, and place parts of functional MCDs)” or “a portion of a LAUS area that is census-shared from a whole LAUS area.” States’ findings of high unemployment areas using even parts of a census tract are therefore valid, as long as states use standard DOL methodology specified in the Manual for Developing Local Area Unemployment Statistics and follow all other procedures and statistical policy directives the memoranda require.

No rule limits how states draw their boundaries for measuring high unemployment areas: “States may create geographic boundaries

Continued on Next Page >>

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uscis update of any size and/or limit the size of these areas.” The DOL ASU guidance states that an area “must be a contiguous geographic area composed of any combination of counties, balance of counties, cities, census tracts, or other areas within a State. Contiguity may be accomplished if two areas are separated by a body of water (for example, river, lake, ocean) if the two areas are directly across the body of water from one another.” Accordingly, DOL guidance gives states discretion to configure the area as long they follow a BLS-approved methodology to find the local unemployment rate.

USCIS Standards USCIS regulations expressly permit irregular areas to be recognized as a high unemployment TEA if based on a state government letter meeting the requirements of 8 CFR 204.6(i). That regulation, in turn, states in part:

“The state government of any state of the United States may designate a particular geographic or political subdivision located within a metropolitan statistical area or within a city or town having a population of 20,000 or more within such state as an area of high unemployment (at least 150 percent of the national average rate).

Evidence of such designation, including a description of the boundaries of the geographic or political subdivision and the method or methods by which the unemployment statistics were obtained, may be provided to a prospective alien entrepreneur for submission with Form I-526.”

These regulations make clear that states have the discretion to draw the geographic bounds of a TEA. First, while “political subdivision” has a general defined meaning (such as a state, county, city), there is no general definition of “geographic subdivision.” Also,

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because the definitions set apart the areas in the alternative as “geographic or political subdivision,” a geographic subdivision must have a meaning apart from political subdivision. It follows then, that “a” geographic subdivision may encompass any single area the delegated state authority designates. This single area may encompass multiple political subdivisions, parts of political or statistical subdivisions, a single census tract, or an aggregation of different types of areas and/or parts of them, consistent with DOL guidance. The open character of “geographic subdivisions” under USCIS regulations is therefore consistent with DOL guidance discussed above.

Second, recall that the regulations provide the state designation letter as an alternate form of high unemployment evidence distinct from evidence readily and publicly available to establish a single political subdivision as having high unemployment. If an MSA, county, or large city qualifies as a TEA, EB-5 petitioners may simply collect public LAUS data and include that data with the petition.

8 C.F.R. 204.6(j)(6)(ii)(A) permits:

“Evidence that the metropolitan statistical area, the specific county within a metropolitan statistical area, or the county in which a city or town with a population of 20,000 or more is located, in which the new commercial enterprise is principally doing business has experienced an average unemployment rate of 150 percent of the national average rate.”

The USCIS’s Adjudicator’s Field Manual (AFM) is consistent with the regulations as set forth above. Chapter 22.4(c)(4)(F) of the AFM states:

In some instances I-526 petitioners may claim high unemployment in only a portion or portions of a geographic area or political subdivision for which distinct unemployment data

is not readily available to the general public from federal or state governmental sources. This may be indicative of an attempt by the petitioner to “gerrymander” a finding of high unemployment when in fact the area does not qualify as being a high unemployment area. Such a claim is not sufficient to establish that the area is a high unemployment area unless it is accompanied by a designation from an authorized authority of the state government.

The purpose of the state designation letter is precisely to permit a state to designate irregular areas not readily encompassed by a political subdivision or subdivisions as high unemployment TEAs. An oddly-shaped TEA is no indication of rules stretching. Both USCIS and DOL rules applicable to state EB-5 TEA designations contemplate and permit states to draw boundaries consistent with DOL methodology such as census-share and population-claims methods. DOL memoranda make clear that for “components of nonrural areas” for which BLS does not publish data, LAUS methodology must be used. As long as states follow this guidance and prescribed methods, 8 C.F.R. § 204.6(i) is satisfied, regardless of the area’s shape.

States as TEA Designators There is no better authority arguably than a state department of labor or workforce agency to designate TEAs. First, as the ASU example shows, states have followed similar DOL guidelines for other federal programs requiring BLS methodology to disaggregate BLS data for smaller geographic areas. Second, it is in every state’s interest to ameliorate unemployment within their state. In particular, no governmental agency, has a greater interest in lowering unemployment and enhancing the workforce than a state labor agency, as their

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

uscis update mission statements show.

Notwithstanding states’ regulation by the DOL, USCIS reserves for itself oversight of states’ designations. USCIS’s policy is to “ensure compliance with the statutory requirement that the proposed area designated by the state in fact has an unemployment rate of at least 150 percent of the national unemployment rate.” Consistent with its regulations, USCIS generally defers to states’ TEA designations. However, USCIS “will review state determinations of the unemployment rate and, in doing so, USCIS can assess the method or methods by which the state authority obtained the unemployment statistics.”

USCIS’s deference policy does not mean that it simply gives state TEA letters a pass.

USCIS regularly issues requests for evidence for updated state designation letters. This is consistent with DOL guidance for states to use “the latest 12-month average or latest annual average of data.” If EB-5 investor petitions for a large project are filed over a long period of time, often the next year’s BLS unemployment data will be available by the time the last ones are filed. In these instances, USCIS requests a new TEA letter to ensure that the project remains within a TEA for the latter filings.

USCIS has thus struck a considered policy balance between deferring to state agencies for the map and calculations, while reserving and reasonably exercising its authority to further review for compliance with EB-5 program rules.

The Project Site and a Non-high Unemployment Census Tract Where the project site itself is not a highunemployment census tract, adjoining census tracts with high unemployment are brought within a contiguous geographic area to designate a TEA. This approach is consistent with how (1) the BLS measures unemployment

and (2) economists measure job creation impacts of stimulation.

The BLS does not use place of employment (i.e. where the business is located, operating, or principally doing business) when producing unemployment rates. Rather, it uses workers’ place of residence using the Current Population Survey (CPS). For states and local areas, the LAUS program uses a combination of CPS, Current Employment Statistics, State Unemployment Insurance programs, and BLS building-block and disaggregation techniques. Households, not employers, are surveyed to determine unemployment. Accordingly, a project site unemployment rate does not determine whether unemployment will be reduced at that site, whether that single census tract on which the project sits itself has high unemployment or not. This is because labor at a place of construction or operation comes from a much larger commuter area surrounding the construction site or place of business. Indeed, the project site census tract may have no residents (and hence zero unemployment, necessitating inclusion of other areas to reach the 150% threshold).

The fallacy of focusing narrowly on project site unemployment rates is further illuminated by economists’ method of calculating project employment impacts. Economists choose a study area surrounding a project site of usually at least the county and more often several surrounding counties constituting the commuting area. This is because in choosing the study area, economists look to location of inputs of production – labor, capital (including supplies), and land. As labor is a significant input, economists find commuter patterns to the project area totaling a significant percentage of the total labor force for that area – in the 80-90 percentile range. Economists typically use that labor force area for job creation impacts modeling.

The RIMS II Handbook, published by the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA), confirms that even one-county study areas, an area far wider than a single census tract, sometimes underestimate impacts. RIMS II is an economic impact modeling system created by the BEA. Many current EB-5 projects use RIMS II multipliers to estimate a project’s job creation impacts. In its discussion of the user’s choice of study area, the RIMS II Handbook states: “if the study seeks a comprehensive estimate of the factory’s impact, then the region of choice is the economic area.” The BEA’s “economic area” is an area typically comprised of regional markets surrounding metropolitan or micropolitan statistical areas, which can include several counties. There are about 179 economic areas. There are about 3,000 counties in the United States, so economic areas are multi-county areas. Clearly, in examining employment impacts of a project – EB-5 or other – looking at just the census tract project location yields no significant information.

Conclusion The very purpose of state designations is to find unemployment in irregular sub-county areas, as the BLS does not generate unemployment statistics for these areas. In doing so, states must follow BLS methodology and use the most recent available federal employment data. It is not difficult for states to find high unemployment TEAs if areas surrounding the project site have pockets of high unemployment. On the other hand, if there is no high unemployment in a project’s commuting area, it is highly unlikely that a state will find a TEA. USCIS’s policy of deference strikes a measured balance between deferring to states’ use of BLS methodology, while reserving authority to review state designations to ensure proper use of federal data. ■

This labor force area is not limited to the single census tract on which the project sits.

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uscis update

The Story is Not the OIG Report

by H. Ronald Klasko January 9, 2014 Immediately prior to resigning under a cloud of suspicion and investigation, the Deputy Inspector General of DHS issued his long‐delayed report on the EB‐5 regional center program. This blog will not focus on that report, which has a number of inaccuracies that others have pointed out, most especially because it is at best of historical interest only. All of the findings and recommendations pre‐date the May 30, 2013 Policy Memorandum, the establishment of the D.C. Investor Unit and the other significant reforms shepherded through by Director Mayorkas that render moot a substantial number of the major findings in the OIG report.

Rather, this blog will discuss new information that we have learned not from the Report itself, but rather from Director Mayorkas’ response to the Report dated November 4, 2013.

We have learned that USCIS intends to draft EB‐5 regulations within nine months – by August 2014 – that will cover, among other things, differences between stand alone and regional center EB‐5s; CIS authority to verify job creation; CIS authority to deny, terminate or revoke regional centers; and possibly much of what is contained in the May 30, 2013 Policy Memorandum. A few points should be made here. The EB‐5 regulations are woefully in need of change – they are actually inconsistent with the statute in parts and completely disregarded in other parts. Second, my experience is that nine months in government time is likely to be far longer in real time. Nine months is the target to draft the regulations, after which they would go through an often interminable agency, Department and interagency review process. Finally, a new CIS Director and a new Manager of the EB‐5 Program may have a different agenda. In other words, the new regulations might be welcomed, but do not hold your breath.

