The most controversial aspect of the EB-5 Immigrant Investor Program is easily the few cases of fraud that have cropped up in the program’s history of 30+ years, harped on by the media despite the immense economic stimulation and job creation the program contributes to the U.S. economy. Within the EB-5 world, however, perhaps the most controversial aspect is the ever-growing backlogs, leaving thousands of investors and their qualifying family members in processing limbo for years despite their ongoing contribution to the U.S. economy.

The foremost victims of processing inefficiencies at United States Citizenship and Immigration Services (USCIS) are Chinese investors, pursuing an EB-5 investment from the most populous country in the world. For the tens of thousands of Chinese investors—and tens of thousands more if dependents are considered—stuck waiting indefinitely, the only hope is to keep checking USCIS’s monthly Visa Bulletin, as applicants whose priority date is earlier than the listed final action date are in line to receive a U.S. green card. But the tumultuous year of 2020 has thrown backlogged EB-5 investors a curve ball, elongating their wait times by an unknown amount.

As of January 28, 2021, the most recent Visa Bulletin is the one for February 2021, which lists the Chinese final action date at August 15, 2015. The problem, other than the fact that this final action date is around four and a half years in the past, is that it hasn’t budged since August 2020’s Visa Bulletin. Although USCIS does not release statistics on the number of EB-5 investment participants with I-526 approval eligible to receive their EB-5 visa, it’s possible to derive this figure through calculations using official USCIS data. Unfortunately for Chinese EB5 investment participants with later priority dates, this calculation doesn’t offer good news.

How Many Chinese Investors with I-526 Approval Are Waiting for Visas?

USCIS periodically provides the number of EB-5 investment participants by nationality who have approved I-526 petitions but whose priority date is not yet current. This information may be useful in its own right but cannot enable prediction of when, and by how much, the final action date may advance again. However, simple logic tells us the number of Chinese investors with approved I-526 petitions and clearance from the Visa Bulletin waiting on EB-5 visas increases with each advancement of the Visa Bulletin and decreases with each EB-5 green card issued to a Chinese investor. Due to the COVID-19 pandemic, the U.S. consulate in Guangzhou has canceled EB-5 visas, issuing precisely 0 since March 2020. Thus, we must focus on the number of additions to the queue.

Based on these figures, the difference between the number of EB-5 investment participants with I-526 approval waiting for their priority date to become current in April 2020 and November 2020, as provided by USCIS, should roughly equal the number of investors with I-526 approval who have been cleared by the Visa Bulletin. Since the figure provided by USCIS for April 2020 is 23,511 and that for November 2020 is 21,253, the difference is 2,258. The calculation gets more complicated than that, however, because spouses and children also take green cards from the yearly EB-5 visa pool. Data from FY2018 shows that dependents accounted for 63.2% of EB-5 visas claimed by Chinese nationals, so we can infer that as of November 2020, roughly 6,136 Chinese nationals were in line to receive an EB-5 visa under the final action date of August 15, 2015.

Given the combined obstacles of suspended visa interviews in China (with no timeline for resumption) and USCIS’s notoriously slow processing speeds, large-scale visa issuances are unlikely. In November 2020, Charles Oppenheim (chief of the Visa Control & Reporting Division at the U.S. Department of State) predicted around 3,000 visas might be granted to Chinese EB5 investment participants in FY2021—enough to supply only half of those eligible with visas. Given these projections, barring a miracle, the Chinese EB-5 final action date is unlikely to budge throughout FY2021. This also suggests USCIS may fail to distribute most of the 18,000+ visas the EB-5 program has been allocated in FY2021, nearly double the typical annual allocation.

It’s hardly a secret that the Biden administration is far friendlier toward immigration than the Trump administration was. While President Trump introduced various hurdles for newcomers to the United States, including an outright ban on most forms of immigration throughout 2020, President Biden has announced that comprehensive legislative reform to United States Citizenship and Immigration Services (USCIS) can be expected. Indeed, immigration reform was among Biden’s top talking points throughout his presidential campaign, and if his proposed plan is anything to go by, he will certainly make good on his promises. The full text of the bill has not yet been officially released, but the White House has published a fact sheet that provides a detailed outline of the changes to be proposed.

If the U.S. Citizenship Act of 2021 is passed, it will constitute one of the biggest legislative overhauls the U.S. immigration system has seen in decades. It would revolutionize the way the United States deals with immigration, with the White House citing “keeping families together, growing our economy, responsibly managing the border with smart investments, addressing the root causes of migration from Central America, and ensuring that the United States remains a refuge for those fleeing persecution” as the primary goals of the reform.

How Would the EB-5 Program Benefit from the Act?

The EB-5 Immigrant Investor Program is not explicitly named in the overview of the bill, and as a controversial residency-by-investment program, it is unlikely to garner significant focus from the president. Nonetheless, EB-5 investment participants stand to benefit greatly from the measures in the proposed bill favoring economic immigration. Here are five key measures that could dramatically improve the EB5 investment landscape.

