USCIS Provides Guidance on Redeployment of EB-5 Capital

Purple image with white text reading blog title USCIS provides guidance on redeployment of EB-5 capital

Gerald LeMelle

By Gerald LeMelle

LeMelle is a partner at Dunlap Bennett & Ludwig’s Tysons Corner Office.

 
[July 26, 2020, Tysons Corner]  USCIS announced that EB-5 capital might be redeployed through the New Commercial Enterprise (NCE), the entity investors initially invested in, within the territory of the regional center, as long as it is redeployed “in commerce,” and consistent with the NCE’s ongoing purpose of conducting lawful business activity. Redeployment does not have to be within a TEA, even if the initial investment was in a TEA. Further, USCIS considers one year as a reasonable time to redeploy the capital.

In 2017, USCIS stated in its policy that EB-5 investment capital is required to remain “at-risk” in the NCE until each EB-5 investor’s I-829 petition is adjudicated. This has precipitated the need for the NCE to “redeploy” the invested funds. However, USCIS has provided no guidance on what requirements the redeployed investment is required to meet, other than that it must meet the definition of “at-risk”.

One of the top questions we receive from EB-5 clients is about “redeployment.” The fundamental problem is EB-5 investors who would like to know from the time of investment (a) where their money will be redeployed and (b) feel that there is some assurance that their money will be at the least level of risk possible consistent with the requirements of EB-5 law and policy.

This is a critically important consideration facing EB-5 investors, especially those from countries that don’t have EB-5 visas currently available. For example, because of limited visa availability for mainland Chinese-born clients, their original investments are likely to mature before they can file their I-829 petitions and remove the conditions on their green cards. Today, loans are typically paid off in 5- and 6-year, while Chinese investors with a quota backlog have to wait for 8 to 10 years or longer before they can receive a return of their invested funds from the NCE. Before the updated guidance, it was unclear how to satisfy their ‘at-risk’ program requirement, when the job-creating enterprise (JCE) is ready to repay the loan made to them by the entity representing investors. Redeployments that did not meet these requirements may be deemed a material change that would result in the denial or revocation of investor I-526 petitions for any investor who has not yet become a citizen.

Many NCEs preferred to redeploy funds into their next project. However, this often-raised issue of a possible conflict of interest, breach of securities law, and/or violation of the fiduciary duty to investors. If you have any questions about this or other EB-5 issues, contact the experienced Immigration attorneys at Dunlap Bennett & Ludwig by calling 703-777-7319 or emailing clientservices@dbllawyers.com.

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