USCIS has also committed to completing two other projects within six months. One is to develop a formal interagency cooperation plan with the Department of Commerce and the SEC, and the other is to establish “quality assurance steps.”

We will attempt to ensure that these activities are collaborative processes.

We have learned a lot about the staffing of the new DC office and the transition of the EB‐5 program from California to DC. Director Mayorkas states that the transition will be complete by May 2014. As of November, USCIS has more than eighty employees assigned to the EB‐5 unit. Included within the employees are 22 economists; corporate and immigration attorneys; adjudicators; and, for the first time, full‐time fraud and national security staff. Also for the first time, economists are in an adjudicatory role, not just a consulting role.

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Director Mayorkas set out a strong defense of the “deference policy”, including reference to a “Deference Board” to deal with issues relating to when it is appropriate for the agency to reverse a prior approval. I assume, but have not yet verified, that this is the same concept as the Decision Board.

We have learned at least a little more than what was known previously regarding security checks within the EB‐5 system and USCIS collaborations with other agencies. In addition to source of funds reviews, there are two levels of fraud and national security review within the I‐526 process presently. On EB‐5 fraud and security issues, USCIS collaborates with ICE, CBP, FBI, SEC, Department of Treasury and others within the intelligence community. For the first time, CIS is conducting security checks on both the regional center business and its executives and referring substantial numbers of EB‐5 matters to its interagency enforcement partners.

uscis update

The Story is Not the OIG Report

Interestingly, Director Mayorkas agreed that, prior to the May 30 Policy Memorandum, USCIS applied its EB‐5 policies inconsistently. One such policy was the need for a fully developed business plan. Director Mayorkas reconfirmed that the regional center does not need a fully developed business plan at the time of regional center designation but only at the time of I‐526 filing. USCIS does want to see substantial evidence of how jobs will be created at the I‐924 stage.

More interesting than surprising, Director Mayorkas acknowledged that USCIS receives “thousands” of Congressional EB‐5 inquiries per year. He believes that if an inquiry brings to the attention of the agency an error in adjudication, it is appropriate for the agency to correct the error.

Finally, we have learned several issues on which USCIS will seek legislative reform. These include: expanded authority to deny, terminate or revoke a regional center for reasons of national security, and authority to oversee job‐creating enterprises.

Although much will be made by Senator Grassley and others regarding negative aspersions on the EB‐5 program coming from the OIG report, I believe the Mayorkas response provides both an excellent defense of the program and a path for future advocacy for further improvements to the program.

Klasko, Rulon, Stock & Seltzer, LLP

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uscis update

New USCIS EB-5 Policy Memorandum Mostly Gets It Right June 14, 2013 by H. Ronald Klasko Following a long and deliberative process, including three opportunities for public comment, USC IS issued its long-awaited universal EB-5 Policy Memorandum on May 30, 2013. For the most part, it was well worth waiting for.

The Policy Memorandum formalizes legal positions that the EB-5 community has been advocating (no questioning of geographical boundaries of a state-designated TEA; indirect jobs can be created outside of the regional center boundaries; EB-5 money can be used to pay off bridge financing; a material change after an approval of an I-526 is not in itself a basis to deny an I-829). It formalizes and expands upon two important legal principles (adjudications are based on the preponderance of the evidence legal standard and USC IS examiners should give deference to previous decisions).

Finally, it stakes out favorable positions that are unexpected but helpful in making the EB-5 program more successful (elimination of reliance on industry codes; elimination of necessity of amendments; clarification of what is required for a hypothetical project; unconditional adoption of the fund model).

This article, in two parts, will explore all of these concepts, as well as other new clarifications contained in the Policy Memorandum.

Let’s start with the headline. A regional center is no longer restricted to its approved industry codes, economic methodology or even geography. Investor I-526s can be filed for projects in different industry codes, different geographical areas and using different economic methodologies, rendering the amendment process optional if the investors want assurance that USC IS will agree with these changes. Although the Memo does not fully explain this, I believe there are big differences between projects that use economic methodologies and industry codes for which the regional center is not approved on the one hand, versus projects that are in geographical areas for which the regional center is not approved on the other hand. The reason is that the Memorandum expressly states that industry codes do not limit economic or job-creating activity of the regional center and are just for reporting purposes. Given this (correct) statement, an otherwise approvable I-526 petition should not be denied for any issue relating to industry codes.

On the other hand, the Memo does provide standards for determining acceptable regional center geography (“the proposed area is contributing significantly to the supply chain, as well as the labor pool, of the proposed project.”)

Significantly, the Memorandum eliminates the disturbing language in the third draft EB-5 Memo which required proving that the proposed economic activity “will substantially promote economic growth in the proposed area as whole.” Although not clear, it appears that the net result of these changes is that an I-526 petition filed in a contiguous geographical area outside of the approved regional center geographical boundaries would have to contain a justification for expanding those boundaries; and the investors would have to take a risk that the justification will be accepted unless the regional center files for and obtains a geographical amendment. What is certain is that regional centers now have greatly expanded capacity to sponsor projects without extensive amendment delays and that project developers have an expanded list of regional centers with which to negotiate for project sponsorship.

The next headline relates to the fullest discussion yet of the USC IS position on “material change”. The bottom line is that much of the policy contained in the December 11, 2009 Neufeld Memorandum, which established the material change standard, has been rescinded. The changes are a step forward, but issues remain. For the first time, USC IS attempts a definition of “material change”, adopting the definition of a material misrepresentation in the denaturalization context (“a change in fact is material if the changed circumstances would have a natural tendency to influence or are predictably capable of affecting the decision.”) This standard seems to be singularly unhelpful in the EB-5 context.

Although the definition remains obscure, the result becomes more predictable. If there is a material change between the time of the filing of the I-526 petition and the time the investor obtains conditional permanent resident status, a new I-526 petition is required (to the dismay of any child who has aged out prior to the filing of the new petition). The major step forward relates to material changes that occur after conditional permanent resident status is obtained. In that event, the investor can remove conditions as long as the investment has been sustained and the jobs have been created, even if there is a completely different business plan. However, in the event of a different business plan, USC IS would examine the new facts for compliance and not defer to any approval at the I-526 stage. This makes perfect sense and is completely consistent with advocacy efforts ever since the publication of the Neufeld Memorandum. C heers also to USC IS for stating that it is developing a mechanism for regional centers to notify USC IS regarding material changes (and presumably to get an advance determination of whether there is a material change).

The changes regarding bridge financing both formalize evolving USC IS policy and go a few steps further in a favorable direction. First, the Memorandum contains a helpful statement of what appears to be current policy: “Generally, the replacement of bridge financing with EB-5 investor capital should have been contemplated prior to acquiring the original

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Over the years, USC IS has taken multiple contradictory positions on the issue of whether indirect and induced jobs must occur within the geographical boundaries of the regional center. The most recent policy seems to have been based on correspondence between USC IS Director Mayorkas and Vermont Senator Leahy, which allows counting of jobs outside of the regional center if appropriate justification is provided. The Policy Memorandum appears to eliminate any geographical boundaries of indirect jobs whatsoever: “indirect jobs can qualify and be counted as jobs attributable to a regional center, based on reasonable economic methodologies, even if they are located outside of the geographical boundaries of a regional center.” Presumably, no justification is required.

uscis update

non-EB-5 financing.” However, the Memorandum expands this policy to be responsive to realities of the business world.

No longer does the EB-5 financing have to be contemplated prior to acquiring the temporary financing. In the final Memo, the issue is whether the financing to be replaced was contemplated as short term temporary financing which would be subsequently replaced – even if the anticipation was that it would be replaced by non-EB-5 financing which fell through.

Many existing and future projects will benefit from this interpretation.

The Memorandum draws a distinction between two types of projects – “actual” and “hypothetical”. A hypothetical project, which is sufficient to obtain approval of a regional center designation, must only contain “general proposals and general predictions” which enable USC IS to determine that the proposed regional center will more likely than not promote economic growth, improve regional productivity, enhance job creation and increase domestic capital investment. It does not require a Matter of Ho-compliant business plan. It does not require “organizational and transactional documents”, which presumably includes offering documents. What degree of detail USC IS will actually require will become clearer as adjudications applying these standards are completed. Hypothetical projects are not mentioned in regional center approval notices and receive no deference whatsoever in connection with the adjudication of investors’ I-526 petitions.

Actual projects, on the other hand, do require a Matter of Ho-compliant business plan and require “verifiable details” in order to be given deference in the adjudication of investors’ I-526 petitions. If such details are lacking, USC IS can still approve the project as a hypothetical project.

Rather than treating an “exemplar” project as a third type of project, the Memorandum makes only brief reference to an exemplar as a type of actual project. The exemplar requires submission of “organizational and transactional documents”, which apparently an actual project without an exemplar does not require. The actual project is given deference with respect to everything except the “organizational and transactional documents”, and the exemplar is given deference with respect to all documents, including organizational and transactional documents. In either event, the project is mentioned by name in the regional center approval notice.

The concept of “deference” appears throughout the Memorandum. As stated above, actual projects receive deference.

Adjudication of project approvability for an I-526 investor receives deference for future investors. Approved I-526s receive deference in connection with the I-829 condition removal petition if the business plan has been followed.

So what is deference? It means that USC IS should not reexamine whether the business plan is comprehensive and Matter of Ho-compliant, whether the economic methodology is reasonable and whether any aspect of the project is legally sufficient. The exceptions are if there is a material change, if misrepresentation or fraud is discovered or if there is reason to believe that there is an objective mistake of fact or law that was made in the earlier adjudication. The problem is that this latter exception could swallow the rule. What is probably meant is guidance to examiners not to reexamine every petition ab initio. However, this language could be used by examiners to reexamine any approved petition based on that examiner’s belief that the law was improperly applied or that the facts were not completely understood. Whether this deference policy really has teeth therefore remains an open question.