Clearing Employment-based Visa Backlogs

Since 2014, the EB-5 program has been plagued with lengthy backlogs for EB-5 investment participants from particularly high-demand countries. China has led the pack in backlogs since the onset, but their southern neighbors in Vietnam joined the ranks a few years later. With thousands of EB5 investment participants with approved I-526 petitions awaiting visa availability per the monthly USCIS Visa Bulletin, backlogs dramatically delay an investor’s start to a new life in the United States while presenting the risks of necessary redeployment of EB-5 investment capital and dependent children aging out and becoming ineligible for a U.S. green card. Focusing on clearing the backlogs would change the lives of thousands of Chinese and Vietnamese EB-5 investors.

Recapturing Unused Visas

At the beginning of every fiscal year, USCIS designates a certain number of visas to each immigration program. If unclaimed visas remain at the end of the fiscal year, they are generally recycled into other programs more heavily favored by the U.S. government. Sometimes this can be good for the EB-5 program—for example, the unprecedented events of 2020 resulted in tens of thousands of unused family visas being rolled over to employment-based immigration in FY2021, with the EB-5 program receiving almost 10,000 more visas than usual.

Of course, most years won’t be like 2020, and recapturing unused visas will generally ensure that the EB-5 program doesn’t lose visas it was previously allocated. With USCIS having issued only a fraction of EB-5 visas five months into FY2021 despite the huge uptick in supply, the enactment of the proposed bill could save thousands of unused visas from rolling over into other programs.

Shortening Long Wait Times

As of February 2021, the typical wait time for I-526 petition approval—the first step on the EB5 investment journey toward U.S. permanent resident status—hovers around two to four years. For backlogged investors, this wait time is only elongated. USCIS’s inefficiency since FY2019 has resulted in ever-growing wait times for investors, markedly decreasing the attractiveness of the United States’ residency-by-investment program. Shortening wait times could boost the appeal of making an EB-5 investment, resulting in more investors embarking on the journey and funneling more capital into the U.S. economy.

Eliminating Country-based Visa Caps

U.S. immigration programs are subject to country-based visa caps, originally intended to spread immigration out across many countries. However, these caps are applied uniformly with no regard for the demand or population of a country, leaving China with the same number of permitted visas per fiscal year as Andorra. These caps are the reason behind the EB-5 backlogs, as the demand in large countries like China and Vietnam significantly outpaces the uniform country caps. Eliminating country limits for EB-5 visas could see the backlogs disappear rapidly, with thousands of Chinese and Vietnamese EB-5 investors finally receiving their long-awaited permanent resident status.

Exempting Spouses and Dependent Children from Employment-based Visa Quotas

Also contributing to the lengthy backlogs are EB-5 visas for spouses and dependent children cutting into the number of visas available for EB5 investment participants themselves. With roughly 10,000 EB-5 visas available per year, only around 3,000 go to investors. If spouses and dependent children are exempted from this pool, thousands more EB-5 investors will become eligible for visas, allowing USCIS to easily clear the long-standing backlogs and granting more families a brighter future in the United States.

Promoting Economic Growth with the EB-5 Program

EB-5 investors should monitor the U.S. Citizenship Act of 2021 eagerly, as its enactment could bring radical changes that significantly improve the outlook of an EB5 investment. The EB-5 program offers the Biden administration an excellent opportunity to fulfill its stated goal of immigration-driven economic growth, considering that the program has contributed billions in EB-5 investment capital to the U.S. economy over its three-decade history. The proposed bill would allow the EB-5 program to more efficiently stimulate the U.S. economy, attracting more investors and their EB5 investment capital.

Good news for the EB-5 community: Alejandro Mayorkas, Biden’s pick to head the Department of Homeland Security (DHS), has officially been confirmed by the Senate. Mayorkas, whose family fled Cuba for Los Angeles when he was just an infant, built an impressive legal career for himself before diving into politics, serving in positions in the Clinton and Obama administrations. He previously headed United States Citizenship and Immigration Services (USCIS), promoting and fostering the EB-5 program from the severely underused state he inherited it in. With a streak of successes behind him, Mayorkas was among the first cabinet nominees announced by Biden, and his appointment as secretary of DHS is welcome news to EB-5 investment stakeholders everywhere.

Mayorkas’s confirmation was supposed to come sooner, but some Republican senators, notably Josh Hawley (R-MO), objected to the fast-tracked confirmation, triggering a more rigorous background check into the nominee. However, when a vote was held the next week, a number of Republican senators, including Mitt Romney, voted in line with the Democrats to speed up the confirmation. Another week later, the vote for Mayorkas’s confirmation was held, and the Senate voted to confirm him as the secretary of DHS.

As head of DHS, Mayorkas will oversee UCSIS and its various programs, including the EB-5 program. Unless his priorities have shifted from his time in the Obama administration, he is likely to usher in favorable changes to the EB-5 program, restoring the residency-by-investment program to its former glory. The White House has already announced President Biden’s proposed U.S. Citizenship Act of 2021, which promises a major overhaul to the U.S. immigration system, packed with policy changes that could dramatically improve the situation for EB5 investment participants. As secretary of DHS, Mayorkas will occupy an important role for the rollout of these wide-ranging changes, and his partiality to the EB-5 program could bode well for those involved in EB-5 investments.

