Nation Of Immigrators

Nation Of Immigrators

A public policy blog on America's dysfunctional immigration system

Immigration “Fire on the Ground” — What’s Next for the L-1B Visa?

Posted in Administrative Appeals Office - USCIS, Courts on Immigration Law, Employment-Based Immigration, L-1 Visa, Requests for Evidence (RFEs), USCIS

Since 2008 American employers have been burning mad about how U.S. Citizenship and Immigration Services (USCIS) has gone from fairly reasonable to highly restrictive in its interpretation of the L-1B “specialized knowledge” visa category. This statutory visa category allows certain “intracompany transferees” to enter and work in the U.S. for a qualifying employer if  he or she “has a special knowledge of the company product and its application in international markets or has an advanced level of knowledge of processes and procedures of the company.”  See Immigration and Nationality Act § 214(c)(2)(B).

Concerns over the USCIS’s change of direction on the L-1B have been voiced in many quarters, including the USCIS Ombudsman, a wide array of U.S.-based companies, the U.S. Chamber of Commerce, the National Foundation for American Policy, the American Immigration Lawyers Association, and this blog. Ever since the agency’s appellate body, the Administrative Appeals Office (“AAO”), issued a 2008 non-precedent decision, known as the GST” case, immigration adjudicators found their conceptual road map to drive ever higher rates of Requests for Evidence and denials of L-1B petitions.  GST repudiated settled policy guidance from the legacy agency, the Immigration and Naturalization Service (INS), defining specialized knowledge found in the 1994 “Puleo Memorandum.” That memo, later reaffirmed by INS and USCIS, applied dictionary definitions of the terms “specbrazilian_meat_193236ial” and “advanced” and outlined several fairly reasonable factors that would allow an individual to qualify under the L-1B category.

Criticism of the restrictive interpretation of specialized knowledge ultimately reached the ear of the then Director of USCIS, Alejandro Mayorkas (now the Deputy Director of the Homeland Security Department), who stated in 2012 that updated guidance reflecting USCIS’s interpretation of specialized knowledge would be forthcoming.  The agency, however, has never released the guidance. Numerous Beltway insiders suggest that the White House suspended its release and that the updated guidance is now being revised, presumably to satisfy whatever concerns of policy or politics may have prompted the suspension.

More recently, the interpretation of L-1B specialized knowledge and the Puleo Memorandum received extensive consideration in an October 21, 2014 opinion of the U.S. Court of Appeals for the District of Columbia Circuit, Fogo de Chao (Holdings) Inc., v. United States Department Of Homeland Security. In that case, a persistent prospective employer, operating numerous Brazilian steakhouse restaurants (churrascarias) under the brand, Fogo de Chao — Portuguese for “fire on the ground”was denied L-1B classification for a chef, Rones Gasparetto, who had been “raised and trained in the particular culinary and festive traditions of traditional barbecues in the Rio Grande do Sul area of Southern Brazil” and who also received extensive in-house training from an affiliated employer abroad.  The denials occurred at the USCIS Vermont Service Center, the AAO and the District Court.

At first blush, the decision could be seen as limited to its unusual facts. A two-judge majority remanded the case to USCIS because the AAO categorically refused to consider whether culturally acquired knowledge could be treated as “specialized” under the L-1B category and disregarded evidence that Mr. Gasparetto participated in the foreign employer’s training program.  But a closer reading reveals a number of legal gems that may prove helpful in other L-1B cases:

  • The courts will not defer to the presumed expertise of the agency under the Chevron doctrine in the interpretation of L-1B “specialized knowledge” because the agency’s definition in its regulations virtually parrots the statutory definition:  

[Because] the regulation “gives little or no instruction . . . on the question at issue—what constitutes “special” or “advanced” knowledge for the purposes of L-1B visa eligibility—we cannot say that the agency has interpreted its regulation, rather than the underlying statute (citation omitted).

  • An AAO decision lacking designation as a precedent is not entitled to Chevron deference. Rather, it will be given Skidmore consideration only to the extent of its persuasiveness.
  • Consistent with the Puleo Memorandum, knowledge and experience gained outside of the petitioning organization may be considered in determining whether L-1B eligibility has been established.
  • Although the AAO passingly noted the need to train another in the same field of endeavor, its failure to carefully consider evidence of economic disruption and the time required to train another to perform the L-1B candidate’s duties — also factors in the Puleo memorandum — constitutes reversible error:

[Consideration] of evidence of this type provides some predictability to a comparative analysis otherwise relatively devoid of settled guideposts. After all, to understand what is “specialized” knowledge, the agency needs to define with consistency a comparative baseline.  . . . That specialized knowledge may ultimately be a “relative and empty idea which cannot have a plain meaning,” Department Br. 22–23 (quoting 1756, Inc., 745 F. Supp. at 15), is not a feature to be celebrated and certainly not a license for the government to apply a sliding scale of specialness that varies from petition to petition without explanation. Suddenly departing from policy guidance and rejecting outright the relevance of Fogo de Chao’s evidence of economic inconvenience threatens just that.

  • Although the majority opinion found insufficient evidence of Fogo de Chao’s claim that the agency had approved 200 prior petitions for the same position, and therefore rejected a claim of inconsistency,  it noted that a proven “pattern of visa grants of sufficient magnitude could obligate the agency to provide a “reasoned explanation for . . . treating similar situations differently,” — or at least something more reasoned than [USCIS] confessing a decade-long pattern of “material and gross error (citation omitted).”   Nonetheless, a definitive legal rule cannot be wrung out of a pattern of decisions unless the decisionmaker has “the authority to bind the agency,”  and in this case, neither the Vermont Service Center nor the AAO had or exercised such authority.

Given that Court of Appeals remanded the case back to USCIS, it remains to be seen whether Chef Gasparetto will be serving American customers Brazilian-style steaks anytime soon.  Also unknown is whether the long-awaited USCIS policy guidance, if ever issued, will provide accessible clarity on the requirements to establish L-1B specialized knowledge in a way that takes into account the reasonable needs of multinational companies in the 21st Century.


The “When” of Immigration

Posted in Congress on Immigration, Enforcement/USICE, GOP on Immigration, Immigration Reform, Obama Administration on Immigration

whenIn everyday English, “when” clearly “connote[s] immediacy.” . . . ’”when’ … can be read, on the one hand, to refer to ‘action or activity occurring ‘at the time that’ or ‘as soon as’ other action has ceased or begun … [But on] the other hand, ‘when’ can also be read to [mean] ‘at or during the time that,’ ‘while,’ or ‘at any or every time that. “‘ (Footnotes omitted.)

This quote from an October 8, 2014 tour de force opinion of U.S. District Judge Shira A. Scheindlin of the Southern District of New York in Martinez-Done v. McConnell shows the many permutations and litigation-spawning power of a four-letter word.  In Martinez-Done, Judge Scheindlin canvassed the nationwide landscape of conflicting opinions interpreting the word “when” in Immigration and Nationality Act § 236(c)(“Detention of Criminal Aliens”).  That section requires U.S. Immigration and Customs Enforcement (ICE) officers, upon the happening of a condition, to arrest and incarcerate individuals convicted of a qualifying offense without the chance for impartial review of their detention.  The condition that permits mandatory detention is triggered “when,” after conviction, the individual “is released”.