The next article will discuss the remaining noteworthy provisions contained in the May 30, 2013 EB-5 Policy Memorandum.

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Federal Court Litigation of EB­-5 Cases

BY IRA J. KURZBAN uscis update

W

hy litigate an EB-5 case in federal court?

There are clearly other administrative options.

A client confronted with a denial of an I-526 petition can file a motion to reopen. Alternatively, she can file an appeal of the denial to the Administrative Appeals Office (“AAO”) within USCIS. A client denied an I-829 petition might have time to ask for reconsideration, or could battle the case out with district counsel in a removal hearing before the immigration judge.

The best course of action among these options is never obvious. Filing a motion to reopen delays resolution of the case. It gives the government an opportunity to explain its decision further, at times providing an avenue for USCIS to offer new, different, and more reasonable grounds for their denial. Appealing cases to the AAO is fraught with the same dangers and the time delay may be far greater than litigation. On the other hand, litigation is time consuming, expensive, and offers no guarantees of success.

So how to decide whether to litigate in federal court? To answer the question, we must first know what we are litigating, what issues can be resolved through litigation, what does the litigant hope to accomplish strategically at the end of the process, and whether the fight will be worth it.

Litigating Delay One of the major problems facing regional centers and their investor clients is simply the waiting time the USCIS takes to adjudicate their cases. Delays in adjudications cause hardship to regional centers, project enterprises, and investors. Projects cannot be funded if the EB-5 capital is sitting in escrow.

The clients are understandably unhappy with the waiting time. Even cases where the funds have already been invested to the commercial enterprise pose problems; the lack of certainty about adjudication leaves open the possibility that investors may elect to withdraw at a time when funds are not easily accessible. Similarly, a person who has received his conditional

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residency and is waiting over a year to have the condition removed finds herself uncertain as to when or if the condition will be removed or whether she will be placed in a removal proceeding.

In these circumstances, a federal court petition for mandamus to compel the government to take action makes good sense. A mandamus action seeks to compel the government to render a decision. A litigant may also seek the same result through the Administrative Procedure Act which requires that the government not “unreasonably delay” a decision on the merits of an application. When either or both mechanisms are invoked, the government is put to the test of explaining why a case has been pending for a substantial period of time. Generally, the courts are reluctant to intervene when the time period is less than a year but each case turns on its own merits and the government’s own “processing times” may be used against them when those times have already run.

The greatest advantage of the mandamus remedy is that the government often will make a decision regarding the investor’s case within the 60-day period it was otherwise required to answer the mandamus complaint under the Federal Rules of Civil Procedure.

Thus, rather than give excuses or defenses for their failure to adjudicate the I-526 or I-829 petition, USCIS will simply go ahead and address the merits of the case—the exact remedy the regional center or investor seeks in bringing the action.

Clients are often fearful that bringing a mandamus action will result in the government denying the case out of sheer exasperation in being pressured to make a decision, or out of anger at having to answer the suit. My experience suggests otherwise. The government may deny cases that they were inclined to deny anyway. More often than not, the cases get approved in quick succession.

Review of a Merits Denial Federal court review of a denial on the merits is a far more complex problem. Whether a client should file suit will turn on the nature of the denial, the likelihood of success in litigation, and the client’s willingness to endure what may be a long battle.

The details of the denial will often be a good indicator of whether the government may be willing to resolve the case quickly in the litigant’s favor, reopen the case and take a second look, or fight the case on the merits.

One of the most important indicators is the number of reasons USCIS offers in its denial.

If the case involves one issue, such as whether the funds are “at risk” or the arrangement constitutes a “redemption agreement,” the government may be more willing to settle the case if the issue can be resolved by refiling or simply making changes that do not constitute “material changes” in the documentation. In other cases, USCIS engages in the strategy of “death by a thousand cuts.” They offer so many reasons for the denial, many petty, erroneous, or legally insufficient, that the lawyer is faced with the difficult task of unthreading the mosaic USCIS has created. In these cases, it may be more likely that the government will fight the case with its seemingly unlimited resources. However, our experience is that in many circumstances these cases can be pared down, simplified, and either fought on limited grounds or settled with USCIS. Faced with the denial, the investor must realistically ask what are the alternatives? She can withdraw and invest the money with another EB-5 project. But then she may be waiting an additional 16 to 18 months to have the new case adjudicated. The second adjudication is no more secure than the first and the idea that simply hopping from one regional center project to another will give you a better result is misleading. Children may have “aged-out” and there may be no method to include the child in their new petition, absent winning the lawsuit based on the initial I-526 petition. In contrast to these untenable outcomes, federal court litigation might be completed in a relatively short period of time if the government is willing to reopen and approve the case or at least take a serious second look at the denial.

Likelihood of Success Versus Cost The regional center and the investor also must weigh the likelihood of success versus the cost of litigation. These EB-5 cases are complex and commercial, economic, securities, corporate and immigration issues are

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

Cost is always an issue in litigation, and it is difficult to predict ahead of time the likely

recover their attorneys’ fees from the government in federal litigation if the government fails to demonstrate that its position in the litigation, and its underlying actions, were not substantially justified.

At the present time there is on-going litigation in many areas of the EB-5 program. Litigation has arisen in the form of mandamus, review of I-526 and I-829 petition denials, review of regional center denials, and defense of securities law violations. In a highly regulated field such as EB-5, and as the federal government looks more closely at the details of each regional center and investment program, it is likely that such litigation will continue. ■ total cost of litigating a case in federal court.

An experienced litigator should be able to provide ranges of cost for particular phases of litigation. But inaction, or simply filing endless motions to reopen or appeal, is also a costly exercise. Consider, too, that the federal court litigant might recover attorneys’ fees in certain limited circumstances. The Equal Access to Justice Act provides that litigants whose incomes are below a certain level may

uscis update

woven into the disputes in each and every case. Consequently it is impossible to reduce the likelihood of success to some formula. But there may be a better chance of success than the regional center or investor perceives. The other side of the complexity is that the USCIS decision may be indefensible in ways that the government would least expect. Often the cases involve retroactive application of principles that USCIS announces spontaneously. Often cases turn on a misperception of a relatively simple issue such as the nature of the inputs into IMPLAN or the miscalculation of the source of employment.

At times, the cases will turn on a legal interpretation of one or two issues.

Litigation works best in the EB-5 context when we can narrow the issues and present clear, coherent arguments to a federal judge on limited issues. You cannot successfully challenge a USCIS decision on every incorrect factual or legal ground. The likelihood of success rises as the number of issues you must address is narrowed to clear statements of fact or law.

Mr. Kurzban is a partner in the law firm of Kurzban, Kurzban, Weinger, Tetzeli and Pratt, P.A. of Miami, Florida and is the author of Kurzban’s Immigration Law Sourcebook, the most widely used single volume work on immigration law. He has litigated over 50 federal cases involving immigration matters, has argued cases in the United States Supreme Court, and is currently litigating a substantial number of EB-5 cases.

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uscis update

IIUSA Obtains I-526/829/924 Adjudication Data for FY2013, Releases Comprehensive Dataset

II

USA recently obtained data on EB-5 adjudications at U.S. Citizenship & Immigration Services (USCIS) for FY2013. In doing so, we have rounded out receipt/approval/denial data for I-526/I-829 petitions and I-924 applications since the start of the EB-5 Program. This comprehensive dataset, which spans from 1991-2013, is available exclusively to IIUSA members and paints a complete picture of adjudication and investor demand trends since the beginning.

The comprehensive dataset brings to light several data points that all EB-5 industry stakeholders should be aware of. Here is a list of our eight favorites (we look forward to hearing what yours are!): 1. The 6,346 I-526 petitions received in FY2013 accounts for $3.25+ billion in capital formation – a record setting year – while the 3,699 I-526 approvals account for just over $1.83 billion.

2. FY2008-2013 (the most recent six years) accounts for 68.5% of all I-526 receipts and 62.8% of all I-829 receipts.

3. The I-526 approval rate over the last six years (FY2008-2013) averages out to 83.7%, much higher than the 64.4% over the entire span of the Program’s existence. We see this as evidence that EB-5 policy has become more predictable in recent history, improving approval rates along the way.

4. Over the last three years (FY2011-2013), I-526 approval rates have hovered right around 80%; while the I-829 approval rate has eclipsed 90% in each of those years.

5. In FY2013, I-829 filing volume was the second highest it has ever been at 1,217, behind only FY2011 when 2,345 were received by USCIS. Given the higher volume of I-526 filings over time, we expect even higher I-829 volume in FY2014.

6. The I-829 approval rate over the last six years (FY2008-2013) averages out to 87.1%, much higher than the 73.2% over

130

I-526/829/924 FILING STATISTICS FOR FY2013 FORM

RECEIPTS

APPROVALS

DENIALS

APPROVAL RATE

GROWTH IN RECEIPTS FROM 2012

I-526

6,346

3,699

943

79.6%

+4.8%

I-829

1,217

844

44

95%

+70.9%

I-924

207*

218

32

87.2%

-13.7%

* Through a December 2013 response to IIUSA’s Freedom of Information Act (FOIA) request for adjudication data, USCIS indicated I-924 receipts for FY2013 to be 436. We are communicating with USCIS to reconcile the figures.

the entire span of the Program’s existence.

We see this as evidence that the Program is delivering on its promise to EB-5 investors!

7. I-924 approvals were up 500+% between FY2012 and FY2013, going from 35 to 218 in just one year! This includes applications for initial designation and amendments to existing designations. USCIS made some policy decisions in 2013, while enhancing its administrative capacity, that made this possible.