Mayorkas’s takeover of DHS comes at an opportune time for the EB-5 Regional Center Program as well. With a sunset date of June 30, 2021, the ever-popular regional center program is hurtling toward the most likely termination in years, having been divorced from the year-end government funding bill it is normally associated with. EB-5 industry leaders believe the only way to save the EB-5 Regional Center Program may be to enact large-scale reform, but it’s a race against time to unite the EB-5 world and work toward the needed policy changes. Having already proven himself a valuable ally of the EB-5 program, Mayorkas could further the fight for reform and permanent authorization, which would constitute a major boon for EB-5 investment participants.

To say FY2020 was a volatile year is an understatement. 2020 will forever be known as the year the COVID-19 pandemic struck the world, a crisis that has also had devastating effects on the EB-5 Immigrant Investor Program and the thousands of investors in the throngs of EB-5 uncertainty. Those with EB-5 investments active throughout FY2020 faced more than just the pandemic, however. The switch to a visa availability processing approach for I-526 petitions and a narrowly averted large-scale furlough at United States Citizenship and Immigration Services (USCIS) also presented challenges to EB-5 investors in 2020.

To top off the woes of EB5 investment participants in FY2020, USCIS was fairly unproductive in I-526 processing, despite all the time freed up by the pandemic. What could have been an unprecedented opportunity to cut down the backlogs was squandered, lost to Immigrant Investor Program Office (IPO) inefficiency. This is what the release of FY2020 Q4 data on the three key EB-5 forms—I-526, I-829, and I-924—indicates, wrapping up the tumultuous year of FY2020.

Download USCIS EB-5 Visa Petition Statistics through FY2020

FY2020 covers the period from July to September 2020, as USCIS’s fiscal year ends three months before the respective calendar year. According to USCIS data, EB-5 form data for this period can be summarized as follows:

Form I-526

• Received: 53
• Approved: 904
• Denied: 236
• Pending: 15,063

Form I-829

• Received: 740
• Approved: 732
• Denied: 62
• Pending: 10,304

Form I-924

• Received: Unreported but estimated to be 129
• Approved: 45
• Denied: 45
• Pending: 163

I-526 Data

The figures for I-526 processing show a slight improvement in productivity compared to FY2020 Q3, with adjudication rates in FY2020 beating out the figures in the final three quarters of FY2019. The low productivity is generally attributed to Sarah Kendall’s reign of the IPO, which contrasts starkly against the performance achieved by her predecessor, Julia Harrison, in FY2018. Notably, USCIS has maintained denial figures at roughly the same level as throughout EB-5 history, with only approval rates dropping, meaning adjudicators exercised harsher decision-making under Kendall. Graphs make clear that the gap between approvals and denials has narrowed dramatically under Kendall, with USCIS issuing only slightly more I-526 approvals than rejections.

I-829 Data

Kendall’s focus on I-829 petitions, to the detriment of I-526 petitions, was no secret. I-829 adjudication remained high throughout FY2020 Q4, beaten only by figures seen in 2017. One important distinction between the FY2020 I-829 adjudication data and that from 2017, however, is that FY2020 saw far more denials, generally outpacing historical I-829 denial figures.

Receipts

In FY2020 Q4, I-829 petitions poured in steadily, which is to be expected considering that I-829 petitions must necessarily follow I-526 trends from a few years prior. Since I-829 petitions need to be filed within the final 90 days of an investor’s two-year conditional permanent residency period, current events have little effect on the number of receipts.

I-526 petitions are different, and the chaotic circumstances of FY2020 resulted in some of the lowest receipt numbers the EB-5 program has ever seen. With I-526 petitions arriving in the mere double digits, the low receipt figures are offset by the spike in FY2020 Q1, when more than 4,000 arrived at USCIS’s door. Covering the period of October to December 2019, this was pre-pandemic and was triggered not by the economic turmoil that was to come but the EB-5 Modernization Rule, which, when enacted in November 2019, doubled the minimum required amounts for EB-5 investments. Having been given a deadline, EB-5 investors rushed to submit their applications under the lower investment amounts.

Throughout the rest of FY2020, few investors were inspired to jump into an EB5 investment. Though investing during the COVID-19 pandemic also offers advantages, a number of factors likely contributed to the diminished appetite for EB-5 investment in 2020, including the pandemic and the associated shutdowns, the newly increased required investment amounts, and the notoriously long processing times of the EB-5 program. The good news is that the low receipt figures present an opportunity for USCIS to significantly reduce the backlogs—the question is just whether the immigration agency will jump on this chance.

