By Anayat Durrani
As investors await word on the latest developments on the EB-5 Regional Center front, many pressing legal questions remain. With investments and immigration benefits on hold, many EB-5 investors are wondering what legal options they may have.
“It's completely understandable that investor anxiety and frustration increases each day the EB-5 RC program remains lapsed,” says Phuong Le, a partner with KLD LLP. “While the continued delay is maddening to all of us, it's important to remember that for the most part, the program has continued silently in the background: pending I-526 petitions have not been denied, USCIS is finally, and rightfully, adjudicating interim benefits for qualified investors such as travel documents/EADs, and I-829 processing remains as usual.”
Le says this is important as it ties into investors’ prospective legal options during the lapse. He says until cases or benefits are actually denied, there are not many practical options available.
“This is mainly because under U.S. law, normally a harm or injury must actually be suffered before someone can really sue,” says Le.
He says the exception is for investors who are eligible for travel documents/EADs and have experienced unreasonable delay, which for those clients, mandamus is viable.
Andy J. Semotiuk, U.S. and Canadian Immigration Lawyer, Pace Law Firm, says any legal options for EB-5 Regional Center foreign investors would need to be focused on Regional Centers and possible legal representatives.
“The U.S. government is not likely to be a defendant in these cases as there is little that can be alleged against it,” says Semotiuk.
Issues EB-5 investors are faced with while waiting for EB-5 program reauthorization
Some of the issues investors are faced with during the lapse include investors seeking litigation against regional centers to get their funds refunded and compensation for time lost during extended wait periods.
“The issue would be was there any fraud or failure to adequately inform the investors of the potential delays and possible loss of funds that could result from delays regarding the processing of applications? Did the management of the Regional Center projects avoid inordinate costs associated with delays that were predictable?” says Semotiuk.
Semotiuk says a key concern is whether investors were warned in the disclosure documents that the Regional Center program was temporary and had a sunset provision when it was established.
“Were the representations to the investors made by Regional Center representatives and attorneys inordinately optimistic or unreal given all the circumstances and did such representations result in investors reliance to their detriment?” says Semotiuk.
He says a successful claim would have to show that the investors were improperly and negligently ill-advised on the risk they were assuming by investing in the EB-5 Regional Center project.
Investors who already paid hundreds of thousands of dollars have been plagued with long wait times. Others worry about issues like children aging out due to the lapse. Some investors are angry with regional centers, incorrectly believing they are behind the lapse.
What EB-5 investors can do to work proactively for a reauthorization
Le says he advises that investors channel their anger and emotions into more proactive measures that can benefit them.
“For example, everybody knows that any eventual reauthorization will need support from Republican members of Congress,” says Le. “For investors and EB-5 stakeholders that reside in those same areas, we encourage them to reach out and focus their energy and lobbying to highlight the real world impact the continued lapse has had on their families and communities, how they've funded projects in the backyards of these same members and are now left stuck in limbo with their families.”
Le says his firm has reached out to some clients to get them to tell their stories and the impact it's had on their lives in an effort to push Congress to finally pass reauthorization. Le says while he is sympathetic to investors’ frustrations, the last thing investors should do at this point is sue the project, NCE, or the RC.
“Why? Because not only are they not responsible for the current lapse—they're in the same boat after all—but suing them for the lapse is effectively suing yourself and you may actually jeopardize your EB-5 eligibility,” says Le. “If the RC or project gets tied up in expensive litigation and is forced to shut down because it doesn't have the money for litigation or operations, guess who suffers?”
He says the investor would suffer and their case will be denied if the RC is terminated or repayment is jeopardized if a project is tied up in litigation and lowers its value.
“Tread carefully and speak with your attorney before making any decisions,” says Le. “Ultimately though, all this may hopefully be moot if reauthorization finally happens this month. Let's hope for good news soon.”