8. The I-924 approval rate jumped from 35.7% in FY2012 to 87.2% in FY2013.

What do these adjudication trends say about the EB-5 Program’s promise to create American jobs, generate federal/state/local tax revenue and contribute to overall U.S. GDP? To answer this vital question, we must take a closer look at the results of the IIUSAcommissioned Economic Impact assessment of the EB-5 Program from 2010-2011 and early initial results from the 2012 report (which has been drafted and is currently under peerreview, before finalizing and publishing in a matter of weeks). According to our initial results, in 2012 the industry supported 42,000+ American jobs, added $3.39+ billion in GDP and generated $712+ million in federal/state/ local tax revenue (up from 33,000+ jobs, $2.6 billion in GDP, and $564+ million over the previous two years combined!).

All of this data, in tandem with IIUSA’s EB-5 Economic Impact reports, goes to show that the EB-5 Regional Center Program is close to maxing out its capacity. Without legislative reforms, such as recapturing unused visas since 1990, eliminating per country caps, and only counting the principal visa applicant toward the annual visa allocation (currently, the entire investor’s family counts against the visa cap) the EB-5 Program is set for a collision course with a nightmare retrogression scenario. IIUSA remains hard at work advocating for these changes in Congress and are hopeful 2014 will provide relief we all hope to see. ■

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

Send IIUSA Your WAC#s for Petitions Outside of Normal Processing Times Dear IIUSA Members:

O

n March 4th at the IIUSA Leadership Meeting in Washington, DC the Board of Directors formally adopted a resolution to undertake the mission of breaking the unacceptable backlog of I-526 petition processing. This decision came after substantial input from IIUSA Regional Center members who have seen processing time for I-526 petitions grind to an unacceptable length of processing.

In order to remedy the situation, IIUSA intends to articulate the delays in terms of the economic impact that is being unnecessarily halted due to these delays. In other words, we are going to use the data we collect to describe the delays in terms of lost capital formation and resulting U.S. job creation - all at no cost to the taxpayer.

WE NEED YOUR HELP!

uscis update

Let’s Break the I-526 Backlog!

IIUSA is collecting receipt numbers (or WAC#’s, as most of us know them in shorthand) for I-526’s that are outside of normal processing times. Email info@iiusa.org to submit your receipt numbers, which will be kept in confidence

by IIUSA. The image below is a screenshot from USCIS’ Case Status web application showing the current processing times that they are reporting.

IIUSA members have indicated that the times below are not reflective of the real amount of time that it is taking for I-526 petitions to be adjudicated. Help us show USCIS and other interested federal agencies just how slow processing has gotten.

Thank you in advance for your prompt response to the above request. ■

Email your backlogged WAC#s to info@iiusa.org to make your voice heard!

O

It’s Worse Than we Thought...

n Wednesday 4/10/2013, IIUSA sent a letter to USCIS Director Alejandro Mayorkas concerning the processing backlog and its detrimental impact on the success of the EB-5 Program.

IIUSA notified Mayorkas of its pool of over 500 WAC#s for backlogged I-526 petitions collected from our Regional Center

members all over the country, representing over $250 million in pure EB-5 capital formation. In this small sample, processing times range from five to over twenty plus months. Further research using USCIS Case Status data brought us to the exact and staggering number of pending I-526 petitions to be 5,887 (as of January 2-13).

It now being late-April, the number is likely closer to 7,000 pending (or $3.5+Billion and 70,000+ U.S. jobs). This kind of inefficiency and unpredictability in processing times would lead to seriously negative consequences in the EB-5 Program at a time when it is peaking in economic growth and regional development nationwide. ■

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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I-526 & I-829 TRENDS SEPTEMBER 2013 uscis update

132

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

I-526 & I-829 TRENDS uscis update

JANUARY 2014

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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Reaching NEW HEIGHTS of Success

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11 PROJECTS $4.6 BILLION IN DEVELOPMENT $1.1 BILLION IN EB-5 FINANCING

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1.855.EB5.USIF I WWW.USIFUND.COM To encourage immigration through the EB-5 category, Congress created the EB-5 Regional Center (Pilot) Program in 1990. EB-5 Regional Centers are considered to be any government approved entity, organization or agency, which focuses on a specific geographical area of the United States and that seeks to promote economic growth, increased regional productivity, job creation and domestic capital investment. This advertisement is intended for general information purposes only. All financial information and projections are rounded numbers and should not be relied upon for exact statistics.This does not represent an offer or solicitation to buy or sell any security. Investments are available only to qualified investors via a confidential offering memorandum.

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

“Thinking Global: Diversifying the EB-5 Investor Marketplace & Increasing Competition for Immigrant Investors” PANELISTS:

Angelique Brunner, President, EB5 Capital; Chair, IIUSA Public Policy Committee

Gonzalo Lopez-Jordan, Managing Partner, American Regional Center Group

thinking global

FRIDAY, MAY 9TH | 9:05 AM–9:55 AM | MAIN ROOM (REGENCY A)

Daniel Perron, Managing Partner, Henley & Partners

PANEL SPONSOR:

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

135

2022

2012

Wealth Report 2013: Global Perspective on Prime Property and Wealth thinking global

K

night Frank LLP, a global residential and commer-

cial property consulting agency founded in London in 1896, released its latest edition ofThe Wealth Report 2013: Global Perspective on Prime Property and Wealth. The Wealth Report is globally recognized as the leading annual commentary on prime international property markets and high net worth individuals, and as such is an important resource for IIUSA members. The report assesses the attitudes of the wealthy concerning property and investments and provides an analysis of the distribution of wealth across the globe.

The Report predicts how the international distribution of High Net Worth Individuals (HNWIs) is expected to change over the next 10 years. It states that wealth continues to be created around the globe and that there is a “growing interest in commercial property among private investors (p36), while the results of [the] Attitudes Survey suggests that HNWIs are slowly but surely regaining their taste for risk (p54).” According to statistical analysis, New York and London continue to be the most influential cities for HNWI’s, but Asia is catching up quickly. ■

136

2012

2022

+85% Predicted increase in number of billionaires globally between years 2012-2022 by Knight Frank Wealth Report.

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

I-526 PETITION APPROVAL TRENDS BY COUNTRY OF INVESTOR ORIGIN 1. GROWING SIGNIFICANCE A aSOURCE OF EB-5 INVESTORS Figure FIGURE 1. Growing Significance of OF MMAINLAND ainland CCHINA hina ASas Source of EB-­‐5 Investors 4,000 China

Other Countries

Investors from Mainland China as a % of Total I-­‐526 Approvals

86%

68%

68%

70%

3,000

thinking global

Number of I-­‐526 Approvals

90%

79%

3,500

50%

2,500

50%

38% 2,000 21% 1,500

17%

12%

21%

30%

26% 18%

20%

18%

17%

15%

22% 16%

30%

23%

17% 10%

0%

1,000

-­‐10%

500

0

-­‐30%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fiscal Year

TOP COUNTRIES OF ORIGIN FOR EB-5 INVESTORS, PRE- AND POST-RECESSION FIGURE 3A. I-526 APPROVALS FOR INVESTORS FROM COUNTRIES OTHER THAN CHINA AND SOUTH KOREA, FY1992-2008

Figure 3a. Number of I-­‐526 Approvals for Investors from Countries other than China and South Korea, FY1992-­‐2008 91 Other Countries, 566

FIGURE 3B. I-526 APPROVALS FOR INVESTORS FROM COUNTRIES OTHER THAN CHINA AND SOUTH KOREA, FY2009-2013

Figure 3b. Number of I-­‐526 Approvals for Investors from Countries other than China and South Korea, FY2009-­‐2013 TAIWAN, 199

101 other countries, 543

UNITED KINGDOM, 198

TAIWAN, 834

IRAN, 165

PHILIPPINES, 35 PAKISTAN, 35 GERMANY, 35

MEXICO, 35 IRAN, 46

NETHERLANDS, 36 SOUTH AFRICA, 45

NETHERLANDS, 54

INDIA, 162

BRAZIL, 48

CANADA, 68

VIETNAM, 53

GERMANY, 70 UNITED KINGDOM, 166

CHILE, 75 JAPAN, 101

INDIA, 104

HONG KONG, 143

MEXICO, 138

JAPAN, 71 CANADA, 79

RUSSIA, 97

VENEZUELA, 114

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

137

SPOTLIGHT ON POST-RECESSION GROWTH MARKETS FIGURE 4A. I-526 APPROVALS BY INVESTOR’S COUNTRY OF BIRTH, FY1992-2013

thinking global

FIGURE 4B. I-526 APPROVALS BY INVESTOR’S COUNTRY OF BIRTH, FY1992-2013

138

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

SPOTLIGHT ON POST-RECESSION GROWTH MARKETS, CONT.

thinking global

FIGURE 4C. I-526 APPROVALS BY INVESTOR’S COUNTRY OF BIRTH, FY1992-2013

Bridge Financing: A Better Alternative to Early Release Escrow For more information, stop by booth #11 or contact: Gina Nisbeth 212.723.4233 gina.d.nisbeth@citi.com Ishween Sethi 212.816.5835 ishween.sethi@citi.com

© 2014 Citigroup Inc. All rights reserved.

Citi and Citi with Arc Design are registered service marks of Citigroup Inc.

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

139

thinking global

Canadian Immigrant Investor Shutdown Holds Lessons for EB-5 Applicants

BY PETER D. JOSEPH IIUSA EXECUTIVE DIRECTOR

L

ast month, Canada terminated its Immigrant Investor Program, sweeping out the pending applications of nearly 75,000 applicants. The program had been frozen since 2012 due to the enormous influx of applications, which essentially paralyzed immigration staff with a backlog in the tens of thousands. The elimination, according to a statement from Citizenship and Immigration Canada, will “pave the way for new pilot programs that will actually meet Canada’s labor market and economic needs.” Applicants who had been waiting in queue, among them approximately 45,000 Chinese, will be returned their fees.