United States Citizenship and Immigration Services (USCIS) has released the February 2021 edition of its monthly Visa Bulletin to inform petitioners of the state of the visa backlogs in February 2021. As the world hurtles into strengthened COVID-19 travel bans and restrictions following the emergence of new, more contagious strains of the virus, USCIS provides no light at the end of the tunnel for those involved in EB-5 investments and hoping to earn U.S. permanent residency rights. Five months into FY2021, the U.S. immigration body has failed to take advantage of the thousands of extra EB-5 visas allocated for the fiscal year to reduce the lengthy EB-5 backlogs, risking countless EB-5 visas going unused by the end of FY2021.

With COVID-19 vaccines making their global debut, albeit at dramatically varying speeds depending on the country, there is hope for some sense of normalcy in 2021. However, from the current vantage point in late January 2021, the future of EB5 investment participants and the world at large is unpredictable, and EB-5 investors should prepare for the possibility of a second 2020. Adding to the EB-5 program’s challenges in FY2021 is the increased risk for EB-5 Regional Center Program termination on June 30, 2021, with industry leaders rallying stakeholders to work together toward EB-5 reform as the most effective weapon against a program sunset.

While the February 2021 Visa Bulletin is good news for Indian EB-5 investors—still no backlog since achieving “current” status in July 2020—the outlook is not so good for those in China and Vietnam pursuing EB-5 investments. The Vietnamese final action date has advanced two weeks from the January 2021 Visa Bulletin, landing at October 1, 2017. The Chinese final action date, meanwhile, remains at August 15, 2015, where it has stood since the August 2020 Visa Bulletin. The deluge of new EB-5 visas in FY2021 has thus far done nothing to improve the situation of EB5 investment participants, with wait times growing ever larger and Chinese investors entering their seventh month of final action date inaction.

Chinese EB-5 investors have to face not only a stalled final action date but also a disconcerting lack of movement in the date for filing, which has stood steady at December 15, 2015, for 11 months. Should the March 2021 Visa Bulletin not offer any improvements, Chinese EB-5 investment participants will have reached the unfortunate milestone of a year-long unchanged date for filing. Though a lot can happen in a month, the current global situation surrounding COVID-19 does not offer a lot of hope that the March 2021 Visa Bulletin will provide good news to Chinese EB-5 investors.

Reform has been a major theme in EB-5 Immigrant Investor Program world for years, with the unresolved problems in the program becoming more and more aggravated each year. In January 2021, EB-5 industry leaders, including Invest in the USA (IIUSA), have made official calls on Congress to finally implement EB-5 program reform as well as permanently reauthorize the ever-popular EB-5 Regional Center Program.

The EB-5 World Narrowly Missed an Opportunity for Reform

Throughout its history of 30+ years, the EB-5 program—especially through the EB-5 Regional Center Program—has pumped billions of dollars into the U.S. economy, particularly into in-need communities in targeted employment areas (TEAs), and created tens of thousands of new jobs for U.S. workers. Despite this impressive track record, critics fault the regional center program for insufficient integrity measures, accusing those who make EB-5 investments as abusing the guidelines. In response, IIUSA has released a statement stressing the necessity of EB-5 reforms and the legislation needed to enact them.

According to IIUSA, an integrity-based reform to the EB-5 Regional Center Program is “necessary to achieve any other significant legislative goal.” Until integrity measures within the program are tightened, EB5 investment stakeholders have no room to address the mountain of other problems the program faces. At the end of 2020, the long-awaited reform almost came, but ultimately, it was too little, too late.

The EB-5 Reform and Integrity Act was presented by Senators Chuck Grassley and Patrick Leahy, who for years have formed a bipartisan partnership for the betterment of the EB-5 program. The bill addressed only a fraction of the issues that EB5 investment stakeholders have been pushing for years, but nonetheless, it offered an opportunity for strong reform and long-awaited chances. Promising integrity reforms to the regional center program and long-term reauthorization, the bill could have transformed the EB-5 landscape—but since it wasn’t finalized in time to be passed in conjunction with 2020’s year-end federal spending bill, the EB5 investment community must continue the fight for reform and permanent reauthorization.

Reform Needed Desperately to Ensure the Future of the Regional Center Program

As of January 2021, the EB-5 Regional Center Program is set to expire on June 30, 2021, the decision coming after a bumpy few months at the end of 2020 characterized by constant, short-term reauthorization. The reauthorization came alongside a wider government spending bill that included various government programs, as has been the custom for years. This time, however, Congress opted to give the EB-5 Regional Center Program a sunset date of June 30, 2021, as opposed to the normal September 30 date allocated to the other programs in the bill, effectively divorcing the regional center program from the consolidated bill.

This situation represents a rich opportunity for the EB-5 investment world, but it simultaneously presents a major risk—having been separated from federal budget legislation, the regional center program now needs to achieve reauthorization based solely on its own merits. The program has until June 30, 2021, to prove its worth, and then, if no legislation is passed, the program will become a relic of the past. IIUSA’s statement acknowledges the very real risk of termination, calling on the EB-5 industry to support Grassley and Leahy’s reform bill as “perhaps the only path to reauthorization.”