In this case, ICE detained Mr. Martinez-Done “nearly ten years [after] he was released from post-conviction custody.”  No matter the varying meanings of “when,” the word, Judge Scheindlin ruled, could not be stretched so far into the future.  She also noted that with the passage of time the underlying concerns prompting Congress to require mandatory detention wane in significance:

As the Supreme Court has explained, the imposition of different forms of detention on different classes of removable aliens stems from concern that some aliens “present an excessive flight risk or threat to society.” Section 236(c) was Congress’s solution to this concern. As far as dangerousness is concerned, there is often very little evidence that a removable alien ever was dangerous, much less that he continues, years after release and reincorporation into the community, to “threat[ en] society.” Furthermore, “[b ]y any logic, it stands to reason that the more remote in time a conviction becomes and the more time after a conviction an individual spends in a community, the lower his bail risk is likely to be.” (Footnotes omitted.)

Thus, on due process and statutory grounds, she held that Mr. Martinez-Done had the “right . . . to have an impartial adjudicator decide if he may be released during the pendency of his removal proceedings,” and ordered that he be granted a bond hearing.

Cities and states across the nation are coming to a similar conclusion as they increasingly decline to follow ICE’s notion of what makes a community secure and refuse to cooperate in releasing to ICE persons arrested or convicted of crimes.  As Emily Badger of WonkBlog reports:

In many ways, cities with large and deeply rooted immigrant populations have interests here directly at odds with ICE. They have scarce resources to devote to public safety, which they believe are better spent addressing actual crime than federal immigration. (Recent ICE data suggest that only about one in 10 detention requests applies to people who’ve been convicted of a serious offense). Officials worry that the detention requests also undercut community policing, making neighborhoods less safe by discouraging victims in immigrant neighborhoods from reporting crime or working with police. Local communities, unlike ICE, are also left with the collateral damage of families fractured by deportation.

Other “when[s]” of immigration are when families are “fractured by deportation” and businesses must resort to work visa lotteries to see if their hiring needs will be met.   These “when[s]” happens every day, when the House adamantly blocks efforts by the Senate to enact comprehensive immigration reform, and when President Obama stalls on his promises to use executive authority to make as many ameliorative changes as the power of his office will allow.  So when will our immigration system be fixed?  Whenever.



Immigration Voices: Baring My Teeth at I-9 Enforcement Inequalities

Posted in Enforcement/USICE, Guest Columns, I-9s, State Immigration Laws

[Blogger's note:  Here we go with another guest column from Nicole (Nici) Kersey who offers a witty, wise and worthy post on the inequities and inanities of the worksite enforcement scheme concocted by Congress in 1990, a flawed system of employer deputization of governmental functions largely maladministered by various agencies of the Executive Branch.  Worse yet for employers, the states too are getting into the act.  Witness last week's California Supreme Court decision, Salas v. Sierra Chemical Co., which held that claims of undocumented workers who present false documentation during the I-9 process are enforceable against employers under state antidiscrimination and worker protection laws , despite the defense of federal immigration-law preemption  -- at least until the employer receives notice that the worker is unauthorized for employment.  So the broken enforcement scheme creates ever more headaches and hurdles for employers.]

Baring My Teeth at I-9 Enforcement Inequalities

By Nicole (Nici) Kersey

I admit it.  I know more about quidditch than about soccer.  The World Cup holds little interest for me, aside from the occasional glimpse of impressive Chilean, French, or Honduran abs[1].  (And, lucky for me, I can skip the games and jump to VH1’s “Best Soccer Abs” contest to see the most rippling of 6-packs.)


So as the rest of the world holds its breath while these guys run up and down the field, apparently biting one another and causing Adidas to pull “teeth-baring” ads, I’ve been holed up in my office working and, for fun, binge watching Orange is the New Black.  I read the book before it became a series, but when my nearly 4-year-old daughter asked me (completely out of the blue[2]) – “Mommy, why are you probably going to die in jail?” – I thought I should study up.

The World Cup and the New Black both got me thinking about the assumptions people make based on appearances or accents.  In many ways, soccer and prison are great equalizers.  You can play soccer no matter what your size, gender, citizenship status or national origin.  And in jail, while race, gender, and age may divide inmates more dramatically, those who may never have come into contact on the outside become roommates (at least they do on tv), wear the same clothes regardless of wealth, and eat the same food.

In the immigration world, employers face a number of dilemmas every day, driven largely by the appearance or voice of employees or applicants:

  • When to ask if someone is authorized to work in the U.S.
  • Whether to ask what a job applicant’s immigration status is
  • Whether to refuse to sponsor a visa
  • When to refuse a document presented as proof of work authorization
  • When and how deeply to investigate a tip indicating that a worker or group of workers lacks work authorization
  • Whether to terminate a worker’s employment if the individual comes forward with a new SSN/identity and admits that he was previously not authorized to work
  • What type of document an employee must present to prove work authorization (and whether the employer can specifically ask for that document)

These are just a few examples that lead to seemingly awkward situations in which a recruiter cannot ask the applicant with the great French accent whether he’s from France or Canada; and an HR manager is warned not to tell the new intern that she needs to see his I-20, even when that’s the only document he could possibly present to prove work authorization.   Because of confusion about the proper questions to ask on a job application, employers find themselves rescinding job offers to new hires who turn out to be H-1B employees.

And employers who work hard to ensure equality, making no assumptions based on appearance, native language, a foreign-sounding accent, or citizenship status, face a serious and unjust risk:  if it turns out that those employees lack work authorization, the employer faces a greater likelihood of penalties for Form I-9 paperwork violations and increased fine amounts, even if the employer had no reason to know that the employees were unauthorized.

Under ICE policy, employers who would otherwise receive a Warning Notice for paperwork violations (avoiding fines), must instead receive a Notice of Intent to Fine (NIF) in “instances where unauthorized aliens were hired as a result of substantive paperwork violations.”  While this policy implies that the paperwork violation must have actually caused the employer to hire someone who was not authorized to work, in practice ICE need not prove causation: correlation is sufficient.  (If causation could be shown, one might expect ICE to charge the employer with a knowing hire violation instead of – or in addition to – a paperwork violation.)

Once the employer is on the hook for fines, ICE increases the base fine amount by 5% for each I-9 relating to an unauthorized worker.  (An increase is suggested by the regulations, though no specific percentage is set out.)

This leaves employers, particularly in the construction, hotel, manufacturing, and restaurant industries particularly vulnerable.  They’ve been effectively deputized and asked to enforce the immigration laws.  They are prohibited from discriminating based on citizenship or national origin.  They must accept documentation as proof of identity that reasonably appears to be genuine and to relate to the employee presenting it.  Yet if they make a substantive error on the Form I-9 (such as attaching copies of the employee documentation to the form instead of writing the data in Section 2; or failing to make the employee input his A# in Section 1 of the form), and the employee turns out to lack work authorization, the employer is at a high risk for high-level fines (again, even if the employer did not have any reason to suspect that the employee was not work-authorized).

An employer in another industry (such as the banking or consulting industry) is at a much lower risk, even with a high rate of paperwork errors, simply by virtue of the makeup of its applicant pool and the birthplace of its employees.  The employer is less likely to be inspected by ICE in the first place.  If inspected, it is more likely to receive a Warning Notice for its paperwork violations, and if fined, the fines will be lower due to the lack of unauthorized workers.

