INS on EB-5 Hold
Date: March 11, 1998
To: Regional Directors
All Service Center Directors
District Directors (Including Foreign)
All Officers in Charge (Including Foreign)
All Port Directors
Directors, ODTF-Glynco, GA and Artesia, NM
Office of General Counsel
Regional and District Counsel
Administrative Appeals Office
Office of Policy and Planning
Office of Naturalization Operations
Chief of Staff
Office of Congressional Affairs
Office of Public Affairs
The purpose of this field memorandum is to forward the attached legal memorandum and summary, advise Service Centers to hold certain petitions and prepare certifications to the Administrative Appeals Office, and alert field offices to the return to certain immigrant investor petitions by U.S. consulates abroad.
Legal Opinions
The attached legal memorandum, responding to questions from the Texas Service Center, reflects a review of a representative sampling of pending and approved petitions pertaining to immigrant investors under 8 CFR 204.6 and 8 CFR 216.6 and section 203(b)(5) and 216A of the Immigration and Nationality Act. The INS General Counsel concludes that certain business agreements in petitions for immigrant investor classification, although they originally appeared to constitute acceptable investment arrangements, do not, as a factual matter, comport with the law.
Accordingly, the legal memorandum provides guidance to adjudicators in applying existing regulations to complex business arrangements presented in certain investor petitions that include some combinations of the following provisions: (1) the use of a down payment of cash with the remainder of the alien’s contribution in the form of a promissory note; (2) a multi-year installment payment plan on a promissory note with a substantial balloon payment after the conditions on the alien’s lawful permanent resident status are removed; (3) an option given to the alien to sell his or her investment for a fixed price that may be less than, equal to or greater than the alien’s cash contribution (usually exercisable before or at approximately the same time as the balloon payment on the promissory note is due), or to be released from the obligation under the promissory note in the event of the insolvency of the partnership; (4) an option given to the enterprise or limited partnership to buy the investment at a fixed price (usually exercisable before or at the same time as the balloon payment on the promissory note is due); (5) a provision that allows or requires the commercial enterprise to place sufficient cash into a bank account to guarantee that funds will be available to repay the alien if the alien exercises the sell option; (6) withholding of a portion of the alien’s capital contribution for attorneys’ and finders’ fees and other administrative costs; and (7) a guaranteed return on the cash portion of the alien’s “investment.”
Hold on Certain Immigrant Investor Petitions
On December 1, 1997, the Office of Adjudications requested that Service Centers refrain from adjudicating petitions involving the complex financial arrangements addressed in the legal memorandum. Subsequently, at the Service’s request, the Department of State instituted a similar “hold” of visa applications containing these arrangements. With the exception of the preparation of decisions for certification referenced below, the current hold remains in place for all initial petitions seeking immigrant investor classification, petitions returned from consulates, petitions for removal of conditions filed under section 216A of the Immigration and Nationality Act, and related matters containing provisions addressed in the attached legal opinion.
The hold does not apply to all EB-5 petitions. Service Centers are instructed to continue to adjudicate immigrant investor petitions that are not subject to the hold. Petitions subject to the hold may be withdrawn and new petitions that are not subject to the hold may be filed and adjudicated. Any such new petitions, however, should be treated in the same manner as any other newly filed petition.
New Returns by Consulates of Investor Petitions
On February 22, 1998, the Department of State instructed that all approved Form I-526 petitions held at consular posts be returned to the appropriate Service Center. As requested by the Service, consular officers were instructed to forward the held petitions by air courier, flagged with the name of the forwarding consulate, directly to the Business and Trade Product Line Managers along with evidence submitted by the applicant, a brief cover memorandum describing the reasons for the return, and a copy of the February 22 cable. Service Centers are instructed to track these returns by using the courier receipt numbers provided and forward to this office a list of all cases returned by the consulates for review and revocation which are subject to the hold.
Communication About Petitions Subject to the Hold
All Service personnel are instructed to discontinue communication with petitioning companies (including their legal or other representatives) whose petitions are subject to the hold. Requests for communication shall be forwarded to David M. Dixon, Acting Deputy General Counsel, Headquarters INS (telephone 202/514-2895).
Preparation of Cases for Certification
Each Service Center is instructed to select approximately four Form I- 526 petitions from among the held cases for certification to the Administrative Appeals Office. Decisions may be approvals or denials but should reflect, if possible, the range of provisions addressed in the legal memorandum and not isolate any one or two petitioners.
In addition, each Service Center is instructed to adjudicate two clearly approvable Form I-526 petitions not subject to the hold and prepare them for certification to the Administrative Appeals Office. Both categories of cases prepared for certification should be forwarded to the Administrative Appeals Office and clearly addressed to the attention of Edward H. Skerrett no later than two weeks from the date of this memorandum.
Your assistance is greatly appreciated. Please refer questions regarding this policy to Katherine A. Lorr, HQBEN 202/514-5014.
Micheal D. Cronin
Acting Associate Commissioner