Other industry leaders have released similar statements, some elaborating on the type of reforms they would like to see realized. While Grassley and Leahy’s bill revolves around integrity—which indeed has been the focus of critics—calls have also been made to remove dependents from the yearly allocation of EB-5 visas, which would significantly clear up the backlogs and sufficiently meet EB-5 investment demand.

Reform Is the Way Forward for the EB-5 Program

As a temporary government program, the EB-5 Regional Center Program has dealt with short-term reauthorizations since its debut in 1992, so EB-5 investment stakeholders are no strangers to program uncertainty. The difference this time is the independence of the EB-5 program, having been released from the consolidated federal spending bill, as it faces a looming expiration date.

The EB-5 industry should not panic but rather work together to prove before the June 30, 2021, deadline that the program is beneficial to the United States. Industry stakeholders in all areas agree on the need for reform, and in light of the potential termination of the regional center program, it’s imperative for EB-5 leaders to work together to ensure a bright future for the EB-5 program and all the foreign investors looking to start a new life in the United States.

The EB-5 Immigrant Investor Program has long been a popular way for foreign investors to gain permanent residency in the United States for not only themselves but also their immediate family members. In fact, for some, the program has proven too popular—as of January 2021, EB-5 investment participants from China and Vietnam face lengthy backlogs that significantly delay the start of their new life in the United States.

Every fiscal year, a limited number of U.S. green cards are allocated for successful EB5 investment participants, and United States Citizenship and Immigration Services (USCIS) further restricts visa issuance by country of origin. All countries are capped at around 700 EB-5 visas per year, regardless of their population or EB-5 investment demand. Thus, in high-population, high-demand countries like China and Vietnam, backlogs can easily build up that significantly lengthen an EB-5 investment participant’s wait time.

To shed light on the state of USCIS backlogs, the immigration body releases monthly Visa Bulletins that list which countries are “current” (i.e., not backlogged) and the final action dates for those that are not current. If the posted final action date is later than an EB5 investment participant’s priority date (i.e., the date on which USCIS received their I-526 petition), the investor is finally in line to receive their conditional permanent resident status.

China’s Final Action Date

In May 2015, the Chinese EB-5 backlog first sprung up and has raged on for more than five years with no signs of decreasing. In the early days of the backlog, the number of days between the final action date and the current Visa Bulletin month was 730 days, meaning the initial final action dates clocked in at May 2013. Though more than five years have passed since the emergence of the backlog, the final action date has advanced by only two—as of the January 2021 Visa Bulletin, the Chinese final action date is August 15, 2015. Advancing a mere 31 days between June and November 2020, the day gap now stands at 1,935, the highest it’s ever been. The Chinese final date has remained at a standstill since August 2020.

Vietnam’s Final Action Date

It was May 2018, three years after the emergence of the Chinese backlog, that EB5 investment participants from Vietnam joined their northern neighbors in USCIS’s Visa Bulletins. With a final action date in July 2014, Vietnam began its Visa Bulletin journey with a four-year backlog—a day gap of 1,379 days. Unlike the Chinese day gap, which has risen steadily since emergence, the Vietnamese day gap has remained fairly consistent at between 1,000 to 1,100 days, save for a sudden spike to 1,775 in mid-2019 and a subsequent drop back down to normal levels a couple months later. As of January 2021, the Vietnamese final action date stands at September 1, 2017, with a day gap of 1,187, having advanced 51 days between June and November 2020. For the most part, the Vietnamese day gap has remained remarkably lower than the Chinese one, though the Vietnamese backlog similarly slows no signs of letting up.

Download EB-5 Visa Bulletin Trend Analysis

On January 19, 2021, just a day before President Biden’s inauguration, a Senate confirmation hearing was held for Alejandro Mayorkas, Biden’s choice to head the Department of Homeland Security (DHS). The secretary of DHS performs important work in overseeing U.S. immigration policy, and as a residency-by-investment immigration program, the EB-5 Immigrant Investor Program falls under the purview of DHS. That means EB-5 investment stakeholders should keep tabs on the leadership of DHS, as the secretary of DHS can introduce policy changes that impact the popular investment program.

During the confirmation hearing, Senator Josh Hawley (R-MO) blocked the fast-tracked confirmation of the nominee, citing concerns about Mayorkas insufficiently enforcing laws related to border security. Mayorkas is still expected to be confirmed, but the process is now delayed, with Transportation Security Administration Head David Pekoske taking over the role until Mayorkas’s confirmation. As Mayorkas will likely assume the position in due time, it’s worth it for EB5 investment participants and other stakeholders to take a look at his background.

Who Is Alejandro Mayorkas?

Though Mayorkas was born in Havana, Cuba, in 1959, he has spent most of his life in the United States, as his family fled Cuba in 1960 as a result of the communist revolution. Growing up in Los Angeles, he attended law school and served as an assistant U.S. attorney in California’s Central District for a period, successfully prosecuting various white-collar crimes. He then made the jump into a political career in 1989, eventually being appointed in 1998 by President Clinton as U.S. attorney for the Central District of California. In the period before he left office in 2001, Mayorkas managed a number of high-profile cases.

