No guarantee of return on EB-5 investment

The EB-5 Program is seeking to attract individuals from other countries who are willing to put their capital at risk in the United States, with the hope of a return on their investment, to help create U.S. jobs. The law does not specify what the degree of risk must be; the entire amount of capital need only be at risk to some degree. If the immigrant investor is guaranteed the return of a portion of his or her investment, or is guaranteed a rate of return on a portion of his or her investment, then that portion of the capital is not at risk. For the capital to be “at risk” there must be a risk of loss and a chance for gain. In our precedent decision Matter of Izummi, 22 I&N Dec. at 183-188, the AAO found that the capital was not at risk because the investment was governed by a redemption agreement that protected against the risk of loss of the capital and, therefore, constituted an impermissible debt arrangement under 8 C.F.R. § 204.6(e) as it was no different from the risk any business creditor incurs. Furthermore, a promise to return any portion of the immigrant investor’s minimum required capital negates the required element of risk. Thus, if the transactional agreements provide that the investor may demand return of or redeem some portion of capital after obtaining conditional lawful permanent resident status (i.e., following approval of the investor’s Form I-526 and subsequent visa issuance or, in the case of adjustment, approval of the investor’s Form I-485), that portion of capital is not at risk.

Taken directly from USCIS’ EB-5 Adjudications Policy Memorandum posted on February 14, 2013.