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Evidence of Source of Capital in Immigrant Investor Cases (Part I)
Introduction This article is written for immigration law practitioners with an interest in the law concerning immigrant investors. Substantial hurdles exist for practitioners representing immigrant investors, as legal standards appear to be evolving. An ever-higher hurdle is the government's insistence on voluminous evidence concerning the investor's "lawful" source of funds. Recent practice strongly suggests that the government has erected a de facto evidentiary presumption that all investor capital is not from a lawful source. This article attempts to present the arguments available to the practitioner who confronts these challenges. Background of Immigrant Investor Law In 1990 the U.S. Congress enacted legislation authorizing issuance of approximately 10,000 immigrant visas annually to aliens who invest substantial capital and create full-time employment for at least ten U.S. workers.1 This provision is contained in Immigration and Nationality Act (INA) § 203(b)(5).2 It is known as the immigrant investor or EB-5 category. The Immigration and Naturalization Service (Service or INS) promulgated regulations implementing the immigrant investor category in 1991.3 The purpose of the immigrant investor law is to stimulate investment that would create jobs in the U.S. economy, by offering to foreign nationals the benefit of U.S. permanent residence.4 The authorizing legislation requires an investor to establish a new commercial enterprise, participate in the management of the enterprise, and invest capital so that the enterprise will employ at least ten qualified U.S. workers.5 In 1993 Congress enacted the immigrant investor pilot program.6 The purpose of the pilot program is to amass large amounts of capital and to concentrate the investment of capital in certain defined regional zones "to determine the viability of pooling investments in a region of the United States."7 Congress sought to achieve these economic development objectives by appealing to immigrant investors who invest in "regional centers." The statute authorizes such investors to establish eligibility for an immigrant investor visa based on the relaxed standard of indirect job creation. Congress has extended the pilot program twice, most recently in 2000.8 In doing so, Congress has increased the number of visas available under the pilot program to 3,000 visas annually, and has amended the statute to facilitate immigrant visa issuance to investors in regional centers.9 An immigrant investor files an I-526 petition with the Service. If that petition is approved the investor proceeds via immigrant visa processing or adjustment of status to obtain conditional permanent residence status. That status is conditional for two years.10 Before the expiration of the two-year period the investor must file a I-829 petition to remove the conditions.11 Since its enactment in 1990 the immigrant investor law has not proven to be the vehicle for many investor families to immigrate to the United States.12 Visa issuances to immigrant investors have dropped precipitously since the issuance of four precedent case decisions in 1998 by the Service's Administrative Appeals Office (AAO).13 Since then, standards employed by the Service to qualify investors for the immigrant investor visa classification appear to have tightened significantly, and just a trickle of cases have been approved.14 The Service's insistence on overwhelming evidence of the investor's "lawful" source of capital appears at the heart of many investor case denials. The Problem: How to Prove to the Service's Satisfaction that Invested Capital is "Lawful" In recent nonprecedent AAO decisions and in case decisions by INS Service Centers, the Service requires that the investor petitioner prove that the source of the invested capital is "lawful," and that the investor petitioner has a "level of income" or has accumulated sufficient wealth that would enable the investor to invest.15 While at first glance these requirements may appear to be innocuous and in furtherance of seemingly salutary objectives, substantial practical problems exist in meeting these requirements.16 The fact is that many law-abiding investors who have entirely legitimate wealth to invest, and who have presented substantial evidence of how that wealth was obtained, have nonetheless received petition denials from the Service. Until the Service acts to encourage investment-based immigration, the key to turning the tide in these immigrant investor cases may be to challenge Service decisions by demonstrating that the Service imposes unsound principles of evidence, legal standards that lack a statutory basis, and requirements that are arbitrary and capricious.
© Copyright 2001 Lincoln Stone and Stephen Yale-Loehr. All rights reserved. Reprinted with permission. This article was originally published in 6 Bender's Immigration Bulletin 972 (Oct. 1, 2001).
1Immigration Act of 1990, Pub. L. No. 101-649, § 121, 104 Stat. 4978 (enacting INA § 203(b)(5), 8 U.S.C. § 1153(b)(5)). About The Authors Lincoln Stone (Lstone@fms-law.com) is co-chair of the American Immigration Lawyers Association (AILA) Investors Committee, and is of counsel to Fainsbert Mase & Snyder, LLP (http://www.fms-law.com) in Los Angeles, California. Stephen Yale-Loehr (syl@twmlaw.com) co-chairs the AILA Investors Committee with Lincoln Stone. He is co-author of Immigration Law and Procedure, published by Matthew Bender & Company, Inc. He also teaches immigration law and refugee law at Cornell Law School, and is of counsel at True, Walsh & Miller (http://www.twmlaw.com) in Ithaca, New York.  Share this page | Bookmark this page | Print this page |  Add to del.icio.us
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