EB-5 Delays, Denials & Investments

Pursuing an EB-5 visa is a lengthy and expensive process. It involves large investments of time and money, financial risk and years of patience for the capital to be returned. Problems that arise during this process – petition delays, petition denials, incomplete investment returns, redeployments of invested funds, etc. – can sometimes be resolved with litigation or the threat of it.

The attorneys at Sarraf Gentile combine a unique set of skills to provide innovative solutions to unreasonable delays, wrongful denials and problems associated with the EB-5 process:
  – immigration expertise 
  – decades of corporate & securities work
  – experience working with government lawyers 
  – nationwide federal litigation & class action success
Few lawyers have all the skills needed to resolve EB-5 problems.

And because we have investigated and litigated financial frauds and corporate misconduct for decades, we are ideally suited to counsel clients on the investment-nature of their EB-5 petitions and provide innovative solutions on how to get their money back.  Those solutions also include variable fee structures, such as flat fees, staged fees or contingency fees, where clients only pay attorneys’ fees if the matter is successful and money is recovered.

The EB-5 Program

The EB-5 investment program provides certain foreign investors who can demonstrate that their investments are creating jobs in this country with a potential avenue to lawful permanent residency in the United States. To raise money from foreign investors, business owners and developers apply to the US Citizenship and Immigration Services (“USCIS”) to be designated as “regional centers” for the EB-5 program.  These regional centers offer investment opportunities in “new commercial enterprises” that may involve securities offerings.  Through an EB-5 visa, a foreign investor who invests a certain amount of money that is placed at risk, and which creates or preserves a minimum number of jobs in the United States, is eligible to apply for conditional lawful permanent residency.  Toward the end of the two-year period of conditional residency, if he or she can establish that the job creation requirements have been met, the foreign investor is eligible to apply to have the conditions on their lawful permanent residency removed and receive an “unconditional” Green Card.

The EB-5 Process

An EB-5 visa is available to those individuals seeking to invest in a new commercial enterprise in the United States as part of obtaining lawful U.S. residency.  The EB-5 process includes the following main stages:

  • Eligibility & Making the Investment: The first step in the EB-5 process is to determine whether the individual is eligible to participate in the program. To be eligible, the individual must make a qualifying investment in a new commercial enterprise, demonstrate the investment will create or preserve at least 10 full-time jobs for U.S. workers, and meet other requirements.
  • Petitioning For Immigration: Once the individual has determined eligibility, they must file an Immigrant Petition by Alien Entrepreneur on Form I-526 (“I-526”) with USCIS. The Form I-526 provides details about the individual’s investment and the proposed business venture.
  • Wait for Adjudication: After filing the Form I-526, the individual must wait for USCIS to adjudicate the petition. The processing time can vary depending on the volume of petitions received and other factors.
  • File the Form I-485 or DS-260: If the Form I-526 is approved, the individual may file an Application to Register Permanent Residence or Adjust Status on Form I-485, if they are already in the United States, or an Immigrant Visa Application on Form DS-260, if they are outside of the United States.
  • Interview & Decision: The individual may be required to attend an interview with USCIS or a U.S. consulate. After the interview, USCIS or the consulate will make a decision on the individual’s application.
  • Conditional Permanent Residency: If the individual’s application is approved, they will be granted conditional permanent residency in the United States for a period of two years.
  • Removing Conditions on Permanent Residency: After two years, the individual must file a Petition by Entrepreneur to Remove Conditions on Form I-829 (“I-829”), to remove the conditions on their permanent residency. This requires providing evidence that the individual’s investment has created or preserved the required number of jobs and that the business is still operating. If the Form I-829 is approved, the individual will receive permanent residency in the United States.

EB-5 Problems We Can Help Solve

Immigration-Related Problems & Solutions

Individuals who have pending EB-5 petitions and are experiencing delays or have had one or another of their immigration petitions denied, have several options, including renewal requests, appeals and litigation – which may involve filing a lawsuit against USCIS or other relevant government agency(s).

