ELIS for EB-5: Big Brother and Your EB-5 Petition

by Soyini Coke

The Electronic Immigration System (ELIS) was introduced in May 2012 to streamline the process of submitting petitions to U.S. Citizenship and Immigration Services (USCIS). While the I-526 is the only form relevant to the EB-5 process currently accepted by the system, USCIS has a stated objective to migrate away from a paper-based model to an electronic model, much like the banking industry. The promises of improved efficiency will be welcomed by all stakeholders. However, digital submissions will have far-ranging implications beyond the obvious improvements in customer service. When weighing implications, it is important to examine why electronic submission matters and how one can adjust to meet the changing environment.

Although not explicitly stated, ostensibly, e-filing through ELIS has been instituted to help address the extensive backlog of EB-5 petitions. As of the fourth quarter of 2013, there are 7,131 I-526 petitions pending. USCIS is taking 11 months to process I-526 petitions, 12 months for I-829 petitions, and 14 months for I-924 petitions[1]. With all processing times close to one year, frustration abounds. In fact, on its February 2014 EB-5 stakeholder conference call, USCIS asserted that a decreased processing time is a key customer service objective.

The promise of ELIS

Along with all the other benefits of going electronic, ELIS does have the potential to significantly ameliorate the backlog at USCIS. The agency touts benefits such as 24-hour access, electronic payment, expedited requests for information, and ongoing tracking of case status—everything to which modern technology users have grown accustomed. The clear intent is to simplify and accelerate the process.

On the aforementioned stakeholder call, the PACER (Public Access to Court Electronic Records) system, used by the U.S. courts was suggested as a model. Launched in 1999, the PACER program supports more than 1.5 million user accounts, serving lawyers, litigants, government agencies, and many other constituencies with a 90 percent satisfaction rate. Whether or not USCIS’s execution of the strategy delivers on this intent will become evident in the upcoming month.

Potential for increased scrutiny

ELIS could be an elegant solution to the misery presently encountered by thousands of EB-5 applicants, left biting their nails for close to a year. However, the system could also create new challenges for petitioners as well.

Electronic processing will allow a deeper dive into the business plan and economic forecasts that accompany all EB-5 applications. For example, an adjudicator can easily do keyword searches throughout both documents if they want to look for  specific concepts or ideas. If they begin to require electronic submission of financial projection spreadsheets, they can test scenarios in the financial projections by varying the numbers in a forecast. With a few keystrokes, they can answer questions like: What happens if the price of your product drops by 10 percent? Does it break your business model? Similarly, they can click on hyperlinks in a document to verify sources versus having to move from paper to computer to investigate the veracity of the data in an application. This kind of thorough and intense examination is only possible when working with documents in an electronic medium.

Beyond allowing an individual adjudicator to probe more incisively into any petition, once EB-5 submissions go fully electronic, the evaluation can become more automated, looking for patterns that correlate with success or with fraud. The documents can be parsed according to a pre-determined algorithm. They can perform standardized keyword searches or institute a uniform scoring system. While a human element will be involved, some level of automation in the approval process is predictable. Loan approvals in the banking industry are a likely analogy—a loan officer may have some discretion, but much of the process is determined by a set of variables logged into an electronic system. Just like applying for a mortgage or credit card, in an EB-5 application this process could look like harvesting a few data points from a submission (i.e. industry, deal size, projected income, etc.), and then crunching them to spit out an immediate denial, approval, or RFE.

At the highest level, electronic submission allows a “big data” approach to be applied to these petitions, allowing USCIS computers to analyze relationships and predict outcomes. In the same way that online advertisers (like Amazon) can predict the preferences of an individual user (i.e. maybe you’ll also like…), USCIS can begin to cross-reference many pieces of data in an effort to predict the behavior or success of its petitioners. For example, the agency can begin to pull data from other sources (i.e. LinkedIn or Facebook) to garner more information on, and perhaps better assess, their applicants. Such far-reaching and automated analysis might allow USCIS to draw some conclusions more accurately, while leaving them to draw inaccurate conclusions in situations that require human judgment and nuance.

There is one level of scrutiny when USCIS evaluates an application through the lens of what is submitted in the petition; there is an exponentially more intense level of scrutiny if they should evaluate the submission through the lens of all the information that is available to them on applicants, investor and prospective transactions (USCIS sits in the Department of Homeland Security, after all). This kind of predictive modeling is not a stretch. It is already being applied in many contexts—business, intelligence agencies, manufacturing, and science—and would be natural to apply to EB-5 submissions.

How to approach the changing environment

Petitioners can employ a number of strategies to cast their application in the best light:

Make sure the key theses are clear. Every sustainable busines  has a basic underlying premise (i.e. building an assisted living center in a place with aging demographics and little competition). This idea ust be readily apparent everywhere in your business plan, projections and economic forecast. Keep it crisp and obvious, and then support the key ideas with the numbers. This approach allows adjudicators to easily synthesize the information in your application.

Stick to business fundamentals. A good business is a good business—period. Build your business plan around a venture that is designed to yield a return, regardless of the EB-5 aspect. You want a credible plan into which a rational investor would buy. This is the standard set by the Matter of Ho. If you apply this principle, when USCIS, or their computer, reads your business plan it will make sense to them.

Annotate and reference all research carefully. Every assumption in the business plan and accompanying analysis must be derived from verifiable, reliable third-party research or historical data. Attention to detail is critical. Being meticulous will save you time in the long run, by heading off RFEs. Adjudicators want to be sure that the underlying data in the business plan is sound. Since they are going to look for the sources, you will make them happy if the information is straightforward.

While these principles are already accepted as best practice in the industry, maintaining these standards when filing petitions will become even more important as the ability of USCIS to scrutinize applications becomes possible with just a few mouse clicks and keystrokes.

The ultimate objective of an EB-5 petitioner is to receive an approval for their I-526, I-924, or I-829. Adjusting to the changing environment at USCIS, including the advent of ELIS, is necessary to achieve this objective. USCIS does intend to migrate to a fully electronic submission process—the issue of when is uncertain. To make sure you are ready when it happens, focus your documents on a couple of main ideas that shine through, build your business plan around profitability, and carefully cite your sources. Even though Big Brother may be reading your EB-5 petition, electronic processing has enormous potential benefit. And let’s face it, he is already reading your email, tracking what you buy online, and watching your TV with you anyway.

[1]See http://blog.klaskolaw.com/2014/03/14/eb-5-stakeholders-call-what-we-learned/
Soyini Coke

Soyini Coke

Soyini Coke is managing principal at Annona Enterprises, a strategic advisory firm that provides business planning and investment support for companies with up to $100 million in annual revenues. Most recently, Soyini has finished The Perfect Business Plan: A Step-by-Step guide, which captures the methodology she has successfully used with her clients. She began her career at McKinsey after graduating cum laude from Harvard University in 1998 with a Bachelor of Arts in Applied Mathematics and Economics.