The loss of political support for the Canadian IIP can be traced to its design, which granted residency in exchange for a five-year, interest-free loan of C$800,000 ($730,000 USD). While relieving the immigrant investor of financial or immigration risk, the Cana-

140

dian IIP also lacked economic impact metrics to evaluate whether the program benefited the broader Canadian public.

According to Citizen and Immigration Canada, “Research shows that immigrant investors pay less in taxes than other economic immigrants, are less likely to stay in Canada over the medium- to long-term and often lack the skills, including official language proficiency, to integrate as well as other immigrants from the same countries.”

As would-be Canadian investors look to emigrate by investment elsewhere, the U.S. EB-5 program appears likely to continue growing from its all-time high of over 6,500 investor applicants in fiscal year 2013.

In contrast to the Canadian Immigrant Investor Program, the U.S. EB-5 Program requires capital—at least $500,000—to be “at risk” throughout the term of the investment. Two years after the initial investment, EB-5 investors must prove their investment created at least ten American jobs. And once

immigrant investors become EB-5 visa holders, they must pay U.S. taxes based on their worldwide income. Thanks to these requirements, the EB-5 Program has demonstrable economic benefits—and broad bipartisan political support. In fiscal year 2012 alone, the Program contributed $3.4 billion to U.S. gross domestic product, supported over 42,000 American jobs and generated over $712 million in federal, state and local taxes.

Potential immigrant investors to the U.S. need to understand that successful utilization of the EB-5 requires substantial due diligence from an immigration, economic and financial perspective. These risks can be minimized and managed, but not eliminated, by EB-5 investors who take the time to perform thorough due diligence with the help of properly licensed and credentialed professionals. It is far more important that investors take their time and pick an EB-5 project that gives them an opportunity to succeed, rather than rush to apply for an EB-5 visa. ■

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

SPONSORSHIP OPPORTUNITY STILL AVAILABLE FOR Q4 OF 2014! webinar block today!

SPONSORSHIP BENEFITS INCLUDE: • •

•

•

•

•

Your company’s Logo and link featured prominently on the Webinar’s registration page.

Your company’s Logo and link placed in our marketing materials as well as special mention on IIUSA’s blog, website, quarterly magazine, e-newsletter and press releases.

Designation as title-sponsor in member-only communications, including weekly e-newsletter (145+ Regional Center Members and 180+ Associate Members, among the most inf luential stakeholders in theEB-5 Regional Center Program Industry).

Opportunity to welcome attendees at the beginning of the webinar and introduce your company’sproducts and services.

Additional exposure af ter the event as IIUSA webinars will be hosted as “On-Demand videos” as a pay-per-view service.

Associate your company IIUSA and industry best practices by sponsoring webinars with important valueadded content and expert speakers.

Questions?

Contact Allen Wolff, allen.wolff@iiusa.org

Q1 SPONSOR: 1/30 – EB-5 Industry Advocacy: IIUSA Government Affairs Strategy

thinking global

We hope you’ve enjoyed the first webinars of 2014 – but the fun is still going! IIUSA still has more webinars to in 2014 and we are counting on YOU to make our online educational events as successful as possible by becoming a title-sponsor for our fourth quarter

for 2014 (OnDemand Available to All-Access Pass Holders Only)

2/27 – Securities Laws & EB-5: Broker/Dealer Business Model & JOBS Act Update (Available OnDemand)

3/27 – Tools For EB-5 Due Diligence (Available OnDemand)

Q2 SPONSOR: 4/30 – IIUSA Pre-Advocacy Conference Webinar: How to Maximize the Value of Attending (Free)

5/29 – EB-5 Economics: Overview of Available Input/Output Models 6/26 – Finance: Combining EB-5 Capital with Other Economic Development Tools

Q3 SPONSOR: 7/31 – Securities Laws & EB-5: Enforcement Actions & Registration Guidance

8/28 – USCIS EB-5 Adjudication Trends: I-526 Petitions & I-829 Petitions

9/25 – EB-5 Economics: Targeted Employment Areas

Q4 SPONSOR: STILL AVAILABLE! ACT FAST! 10/30 – Form I-924A: Strategies for Fulfilling the Annual EB-5 Regional Center Reporting Requirement

11/20 – Finance: EB-5 Escrow, Fund Administration & Bridge Loans 12/18 - 2014 EB-5 Industry Year-In-Review & Look Ahead at 2015

BECOME AN ALL-ACCESS PASS HOLDER FOR ENHANCED INDUSTRY INTELLIGENCE New in 2014, IIUSA members can purchase a twelve-month “All-Access Pass” and ensure access to another layer of EB-5 Regional Center industry intelligence. Pass holders will automatically be registered for all 10 remaining IIUSA webinars (hosted monthly), have access to previous webinars, presentation and recording OnDemand and receive industry reports for one flat fee!

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

FRIDAY, MAY 9TH | 10:10 AM–10:55 AM | MAIN ROOM (REGENCY A) KEYNOTE PANEL:

“EB-5 Retrogression Predictions (and Consequences)” retrogression predictions

PANELISTS:

Charles Oppenheim, Chief, Visa Controls Office, U.S. Department of State

Bernard Wolfsdorf, Managing Partner, Wolfsdorf & Rosenthal

PANEL SPONSOR:

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EB-5 VISA AVAILABILITY PROJECTIONS FOR 2014, PREDICTIONS FOR CHINESE VISA APPLICANTS

By Bernard Wolfsdorf *

retrogression predictions

Bernard P. Wolfsdorf is a past national President of AILA and Managing Partner of the Wolfsdorf Rosenthal LLP (www.wolfsdorf.com) a 21-lawyer immigration firm with offices in Los Angeles and New York City. He was honored by AILA with the Service Excellence Award for his contributions.

For the past five years from 2010-2014, Mr. Wolfsdorf has been selected as the most highly-regarded immigration lawyer in the world and awarded the “Global Corporate Immigration Lawyer of the Year” by Who’s Who Legal, the official research partner of the ABA International Law Section. Mr. Wolfsdorf serves on AILA’s EB-5 Committee and has over 20 years’ experience filing EB-5 cases.

The firm specializes in high volume EB-5 petition and regional center filings. He can be reached at Bernard@Wolfsdorf.com Copyright © 2014 Bernard P. Wolfsdorf, A Professional Law Corporation/Wolfsdorf Immigration Law Group (all rights reserved).

In the Fiscal Year 2013, ending September 30, 2013, 8,564 EB-5 visas were used but the annual quota of about 10,000 visas was not reached. It is now likely that the quota will be reached for Fiscal 2014, ending September 30, 2014.

Therefore, it will be necessary to strategically plan the timing of one’s EB-5 petition. Understanding EB-5 visa number availability will be critical to achieving success, especially if there are derivative children who may age out, or in the unlikely event Congress does not extend the EB-5 regional center sunset date beyond September 30, 2015. This practice advisory attempts to provide unofficial tentative predictions for visa availability in the EB-5 category for the rest of the fiscal year.

As of November 1, 2013, there were 4,748 approved I-526 petitions at the National Visa Center (NVC). This is an increase of 50.2% over the prior year. For every petition filed, there are approximately two derivatives, such that, the ratio of EB-5 visa usage for cases processing abroad in Fiscal Year 2013 was: Principals 33.5%, Spouses/Dependents 66.5%.

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retrogression predictions

In August and September 2014 we will likely see visa quota retrogression for Chinese chargeable EB-5 applicants. It is not possible to accurately predict how far back the cut-off date will . Initially it may be relatively short, however in August and September 2014, the backlog is likely to be more severe.

Regardless of the visa backlog in August and September 2014, it is likely that on October 1, 2014, the Chinese EB-5 category will become current again. This is because the beginning of 2015 immigration fiscal year provides a new allocation of visas, and the Chinese EB-5 quota will likely re-open, and visa numbers will become available again for applicants chargeable to China.

Visa numbers may stay available for a few more months during the first quarter of fiscal 2015 (October 1, 2014 through December 31, 2014). In the second and third quarters of 2015 (April 1, 2015-June 30, 2015) and perhaps more likely in the fourth quarter of 2015 (July1, 2015-September 30, 2015), we will likely see the visa dates backlog again, due to increased demand.

While the Department of State previously predicted numbers would backlog, it turned out demand was not sufficiently high to cause a visa backlog. Approximately one year ago, the State Department December 2012 Visa Bulletin was unduly conservative: “It appears likely that a cut-off date will need to be established for the China Employment Fifth preference category at some point during second half of fiscal year 2013…. This would be the first time a cut-off date has been established in this category, which is why readers are being provided with the maximum amount of advance notice regarding the possibility.”

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This cut-off date did not materialize primarily because adjudications slowed down. Increasing demand will likely result in the establishment of an EB-5 cut-off date near the end of the 2014 fiscal year, that is in July, August, and September 2014, with the anticipation it becomes current again October 1, 2015.

It is also possible the EB-5 cut-off date will be much worse near the end of the 2015 fiscal year, in July, August, and September 2015. It is hoped that by then congress may have taken action to extend the expiring September 30, 2015 Regional Center program (either by making it permanent or by granting another 3-year extension). Also, there is a chance the legislative proposals to limit the EB5 visa count to only principal applicants will have been enacted.

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The visa usage forecast tends to remain somewhat murky given the low “visibility” at USCIS, meaning there is limited information available regarding how many visa numbers USCIS will request. As of March 31, 2014, there were about 8,100 I-526 petitions pending, and with approval rates of 85% this would add about 6,885 new petitions, resulting in demand for over 20,000 visas, which is two years of supply.

With these pipeline cases in mind, the following predications are provided:  If demand continues at the current/anticipated pace, a cut-off date may need to be established for mainland China, which accounts for more than 80% of total EB-5 number usage. No other countries in the EB-5 category will be impacted by the imposition of an EB-5 cut-off date.  If a cut-off is established, it will not take effect until July 2014 at the earliest, and is more likely to occur in August 2014 or September 2014.  Over the past two years, only about 15% of EB-5 numbers were used at USCIS through processing of adjustment of status applications, with the overwhelming majority of cases being processed at US consulates abroad, primarily in Guangzhou, China. Some of the cases at NVC as of November 1, 2013, had 2011 and 2012 priority dates: o 812 have priority dates in 2011; o 2969 have priority dates in 2012; and o 813 have priority dates in 2013.

