A final policy memorandum on EB-5 adjudications was issued recently by U.S. Citizenship and Immigration Services (USCIS). The final memo comes as the fourth version in a 19 month process. On November 9, 2011, USCIS released the first draft and sought stakeholder comment. The second draft was released on January 11, 2012, and then the third draft on February 14 of this year.
The memo does not necessarily change policies with respect to EB-5 adjudications, but it does make some specific and important clarifications. Some of those include the following:
Burden of Proof and Standard of Proof. The memo emphasizes the distinction between “standard of proof” and “burden of proof.” The burden of proof means the petitioner has the responsibility to prove all the required elements of his or her case. The standard of proof in EB-5 cases, however, relates to the believability of that proof. The standard is “preponderance of the evidence,” which means that a petitioner must show that what he or she claims is more likely true than not.
Clarification on what funds are not “at risk.” EB-5 petitions require the petitioner to show that the funds invested are placed “at risk.” The memo clarifies that in cases where the investor is guaranteed the right to eventual ownership or use of a particular asset “in consideration of the investor’s contribution of capital to the new enterprise… the expected value of the use of such asset does not count toward the total amount of the investor’s capital contribution in determining how much money was truly placed at risk.”
Verification of job creation at the Removal of Conditions stage. With respect to EB-5’s job creation requirements, the USCIS memo states that it “will not request additional evidence to validate [indirect] job creation estimates in the [reasonable] economic models to prove by a greater level of certainty that the indirect jobs…are full-time or permanent. USCIS may, however, request additional evidence to verify that the direct jobs will be or are full-time and permanent…”
The USCIS policy memo is lengthy and provides valuable information for practitioners and investors. The policy memo can be accessed here in its entirety.