In the end, it seems that while employers are prohibited from discriminating, government policy encourages them to do so.

And now … back to the best abs contest, where Chile and Portugal are on even footing with the French.  Though when determining a winner here, I think it’s okay to take a foreign-sounding accent into account.

[1] The Spanish and Portuguese are in the running as well.

[2] Okay, so we took her to see Muppets Most Wanted, which has resulted in a much more detailed discussion of gulags, jails, thieves and burglars than I ever expected to have with my child.

The Immigration Pony in Eric Cantor’s Defeat

Posted in Congress on Immigration, Employment-Based Immigration, Family Immigration, Foreign policy, GOP on Immigration, Immigration Reform

Steve Case quoting Nelson MandelaThe usual voices said trite things when a sliver of Richmond, Virginia Republican primary voters last Tuesday rejected Eric Cantor’s bid to continue as Majority Leader in the House of Representatives.  With a margin of just over 7,200 votes out of roughly 62,000 cast, David Brat, a college economics professor and Johnny-one-note who beat the anti-amnesty drum with gusto, eked out a victory over a powerful politico and unleashed a flood of prognosticators who argue that immigration reform in this Congress is dead.

Those of us who still believe reform will happen, if not soon but inevitably, are likely to be derided as incurable optimists, much like the young boy in Ronald Reagan’s “pony in the manure” joke.  As I explained, however, to Roy Maurer, Online News Manager/Editor for the Society of Human Resources Management (“Does Cantor Loss Signal the Demise of Immigration Reform?”):

Eric Cantor’s loss is not a death blow to immigration reform.  The economic and moral imperative to resolve an issue of this magnitude is far larger than one individual’s loss in the primary to talk-media stoked anti-amnesty rantings.  Changes will occur as leaders come to the fore — whether, for example, by Majority Leader Boehner with incremental action in the House or by President Obama through executive orders, or by others.  The struggle for reform is not over;  it may be slowed a bit, but the country’s prosperity and its social fabric depend on fixing this broken system.

Immigration reform is not dead because Americans, by an overwhelming margin of 62% in recent polling, favor enacting a pathway to citizenship for undocumented people in our country.  It is not dead because the following problems will not go away merely because 7,200 or so Republicans in Virginia tossed out Eric Cantor (who — unlike steadfast reformer Lindsey Graham, a victor in his GOP primary — blew hot and cold on amnesty versus reform):

These problems will only fester until our politicians realize that the American people have had enough.  Meantime, advocates for reform will continue pushing, while opponents use the techniques of distortion and diversion to forestall the inevitable.  Leaders will emerge.  As Steve Case reminded us with the words of Nelson Mandela, “it always seems impossible, until it’s done.”

Immigration Voices: Dr. No vs. the League of Extraordinary Aliens

Posted in Extraordinary Ability, Guest Columns, O-1 Visas, Requests for Evidence (RFEs), USCIS, USCIS Ombudsman

survey questionnaire

[Blogger's note:  An anonymous immigration lawyer offers this lament on the woeful quality of adjudications at U.S. Citizenship and Immigration Services (USCIS).  For related wailing, see:  “ 'I Hate [Bleep]ing Immigration Law’ — Whenever I Get an Unjust Request for Evidence,” “End the Tyranny of Immigration Insubordination,” and “Immigration Indifference – The Adjudicator’s Curse.”]

Dear Immigration Colleagues:

On my doctor’s advice, I am considering changing careers. Like perhaps many of you, helping clients overcome unreasoned decisions and ludicrous requests for evidence year in and year out has taken its toll on my blood pressure. The quality of adjudications by USCIS seems to be declining even further, unfortunately, and I figure now is the time to get out while I am still living.

A string of recent O-1 RFEs [Requests for Evidence], and NOIDs [Notices of Intent to Deny] from the USCIS California Service Center reveal a new disturbing trend.  The best and brightest, including the very STEM PhDs to whom the Senate and much of the House would essentially just give green cards, now find themselves in the crosshairs of the USCIS such that they are being prevented from even coming to work, or continuing to work, temporarily. We just recently received a Notice of Intent Deny, for example, for the fifth O-1 extension for the CEO and founder of a very successful U.S. technology company.

Unfortunately, the example above is not a one-off training issue, despite what the USCIS brass might say when they read this piece ( I will be sending it to them). We have confirmed with other colleagues that O-1 petitions filed for top notch STEM PhDs, supported by voluminous awards, recommendations, patents, and publications are being stopped in their tracks, and told that such evidence does not show that they meet any of the O-1 criteria.  Do these government officials know that these are the guys whom just about everybody in Congress agrees we should actually be encouraging to come here? Shouldn’t this general understanding of our policy inform officers’ discretion in these matters?   Where is the disconnect between us, our duly elected officials, and the officers adjudicating these cases?

Bureaucrats like the one who is intent on denying our client’s case can have a profoundly negative impact on peoples’ businesses and lives, not to mention the U.S. economy as a whole. Sometimes, this can be fixed. The impact on an attorney’s health year after year, however, may not be reversible. That is why I figure it is time leave.  Of the many careers I have considered, I have thought about becoming a screenwriter of spy thrillers. Dealing in fiction, where no one actually gets hurt by rogue government officials, would seem to be a better way to live a longer, healthier life.  Before I make the leap, I wanted to share with you my pitch for one screenplay idea. It is a sequel to one of the early James Bond thrillers, with a science fiction twist (Please be gentle in your criticism. My nerves are a bit weak these days).

Here it is:

 Title:  Dr. No vs. the League  of Extraordinary Aliens

 Dr. No is back, and this time he is ready to do some real damage. He, and his evil “Culture of No” agents, have  infiltrated the  elite government sub-department responsible for bringing the  “League of Extraordinary Aliens” to earth.  Members of the League comes to us from far off planets like, Europater, and Asiater, and use their super powers to help solve Earth’s biggest problems, like  economic stagnation, global warming, and low quality Hollywood entertainment.

 In reality, Dr. No has never left. He and his agents have operated their secret organization, SPECTRE [Society to Prevent Economic, Cultural and Technological Revitalization and Enhancement] from deep beneath a dark and ominous missile factory somewhere in Orange County.  They have lurked in the shadows,  sporadically attacking international business, and technological innovation to serve what could only be their ultimate goal:  returning society to the Middle Ages.  Now they are going all out. SPECTRE has managed to turn its weapons, the RFE explosive device and NOID blaster, on our last hope for progress, the League of Extraordinary Aliens. Even that most righteous protector of the League, Ombuds Man, is rendered powerless in the face of SPECTRE’s firepower. …

 That is as far as I have gotten with the screenplay. I still need help coming up with an ending, and am having a hard time imaging a happy one.  I look forward to your ideas.

L-1 Petitioners Beware: USCIS Confirms Plans to Expand FDNS Site Visit Program

Posted in Fraud Detection & National Security (FDNS), Guest Columns, L-1 Visa, Uncategorized

L-1 Petitioners Beware:

USCIS Confirms Plans to Expand FDNS Site Visit Program

By Maura K. Travers and Angelo A. Paparelli

History is about to repeat itself. Fraud Detection and National Security (FDNS), a directorate of  United States Citizenship and Immigration Services (USCIS), is set to embark on another foray of surprise visits to Corporate America, seeking to determine whether employers petitioning for work-based immigration benefits have kept their word.

