It’s been over a year since the EB-5 Reform and Integrity Act of 2022 (“RIA”) came into play. Here are ten things that prospective EB-5 immigrant investors should be aware of.
- Concurrent Adjustment of Status Opportunities – For certain persons lawfully in the U.S., the RIA provides a unique opportunity to file an adjustment of status and obtain employment authorization and advance parole to travel internationally even before the EB-5 petition is approved. Many are taking advantage of this new avenue. While dual intent nonimmigrants, such as H, or L-visa holders can file immediately upon entry, for others, it’s important to note that entering with immigrant intent on visitor’s visa can be problematic.
- Layoffs and INA 245(k) – Sadly many foreign nationals on H-1B visa status are being laid off and some are turning to EB-5 as the best option to remain in the U.S. Immigrant investors who fail to maintain lawful status, engage in unauthorized employment, or violate the terms and conditions of their nonimmigrant visa may still be eligible to file a concurrent EB-5 petition and adjustment of status, provided the aggregate period of the violations is 180 days or less since the last lawful entry.
- Reserved Visa Categories – The RIA created new visa categories that are current in the monthly visa bulletin because USCIS processing of new Form I-526Es remains slow. USCIS has indicated it received 980 Form I-526Es, but nobody knows the investor's country of birth or the visa category (rural or high unemployment). It’s unclear how long they will remain current and what the Final Action Date will be. Note, even though the Visa Bulletin is current today this does not mean a visa backlog won’t be in existence at the time a Form I-526E is approved. Investors should file as soon as possible to be in the front of the line.
- Partial Investments – To secure a spot in the visa line, one must file a Form I-526E. To file Form I-526E, one must have invested, or be actively in the process of investing, the minimum investment amount. For those who want to file now but do not have liquidity, making a partial investment and completing the investment within 12 months is a possibility. The critical aspect is for the funds to be clearly identified and to be able to show the investor is in the process of investing and transferring the funds.
- Source of Funds – The RIA removed the requirement that a loan must be collateralized by the investor’s personal property. It now requires that gifted and borrowed funds must be made to the investor in good faith, and that the donor or lender (except banks) must provide evidence on source of funds. The RIA also prohibited funds from any agency, official, or other similar entity or representative of a foreign government entity (with limited exception).
- Path of Funds – In addition to showing how the investment capital was lawfully earned, it has become increasingly important to show how those funds were transferred from abroad to the United States, in particular from countries with outbound monetary restrictions. Immigrant investors would be careful to only use licensed money exchangers who are willing to provide documentation to show the lawful actions.
- High Unemployment Areas – When the U.S. Bureau of Labor Statistics updated their statistics at the end of April 2023, the national unemployment rate fell significantly. However, under the terms of the RIA, investors can still qualify for lower investment amounts based on investments today provided the Regional Center submitted a Form I-956F before the statistics changed.
- Promoter Registration and Fees – USCIS appears committed to getting promoters and migration agencies to file the new Form I-956K registration, which requires a written agreement confirming compliance with the RIA and U.S. securities laws. USCIS wants EB-5 entities to disclose all fees and compensation paid to such individuals and organizations in connection with a particular investment project.
- Redeployment/ Sustainment Period – USCIS still has not confirmed how long a post-RIA investor must sustain an “at risk” investment in the NCE. This issue arose due to sloppy drafting of the RIA by Congress and confusion has emerged as an unintended consequence of a strict reading of the statute. Until USCIS indicates otherwise, it is advisable to maintain the investment funds until at least two years of conditional lawful permanent residency have passed.
- EB-5 Processing – It’s unclear if USCIS will process new EB-5 petitions in a separate queue from pre-RIA petitions and how long it will take USCIS to adjudicate a recently filed I-526E filed in 2023. While the concurrent adjustment provision dampens the blow for some, unduly long processing times are still troublesome as they disadvantage immigrant investors abroad who patiently wait in line. Unfortunately, USCIS’ Immigrant Investor Program Office is struggling to provide answers to critical unresolved questions regarding the many changes to the EB-5 program included in the RIA. EB-5 investors, Regional Centers, and U.S. entities raising EB-5 capital deserve transparency and more detailed guidance from USCIS.
WHAT DOES THE FUTURE HOLD FOR THE EB-5 PROGRAM?
Despite these issues, the EB-5 program continues to increase in popularity and provides a viable path for investors, particularly those stuck in long waiting lines. At the end of the day, the EB-5 program provides a path for a limited number of high-net-worth investors who create jobs directly or indirectly via the Regional Center program. So, if you do not win the lottery, have a close US citizen or green card holder spouse or relatives, and are not eligible to self-sponsor as an extraordinary or exception individual, this program is one of the few options for persons seeking to live in the U.S.
Bernard P. Wolfsdorf is the past national president of the American Immigration Lawyers Association (AILA). He is managing partner of WR Immigration. Wolfsdorf specializes in a broad range of immigration areas, primarily relating to corporate global mobility, including business and investment visas. He has been certified by the California State Bar as an immigration and nationality law specialist for over 25 years. Wolfsdorf is a long-standing member of the Alliance of Business Immigration Lawyers (ABIL) and ABIL Global, which include the managing partners of the top immigration firms worldwide. He has served on the AILA EB-5 Investor Committee, Board of Governors, and Governance Committee. AILA honored him with its prestigious Service Excellence Award for his distinguished volunteer work. He has also received recognition from Best Lawyers, Chambers & Partners, Who’s Who Legal, Super Lawyers, EB5 Investors Magazine, and more. Recently, he has been selected for inclusion in the 2023 edition of The Best Lawyers in America.
Vivian Zhu is a partner at WR Immigration. She advises corporate clients in technology, entertainment, media and retail on global mobility and expansion strategies. Zhu’s clients include Fortune 500 and medium size corporations, as well as entrepreneurs, investors, and individuals. Zhu specializes in U.S. employment and business immigration cases, including immigrant and nonimmigrant visa applications. She also handles complex immigration cases such as protecting age-out derivative children under CSPA, mandamus litigation, and inadmissibility. She supervises large teams including attorneys, paralegals, and administrative staff vigilantly ensuring expeditious resolution of issues and resolves complex immigration cases. Zhu also has several years’ experience in corporate and securities laws representing companies in reverse mergers, PIPEs, initial public offerings, follow-on public offerings, and Exchange Act filings.