EB-5 Investment Visa and Recent related AAO decision

 

The fifth employment based preference (EB5) category is designed specifically for Employment Creation.. To qualify, a foreign national must invest between $500,000 and $1,000,000.00 depending upon the employment rate in a specific geographical location. The national must invest in a commercial enterprise in the U.S. that will create at least 10 new jobs for U.S. citizens, lawful permanent residents, or other lawful immigrants, not including the investor and his/her family. Accordingly, the regulation at 8 C.F.R. §204.6(j) states that to show that the petitioner has invested or is actively in the process of investing the required amount of capital, the petition must be accompanied by evidence that the petitioner has placed the required amount of capital at risk for the purpose of prospective investment arrangement entailing no present commitment, will not suffice to show that the petitioner is actively in the process of investing. The alien must show actual commitment of the required amount of capital. Regulations define Capital as cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness. Additionally, the regulations define Invest as to contribute capital. A contribution of capital in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the alien entrepreneur and the new commercial enterprise does not constitute a contribution of capital for the purposes of this part.

The Administrative Appeals Office (AAO) recently dismissed an appeal in which the petitioner sought classification as an alien entrepreneur pursuant to section 203(b)(5) of the Immigration and Nationality Act. The director of the Texas Service Center initially denied the petition because the petitioner failed to demonstrate a qualifying investment of lawfully obtained funds, and this appeal followed.  

 

 

The record indicated that the petition was based on an investment in a business and the required amount of capital for the specific geographical location was $500,000. In order to secure an investment visa under the EB5 preference category, the investment capital needs to be obtained through lawful means, be identifiable, traceable and “at risk.” Additionally, the type of capital itself needs to fit within the regulations definition.  

The purpose of review by the AAO is to determine from the documentation produced by the petitioner whether the petitioner had established a qualifying investment of lawfully obtained funds. The evidence indicated that the petitioner transferred more than $130,000 directly to the business; however, the fact that the petitioner may have borrowed funds against his home cannot establish that those borrowed funds were subsequently invested into the business. It is the petitioner’s burden to trace the path of any investment from his personal funds to the new commercial enterprise. Additionally, the AAO noted that the investment of $130,000 was poorly documented. Additional evidence indicated that at least some of the petitioner’s contributions to the business were loans. As stated above, the definition of Invest excludes debt arrangements whereby the alien loans funds to the new commercial enterprise. Moreover, the AAO found that the petitioner’s promissory note was unsecured and unpersuasive evidence of a qualifying investment.  

After a thorough review and analysis of the evidence produced by the petitioner, the AAO found that the record lacks evidence that the petitioner had invested the necessary funds or that the funds derive from an ultimately lawful source. Based on the evidence presented, the AAO concluded that the petitioner had not met its burden of proof and therefore dismissed the appeal.

 

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