Crime Scene Investigator

First employers of R-1 religious workers were the target of scrutiny, and then sponsors of H-1B workers in specialty occupations heard the knock on the door (see  ”Immigration Promises Made, Debts Unpaid,” “Immigration Mission Creep and the Flawed H-1B Report on Fraud and Abuse,” and “A Cancer within the Immigration Agency“).

Soon petitioners seeking L-1 intracompany transferees should expect an FDNS site visit.  Just as with the R-1s and H-1Bs, perceived abuses have led to these visitations (see U.S. Department of Homeland Security, Office of Inspector General Reports, “Implementation of L-1 Visa Regulations,” and “Review of Vulnerabilities and Potential Abuses of the L-1 program,”  and “What the ‘L’ is Going on with USCIS?”).

Here’s the scoop.  In an April 24, 2014 stakeholder teleconference, FDNS’s Associate Director, Sarah Kendall, confirmed plans to expand the Administrative Site Visit and Verification Program (ASVVP) to include all L-1 employers.


Under ASVVP, FDNS Officers conduct random, unannounced pre- and post-adjudication site inspections to verify information contained in certain visa petitions (typically, H-1B petitions).  In fiscal year (FY) 2011, FDNS performed more than 17,000 ASVVP site visits, an increase of over 2,000 visits from the previous fiscal year.


The expansion of the site visit program comes in response to an August 2013 report released by the U.S. Department of Homeland Security’s Office of Inspector General (OIG) analyzing USCIS’ L-1 intracompany transferee program and suggesting ways to reduce fraud and standardize adjudications across the program.  Initial evidence suggested that USCIS would focus this expanded site visit effort on extensions of individual L-1 new office petitions originally filed with USCIS Service Centers.


During the April 24th teleconference,  USCIS confirmed plans to administer a phased roll-out of ASVVP to include site visits to all L-1 employers.  Although listeners were left wanting for specific details regarding an anticipated timeline for this phased expansion, USCIS confirmed that the first phase will focus on all L-1A extension petitions filed with USCIS.  Furthermore, USCIS confirmed that a pilot program and inspector training are scheduled to be completed by the end of FY 2014.

In line with the existing ASVVP, L-1 site visits will be conducted randomly based on data gathered from Form I-129.  Although USCIS indicated that it ultimately plans to include L-1 Blanket applicants in the site visit program, the agency did not specify what data will be utilized for the random selection process, because L-1 Blanket applicants do not file Form I-129 with USCIS.

USCIS indicated several areas that inspectors will focus on during L-1 site visits:

  • Does the business exist?
  • Does the business appear to be ‘in business?
  • Was contact made with the signatory of the petition or the Human Resources representative?
  • Did the signatory or Human Resources representative have knowledge of the petition and of the beneficiary?
  • Was the beneficiary available to be interviewed?
  • Was the beneficiary working for the business?
  • Was the beneficiary knowledgeable, forthcoming, and performing same duties as represented in the petition?
  • Is the beneficiary being paid the salary as indicated in the Petition?

Anticipated Issues

While USCIS attempted to assure stakeholders that the random site visit program should raise no concerns for honest L-1 employers, listeners may have been left with a different impression.  It is evident that USCIS has not reconciled some key differences between the H-1B and L-1 visa categories with respect to specific site visit protocols.  For example, in order to file an H-1B petition, an employer must first obtain an approved Labor Condition Application (LCA) from the Department of Labor (DOL).[1]  The LCA includes an attestation to the DOL that the employer will offer the H-1B nonimmigrant the prevailing wage in the intended geographic area of employment.[2]  As such, an employer must accurately indicate the H-1B beneficiary’s salary and worksite location in the petition to ensure compliance with the law.

However, there is no LCA requirement in the L-1 context.  Therefore, the DOL does not regulate L-1 salaries within specified geographic areas.  In fact, an employer is not required to file an amended L-1 petition unless: (1) there is a change in the L-1 beneficiary’s capacity of employment (i.e., from a specialized knowledge position to a managerial position); (2) there is a material change to the L-1 beneficiary’s job duties affecting L-1 eligibility; or, (3) there is a change in the qualifying relationship between the U.S. petitioner and its foreign entities.[3]

As such, under the current law, an L-1 beneficiary’s worksite, salary, and job duties are subject to change without notice to USCIS. Therefore, FDNS inspectors relying on data contained in the Form I-129 may not possess the most up-to-date information at the time of inspection.  An L-1 employee selected for inspection may no longer be present at the worksite indicated in the petition.  Furthermore, it is not entirely clear what USCIS hopes to gain by auditing information about the salaries and job duties of L-1 beneficiaries, considering there is no regulatory requirement for continued compliance with the original petition.

According to the agency, the initial site visit will not be determinative. If the beneficiary has moved to a different work site, the site inspector will follow up with the company to confirm the L-1 beneficiary’s new work site, salary, and job duties.  The site inspector will take into account the particularities of the L-1 category into consideration before completing a compliance review report and submitting it for supervisor review.  However, it remains unclear how follow-up with the employer will occur and how the supervisor review process will work in practice.

While compliance in the H-1B context is straight forward due to the LCA requirement, the standard for compliance in the L-1 context is less clear.  To date, USCIS has provided little guidance regarding L-1 compliance.  Therefore, sending FDNS officers on site visits to investigate employers’ compliance with the L-1 program seems frivolous at best.

Preparing for the Foreseeable

With or without further guidance from USCIS, L-1 employers should be prepared for FDNS site visits.  Employers should take these visits seriously and contact an immigration attorney as soon as an FDNS site visitor appears.  Identify procedures in advance to prepare for an unannounced FDNS worksite visit and notify all personnel of these procedures.  Always provide complete and accurate information whether requested to do so onsite or subsequently via email.  According to USCIS, the ASVVP is a voluntary program.  The employer has a right to terminate a site visit at any time.  If the officer has not gathered the required information, the officer will follow up with the employer via telephone or email to obtain additional information to complete the compliance review.  An attorney can help prepare a timely and thorough response.

Employers should conduct an internal review of the employment of all L-1 employees to ensure that their job duties, worksites and salaries are readily available.  Retain complete copies of all I-129 petitions and paperwork.  Ensure that foreign national employees and their managers are aware of the content of the I-129 petition and supporting documentation.  While there is currently no requirement to file an amended L-1 petition due to minor changes in employment, employers should be prepared to provide complete and accurate information about L-1 beneficiaries to site inspectors either on site or in response to follow-up inquiries by an inspector.  For general background on investigation preparedness, see “No Skating on Thin ICE: Using Enforcement Preparedness Policies to Prevent Drowning in Frigid Immigration Waters.”

[1] 8 CFR §§214.2(h)(4)(i)(B)(l) and 214.2(h)(4)(iii)(B)(l); 20 CFR §655.700(a)(3) and (b); INA §212(n)(1).

[2] INA §§212(n)(1)(A)-(D); AFM ch. 31.3(b): H-1B Classification and Documentary Requirements.