  • Unreasonable Delays. Individuals who believe that their EB-5 process has been unreasonably delayed – whether it is a multi-year pending I-526 or an I-829 that has been pending for more than 180 days, may consider filing a lawsuit against the US government. This may involve challenging the pace in which their delayed petition is being processed or the sheer wait time associated with it.  Delays can have catastrophic personal or legal ramifications – such as the inability to visit family or advance careers – these cases require a personal touch.  Such delay lawsuits are frequently filed using a Writ of Mandamus or claims under the Administrative Procedures Act (“APA”).  To learn more, view our discussion on immigration delay litigation.
  • Unlawful Denials. Individuals who believe that a particular EB-5 petition – such as the I-526 or the I-829 – has been unlawfully denied may consider filing a lawsuit against the US government. This involves challenging the basis for the decision and explaining why the reason behind the denial is not sound.  Frequently, this means having to explain that the decision was “arbitrary” or “capricious” or is in violation of a rule or well-established law.  Appealing the decision to the Administrative Appeals Office (“AAO”) is also an option. Such AAO appeals are sometimes, but not always, required and they have numerous pros and cons which should be considered.  Because every situation is different and individual circumstances change, a careful analysis is critical.  To learn more, view our discussion on challenging immigration denials.

Investment-Related Problems & Solutions

At the heart of the EB-5 process is the financial investment the individual makes, currently ranging in sum from $900,000 to $1.8 million.  Until the entire process is complete, that investment remains “at risk” and subject to complete or partial loss.

Obtaining the return of that investment can sometimes be challenging.  In those instances, we provide a complete review of each client’s circumstances and the nature of the investment itself.  If there’s a litigation solution, we’ll find it.  And even when a litigation solution is not viable or carries too much risk, we can frequently provide alternatives to litigation that may achieve the same result.

EB-5 funds are commonly subject to the U.S. securities laws and the corporate laws of the states in which those investments are made.  This means that where an EB-5 petitioner has a problem with the investment-portion of their EB-5 process, they need to look at various state and federal laws to find the right solution.  In many cases, the right solution is a multi-step process that can include several, potentially simultaneous, actions. Options can include:

  • Investigations / “Books & Records” Search. Investors are entitled – and in many instances legally encouraged – to formally investigate the nature of their financial investment, and the status of the EB-5 project at the heart of their investment, before taking further action. Because EB-5 investments are typically ownership interests in a partnership or a limited liability company, an individual needs to be familiar with the formation documents associated with these entities, and the various state laws pursuant to which these entities are created. While most EB-5 investment entities are created under Delaware’s corporate or partnership statutes, that is not always the case.  Sometimes, the entities are created under the state law in which the EB-5 project is based.  However, most state corporate laws permit investors to request information about their investment and the “books and records” of the company they invested in.  The information requested – if done properly, completely and thoughtfully – can be critical in understanding what, if anything, is wrong with the company or its management.  Sometimes, simply asking for this information can indicate an investor’s sophistication and resolve. This can help facilitate a quick resolution.  If the company resists in providing this information, sometimes a lawsuit is required which is only successful if the initial demand was properly made.
  • Pre-Filing Settlement Discussions. Many individuals and companies prefer to address problems quietly, amicably and without costly litigation. As a result, contacting the EB-5 sponsors or project managers about a problematic EB-5 investment and proposing a solution, can often lead to constructive results.  This requires an understanding of the immigration law at the heart of the investment, the securities at issue, as well as the legal rights of the parties. With this knowledge, skillful negotiators can sometimes obtain the desired result – whether it’s an early withdrawal of funds or the full return of an investment following an I-829 approval. Before filing a lawsuit, a pre-filing discussion can be very fruitful.
  • Litigation / Class Actions. Where the facts support doing so, and a private resolution is not possible, suing the EB-5 sponsors is often the only solution to an EB-5 investment problem. But when, where and how that occurs can vary greatly.  While most litigation involves a single party seeking relief from another party in state court, the complex nature of these cases, the parties involved, the intersection of immigration, corporate and securities laws, means that there are numerous options to consider with varying pros and cons. Among others, litigants need to consider when to file a lawsuit, whether to file in state or federal court, and what exactly to complaint about (and not complaint about).  And because EB-5 investments are almost always made by numerous similarly situated investors who purchase nearly identical investment interests, these types of lawsuits are frequently appropriate for class action treatment, which can greatly enhance their effectiveness.  Attorneys well-versed in these various intersecting areas are best suited to properly handle these types of cases.
  • Whistleblowing. The U.S. Securities and Exchange Commission has noted the existence of fraud in connection with the EB-5 program.  You can view the SEC’s announcements here — Investor Alert: Investment Scams Exploit Immigrant Investor Program.  Where fraud exists, we can advise clients on the best way to address it. Sometimes, this includes filing a tip with the government or the SEC Whistleblower Office.  Some tips can even be filed anonymously.  A successful tip could entitle the whistleblower to a large financial award from the SEC.

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Few lawyers have all the skills needed to resolve problems that arise in the EB-5 context – immigration law, corporate & securities, litigation & class actions, whistleblower representation.  We do.