The Great EB-5 “Expedited Processing” Debate: The Issue of "False Inducement"
Judging from all the recent online discussion regarding EB-5 expedited processing, you'd think that the notion of expediting a case pending with USCIS is something new. It isn't. The USCIS Policy Manual has long offered clear regulatory guidance on what justifies “expedited processing” in Chapter 12 of its section on customer service. Expedited processing is something veteran immigration lawyers - "Geezers", in Eugene Chow parlance - have used successfully for decades. But EB-5-specific “expedited processing”, during these days of huge USCIS delays, is being proactively marketed by top U.S. law firms. (Here’s just one example of a national firm marketing their EB-5 “expediting” prowess, published five years ago, describing themselves as “uniquely equipped for this task, as our firm offers lobbying services to clients”; today, more and more firms are offering “expedited processing services”.)
The criteria detailed in the regulations are clear, and I will not recite them again. Basically, USCIS can expedite a filing for a variety of reasons including emergencies, humanitarian circumstances, national interest, etc. Notably missing from the regulation is provision implemented exclusively for the purpose of getting EB-5 funds deployed to a given EB-5 project… this new “blanket expedite” which has suddenly appeared. The notion that USCIS can approve an comprehensie EB-5 expedite request granting expedited handling to a particular EB-5 project and also for its future investors' I-526 petitions -- irrespective of whether or not the particular circumstances of the investor's expedite request meets existing USCIS expedite requirements...well, that's a whole new one for me.
My problem is not with USCIS being magnanimous with its discretion; I APPLAUD this action on their part. My BIG problem is what happens when that lucky project with the “blanket expedite” aggressively markets its good fortune to create a clear impression that you can cross the EB-5 finish line if you invest with them, and ONLY with them because they are the only project who’s been given this gift by USCIS.
AVS Regional Center has been operating in Vietnam since 2011 and remains the only EB-5 Regional Center with full time staffed offices in the country. I visit Vietnam monthly, and when I arrived there this past June, our phone was ringing off the hook with questions about the project promising 2 month I-526 approvals. Over the years, I’ve seen a lot of misleading EB-5 marketing and when I do, I blog about it. Accordingly, I published a blog detailing how “expedited processing” really works, quoted the U.S. regulations on point, and warned readers that:
- A Regional Center which has benefited from very fast I-526 processing cannot possibly manifest or promise to prospective future investors that they, too, can be assured of equally fast I-526 processing;
- Using a future promise of 2- month I-526 processing constitutes a false inducement to invest under U.S. securities law;
- 3- Even if the USCIS director personally signed off on a promise of 2 month I-526 processing for all of the projects investors and it was all in writing (and it is NOT, btw), the only date which matters is the date of receipt – the date which establishes the Priority Date – not the date of actual I-526 adjudication. Put simply, when a Vietnam investor faces a wait of several years because of the EB-5 backlog, whether their I-526 is approved in two months or in a year and a half is irrelevant to the case processing timeline.
That blog posting led first to a dialogue with EB-5 blogger extraordinaire Suzanne Lazicki and later to direct conversations with both the EB-5 project owner and their highly respected EB-5 counsel (who concurred with me that just because USCIS has issued prior I-526s in a few weeks, the project could not promise the same USCIS timeline to future investors.) After being assured of changes in their marketing language, I deleted the blog at the project’s request. However, the ads in Vietnam did NOT change, so in further blog entries (and in gentler, non-specific terms), I again emphasized the U.S. securities and immigration law issues raised by any EB-5 project purporting to assure prospects of future USCIS processing timelines.
Well, I'm not sure it was my doing, but the hornet's nest has definitely been stirred up. The “expedited processing” online saga continues, with more recent postings by various attorneys confirming that some expedite requests filed for projecs have also resulted in USCIS agreeint to expedite all resulting I-526s. I'm totally supportive of USCIS giving a leg up to a fellow True TEA project in a hard hit economic zone, especially after the plundering of the TEA concept by the big NYC developers. But I am uncomfortable with the summary conclusion that just because USCIS has the power to do whatever it wants (including “blanket expediting” of all I-526s for a given project), it can dispense with case-by-case review of expedite criteria for one specific EB-5 project. Since when can unpublished and unannounced changes in USCIS policy replace and supersede long-established and still-valid regulatory language to the detriment of other equally-compelling and deserving EB-5 projects? Not fair, period. USCIS should either grant "blanket expedites" to the handful of True TEA, legitimate EB-5 offerings across the country or at least provide specific written guidelines on how such projects can apply for the privilege.
With this new “blanket expedite” comes a great responsibility, namely the responsibility for the EB-5 project and regional center to truthfully market its offering in accordance with SEC regulations and to refrain from promising (or even insinuating) assurances of future adjudication timelines by the USCIS. In the context of an investment offering, the U.S. Securities and Exchange Commission mandates that issuers disclose that "past performance is no guarantee of future results." This same disclaimer should doubly apply to EB-5 offerors targeting prospects whose sole reason for investing is to procure US residency for their families and who, for that reason, are all the more vulnerable to false inducements to invest.
Dec 10, 2018
Nov 21, 2018