What Did Mayorkas Do in the Obama Administration?

When the Democrats regained power in 2009 following President George W. Bush’s time in office, Mayorkas was once again appointed in an important role: secretary of U.S. Citizenship and Immigration Services (USCIS). He held the position for most of Obama’s first term, leaving in 2013. As head of USCIS, Mayorkas had a chance to work closely with the EB-5 program, and if his historical achievements are anything to go by, EB-5 investment participants should look forward to Mayorkas’s leadership.

When Mayorkas inherited USCIS in 2009, the EB-5 program was in rough shape—“badly broken,” in Mayorkas’s own words. It was devastatingly underused, with a mere 800 foreign nationals making an EB5 investment in 2007, despite the numerous benefits of U.S. permanent resident status. Taking on the task of reviving the EB-5 program, Mayorkas succeeded magnificently, quadrupling the number of EB5 investment participants in just two years. In his final year as head of USCIS, Mayorkas restructured the way that USCIS evaluates I-526 and I-829 petitions, further strengthening the program and paving the way for explosive growth. Indeed, in 2014, for the first time, the EB-5 program issued all the green cards it had been allocated for the fiscal year.

Mayorkas’s time as head of USCIS ended with a promotion to deputy secretary of DHS in December 2013. Like in January 2021, his confirmation as deputy secretary was stalled on the grounds that he had “exerted improper influence” in the approval of a few EB-5 applications, but the resulting investigation found that he had acted within his powers. His appointment was confirmed in 2014, and he worked in various capacities to improve US–Cuba relations and manage the response to Ebola and Zika.

The Future of EB-5 under Mayorkas

What will happen to the EB-5 program under Mayorkas’s leadership is unknown, but Mayorkas’s qualifications are undeniable. Highly experienced and competent, Mayorkas is a solid choice to lead DHS, and his history with the EB-5 program suggests the development may be great news for those involved with EB-5 investments. With extensive—and personal—experience with immigration, Mayorkas is likely to usher in a period of facilitated immigration for EB-5 investors and other newcomers to the United States.

Since the COVID-19 viral outbreak, U.S. financial markets have fluctuated as governmental and regulatory bodies work to respond. Annual business planning and results have already all but gone out the window for many businesses across an exorbitant number of industries this year, and we still have some time before the true impact of these disruptions are known. Still, there’s one variable we can count on: the continuation of significant changes for as long as the COVID-19 crisis goes on. This can be especially concerning for foreign nationals already deeply invested—both in time and resources—in the EB-5 Immigrant Investor Program.

Updated Disclosures Aid EB-5 Investors’ Reassessment of Risk

EB-5 investment participants involved in financed projects are not sheltered from the adverse effects other similar businesses are experiencing in this relatively volatile time. Uncertainty stemming from temporary business closures, hiring freezes and layoffs, an uptick in medical leave across the nation, supply chain interruptions on a global scale, and even travel industry restrictions can all wreak havoc on an EB-5 project’s plans.

This isn’t necessarily the end of the EB-5 journey for those who have invested in an affected project. If they haven’t already, new commercial enterprises (NCEs) and other EB-5 operators should be providing essential updates on various securities disclosures that will help investors remain informed and able to reassess the risks for their projects so that they can react according to their own best interests. These disclosures will pertain to COVID-19 and the possible impacts on the project itself and on the capital that investors have contributed to it.

Any NCE that has EB-5 projects predating the coronavirus outbreak should be preparing or should have already prepared updated securities disclosures. Learn more about what these disclosures may mean for an EB5 investment and when they should be received, as well as what rights and options an investor may have after receiving them.

Offering Documents Prepared Before COVID-19

All EB-5 investment offerings are legally required by the U.S. Securities and Exchange Commission (SEC) to provide certain risk disclosures. This body oversees the execution of the laws and regulations put into place to protect investors in the United States. This legislation typically covers general risks and cautionary language regarding the uncertainties associated with the particular industry under which the project is classified.

An EB-5 investor is likely to see references to safe harbors availed to NCEs under the Private Securities Litigation Reform Act of 1995 (PSLRA), and the disclosures are even likely to include risks related to public health crises and pandemics. They are not, however, likely to address COVID-19 specifically, nor the current nature or severity of its impact on the economy. This doesn’t necessarily signal underhanded activity—how could a business have anticipated this? But now is the time for proper fiduciary handling, and the SEC requires accuracy in its full and fair disclosure statutes.

SEC’s Statements on Full and Fair Disclosure

A core requirement in the protection of investors is offering documents outlining “full and fair disclosure” of material information on an investment. Specifically, the Securities Exchange Act of 1934 not only outlines the prohibition of disclosing untrue statements of material fact but the omission of material facts necessary to prevent previous statements from becoming misleading as well. While no exact quantitative test for materiality exists under SEC laws, the precedent for determining violations is whether there is a substantial likelihood for a reasonable investor to consider a misstatement or omission an important factor in holding on to or selling their investment.