The Department of State will initially impose the least possibly restrictive Chinese EB-5 cut-off date, most likely starting in July 2014, to see how much impact that will have in slowing down EB5 number use.

If that does not reduce number use to the targeted level, a more severe retrogression will occur, with the possibility of EB-5 becoming “unavailable” for the month of September 2014.

If a cut-off is established in the last quarter of Fiscal 2014, every effort will be made to make Chinese EB-5 numbers current in October 1, 2014, for the beginning of the Fiscal 2015 year, although this cannot be assured.

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retrogression predictions

The chart below shows Worldwide Employment Fifth Preference usage in all categories, and the increase from 4,218 to 8,564 in 2013.

China mainland leads with 6,895 visas issued followed by South Korea at 364, Mexico at 145, Taiwan at 137 and Venezuela at 92.

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It is necessary to add the visas allocated for USCIS adjudications when calculating total immigrant visa demand. Recently, the California Service Center has been moving faster on EB-5 adjustments of status applications, so we can expect USCIS demand to increase substantially. Last year there were 1,252 adjustments applications approved. This year we can expect at least 1,500 EB-5 adjustments. USCIS EB-5 adjustments numbers for the reporting period October 2013 - March 2014 has increased by 34% over the same period last year, suggesting their use will reach an all-time high this year. This is another reason to believe my predictions of retrogression could be realized.

Furthermore, each EB-5 visa petition uses approximately an additional 2 visas for derivative beneficiaries. Therefore for every 4,500 principal EB-5 petitions, add another 8,933 derivatives who will also use up available visas. 

This current pipeline of 8,100 I-526 petitions therefore could use up the entire annual 10,000 visas allotment, and next year’s.



The author of this report guesstimates that in order to remain within the annual quota, the July or August 2014 Chinese EB-5 visa retrogression will have to be at least 12-18 months to adequately slow demand, with August to September having to be in the 18-24 months.

(In Fiscal Year 2014, Chinese EB-5 applicants benefitted from a higher than normal EB-5 annual limit, and relatively low demand for numbers by applicants from other countries. The imposition of retrogression in EB-5 cutoff dates for China is likely to be earlier in FY-2015, when the EB-5 limit is expected to be several hundred visas lower, and this is exacerbated as demand from other countries continues to increase.



This backlog is compounded by the fact that 1,000 visas are still being deducted each year from the overall China Employment annual limit based on the Chinese Student Protection Act, which requires the deduction of 700 numbers from the China EB-5 limit and 300 from EB-3 quota. If the rest of the world presented enough demand to use the total EB-5 worldwide allotment, the 700 deduction would use up all of China's limit of 7% of the total, but it is highly unlikely that the rest of the world's demand would reach even half of the worldwide allotment, so that the effect of the 700 deduction is only to reduce the

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

retrogression predictions

As of March 31, 2014, 4,700 visas have been used and the Department of State is currently issuing about 1,000 visas per month. At this rate, with 6 months left in the Fiscal Year 2014, these figures would indicate about 10,700 immigrant visas are likely to be used. Also, during the summer months, there is a surge of EB-5 applicants in Guangzhou as students are out of school, plus few applicants are delaying because of visa backlog anxieties, so we can expect monthly consular usage to increase to 1,250. If accurate, this could result in severe retrogression in August and possible visa unavailability for Chinese nationals in September.

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extent to which actual native Chinese EB-5 investors and their families can use up the rest of the 10,000 per year total. 

The cut-off would apply to China EB-5 across the board with no distinction between C5 (traditional investor in Targeted Employment Areas “TEA”), T5 (traditional investor in non-TEA), I5 (RC program for TEA), and R5 (RC program for non-TEA).

retrogression predictions

It may be worth considering if there is anything which could be done to address the increasing need for EB-5 numbers, without impacting the overall Employment-based annual limit. One option would be a legislative amendment which would allow unused EB-4 numbers to "fall-down" to the EB-5 category under the same INA provisions which currently apply to the EB-1 and EB-2 categories. The fall-down of unused numbers from EB-4 to EB-5 would only be a short-term “fix”, since EB-5 demand will likely continue to increase. While it may alleviate the extent of FY-2015 EB-5 retrogression, it would be unlikely to provide a solution to the inevitable long EB-5 visa wait lines, and unless there is a legislative fix, the FY-2016 (commencing October 1, 2015) EB-5 backlog is likely to be severe. Mr. Oppenheim indicated that based on the current/historical demand allowing unused EB-4 numbers to trickle down to EB-5 would not have any negative impact on visa availability in the EB-1 category, which is where such unused EB-4 numbers are currently applied.

Mr. Oppenheim indicated there are still several thousand unused EB-1 numbers which “fall down” for use in the EB-2 category. This assumes that there will not be any significant increase in EB-1 number use. It is reasonable to make this assumption because the level of EB-1 demand has been fairly stable during the past two fiscal years, but such demand is always subject to USCIS processing issues.

Another possible solution for the impending immigrant visa backlog is the solution contemplated by the US Senate in its most recent attempt at an immigration reform bill. The provisions of this bill would remove derivative spouses and children from counting against the EB-5 quota. Based on the data above, this would free up approximately two thirds of the immigrant visas counted against the EB-5 quota each year.

The practical consequences of a substantial Chinese EB-5 visa waiting line could have meaningful implications for this program that at current capacity brings in over $1.5 billion dollars of investment capital and creates tens of thousands of jobs annually.i In addition to impeding the inflow of investment capital, it could also impact many derivative beneficiaries with potential age-out issues. The Child Status Protection Act does not continue to "freeze" a child's age between I-526 petition approval and the availability of a visa number. Thus, the deeper the retrogression of China cutoff dates, the more children will "age out."

More than half of the employment-based immigrant visa numbers go to derivative dependents. When investing through the EB-5 program, petitioners are often investing in their family’s futures. For those derivative applicants who are immigrant visa processing abroad and have children in school in the United States, the visa appointment and relocation to the United States is sometimes delayed until the summer months after school has finished for the year.

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The Association to Invest in the USA (IIUSA) commissioned a comprehensive, peer-reviewed economic study finding that from 2010-2011, investments made through the EB-5 program contributed $2.2 billion to U.S. GDP and supported over 28,000 jobs. Initial results of IIUSA’s 2012 economic impact assessment is even greater, accounting for 42,000+ American jobs, $3.3+ billion in capital formation, and $713+ million in federal/state/local tax revenue. An even greater economic impact will likely be reported for 2013, with significant growth in EB-5 investor applications seen in the last two years. IIUSA estimates that the over 7,000 pending EB-5 investor applications alone represent $3.5 billion in potential direct investment and 70,000 jobs.

As the US economy finally emerges from the Great Recession, it would be sad if Congress does not act swiftly to avoid the inevitable backlog in Chinese EB-5 visa numbers that help provide American jobs and much needed capital.

retrogression predictions

Practitioners with clients who intend to follow this timeline ought to strongly urge clients to have their children nonetheless file their DS-260 applications at the earliest possible moment to “lock-in” protection under the Child Status Protection Act. Otherwise, establishment of a cut-off date for EB5 China could see many derivative children age out while waiting for their priority dates to become current. While the children's actual immigration will still be subject to delay in the face of visa retrogression, the State Department has a policy interpretation recognizing CSPA protection in this situation.

The author Bernard Wolfsdorf (Bernard@Wolfsdorf.com) would like to thank Charlie W. Oppenheim, Chief of Immigrant Control & Reporting of the State Department for his insight and guidance in the preparation of this article.

EB-5 Annual Revenue Calculation: During FY-2013 there were approximately 2,800 Principals (worldwide) x $500,000 = $1,400,000. It is safe to assume that for FY-2015, and beyond, the EB-5 annual limit will be approximately 10,100. 10,100 x 33.5% (estimated principals) x $500,000 = $1,692,000,000. i

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

FRIDAY, MAY 9TH | 11:00 AM–12:05 PM | MAIN ROOM (REGENCY A)

“Building International Partnerships in China, the Largest EB-5 Investor Market

K. David Andersson, President, IIUSA; President, Whatcom Opportunities Regional Center

Kelvin Ma, Partner, Shanghai Demei Law Firm; Chairman, IIUSA International Membership Subcommittee

Cindy Chen, Business Relations Manager, American Chamber of Commerce South China

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PANELISTS:

The panel will also include a signing ceremony with officials of Provincial Entry-Exit Associations to formalize IIUSA’s association-to-association partnerships in China.

PANEL SPONSOR:

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IIUSA Reports on Trip to China to Discuss Emerging Industry Issues with Counterparts II USA Executive Director, Peter D. Joseph, traveled to China this past February to discuss the Securities and Exchange Commission’s recent enforcement action against a Chicago based Regional Center and the possible implications it has on the future of the EB-5 Program. IIUSA is pleased to report a successful and productive trip abroad.

assisting IIUSA with delivering the message of successful regional economic development through the EB-5 Program.

Another special thanks to Chair of IIUSA’s International Committee, Kelvin Ma, for his tireless efforts for IIUSA in China – particularly on IIUSA’s recent trip to China to address market concerns that resulted from the recent enforcement action by the Securities and Exchange Commission against a Regional Center (nonmember of IIUSA).

