EB-5 Class Action Law Suit – The Issues

Immigration EB-5 Loans – class action suit

The immigration EB-5 Loans investment class action law suit in short – the Plaintiffs obtained third party loans to obtain funds to finance new enterprises in the United States. These enterprises were created for the purpose of obtaining immigration benefits under the EB-5 program. The loans did not secure any assets in the new enterprises in the United States.

The main issued sought by the Plaintiff is systematic denial of I-526 applications where the source of the money was a loan obtained through a third party. USCIS has historically treated money obtain from third party loans as cash.  See 8 U.S.C. Sec. 204.6(e). However, starting on April 25, 2015 USCIS has recently started treated third party loan proceeds differently. USCIS’ interpretation of the statute has several consequences.

First, USCIS is confusing the definition of indebtedness with that of cash. USCIS does not permit the usage of indebtedness to finance EB-5 projects.  See Matter of Izummi. However, nothing in the regulation prohibits the usage of cash that is obtained from a loan that does not collateralizes any assets used to determine the amount of the investment in the United States.

Second, USCIS did not follow proper protocols allowing time to comment and review of the rule.

Finally, USCIS applied the rule retroactively, thus, petitioners that were not aware of USCIS’ intention to interpret 8 U.S.C. Sec. 204.6(e) to disallow the use of loan proceeds for the investments. This meant systemic denials of petitions that would create great hardship.

Currently, USCIS is taking about 13 months to adjudicate a petition.  In the case of Chinese nationals this wait is even longer. Thus, if a petitioner applies under one set of rules, but USCIS uses a different set of rules, the petitioner is likely to be woefully unprepared for the new interpretation of the rule. Therefore, it should be very interesting how the federal courts interpret the Petitioners’ claims.

In the meantime, investors seeking to immigrate the United States using the EB-5 program should consult a knowledgeable attorney in this matter.

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