By Jinhee Wilde
I recently received a telephone call from a panicked Chinese investor who told me that the regional center she had invested in was terminated. Her own current attorney could not tell her what to do. As USCIS increases audits and site visits to regional center projects, as well as the length of adjudications at USCIS that negatively impacts the regional center business, the possibility of regional centers being terminated or voluntarily dissolving will increase. According to the USCIS website, they have terminated over 290 regional centers. Most of these terminations were in 2017 and 2018, which appear to be after USCIS began conducting audits of the regional centers and conducting project site visits. The visa retrogression in effect for China and Vietnam, and expected for India soon, will also increase the possibility of this scenario repeating in the future.
USCIS will issue a notice of intent to terminate a regional center’s participation in the EB-5 Immigrant Investor Program if the regional center fails to submit required information to USCIS or no longer serves the purpose of promoting economic growth. USCIS has also terminated a number of regional centers based on charges of fraud, misappropriation or misuse of funds, EB-5 or otherwise.
NEW DIRECTIVE BY USCIS
USCIS explicitly states that “the termination of a regional center associated with a regional center immigrant investor’s form I-526 petition constitutes a material change to the petition,” according to the Policy Manual published June 14, 2017. If the investor changes the regional center with which his or her immigrant petition is associated after filing the form I-526 petition, the change constitutes a material change to the petition.1
This is the first time USCIS has stated in writing that such a change in regional center sponsorship is considered a “material change.”
USCIS has followed the following patterns in deciding which changes are considered material versus nonmaterial for the purposes of visa petition adjudication:
Changes in the scope of the investment project, such as an investor switching projects entirely, are considered material. In this regard, filing an investment in one regional center but later changing to a different regional center or another project within the same regional center will be a material change.
Changes to the investment project that do not affect its overall eligibility are not considered material. For example, if an investor files an I-526 petition with the intention to establish one type of restaurant but changes to another is not a material change. as it is still the restaurant business. However, if the investment becomes a hotel business it is a material change, even if the hotel may contain a restaurant.
Changes to the structure of an investment or something that may affect the actual investment of funds are considered material. For example, if the investment agreement provides the return of funds upon a certain date, but later this agreement is changed to eliminate the return upon an USCIS RFE, this would be a material change.
Changes that do not depart substantially from the original project funding structure documents, but merely clarify inconsistency are not considered material.
Since USCIS states that the substitution of a regional center in the event of another regional center’s termination also may constitute a material change that requires denial or revocation of the I-526, the affected investor would have to file the new petition. Unlike the other EB categories based on the I-140 petition, EB-5 does not have a way to preserve the old priority date of the previously approved petition. So, for those investors who have not yet obtained conditional resident status, for example those waiting for their priority date to become current, USCIS’ decision to terminate a regional center effectively ends their EB-5 immigration process. Consequently, they lose their place in the queue of visa numbers (and also probably have a child “age out” of eligibility). They lose thousands of dollars in fees, as well as the potential loss of the initial $500,000 investment, all because their regional center messed up.
A DIFFERENT SITUATION ONCE AN INVESTOR HAVE CONDITIONAL RESIDENCY
In contrast, the Policy Manual specifically states that termination of a regional center after an investor have already obtained conditional residency does not affect an I-829, even for claiming indirect job creation. Thus, for the investors who were admitted as conditional residents before their sponsoring regional center was terminated, this is a generous interpretation of the existing regulation.
While it is cruel to the investor of a terminated regional center before he was admitted under conditional residency, the scenario highlights the ultimate reason for careful deliberation when choosing a regional center and project. That kind of decision should be based on the actual track record of the center or the details of the actual project. It should not be based on the recommendations of migration agents or brokers who may be motivated by commissions or finder’s fees.