The SEC has cast a wide net when it comes to materiality, and issuers are advised to disclose supplemental offering documents any time there is any doubt as to whether a material fact has the potential to influence investment decisions. Any NCE that does not provide disclosures for significant project changes to its EB5 investment participants would potentially come into violation of Exchange Act laws.

Furthermore, some of the changes that can occur in the wake of a major event like the ongoing COVID-19 crisis may be considered material changes in the eyes of U.S. Citizenship and Immigration Services (USCIS) adjudicators too.

Disclosures on Material Changes from an NCE

Investors need these securities disclosures to ensure they remain eligible for their EB-5 investment visas throughout the allotted investment period. USCIS does offer some flexibility when it comes to discrepancies between original project documents and final outcomes—there are always unanticipated events in business. There are instances in which supplemental disclosures due to updated facts do not trigger findings of material change by USCIS. However, discrepancies that materially affect a project may put EB5 investment eligibility at risk.

Material Changes According to USCIS

Material changes are generally defined as those pertaining to significant aspects of an EB-5 project—ones that can impact adjudication decisions. These changes do not automatically result in petition denial, but they can drastically delay processing. There are several types of material changes that can affect an EB5 investment, including

• Changes to investment structure or that involve an investor’s capital in any way—source of funds is a common trigger for material change refiling
• Major shifts in any elements in the business plan, including project scope and timing or staffing structures that change job-creation goals
• Regional center sponsorship changes, especially when it involves the recent and widespread regional center shutdowns
• Significant updates to offering documents or any other project documentation

Typically, when a USCIS adjudicator determines that a material change has taken place during an investment period, the EB-5 investment applicant is required to file an updated I-526 petition providing the details of the project’s new circumstances.

Identifying Material Changes in Post-COVID Disclosures

Updates in statements regarding future risks and uncertainties will specifically address COVID-19. EB-5 investors are looking for accuracy of statements that were previously dependent upon future events and assumptions that may no longer be valid. Parts of the disclosure providing notice that COVID-19 may (or has) caused expected results to materially differ are of great interest. More thorough disclosures will outline a robust explanation of how the pandemic could present additional risks or exacerbate traditional risks.

Topics Proper Disclosures May Address

An NCE should clearly disclose how the virus may cause construction delays on a real estate project, for example, or that demand for a hotel project may dwindle following adverse effects on the travel and tourism industry due to an additional viral surge. They may then provide projections on expected operational changes or project evolution to successfully more through recovery.

The impacts upon job creation and allocation, direct references to material changes—these are the signals that an investor may find addressed in those disclosure documents. Additionally, there should be an explanation of EB-5 investors’ rights and when changes would require their consent. All these topics have the potential to affect material changes and impact an investor’s USCIS processing.

Steps Following Updated Securities Disclosures

An experienced EB-5 professional or immigration lawyer can review an investor’s disclosures to help them determine whether any updates signal a significant material change that needs to be addressed with USCIS. They can also advise on solutions to insulate an EB-5 investor from being negatively impacted by COVID-19. This may incorporate any updates from shifts in organization staffing, plans for new fund sources, or capital redeployment strategies as a few examples.

Ultimately, the EB-5 Immigrant Investor Program was designed to aid the U.S. economy in circumstances just like this. An EB5 investment is meant to help create jobs in areas where they are needed most, and to ensure compliance is in the best interest of all parties involved. Facing material changes due to economic and financial challenges is simply a hurdle, and everyone is rooting for success. With timely securities disclosures and a team of seasoned EB-5 professionals at the helm, the situation becomes nothing more than a matter of properly navigating choppy waters.

The choice to participate in the EB-5 Immigrant Investor Program is a decision that has the potential to change the trajectory of a prospective foreign investor’s life (not to mention that of their eligible immediate family members). The stress of navigating the complexities of today’s EB-5 marketplace and all the decisions involved in making the right EB5 investment can leave potential investors feeling anxious about such a bold move.

But ample resources and trustworthy assistance are available to help every interested investor down the path to permanent residency in the U.S. That said, it is important to understand that working with the right EB-5 investment partners is imperative and that proper due diligence in selecting who to turn to for advice is the first step to ensuring the smoothest EB-5 journey possible.

There are generally two ways a foreign national may elect to invest through the EB-5 program—direct and indirect EB5 investments. Which road to travel depends on the investor’s investment and business goals, but by and large, the most popular option among foreign investors seeking an EB-5 visa is to invest through an EB-5 regional center. Selecting a qualified project through the right regional center often eliminates much of the stress associated with U.S. Citizenship and Immigration Services (USCIS) petition submissions and compliance issues because investors work with people who are already familiar and have experience with the adjudication process.

Long-standing, experienced regional centers with established track records can be a godsend on the path to U.S. residency. However, some bad actors work in the EB-5 landscape. Learn how to determine the difference between finding the perfect project and recognizing a marketing strategy.

What Are Preapproved EB-5 Projects?