The warm welcome received from the Exit/Entry associations in all IIUSA Executive Director, Peter D. Joseph, speaks to attendees in Guangzhou. three Chinese cities for IIUSA, inAbove: Kelvin Ma (IIUSA International Committee Chair), Tom Loeffler (IIUSA Governcluding Shanghai, Guangzhou, and ment Affairs, Senior Counsel at Akin Gump Hauer Strauss & Feld, LLP), Peter D. With support from the Beijing was most appreciated. Dur- Joseph (IIUSA Executive Director), and Harley Seyedin (President, American Chamber American Chamber of Coming the trip, IIUSA received positive of Commerce in South China) in Guangzhou. merce, as well as the Exit/Entry media coverage, promoting the orthorough due diligence, are an effective methassociations, IIUSA was successful in promotganization as well as the U.S. EB-5 Immigrant od of preventing investments fraud. ing the EB-5 Program and advancing the mesInvestors Program as a whole. In an effort to As always, IIUSA is grateful for the warm sage of progressive international investment subdue doubts among Chinese foreign inveshospitality extended by The American Chamas a means toward tangible economic develtors and stakeholders regarding the EB-5 Prober of Commerce in South China and for their opment in the U.S. IIUSA is looking forward gram which arose in the wake of the Chicago being such gracious hosts. In particular we are to working closely with our partners overseas Convention Center case. Mr. Joseph stressed thankful to Harley Seyedin for his leadership in the future. ■ the fact that the U.S. securities laws are workin our collaboration with his organization – ing efficiently and, if coupled with proper and

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I-526 PETITION APPROVAL TRENDS BY COUNTRY OF INVESTOR ORIGIN 1. GROWING SIGNIFICANCE A aSOURCE OF EB-5 INVESTORS Figure FIGURE 1. Growing Significance of OF MMAINLAND ainland CCHINA hina ASas Source of EB-­‐5 Investors 4,000 China

Other Countries

Investors from Mainland China as a % of Total I-­‐526 Approvals

86%

68%

68%

3,000

70%

50%

2,500

50%

38% 2,000 21% 1,500

12%

17%

21%

30%

26% 18%

20%

18%

15%

17%

22% 16%

30%

23%

17% 10%

0%

1,000

-­‐10%

500

0

-­‐30%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fiscal Year

TOP COUNTRIES OF ORIGIN FOR EB-5 INVESTORS, PRE- AND POST-RECESSION Figure 2FIGURE a. I-­‐526 Approvals BY

by INVESTOR’S Investor's 2A.PeIIon I-526 APPROVALS Country ORIGIN of Birth, COUNTRY OFFY1992-­‐2008 BIRTH, FY1992-2008

104 other countries 57% (2,332 approvals)

Mainland China 21% (867 approvals)

I-526Approvals APPROVALS INVESTOR’S Figure 2b. FIGURE I-­‐526 P2B. eIIon

by IBY nvestor's Country of COUNTRYBirth, ORIGINFY2009-­‐2013 OF BIRTH, FY2009-2013 116 other countries 19% (2,098 approvals) South Korea 6% (630 approvals)

South Korea 22% (910 approvals)

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Number of I-­‐526 Approvals

90%

79%

3,500

Mainland China 75% (8,372 approvals)

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Understanding the Exit/Entry Industry in China & Summarizing IIUSA Involvement in 2013 Kelvin Ma Partner, Shanghai Demei Law Firm Kelvinma2009@gmail.com Over the past year, I have had the opportunity to serve as Chair of IIUSA’s International Subcommittee of the Membership Committee. It is been my distinct honor to do so, and has kept me busy this year. This article provides an overview of the Exit/Entry Industry in China in Part 1, followed by details on IIUSA’s work in China in 2013 in Part 2.

Part 1: Introduction of China Exit-Entry Industry

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The Exit and Entry Industry in China is well-organized and regulated. The governing body is the Bureau of Exit and Entry Administration of the Ministry of Public Security (“PSB”). By 2013, there were a total of 789 migration consulting firms (in this article, I use this term and “agents” interchangeably) approved by the Bureau of Exit and Entry Administration. The following link shows the number of agents increased by over 60% over the seven year period of 2006-2013, from 485 to 789: http://www.mps.gov.cn/n16/n84147/n84211/n84409/index.html Like Regional Centers need to be approved by the USCIS, agents have to be licensed by PSB in order to conduct business in the Exit and Entry Industry in China. Furthermore, like Regional Centers have geographic boundaries, agents are required to conduct business within the boundaries of provinces (cities governed directly under the Central Government, and autonomous regions) that they are registered in. Below is a sample approval notice of a Beijing agent approved by Beijing PSB. Note that each agent in Beijing has to submit to its governing PSB RMB 2,000,000 (roughly USD 330,000) as security deposit. If things go south, e.g., some investors lose money due to the agent’s misconduct, the PSB will confiscate the security deposit and use them to pay back the investors. The Exit and Exit Industry understands that RMB 2,000,000 is actually far from enough to deter any serious fraud involving multiple EB-5 investors, and there is ongoing discussion among credible agents in China about how to address this issue.

7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

Agent Qualifications

Australia, Canada, USA, Japan

Issuing authority: Beijing PSB

In addition to the geographic limitations, agents must be approved to promote migration destination countries by the PSB. In the above example, the agent is licensed to promote migration programs of Australia, Canada, United States and Japan. If this company promotes any program beyond the above four countries’ programs, it may be sanctioned by the PSB. In order to obtain specific migration destination country approval, the PSB in certain areas have additional requirements. An example list of documents a Beijing agent is required to submit to the local PSB in order to promote EB-5 projects is listed below:         

Regional Center and Agent partnership agreement Regional Center approval letter (notarized by Chinese embassy) Regional Center and immigration attorney partnership agreement Immigration attorney law firm certificate (notarized by Chinese embassy and the U.S. state of issuance) Immigration attorney law firm's 3-year history notarization Regional Center and investor subscription agreement Notice of informing investment risk from Regional Center to investor Attorney retainer agreement with investor Examples of two successful Chinese I-829 approvals by the immigration law firm

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Printed by PSM

Most of the agents run their agencies in geographic areas with dense populations of high net worth individuals. This is, of course, no coincidence. The more wealthy people a province has, the more potential clients there are for agents to serve. The below picture shows 11 provinces and cities which have an Exit-Entry Industry association, namely, Beijing, Liaoning, Shandong, Suzhou, Shanghai, Zhejiang, Fujian, Hubei, Sichuan, Chongqing and Guangdong. The other picture below shows concentrations of high net worth individuals in the mainland. The darker the color, the higher concentration of wealthy residents live there.

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The Guangdong Exit/Entry Service Association has the largest number of agents with 120. Additionally, the Guangdong Exit/Entry Association has loosened its regulations to allow itself to designate new agents, instead of going through the local PSB for approval.

New agents no longer need a specific license to do immigration business in Guangdong.

The Guangdong Exit/Entry Association along with IIUSA have developed a Memorandum of Understanding for Collaboration that will help to develop standards of due diligence for agents, develop and promote best practices, and more. This puts the onus of maintaining an honest and straightforward EB-5 industry in the hands of the industry stakeholders and away from the PSB. A complete table listing the number of member agents in all 11 exit/entry associations is included below. For reference, Beijing currently has the fastest rate of agent growth of any exit/entry association.

Guangdong Beijing Shandong Shanghai Zhejiang Sichuan Liaoning Fujian Chongqing Wuhan Suzhou

70 (120 is the total number of agents) 82 73 56 (69 is the total number of agents) 46 45 43 35 28 13 11

Out of 11 associations, only 5 have official websites: Guangdong, Beijing, Sichuan, Zhejiang, and Suzhou. Over the course of the last year, IIUSA has established partnerships with several of these associations to collaborate in addressing industry issues as needed. Part 2 of this article will address this in more detail.

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Not all agents are created equal, however. While it may be difficult to know if an agency is worth working with, there are some signs to look out for. First, if an agency is wellknown or part of a branded chain of agencies, it usually indicates that they have respect within the industry and have built their brand by conducting business with integrity.

Second, agencies should always make it clear that the interests of their investors come before their own. An agency should demonstrate value to the investor not just through words, but more importantly, through its actions. Third, successful agencies ensure they are informed on the most current developments within the industry. As such, they attend industry events, cognizant of any changes, and make sure that they convey any and all changes within the industry to their clients as necessary. Lastly, top agents are great communicators. . If they cannot effectively communicate with investors, the PSB, or others industry stakeholders, then they are highly unlikely to be successful. As a rule, agents need to develop deep and substantial relationships with a wide variety of people to be successful.

Another way to determine the credibility of an agent is to know their involvement with IIUSA. Agents are becoming increasingly aware of the importance of joining IIUSA; by involving themselves with the industry trade association, they are demonstrating to investors and potential business partners that they follow industry trends closely and strive to ensure integrity and accountability within the industry. These agents utilize the resources of IIUSA in a variety of ways. IIUSA affords them increased ability to conduct due diligence on Regional Centers and specific projects in order to avoid fraudulent situations or scams similar to the Chicago Convention Center project. Through increased collaboration between IIUSA and migration agencies in China, Chinese investments through the EB-5 program in the United States can be conducted with more confidence and will promote future growth and success.

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In China, migration agents operate independently but also must adhere to the rules and regulations as enforced by the local PSB. “Active” agencies are sometimes branded with independent branches in different cities/provinces. Other “active” agencies operate only within their local city or province. There are also so called “zombie” agencies that are listed online as approved but are actually dormant and do not provide agency services at the present time (similar to the situation with "non-active" Regional Centers in the U.S.).

IIUSA has created a Sina Weibo account in Mandarin language to communicate with Chinese agents as well as other stakeholders in China on the most up to date information in the EB-5 industry. Weibo is similar to Twitter here in the U.S. Since creating the account in May, we already have 333 followers. This number is increasing every day! We encourage you to visit the Weibo page at the following link: http://weibo.com/iiusa/ Having a thorough understanding of the Exit and Entry Industry in China is vital to all stakeholders of the EB-5 program. These agents are the main link between Regional Center projects and the investors themselves. Without this link, the flow of capital from EB-5 investors would have a far less efficient path to the U.S. at the expense of jobcreating projects that need it. With agents acting as an important conduit between the various parties, it is essential to fully understand the agency process. Before working with

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any agent you should know their track record, their involvement in the industry and with IIUSA, their credibility in China, and all other relevant information you may need to make an informed decision and keep the EB-5 Regional Center Program on the right track.