[3] 8 CFR §214.2 (l)(7)(C)

USCIS Gets an EB-5 Earful at Immigration Listening Session

Posted in EB-5, Investor Immigration, USCIS

earful.jpg[Blogger's note:  For EB-5 stakeholders interested in learning more about the USCIS Listening Session, you can register for "EB-5 Immigrant Investor Update,"  a webinar presented by members of Seyfarth Shaw LLP's EB-5 Immigrant Investment Team on May 13, 2014.  Topics include: 

• The April 23, 2014 USCIS’s stakeholders listening session

• FINRA’s recent notices and how to spot key trends in EB-5 regulation

• Recent subpoenas issued by the SEC and what these enforcement efforts may mean for you

• Brokerage issues and Investment Advisor registration requirements

• Senator Coburn’s requests to regional centers for EB-5 program data.]

USCIS Gets an EB-5 Earful at Immigration Listening Session

On April 23, 2014, U.S. Citizenship and Immigration Services (USCIS) — the component of the Department of Homeland Security (DHS) that administers the EB-5 Immigrant Investor Program — held an important “Listening Session” with the stakeholder community.  

EB-5 Program Chief, Nicholas Colucci, flanked by representatives of the Offices of Policy, Chief Counsel and Public Engagement, and by Dr. Winslow Sargent, Chief Counsel to the SBA’s Office of Advocacy, explained that the session is a prelude to the promulgation of new EB-5 regulations. These new rules, he noted, would enhance program predictability and consistency by better defining substantive eligibility requirements and establishing consistent filing requirements.  He added that the new regulations are but one step in transforming the EB-5 program, noting that the agency concurred in the December 2013 recommendations of the DHS Office of Inspector General that USCIS take additional measures, which he did not describe, to address EB-5 fraud and national security concerns.

The Listening Session — which Mr. Colucci noted was held in deference to Executive Order 13563 (“Improving Regulation and Regulatory Review”)  – covered a wide array of suggestions including proposals for new legal rights and interpretations, greater access to accurate program data and improvements in investor protection, the impact of immigrant visa quota backlogs and the need for greater speed and predictability of adjudications.  

Legal Rights and Interpretations

Private attorneys and others on the call made a number of suggestions:

  • Allow each party with a material stake in the outcome of an EB-5 adjudication — an I-924 request for designation as a regional center or amendment; an I-526 immigrant investor petition to be found classifiable as a qualifying EB-5 investor; and an I-petition to remove conditions on permanent residence — to have a right to be heard before the agency and to be represented by separate counsel (at present only a regional center is represented in an I-924 proceeding, and only the immigrant investor is represented in I-526 and I-829 petition).
  • Allow investors who are members of limited liability companies (LLCs) to be treated on par with limited partners in establishing that “the petitioner is or will be engaged in the management of the new commercial enterprise” under 8 CFR § 204.6(j)(5)(iii).
  • Interpret the corporate restructuring or reorganization provision of 8 CFR § 204.6(h),
  • which holds that a new commercial enterprise may consist of the “purchase of an existing business and simultaneous or subsequent restructuring or reorganization such that a new commercial enterprise results,” consistently with traditional notions of corporate law allowing the formation and recognition of a new legal entity that acquires a predecessor’s assets, and thus overrule contrary interpretations found in Matter of Soffici, 22 I&N 158 (Assoc. Comm’r, Examinations 1998) [the caller mistakenly referred to Matter of Izummi, a different precedent decision] and the May 30, 2013 USCIS EB-5 policy memorandum. In other words, as another attorney later noted, asset acquisitions should be treated as new commercial enterprises. 

  • Given the delays of adjudication and the need for careful due diligence on potential investments, allow prospective EB-5 investors to enter as B-1 business visitors and provide them with work and travel-abroad permission while they evaluate and make a suitable employment-creation investment. 
  • Allow an investor to cure a perceived problem with the investment subscription documents, say, a prohibited redemption right that would deny the “at risk” nature of the investment, by permitting amendments to these documents rather than denying the case entirely, or, requiring a refiling and payment of a duplicate filing fee. 
  • Take into account and adjust for the foreseeable impact of immigrant visa quota backlogs that artificially change the measuring period in which the jobs per EB-5 investor must be created and prolong project liquidation and ultimate distributions to EB-5 investors beyond the prevalent five year holding period. The caller also suggested that the measuring periods for the I-526 approval (2-1/2 years) and the I-829 approval (up to 3 years) need to be reconciled. 
  • Revise the current Targeted Employment Area (TEA) concept involving discrete areas within counties as determined by state officials into a regional TEA principle based on the recognition that “where jobs are created [is] not necessarily where people live.” Also, extend TEA designation authority to all U.S. territories and to federally recognized Indian nations. 
  • The validity of a TEA determination should also be extended beyond the one-year period currently permitted. 
  • Reconsider the Tenant Occupancy concept so that retained jobs are considered acceptable. 
  • Make clear that the EB-5 program as provided by statute is only concerned with the fact that jobs are created and not with the duration of jobs once they have been created. 
  • Allow investors to port an approved project to a different regional center in case an existing regional center loses its designation.
  • Create an administrative presumption that the infusion of investment funds would create a presumed number of jobs or use more flexibility in accepting job-creation methodology.
  • Change the definition of how net losses are determined for a troubled business by moving away from Generally Accepted Accounting Principles (GAAP) which are prohibitively expensive to document for small businesses because GAAP will be phased out in favor of international financial reporting standards.
  • Clarify that investors in a direct EB-5 project who receive a salary are not necessarily receiving a redemption or return of their investment.
  • Allow investors whose I-824 petition for removal of conditions USCIS has denied to file motions to reconsider and/or reopen (MTRs) with the regional service center and appeal to the USCIS Administrative Appeals Office (AAO) rather than require immediate referral to an immigration judge at a removal hearing.  The caller noted that the immigration courts are backlogged for months or years, thus leaving the conditional permanent resident in a legal limbo for an inordinate period.  The caller could have also noted that the regional service centers and the AAO presumably would have more time and greater expertise in EB-5 issues than the Immigration and Customs Enforcement Trial Attorneys and the Immigration Judges who deal with a plethora of other immigration factual and legal issues in removal proceedings.  The caller could also have observed that, since the issues at the I-824 stage often involve a regional center, the center should likewise have the right to file an MTR or an AAO appeal.

Investor Protections and Anti-Fraud Measures

Various callers expressed concern about the need to stem fraud and enhance the protection of EB-5 investors, urging the adoption of specific regulations:

  • Hold regional centers liable for misrepresentations by overseas brokers and require the centers to maintain and monitor marketing materials.
  • Monitor changes and amendments to governing subscription and operating documents and allow investors to object in writing to USCIS.
  • Extend the same benefit of counting indirectly created jobs accorded regional centers to direct EB-5 investors.
  • Require USCIS to mount an investor education initiative through U.S. embassies and consular posts and to release more regional center performance data and approval/denial outcomes. One caller, however, expressed concern that release of such data would likely be misleading because of the widespread “rent-a-regional-center” practice, and because some approvals have led to projects that failed. Investors should be encouraged to investigate the project rather than the regional center.  Regional center metrics would not address that issue. The caller also worried that new and more innovative regional centers would likely lose out in investor attention to long-established centers.  
  • Verify source of funds documentation by the issuing bank or other authority rather than accepting such documentation at face value. 
  • Provide a remedy for investors who are victims of fraud in cases where the I-526 is approved and the investor has become a conditional permanent resident (assuming that the invested funds have been lost or depleted and investors lack the financial ability to invest in another regional center).
  • Instructions to EB-5 forms should outline the most common types of requests for additional evidence to help investors and the regional centers submit information likely to lead to approval and project success.  The forms, another caller noted, should not request burdensome and irrelevant information.

