Wednesday, May 27, 2015

Sharp increase seen in number of EB-5 visa petitions denied by USCIS at I-526 and I-829 stages

It seems that an increasing number of EB-5 visa investors are seeing RFE's and rejections at both the I-526 and I-829 stages due to increased scrutiny and review of petitions. It is common knowledge that EB-5 visa investors who choose regional centers experience loss of all or part of their capital, but the increasing number of denials shows that regional centers continue to be a bad idea for EB-5 visa investors.

Even DHS Chief, Jeh Johnson, has asked Congress for more powers against regional centers.

The regional center program is expiring in September 2015. It is expected that at least 16,000 EB-5 visa investors will have pending petitions when the regional center program expires. Last year, a bunch of lawyers were asked to opine on what would happen to EB-5 visa investors whose petitions were pending when the regional center program ended (see link The fact is, despite the frantic efforts of regional center supporters who're signing up co-sponsors, there is ZERO chance of regional centers continuing to exist in the EB-5 visa program as per GovTrack: see link

Most of these lawyers were unwilling to even contemplate the possibility of this happening even though a similar bill died last year (see link and the current bill is also expected to die due to fierce opposition from investigators from USCIS FDNS, IRS - CID, FBI, SEC, Diplomatic Security Service, ICE-HSI, etc., due to which the official probability of the regional center renewal bill is now 0% (see link

The reasons that the regional center renewal bill is Dead on Arrival is due to massive scandals, scams, money laundering and securities fraud violations as well as juicy opportunities for politicians to settle old scores and unprecedented opposition from law enforcement agencies and law enforcement agents. There are at least 2 more regional center related EB-5 visa issues that will soon be coming up, of which one issue that makes it difficult to get the necessary votes is the soon to be released GAO report that is expected to be quite unfavourable for the regional center industry.

The simple question that these attorneys failed to contemplate and answer is: 
Will USCIS approve a petition if on the date of the visa adjudication, the visa category for the petition does not exist any more? 
I will be asking the question myself tomorrow in the USCIS EB-5 stakeholders conference call, and hopefully we shall see some clarity although I suspect that the answer is a no.

The only safe option for EB-5 visa investors is to choose Genuine Direct Investments as it is the only permanent portion of the EB-5 visa program.

Those who invest in Genuine Direct Investment Businesses usually earn ROI's that are significantly larger than the measly returns offered by regional centers, and capital losses are quite uncommon in Genuine Direct Investment Businesses in contrast to regional centers, where capital losses are the norm.
As it is, regional centers will cease to exist after September 2015 due to massive pressure on politicians by investigators and prosecutors from multiple agencies as well as the recent scandal involving Alejandro Mayorkas, who helped at least 3 regional centers fraudulently obtain EB-5 visas. The legislative impact of this scandal is that the bill to extend the regional center program is dead in the water as it has become a political hot potato, and IIUSA + Greenberg Traurig will again fail to get it passed this year as they failed to get it passed last year. (see the independent bill tracker Even last year Congressman Polis tried to extend the regional center program, but could not succeed, and this year looks like the same story as few politicians wish to be openly associated with supporting such a scandal ridden program.
The full DHS OIG report is available for review at OIG EB-5 Report March 2015.pdf and EB-5 visa investors can read it to understand that due to the fact that USCIS employees are actively opposing the extension of the regional center program, and are joined by ICE - HSI, DHS OIG, SEC, IRS - CID, etc., which means that the practical chances for the extension of the regional center program are zero percent and the theoretical chances for the extension of the regional center program are 1%
The DHS OIG report on regional centers is at

Even the SEC has advised EB-5 visa investors to avoid regional centers due to the fact that securities fraud is quite common in the regional center program. See the SEC memo at

The ICE memo recommending a complete ban of regional centers can be seen at 

In practical terms, this means that those EB-5 visa investors whose petitions were not approved by September 2015 will probably have to re-apply under the Direct Investment Program, and this will significantly help boost the EB-5 visa program by eliminating the fraud and conflict of interest seen in the regional center program. It would also help increase actual employment in the US as opposed to the hypothetical numbers seen in the "indirect employment" model given to regional centers.

The upcoming EB-5 visa stakeholder's conference is expected to show a continuing trend of growing backlog of petitions, very long approval times and increased denial rates for regional center affiliated EB-5 visa petitions as DHS, IRS, ICE, SEC and FBI continue to investigate fraud and money laundering.
Since 2012, ICE has officially recommended banning regional centers from the EB-5 visa program and actually said "there can be no safeguards that can be put in place that will ensure the integrity of the regional center model." See link at

EB-5 visa investors need to remember that the ONLY safe way to get approved is through Genuine Direct Investment Businesses.

Here are some of the critical reasons that EB-5 visa investors should ALWAYS choose Genuine Direct Investment Businesses and avoid regional centers:
A.   In a Genuine Direct Investment Business, it is quite unusual to encounter fraud or conflict of interest. This alone is THE biggest reason why EB-5 visa investors usually experience capital loss if they opt for regional centers or unsafe Direct Investments (such as Voodoo or Marcos Pizza), while those who opt for Genuine Direct Investment Businesses usually NEVER experience capital loss.
B.   EB-5 visa investors who choose Genuine Direct Investment Businesses usually earn annual ROI of 15% to 40%, while those who select regional centers usually earn 0-2% annual ROI.
Genuine Direct Investment Businesses offer easy exit strategies to EB-5 visa investors while those who invest in regional centers experience TERRIBLE exit strategies. 
C.   Regional Centers usually commit securities fraud and securities law violations while this is usually unheard of in Genuine Direct Investment Businesses. 
D.   EB-5 visa investors usually get capital gains if they invest in a Genuine Direct Investment Business and almost NEVER get capital gains if they invest in a regional center. 
E.   EB-5 visa investors in Genuine Direct Investment Businesses usually see faster processing and approval of their petitions, while it takes much longer for EB-5 visa investors to get their immigrant visa through regional centers. 
F.   EB-5 visa investors in Genuine Direct Investment Businesses have a higher chance of getting their permanent green card, while those who opt for regional centers have a lower chance of getting their green card. 

If you are a business owner or high net worth individual interested in migrating to the US using EB-5 visa or L1A + EB-1C visa, please contact us for a free consultation. We offer a turnkey solution and have a 100% fee refund guarantee if a client is denied due to our fault.

Mohammed Shaikh, MBA (Accounting), CFE, Licensed Business & RE Broker (CA & FL)
Online Phone: +1 407 535 0616

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