Part 2: IIUSAâ&#x20AC;&#x2122;s Development in China in 2013 January 2013: Guangzhou and Hong Kong It has been my pleasure to help broaden IIUSA's ability to impact EB-5 industry in China throughout 2013. It started in January 2013 when K. David Andersson, IIUSA President, Peter D. Joseph, IIUSA's Executive Director, and I first established formal cooperation with the American Chamber of Commerce in South China ("AmCham South China"), led by its President Harley Seyedin - an essential partnership which grew in importance as the year went on., IIUSA had the opportunity to present to several AmCham South China members and Guangdong agents on the EB-5 Program and IIUSA membership â&#x20AC;&#x201C; signing up a member on the spot

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We then travelled to Hong Kong to attend and speak at a Migration Forum organized by several major agents in China. David Andersson gave a speech in which he introduced IIUSA and its mission, updated attendees on the latest industry developments, and provided an outlook on 2013. About 100 migration agencies attended, many of whom were introduced to IIUSA for the very first time.

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February: Shanghai, Guangzhou, and Beijing

international partnerships

Just one month later, in February, Peter Joseph traveled back to China under much more auspicious circumstance, visiting Shanghai, Beijing and Guangzhou to address the Securities and Exchange Commission’s enforcement action against Chicago Conventional Center, how the case was likely to proceed, and how U.S. securities laws work to protect investors. In Shanghai, 20 agencies attended a seminar hosted at Shanghai Demei Law, where I am a Partner. From Shanghai, Peter and I headed to Guangzhou, where IIUSA presented to more than 50 agents in attendance at the AmCham South China offices in attendance. Mr. He Boyi, Chairman of the Guangdong Association, and Ms. Cai Jing, then General Secretary of the association were of great help in bringing this event to fruition. Their primary concern was the swift return of investor funds. In Beijing, IIUSA gave a talk to about 15 agents who are Directors of Beijing Exit-Entry Industry Association, led by Mr. Lin Kang, Chairman, and Mr. Chang Xin, General Secretary.

May: Beijing and Guangzhou IIUSA returned to China three months later bringing the good news that investors in the Chicago Convention Center began to receive their funds back from the escrow bank. In Beijing, with the help of Mr. Lin and Mr. Chang, IIUSA hosted a seminar to pass along the news, along with an update on other industry developments, to a group of 60 agents, including many from Sichuan and Shandong who took great efforts coming to Beijing to attend. In Guangzhou, IIUSA’s presentation was attended by an even larger number of agents than in February. IIUSA actively engaged media during this trip. Several mainstream media outlets covered IIUSA’s efforts to assist in the return of funds to investors from the Chicago Convention Center, such as the Beijing Evening Post, and Tencent News.

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September: Xiamen, Taipei, and Beijing The culminating event for IIUSA in China this year occurred in September. IIUSA and

AmCham South China led a delegation of over 300 attendees to the 17th Annual China

International Fair for Trade & Investment (CIFIT) held in Xiamen, China from Sept. 6-

10, 2013 â&#x20AC;&#x201C; which is the largest U.S. delegation to CIFIT on record. With IIUSA delegates in excess of 120 (including IIUSA Vice President, Robert C. Divine, and Peter again) and 25+ IIUSA member exhibitors, CIFIT was an indispensable opportunity to showcase the EB-5 Program to a large and comprehensive network of globally-minded investors. At CIFIT, IIUSA hosted an EB-5 seminar which covered topics such as the importance of

cross-pacific partnerships for EB-5 success, the potential for immigration reform in the U.S. and its implications for the EB-5 industry, USCIS EB-5 policy, processing trends,

and more. This event represented the culmination of a year of hard work and cooperation

with AmCham South China in our steadfast effort to support the vitality of EB-5â&#x20AC;&#x2122;s largest international partnerships

investor marketplace.

In addition to CIFIT, IIUSA traveled to Taiwan to share EB-5 information at a seminar

with counterparts at the Taiwan Immigration Consultants Association (TICA). Attorney David Enterline, from WTW Taipei Commercial Law Firm, provided invaluable help in

setting up this engaging seminar. Taiwan continues to rank among the most consistent sources of EB-5 investors in the world. After Taiwan, IIUSA headed to the Summit of

Beijing Exit/Entry Migration Agents Association of Year 2013. IIUSA Vice President,

Robert Divine, was the keynote speaker at the event, updating attendees on the latest of EB-5 developments.

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November: Guangzhou Lastly, in November IIUSA was invited to speak at the Annual Meeting of Guangdong

Exit/Entry Service Association and brought the latest information of EB-5 Program to the people present there on Nov. 22, 2013. David addressed attendees about the growth of the EB-5 Program and importance of due diligence.

international partnerships

A full list of 20+ overseas migration agency members of IIUSA can be found at the following link: https://basecamp.com/2282260/projects/3476558-member-directory

THANKS TO OUR WI-FI SPONSORS!

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a track-record of

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international partnerships

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REGIONAL CENTER D E V E LO P E R S

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right Johnson is the national leader in EB-5 Regional Center consulting. We are a preferred consulting firm for Regional Center applications and economic analysis. Wright Johnson prepares the necessary materials for the regional center application/submission required by the USCIS for approval of a Regional Center.

USCIS guidelines for Regional Centers are complicated and difficult to comprehend.

Our Regional Center experience will help the client successfully navigate this complex process. A major advantage provided by Wright Johnson to our clients. Wright Johnson is one of a small number of firms, and the dominant nonlaw firm that truly understands what is required by USCIS to obtain a Regional Center designation.

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Further, Wright Johnson prepares USCIS compliant economic impact studies and business plans for projects within a number of the approved regional centers.

Experience: Wright Johnson has significant EB-5 experience. Wright Johnson is responsible for the USCIS approval of over 40 Regional center applications. This excellent record is due to our attention

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7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

AMCHAM

SOUTH CHINA

U.S. DELEGATION TO

CHINA INTERNATIONAL FAIR FOR INVESTMENT & TRADE SEPTEMBER 6-10, 2014 XIAMEN, CHINA

IIUSA is proud to announce that for the second consecutive year, it will lead a U.S. Delegation to CIFIT (China International Fair for Investment and Trade) from September 6-10 in Xiamen, China.

DELEGATES WILL HAVE A CHANCE TO:

SPONSOR- $15,000

• Registration for up to four (8) exhibitors • Two Booths (3 x 3 meters each, predecorated) • Premium Exhibiting Space • Verbal Recognition at IIUSA EB-5 Seminar and Cocktail reception • Complimentary Full Page ad in Conference Handbook, to be distributed to all attendees • One email to all event attendees one time the week of the event.

• Designated “Sponsor” and logo appears on all event materials, including print, digital and mobile app

EXHIBITOR - $5,000

• Registration for up to four (4) exhibitors • One Booth (3 x 3 meters each, predecorated) • First-Come-First Serve Exhibiting Space • Admittance to IIUSA EB-5 Seminar and Cocktail reception • Company Name Listed in Conference Handbook as Exhibitor • Designated “Exhibitor” and logo appears on all event materials, including print, digital and mobile app

INDIVIDUAL - $750

• Registration for one (1) person • Does not include exhibiting space • Admittance to IIUSA EB-5 Seminar and Cocktail reception • Company name listed in conference handbook as “attendee” • One email to all event attendees one time the week of the event.

• Company name/logo appears on all event materials, including print, digital and mobile app

international partnerships

Exhibit their projects and services • Meet with potential investors, other EB-5 stakeholders and international business/government leaders • Take part in bilateral industry education

Extra Booths Are Available at 20% off!

Contact IIUSA Marketing/Communications Coordinator Allen Wolff, allen.wolff@iiusa.org for more info!

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M A R G A PRO

!

N O I P M A NAL O I G H E R C TO IIUSA’S EB-5 IONS FUND!

E M O C BE

DONATE OGRAM CHAMP PR R E T N E C

Donations to IIUSA’s EB-5 Regional Center Program Champion Fund Support IIUSA’s Advocacy & Public Affairs Initiatives. With your support, IIUSA will commission additional economic studies to show the Program’s economic impact down to the congressional district level – perhaps the most sought after advocacy tool today.

IIUSA also continues to build partnerships with likeminded independent global think tanks and interest groups on promoting the economic benefits of the EB-5 Program. Please help contribute to the development and success of the EB-5 Regional Center Program through your national trade association!

All Contributors to the EB-5 Regional Center Program Champion Fund will be recognized in IIUSA publications such as the Regional Center Business Journal. IUSA offers the following suggestion for voluntary contributions:

MEMBER TYPE: Regional Center Associate

SUGGESTED CONTRIBUTION: $500 $250

For those industry leaders out there who are willing to give an enhanced about will get equally enhanced recognition for their support in IIUSA’s multi-platform publications:

CHAMPION TYPE: MINIMUM CONTRIBUTION: Luminary $5,000 Legend $3,000

Contact IIUSA Marketing/Communications Coordinator Allen Wolff, allen.wolff@iiusa.org for more info!

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Successful Projects • 550 investors from 74 countries • 100% success record on I-526 and I-829 applications • Only State owned & operated regional center in the country

Opportunities

• Two equity based projects ANC Bio and Burke Mountain

eb5jaypeak.com

Vermont

Q Burke Mountain Resort Hotel & Conference Center

For more information Alex Maclean | Project Manager | amaclean@jaypeakresort.com 7th Annual EB-5 Regional Economic Development Advocacy Conference | Washington D.C. | May 7-9, 2014

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