USCIS Does Right Thing on EB-5 Issue — and Gets Sued

By David North, September 19, 2012

USCIS has rejected a set of petitions filed by alien investors in the EB-5 program and has, as a result, been sued in federal court by some of the major players in this controversial buy-a-set-of-visas scheme.

Aliens who are otherwise ineligible for green cards can secure them for themselves and their families by investing as little as $500,000 in business programs approved by the government; each investment is supposed to create 10 jobs, directly or indirectly.

The 23 alien investors in this case say that they have already invested at least some of the money involved in a warehouse conversion deal in Riverside, Calif., and that USCIS, is, in effect, changing the rules in the middle of the game.

Many of the important details of the case are not clear because of sketchy news reporting and, at least momentarily, the sealing of the documents in this federal court case.

What is clear is that the aliens are investing in the purchase of, and, to a lesser extent, the renovation of a warehouse, and that they are claiming that the jobs that need to be created to activate the visas will come from firms moving into the new development. This process, called "tenant occupancy" is a controversial one, and many critics say that it is wrong to give an investor credit for creating jobs when all the investor has done is to house — not fund — the new jobs.

According to a news account, USCIS has declared (correctly in my eyes): "It is not appropriate to take credit for the employment impacts created by unrelated business ventures of future tenants."

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It does not always take this position, which may be a cause of the suit.

My worry is that once the USCIS leadership, which is extremely fond of the EB-5 program, hears about the suit they will work out a settlement that gives the alien investors, and the middlemen, what they want.

The suit involves investors apparently recruited by a major player in the EB-5 program, London-based American Life Development Company; and though the warehouse remodeling activity is in the far southwest of the country, the law firm retained, an assertive one run by Ira Kurzban, is based in the far southeast (Miami).

Interestingly, the judge in the case, Christina Snyder, and the USCIS Director, Alejandro Mayorkas, must know each other; she was appointed to the bench in the Central District of California by President Clinton at a time when Mayorkas, another Clinton appointee, was the U.S. Attorney for the same district. Old chums? Old adversaries? None of the above? Who knows?

I first learned about this case from the website of Joe Whelan, an EB-5 consultant.