Processing times, Rulemaking Process and Adjudication Procedures

Many callers expressed process concerns:

  • Allow the use of the Premium Processing Service to speed all adjudications and create sufficient funds to ensure and enhance program integrity.  Faster adjudications winnow out weak projects and facilitate the success of projects with solid prospects by leading to the speedier release of escrowed funds.
  • Charge a substantial annual regional center recertification fee to weed out inactive centers and help investors more readily identify successful centers and projects.
  • Institutionalize the informal process of email clarification of specific issues of concern in lieu of issuing long and burdensome requests for additional evidence.
  • Give priority adjudication processing to investors in the U.S. on work visas.
  • Once a set number of approvals of I-526s have been issued, e.g., three approvals, expedite the adjudication of all similar cases for investors in the same project.
  • Maintain the integrity of USCIS published processing times by publishing actual rather than targeted processing times.
  • Expedite I-924 adjudications for regional centers seeking to expand into contiguous areas to enhance investor confidence that a new project in an adjoining area will be approved.

* * *

As can be seen, USCIS has much to digest from the Listening Session’s cornucopia of proposed changes.  As two callers urged, however, USCIS should not rush to publish proposed rules without first engaging in the kind of “iterative process” or sounding out of concepts and lines of thinking with the stakeholder community — just as occurred with the May 30, 2013 policy memorandum — a document largely praised as providing practical and clear adjudication guidance.

Waiting in the Wings: A New Leader at the Immigration Helm

Posted in Congress on Immigration, Democrats on Immigration, EB-5, GOP on Immigration, Immigration Law Complexity, Immigration Reform, Immigration Regulations, L-1 Visa, Obama Administration on Immigration, USCIS

The dysfunctional immigration world continues to spin dangerously out of control. 

Do-nothing House Republicans (and five pusillanimous Democrats) commit political seppuku with the passage of the ENFORCE Act  – a going-nowhere bill which would authorize civil suits against the President to dissuade him from doing something to husband scarce prosecutorial resources and ameliorate the harsh consequences of deportation for noncriminal violators of immigration regulations.  As Rep. Luis Gutiérrez reminds us, prominent Republican House leaders advocated for the exercise of presidential authority and prosecutorial discretion before they turned against it — the only difference being that this time they cannot suffer the insufferable, namely, that it be used by President Obama.

For their part, House Dems file a discharge petition seeking a vote on the Senate-passed comprehensive immigration reform bill, S. 744, while Minority Leader Nancy Pelosi admits that the votes are not there to prevail, thus making the effort look like a stunt pursued for political advantage. 

Provocateur Ann Coulter spews anti-immigration vitriol at the gathering known as CPAC, the Conservative Political Action Conference, as she attacked “MSNBC, where they are celebrating the browning of America,” compared immigration reform to “rape,” claimed that immigrants would upend the Social Security and Medicare programs, and espoused vigilantism (“If you pass amnesty, that’s it. It’s over, and then we organize the death squads for the people who wrecked America”).

Elsewhere in the land, activists for comprehensive immigration reform fast, while undocumented immigrants are denied bar licenses in Florida, but allowed to practice law in California.

Meanwhile, a U.S. citizen child must travel to Rome for a visit with Pope Francis — a true friend of legal immigration — and gains the release of her dad from immigration detention. This happens just before the President and the Pope meet to discuss immigration, an act that would perhaps be more meaningful had the Obama Administration, in releasing its proposed FY 2015 budget, not reflected conflicting priorities and the malapportionment of heavier spending on immigration enforcement than on benefits and immigrant integration.

All this time, U.S. Citizenship and Immigration Services (USCIS) has continued since December to make do without a permanent leader.  Following the departure of Alejandro Mayorkas, the erstwhile and accomplished USCIS Director, appointed to serve as Deputy Secretary of Homeland Security, an acting director, career officer Lori Scialabba, has served as its interim leader and caretaker. While this beleaguered agency with a huge and hugely important mission and long-endemic problems has shown spunk and commendable results in some areas, such as public engagement, a new online “e-Request” form for simple-problem resolution, and the EB-5 immigrant-investor domain, growing problems only proliferate.

leonrodriguez.jpgThe President’s nominee as new USCIS Director, Leon Rodriguez, a seasoned federal prosecutor and Director of the Office for Civil Rights of the Department of Health and Human Services, may be recommended on April 3 in an Executive Business Meeting of the Senate Judiciary Committee.

Mr. Rodriguez, whose “grandparents fled anti-Semitism and poverty in Turkey and Poland in the late teens and early 20’s to come to Cuba where [his] parents were born,” only later to seek refuge from the Castro regime in the U.S., has offered tantalizing insights into how, if approved by the Senate, he might tackle the daunting job of USCIS Director, especially in reply to Sen. Grassley’s queries. 

In written answers to various Senators’ questions, he reaffirms his belief in the proper use of prosecutorial discretion and the need to protect internal agency whistleblowers from retaliation, agrees to meet with union representatives of USCIS employees, expresses support for recent USCIS reforms of the EB-5 program and states that in limited circumstances it is incumbent upon the USCIS Director to intervene in a pending case when the “outcome of adjudication is wrong, or when adjudication may present a legal, factual, or policy issue of broad application.”

Unfortunately, the Senators’ written questions to Mr. Rodriguez ignored many problems and challenges facing USCIS.

One of the most pressing is the L-1 intracompany-transferee visa category and the ever mounting rates of denials by USCIS of  employer petitions seeking L-1B “specialized-knowledge” workers.  As reported in the latest USCIS dataset (released through a Freedom of Immigration Act request by the American Immigration Lawyers Association), although as recently as FY 2006 the agency denied only 6% of L-1B petitions, rejections for lack of specialized knowledge jumped to 34% in FY 2013, after accelerating to 30% in FY 2012 – a five-fold increase in the denial rate even though the agency has not published any new regulation changing the adjudication standard. In a press release accompanying its recent report (““L-1 Denial Rates for High Skill Foreign Nationals Continue to Increase”), the National Foundation for American Policy (NFAP) observed:

Denial rates for L-1B petitions increased in FY 2012 and FY 2013 – after U.S. Citizenship and Immigration Services officials pledged in early 2012 to develop new proposed guidance, for public review and comment, in order to update and modernize the understanding of the specialized knowledge definition. The new proposed guidance never materialized and, in the eyes of employers and their attorneys, the situation has continued to provide inconsistent decision-making and the high levels of denials and Requests for Evidence have continued in the past two years.