As an investor searches for the right project, they are likely to encounter EB-5 regional center projects that have been preapproved by USCIS. One of the greatest advantages of working through a regional center is easier access to preapproved projects, but it is important to understand what that means.

Saying a project is preapproved may give some prospective investors the impression that USCIS has somehow granted preference to their EB5 investment project over others in the market. This is not true. While reputable regional centers have worked hard to establish solid relationships with USCIS, understand that the agency does not offer any preference for one project over another. Every single project must be presented in the proper format, must be evaluated against the same set of guidelines, and must be officially adjudicated and approved.

The marketing tactic of framing investment in a preapproved project as guaranteeing successful immigration outcomes stems from regional centers securing approval on an I-924 petition which, in reality, involves the evaluation of a preliminary business plan. This approval is known as an I-924 exemplar.

Marketing the I-924 exemplar to entice investors doesn’t necessarily mean a regional center should be immediately stricken from a consideration set, but it may send up a red flag depending on how far into the discussion they communicate what this approval actually means and where your project of interest actually is in the process.

If they explain exactly what they mean early on in your initial inquiry, then the project may be worth further exploration. If you don’t hear a word about what an I-924 exemplar actually means, you may be safer to pass on the investment.

Approved I-924 Exemplar and “Deference”

In December 2009, USCIS introduced the notion of an I-924 exemplar. The rationale was that if an EB5 investment project submission (through an I-924 petition packet) included a business plan that was evaluated and deemed to sufficiently meet EB-5 program requirements before Form I-526 submission, then USCIS provides “deference” to the I-526 petitions that use the same business plan and documents later on in the process.

Deference is simply the acknowledgement of previous evaluation of a business plan, meant to conserve already scarce USCIS agency time and resources. When an EB-5 regional project has deference, it means that when a new EB-5 investor submits their I-526 petition for adjudication, USCIS is not required to reevaluate the business plan portion of their application, but can instead focus on an applicant’s source-of-funds verification and other personal information.

Furthermore, deference does not shield a later investor’s submission from denial. An I-924 exemplar is granted when the project outlined in the original submission met all EB-5 program requirements—it was “approvable” at the time of that original filing. Because an I-924 petition can sometimes take years to process, by the time a new investor files their I-526 petition, it is quite possible that components of that original I-924 have become irrelevant or invalid.

When Policies Change After I-924 Approval

Some common aspects of a business plan that can change include economic and financial projections and project feasibility studies. Thus, it is nearly impossible to guarantee a project as preapproved and compliant with all current policies and regulations—especially with the current political and economic state of the U.S. In fact, the newest regulatory reforms for the EB-5 visa program went into effect in November 2019. So, if an investor is considering a regional center partnership on a project that was preapproved before then, chances are there would need to be changes to the plans before final USCIS project approval.

Again, an older I-924 exemplar doesn’t necessarily mean an investor should cross a current project off the list. Rather, they need to ask important questions about the validity of its supporting documents, whether a project meets the latest compliance guidelines, and if updates are available or in queue before proceeding with an EB-5 investment submission. As with any type of investment, the key is always clear communication of risk. If, however, a regional center is promising an expedited process based on outdated I-924 approvals prior to November 21, 2019, with no mention of the risks involved, it should certainly signal a hard pass.

Communicating Risks in an EB-5 Project

The primary goals of every EB-5 investment are to successfully obtain green cards for investors and their eligible family members and to have their capital investment successfully returned. To ensure both these goals are met, each investor and their immigration attorney must engage in proper due diligence at the core of their endeavors. Even when an investor uncovers risk through their own investigation, their project partners should be openly disclosing it to them as well. A lack of transparency means even further increased risk and quickly leads to questions of ethics and mistrust—neither of which is acceptable when working with the U.S. government.

On the other hand, when a regional center is open and upfront about the current status of a project, the exemplar (no matter its approval date) can become a roadmap for the success of each subsequent investor’s I-526 petition. As a leader in the EB5 investment industry, EB5AN retains a 100% approval rate with USCIS, in large part due to its level of transparency among all its partners. These include 14 EB-5 regional centers with operations in more than 20 states across the nation and over 1,800 foreign investors from 60-plus countries around the globe, as well as the governing bodies of the residency-by-investment field.

Why Investors Choose EB5AN

Besides its long-standing EB-5 industry relationships and its proven track record, foreign investors who choose an EB5 investment look to EB5AN because of the wealth of cost-free resources available to all of our partners. Whether an investor is still vetting projects and needs access to an up-to-date national TEA map, wants to pass a project through an EB-5 project risk assessment questionnaire, or is ready to run their plans through an EB-5 job creation calculator, EB5AN can help! The network also maintains a digital library chock full of industry news and insider advice.

Furthermore, the top-notch team of EB-5 investment professionals has extensive expertise in areas ranging from business and investment evaluation and strategy to immigration, securities, and tax law. Every foreign national seeking answers to EB-5 program questions is welcome to reach out. Begin to see the difference EB5AN can offer from first contact!