File No.: WAC-98-076-51656, California Service Center (AAO, April 6, 1999)

Non-Precedent Decision

AAO Designation: S

Principle of Law:

Main Holding: EB-5 immigrant investor visa petition denied.

Index of Issues: Employment-Based Immigrants- Fifth EB preference

Cross-reference: Immigration Law and Procedure § 39.07[1]

Represented by Kenneth S. Li (Monterey Park, CA)

Summary of Decision:

The petitioner was seeking an EB-5 visa for investment in a targeted employment area and in a regional center eligible for the Immigrant Investor Pilot Program. This program requires that a business create at least 10 jobs "directly or indirectly through revenues generated from increased exports." The petitioner planned to build a facility that would house stores and offices, only 50% of which would be dedicated to export. The AAO stated that employment created by the offices not related to export would not be counted, and it was possible that the non-export offices would be larger than the export offices. In this scenario, less than half jobs would be related to export. The petitioner also failed to show that she had any potential tenants. Consequently, the AAO required that the petitioner demonstrate direct employment, rather than allowing indirect employment as well.

The petitioner also failed to show that she had invested the required amount of capital. Half of her investment was based on a promissory note that she claimed she would acquire upon receipt of an immigrant visa. The AAO refused to consider money not "already committed and placed at risk." The intent to invest was not sufficient. Further, the petitioner had an agreement granting her the right to sell back her interest in the company in three years for $ 500,000. This makes the investment a loan, not a risk of capital, which Matter of Izumii specifically prohibits. Such an agreement is only acceptable when the petitioner must sell the shares at market value, thereby maintaining the element of risk.

It was unclear which corporate entity was to be involved in job-creation. The AAO argued that if the company in which the petitioner was investing had a parent company, the funds channeled to the parent company could not be included. Only funds directed to job-creation and the generating of profits could be considered in the opinion of the AAO.


Matter of [name not provided]

File No.:WAC-98-115-55974, California Service Center (AAO, March 22, 1999)

Non-Precedent Decision

AAO Designation: S

Principle of Law:

Main Holding: EB-5 immigrant investor visa petition denied

Index of Issues: Employment-Based Immigrants-Fifth EB preference

Cross-reference: Immigration Law and Procedure § 39.07[1]

Self-Represented

Summary of Decision:

Petitioner's application for an EB-5 visa was denied for failure to demonstrate the proper investment. He argued that the business was located in a targeted employment area, and so should only be required to invest $500,000. He based this on previous cases that considered Los Angeles County a targeted employment area. The AAO denied this categorization for two reasons. First, he failed to produce documentation of the employment rate of the specific city of the business. Second, the business plan indicated that the company would have several offices in other cities. The AAO argued that it was not enough to employ a few people in the underemployed area and the rest in non-targeted cities.

As to the investment itself, the AAO found it to be of questionable worth. It came in the form of a promissory note, secured with the balances of two checking accounts and shares held in a Chinese corporation. The statements from the two bank accounts were from different days, so the petitioner could have easily transferred funds from one to the other. The petitioner also failed to show that the funds invested in the Chinese corporation would be "fully amenable to seizure by a U.S. note holder," a factor in determining the value of a promissory note. Even if the shares were amenable to seizure, the cost of claiming them might be high enough to decrease the actual value of the promissory note. Further, the promissory note indicated that 75% of the total required investment would be paid by the end of the second year. The petitioner cited the standard set in Matter of Izumii, that "nearly all of the money due under a promissory note must be payable within two years." The AAO found that 75% did not constitute "nearly all."

The petitioner's investment was in a parent company that was created to lend money to other businesses. The petitioner argued that because one of the recipient companies of these loans would create employment, his investment met the requirement of creating new jobs. The AAO argued that the investment must be in the company "most closely responsible for creating the employment." Finally, the petitioner failed to establish that he established the new commercial enterprise in which he was investing. The company had exited before his investment, and there is no proof that he expanded the business significantly.



Matter of [name not provided]

File No.: A74-351-517, Texas Service Center (AAO, June 16, 1999)

Non-Precedent Decision

AAO Designation: S

Principle of Law:

Main Holding: EB-5 immigrant investor visa petition denied.

Index of Issues: Employment-Based Immigrants-Fifth EB preference

Cross-reference: Immigration Law and Procedure § 39.07[1]

Represented by Roger C. Linde (New Orleans, LA)

Summary of Decision:

The petitioner filed an EB-5 visa petition based on investment in a new corporate entity. The AAO saw several flaws in his argument. The petitioner presented evidence of investment in eighteen separate corporations, but the AAO argued that it could only consider investment in one single corporate enterprise. Petitioner countered that many of the corporations were subsidiaries of his main enterprise, but this was rejected because the regulations at 8 C.F.R. 204.6 (e) limit eligible investment to holding companies and "wholly-owned subsidiaries." The subsidiaries in question were not wholly-owned by the holding company. Further, the petitioner felt that he was being unfairly punished by the inconsistency of tax law and immigration law. The immigration regulations require that he, as an individual investor, supply capital for the new corporate enterprise. The petitioner instead used the assets of one corporation to invest in another, thereby avoiding the tax implications of withdrawing funds from a corporation. The AAO stated that this was the choice the petitioner made to avoid taxes, but he should have been aware of the implications of this choice on his EB-5 application.

The AAO also questioned the petitioner's personal liability. To secure loans for the purchase of equipment, the petitioner offered the equipment itself as collateral. Because the equipment was the property of the corporation, the petitioner was not personally liable for the debts. The AAO held that the petitioner's argument that the rapid depreciation of the equipment would leave him liable as the corporation's primary shareholder was unconvincing because "shareholders are not liable for corporate debts; in fact, the main reason for incorporating a business is to avoid personal liability."

Finally, upon examination of the petitioner's bank statements, the AAO found that the money used as venture capital was transferred in from Australia, the home of other investors in the petitioner's companies. The AAO concluded that the investments were not the personal capital of the petitioner, but rather loans from outside sources.



Matter of [name not provided]

File No.: BLACKED OUT, Vermont Service Center (AAO, June 16, 1999)

Non-Precedent Decision

AAO Designation: S

Principle of Law:

Main Holding: Immigrant investor visa petition petition (EB-5) denied

Index of Issues: Employment-Based Immigrants-Fifth EB preference

Cross-reference: Immigration Law and Procedure § 39.07[1]

Self-Represented

Summary of Decision:

Petitioner's visa petition was denied because he did not invest the requisite amount in the new commercial enterprise. The initial investment was $27,800. The petitioner argued that the gross revenues of the company over its six-year existence should count toward the requirement of a $1 million investment. In response, the AAO made a distinction between a corporation and a sole proprietorship. In the case of the former, corporate income cannot count as an investment on the part of the shareholders, because "a corporation is a separate and distinct legal entity from its owners and stockholders, regardless of the number of owners." For the company's income to become the property of a shareholder or owner, he or she must first withdraw the funds from the corporation and pay taxes on that income. In contrast, because a sole proprietorship is legally identified with its owner, and because the owner already pays taxes on the company's income, money reinvested in the company can be counted toward the $ 1 million investment.
Second, the petitioner based his investment capital partly on a loan that was secured with the assets of the company. Again, this was not considered an investment by the individual petitioner, as he was not personally liable.