The NFAP also noted an alarming nationality-based trend in L-1B denials adversely affecting Indian citizens (a pattern also observed and critiqued in this blog):

Based on an NFAP examination of data for FY 2011 and earlier, it appears much of the increase in the denial rate has been focused on Indian nationals. U.S. Citizenship and Immigration Services denied more new L-1B petitions for Indians in FY 2009 (1,640) than in the previous 9 fiscal years combined (1,341 denials between FY 2000 and FY 2008). In FY 2009, the denial rate of new L-1B petitions for Indians increased to 22.5 percent even though there had been no change in the regulations. In contrast, for Canada, the UK, China and other countries the denial rate in FY 2009 ranged from 2.9 to 5.9 percent for new L-1B petitions. USCIS did not release country-specific data for FY 2012 and FY 2013 but interviews with employers and attorneys indicate the problems with receiving approvals for L-1B petitions involving Indian nationals have continued.

The agency has not offered an explanation of the deterioration in L-1B approval rates or the harsher and disfavored screening of petitions for Indian workers.  Could this be a form of “taking-the-law-into-your-own-hands” in the face of perceived loss of IT jobs by U.S. workers?  Is it an off-the-shelf government a la Oliver North?  Or, is there “a bias [because] there is a sentiment that Indians are taking away American jobs“? 

Only a permanent and reform-minded USCIS Director, ushered forcefully through the Senate, even if Democrats are forced to deploy the “Nuclear Option,” would have the clout to address this disturbing trend in lawless adjudication.  Only an outsider with legal background sufficient to master the complexities of the Immigration and Nationality Act and a history of facing and overcoming entrenched bureaucratic lethargy and resistance, could fix the many daunting challenges still unaddressed at USCIS.  Let’s hope that Mr. Rodriguez is just such an individual and that his nomination is swiftly approved.

Senator’s Saucy Request Roils EB-5 Regional Centers

Posted in Congress on Immigration, EB-5, GOP on Immigration, Immigration Lawyers, Investor Immigration, Obama Administration on Immigration

Business man hushing.jpgImagine you’re the general counsel of Coca Cola (or of any other company that takes great pains to safeguard the internal secrets that endow the organization with competitive advantages over other firms in the same industry).  On your desk lands a letter from a U.S. senator in the minority party asking that your company turn over “voluntarily” a raft of legitimately sought business information as well as sensitive business secrets (in the case of Coke it would be its secret formula).

What do you do?

This is the dilemma faced by America’s EB-5 regional centers — organizations approved by U.S. Citizenship and Immigration Services (USCIS) to accept $500,000 or $1 million from foreign investors, each of whom hopes to create 10 full time jobs for American workers and thereby obtain a green card.  The senator in question is Tom Coburn, M.D., whose “oversight efforts,” he maintains, “are meant to shed light on various challenges facing the federal government that should be addressed by agency management and congressional oversight.”

A conceptual successor to Sen. William Proxmire, who until retirement in 1988, released his “Golden Fleece Award,” Sen. Coburn publishes “Wastebook,” which highlights what he asserts reflect the “Most Egregious Spending of 2013.”

Sen. Coburn, the Ranking Member of the Senate’s Homeland Security and Governmental Affairs Committee, has apparently issued to every one of the 440 USCIS-approved Regional Centers a letter seeking a reply by March 7, 2014 responding to each of the items below:  

• Any approval from USCIS to participate in the EB-5 program regarding the regional center and its business plan, including any subsequent recertification;

• The total annual amount of investment and the number of individuals by country of origin making investments through the regional center since it has been in operation;

• The name, address, and a description of each business in which the regional center has made an investment of funds and the number of jobs created by each investment;

• Any fees charged to EB-5 applicants or received by the regional center, including amount and description;

• A list of any current or former corporate officers of the regional center, including title, position, and dates of employment, and

• The name and address of any individual or entity — either foreign or domestic — that the regional center has an agreement with to provide legal, accounting, recruiting or consulting services, as well as a description of the service provided.

The letter comes as little surprise to close watchers of the EB-5 scene, particularly observers who paid attention to the Senate debate ultimately leading to the approval of President Obama’s nomination of the former USCIS director, Alejandro Mayorkas, to serve as Deputy Secretary of the Department of Homeland Security (DHS).  In seven pages of dense, three-column text published on December 20, 2013 in the Congressional Record (pp. S9072-S9079), the EB-5 regional center program figured more prominently than any other subject managed by Director Mayorkas during his four-year term at USCIS.  In the course of debate Republicans claimed that whistleblower complaints alleging improper intervention by Mr. Mayorkas into an EB-5 regional center adjudication, which triggered a long-simmering investigation by the DHS Office of Inspector General, should be concluded before a vote on the nomination.  For his part, Mr. Mayorkas denied the allegations, testifying at an earlier committee hearing that he made the decision to approve the regional-center designation request solely based on the facts and the law.  Democrats argued that the OIG investigation had become politicized and had produced no credible evidence of wrongdoing by Mr. Mayorkas.

Recognizing that the Mayorkas nomination would be approved by the majority party, Sen. Coburn nonetheless urged postponement of the vote:    

We should wait for this investigation to be completed. I know we are not going to; we are going to roll this right through here. It is a disservice to Mr. Mayorkas. It is a disservice to the American people. It is a disservice to this body. All that I have heard from people who know Mr. Mayorkas are positive things. It is positive, but a legitimate investigation is ongoing.

Undeterred by the approval of the Mayorkas nomination, Sen. Coburn apparently has determined that he will go directly to the source, circumvent USCIS and the DHS OIG, and seek extensive information from every approved regional center as well as from its trade group, the Association to Invest In the USA (IIUSA).  

While regional centers might consider ignoring the request, coming as it does from a single senator of the minority party, that path is fraught with risk.  Yet, voluntarily complying is also risky.  Sen. Coburn’s letter offers no assurance that the information provided — much of which may be viewed as proprietary and a trade secret — will be treated in confidence.  This is unlike similar information submitted to USCIS when filing a request for designation as a regional center, or when providing updated information on an annual basis on Form I-924A.  As the IIUSA reported in its Feb. 20 reply to Sen. Coburn:

It is important to note that our members may consider specific information included on Form I-924A to be proprietary and confidential, and to our knowledge USCIS has treated it so in responding to Freedom of Information Act (FOIA) requests for it.

Indeed, FOIA (5 U.S. Code § 552(b)(4)), expressly exempts from disclosure to third parties information submitted to Executive Branch departments and agencies that are “trade secrets and commercial or financial information obtained from a person and privileged or confidential [information].”  in turn, Presidential Executive Order 12,600 provides for pre-disclosure notice and an opportunity to object if an individual or business submits “confidential commercial information” to a federal agency and a third party requests it under FOIA.

Some may wonder why regional centers are concerned.  After all, the thinking goes, it comes with the territory, when dealing with a government program, that requests for data and documents ought be expected.  Aside from the lack of FOIA protection or other assurance of confidentiality from Sen. Coburn, the requests he makes involve clearly competitive data that may make it materially more difficult for one regional center among 440 others to attract qualified foreign investors.  His request asks for such internal, sensitive data as a regional center’s “business plans,” and a listing of the parties with which it conducts its business (including law firms), together with a “description of the service provided” — a subject that could well involve attorney-client privileged information.  Moreover, were these parties to be identified, presumably other regional centers might seek out their finite services as well, and thus impair their ability to serve existing center clients.  Why should Sen. Coburn, even if unwittingly, allow one regional center to leverage and exploit competitive commercial information amassed by another center?

