EB-5 Immigrant Investor’s Litigation Benefits

Posted on 06/07/2021 by Mark A. Ivener, A Law Corporation

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Litigation involving the EB-5 immigrant investor visa has increased, quickly becoming the most viable solution to some of the challenges many immigrant investors face. The barriers set by USCIS have made applications unnecessarily difficult. I-526 petitions linger for years, and the requests for more documentation are now inevitable. Overall, the denial rate has skyrocketed.

Is the USCIS EB-Immigrant Processing Office (IPO) doing what they have been tasked to do, or are they undermining a program intended to create jobs and bring capital into the country?

Plagued with a myriad of bureaucratic failings, IPOs often fail to transfer files to the National Visa Center for weeks, months, or even years. And while the applicant may have provided all the documentation required, they receive only standard emails with little information and no interview in sight due to numerous Trump bans.

Those filing for adjustment of status in the US have also become frustrated, with work and travel permit applications taking years, while the adjustment seems to sit for years without action. This same delay applies to I-829 removal of conditions, making it almost impossible to apply for US naturalization. To make matters worse, USCIS will not automatically extend the two-year green card beyond the initial 18 months, severely impacting immigrants who need proof of status, travel or work.

While the DHS now has a new director who understands the program, it is anticipated that he may be so overwhelmed with the current challenges for some time to come, leading the courts to continue to be the only option for relief for EB-5 investors.

Challenging the immigration process

Frustrated applicants are taking their cases to the courts, and the courts are listening. Unfortunately, this is often necessary because the USCIS’ Administrative Appeals Office is not an independent tribunal. The statistics on AAO victories show overcoming denials is rare, and the IPO invariably sides with its officers, failing to provide meaningful review or guidance.

This is another reason why EB-5 litigation is more prevalent, with many bypassing the non-mandatory administrative appeal process. Notably, in 2020, the Administrative Appeals Office dismissed 36 appeals while sustaining only two and remanding the remaining six. However, it may be strategically advisable to file a Motion to Re-open in some instances to supplement the record before heading to federal court to challenge USCIS’ adjudication.

It is not unusual for USCIS to send 32-page requests for evidence, often asking for evidence already in the file. The use of boilerplate RFE’s is increasing as almost every case endures bureaucratic challenges. The legal standard of proofs the preponderance of the evidence, is often ignored in favor of a “beyond any reasonable doubt” standard – plainly unlawful in civil proceedings. Trying to navigate this treacherous path without experienced counsel can be extremely difficult.

Mandamus and Unreasonable Delay Under Administrative Procedures Act

Mandamus litigation is a helpful tool for EB-5 investors negatively impacted by the USCIS’ long case processing times and has become more popular. This is a lifeline for immigrant investors who may be running out of time in nonimmigrant visa classifications seeking I-526 adjudications, conditional green card holders who cannot entirely derive the benefits of their conditional lawful permanent residency seeking I-829 adjudications, and EB-5 Regional Centers and US developers seeking I-924 adjudications to provide more assurance to potential investors.

Recently, plaintiffs facing unreasonably long adjudication delays have been victorious with claims under the Administrative Procedures Act (APA) by defeating motions to dismiss by USCIS seeking to rid itself of cases based on USCIS’ posted processing times and supposed “rule of reason in processing cases under the Visa Availability Approach introduced in early 2020. In August 2020, a US District Court judge ruled: “The fact that USCIS takes equally long or longer to adjudicate other applicants’ petitions does not in itself show that such delay is reasonable.”

In February 2021, a US District Judge rejected the USCIS’ attempt “to adopt a bright-line rule for what constitutes an unreasonable delay in the APA context and denied USCIS’ motion to dismiss due to “the numerous disputed factual issues “that can only be resolved on an evidentiary record.” (Gutta v. Renaud.)

Challenging USCIS’ decisions

Another possibility for litigation is when USCIS makes an improper decision based on the plain reading of the Immigration and Nationality Act or applicable regulations. In Zhang v. USCIS et al., two EB-5 investors challenged USCIS’ interpretation of the terms “cash” and “indebtedness”, resulting in denied Form l-526s based on an abrupt policy change announced during an EB-5 stakeholder meeting in 2015. The investors won after years of courtroom battles.

The primary issue was whether or not loan proceeds could be counted as “cash,” which automatically qualifies as capital, or as “indebtedness,” which qualifies as capital only if it is secured by the foreign investor’s assets. Both the US District Court of the District of Columbia and the DC Court of Appeals determined that USCIS’ interpretation was arbitrary and capricious, violating the APA.

The appellate court ruled that “cash is fungible, and it passes from buyer to seller without imposing on the seller any of the buyer’s obligations to his own creditors. The buyer’s source of cash – whether paycheck, gift, or loan – makes no legal or practical difference.”

Circuit Court decisions demonstrate that EB-5 investors and Regional Centers should not be discouraged by denials by USCIS, with the plain language of the INA and applicable regulations taking precedence over USCIS’ policy considerations and the unlawful denial of EB-5 petitions.

Challenging USCIS’ policies

It is also possible to litigate against USCIS when it creates new rules or policy without following the correct procedures as set out in the Administrative Procedures Act. In Civitas Massachusetts Regional Center LLC et al. v. Alejandro Mayorkas et.al., eight regional centers challenged USCIS’ July 24, 2020 policy relating to redeployment. The new policy limited redeployment options to within the geographic area of the same regional center, including any amendments to the regional center’s geographic area approved before the further deployment.

The plaintiffs argued that the implementation of this policy was a legislative rule and that USCIS did not comply with the notice and comment rule-making according to the APA. Additionally, they claimed that this was impermissibly retroactive and violated due process and that, as a reversal on established policy, it was arbitrary and capricious.

Congress continues to focus on integrity measures, but the EB-5 industry remains uneasy about the upcoming reauthorization of the regional center program. At the same time, the increase in litigation benefits investors who have been at the mercy of a runaway USCIS that continues to restrict access and eligibility for many EB-5 benefits unlawfully.

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About the Author

Mark Ivener is an experienced business and EB-5 immigration attorney who has written 5 books on Immigration Law as well as has written numerous articles and spoken at many events on EB-5 topics.