Even more disturbing, the Senator’s request comes at an unhelpful time when — as reports of the latest Stakeholder Engagement of February 26, 2014 confirm — USCIS has moved aggressively to strengthen and improve the EB-5 program by increasing security concerns, program integrity, predictability and transparency.

Sen. Coburn’s request also may undermine the robust economic benefits that the EB-5 program has spawned if current and prospective regional centers conclude that participation in the EB-5 is unwise because it will result in the sharing of competitive secrets with third parties.  A FY2012 study by IMPLAN Group, LLC – the originators of the widely accepted IMpact PLANning (“IMPLAN”) econometric model which measures and forecasts economic impact  – found in peer-reviewed studies vetted by university economists associated with the Association for University Business Economic Research (AUBER) that the EB-5 program produced an economic impact which has increased dramatically over the prior two years.  IMPLAN’s FY 2012 study found that the EB-5 program had contributed more than $3.39 billion to U.S. GDP, supported over 42,000 U.S. jobs, and generated over $712 million in federal/state/local tax revenue.

While Sen. Coburn certainly is not prohibited from asking for information on the EB-5 program, he should temper his use of the requested information with a measure of caution and prudence. One especially helpful step he could take would be to assure all regional centers that he will exercise restraint and refrain from releasing confidential competitive information which would needlessly harm law-abiding regional centers that are doing precisely what Congress intended, namely, helping to create much-needed American jobs through the prudent use and management of foreign investors’ funds.

EB-5 Immigration Lawyers Wear Too Many Hats

Posted in EB-5, Immigration Lawyers, Legal Representation

Hats 2.jpgThe EB-5 employment-creation immigrant investor visa category continues to transcend its chutes-and-ladders early history.  This 24-year-old program — like many young adults of the same era — seems at last to be maturing in healthy ways.  Foreign investors have become more savvy.  Regulators are more attuned to the need for greater investor protection, as well as clear, consistently enforced rules and predictable adjudicative outcomes (including swift justice for law violators).  Seasoned dealmakers and developers, accustomed to raising substantial project capital from private equity markets, are now entering the field and bringing with them a set of industry practices that include robust law compliance as an inherent element of the fundraising business model.

Yet one practice lingers.  Immigration lawyers continue to wear too many hats.  The Bible and law school teach that serving two (or more) masters is a recipe for trouble.  So why then do so many reputable immigration lawyers think they can simultaneously represent the investor, the regional center and the project developers all in the same EB-5 transaction (while possibly also receiving finder’s or consulting fees on the side for procuring investors)?

The answers are only partly governmental.

U.S. Citizenship and Immigration Services (USCIS) and the State Department perpetuate the practice by allowing only one lawyer to submit a Form G-28 (notice of entry of appearance of attorney) in any given EB-5 benefits request, whether that be the request for approval of a regional center (Form I-924), the request for amendment of a regional center designation (Form I-924A), the EB-5 investor’s petition seeking classification as a conditional permanent resident (Form I-526), the application to register permanent residence or adjust status to conditional permanent resident (Form I-485), the immigrant visa application (Form DS-230), or the investor’s petition to remove conditions on residence (Form I-829). 

This governmental practice is unhealthy and unnatural.  Most federal agencies outside of the immigration world recognize that parties with distinct legal interests to protect deserve to be heard and represented by the respective legal counsel of their choice.  The Securities and Exchange Commission, for example, would never mandate or likely countenance that an investor’s counsel represent the interests of an issuer of securities, or vice-versa. Indeed, the adversarial system of justice is founded on the principle that the truth will out and justice will best prevail when conflicts of interest are minimized and each party to a controversy exercises the right to present evidence and legal argument in support of a particular position asserted before a neutral fact-finder/judge determining the truth and deciding on the correct legal outcome.   Not so, the immigration bureaucracy.  As I’ve blogged before, the government needs to stop forcing members of the bar and the several “publics” they serve to rely on only one lawyer to carry the legal water in a single immigration case where several distinct interests hang in the balance.

But archaic immigration rules don’t really explain why EB-5 lawyers practicing immigration law too often tend to represent multiple parties. Immigration attorneys can readily serve distinct parties in an EB-5 case quite well by developing lawful work-arounds through multi-counsel collaboration agreements. Thus, the immigration attorney representing the project or the regional center, with client consent, can provide to investor’s counsel submitting the Form I-526 or Form I-829 all of the deal- or project-related documents and data needed to establish eligibility for the particular immigration benefit sought.  Moreover, investor’s counsel, likewise with client consent, can and usually does undertake to provide the immigration lawyer representing the project or the regional center with timely notice and copies of all petition filings and any USCIS request for additional evidence, notice of intention to revoke petition approval or final decisions in a particular EB-5 investor’s petition.   Similarly, immigration deal counsel or regional center counsel can and should provide the immigrant investor’s counsel with any USCIS actions or correspondence involving regional-center designation or amendment.

So why then do immigration counsel wear so many EB-5 hats?  Is it some misguided paternalism (the desire to make sure all parts of the process are controlled by a single, control-freak lawyer/strategist)?  Is it a belief that the EB-5 project and its attendant investors are best served by the perceived efficiency and cost efficacy of using only one immigration lawyer or firm?  Or is it merely bottomed on a rapacious desire to squeeze out the largest dollar value of legal fees from each and every EB-5 deal?

I disclaim any clairvoyant ability to read the hearts and minds of my colleagues and thereby discern their underlying motivation for embracing joint client representation.  Instead, my purpose in posting is merely to suggest that multi-party immigration representation in EB-5 cases is foolhardy and dangerous.

If a deal fails, if EB-5 benefits are not achieved, or if one or more EB-5 investors fail(s) to receive green cards because too few jobs are created, then — as sure as the night follows the day  — disappointed and disgruntled parties will engage successor counsel to point the finger of blame at whomsoever has pockets that seem deep enough to pay amends and thereby effectuate some form of retributive economic justice. (For more on this topic, check out an article co-authored by securities lawyers, Gregory L. White and Mark Katzoff, and me, “Hot Topics in EB-5 Financings,” published in Forming and Operating an EB-5 Regional Center: A Guide for Developers and Business Innovators (ILW, 2014; Eds., L. Batya Schwartz Ehrens and Angelo A. Paparelli). Even if the multiple-fingers-in-multiple-pies immigration lawyer somehow prevails after all the finger-pointing exercises have been resolved, the process of deposition, discovery, settlement or trial will be enervating.

So, my esteemed and beloved colleagues, it is folly to think that your artfully crafted disclosures and mutual consents to joint representation will withstand close scrutiny and protect you.  

Instead, just say no! Don’t ever agree to represent more than a single party (or perhaps at most a class of similarly situated investors) in any multi-party EB-5 transaction, whether it be a pooled investment involving direct job creation, or a syndicated investment made through a regional center.  In my own case, the need for blissful sleep (and retention of my bar license) compel me to choose sides.  I shall only represent the project or the regional center in any syndicated investment (prospective client referrals without referral fees paid are gladly accepted) and I’ll look to my many talented sisters and brothers at the bar to represent the interests of the investor(s). 

We can do this together while practicing separately — that is, by each of us undertaking to represent only one party in any pooled EB-5 investment.