The passage of the EB-5 Reform and Integrity Act of 2022 (“RIA”) brought about many changes to the EB-5 program. Several of these changes renewed and enhanced the focus on reporting, program compliance, and transparency. The RIA also established the EB-5 Integrity Fund to provide USCIS with the resources needed to conduct more frequent and consistent regional center and project audits, amongst several other goals. However, USCIS conducting in-person audits of regional centers and their sponsored projects is not new. These initiatives have existed for many years, but in 2018 USCIS commenced the process of conducting formal, in-person, compliance reviews. In this article, CMB Regional Centers and EB5 Capital will offer their firsthand experience with these audits. CMB Regional Centers will share their insights from one of the earliest USCIS compliance reviews focused on its CMB Export, LLC regional center. EB5 Capital will share their recent experience with respect to project site visits associated with I-829 adjudications.
PROJECT SITE VISITS: HOW TO PREPARE FOR THE UNEXPECTED
Founded in 2008, EB5 Capital has successfully funded 30+ EB-5 real estate projects, has fueled economic development throughout the United States, and has created thousands of new jobs for American workers. Interestingly, it was just late last year that EB5 Capital had its first experience dealing with a project site visit. We have many projects near USCIS’s headquarters, so we had been expecting and planning for site visits long before one actually occurred. However, EB5 Capital’s recent project site visits involved two of our hotel projects in California, followed by another one of our hotel developments in New York City. While all three visits had many things in common, the inspections were also unique in their process. All site visits were conducted by officers of the USCIS’ Fraud Detection and National Security Directorate, who identified themselves as such at the time of the call and visit. Each of the site visits was announced via phone call to EB5 Capital; however, you should not necessarily expect 24-hour notice as the regional center may be informed about a visit just a few hours prior to the inspection. And, unlike regional center audits, there is no advance notice as to what the officer will be seeking. All the site visits were made in the context of an I-829 petition review but not necessarily the first I-829 petition filed in connection with the specific project being inspected. All the site visits lasted a relatively short period of time and involved officers taking pictures of the project and asking questions regarding job creation and operations. EB5 Capital partners with experienced and highly reputable developers seeking EB-5 project financing through our regional centers and EB-5 offerings. We fully disclose to our development partners the possibility and implications of one or more project site visits by USCIS representatives during the life of the development. Moreover, we require full cooperation from our developer partners before, during, and after a project site visit, and we require that they direct all inquiries by USCIS officers to EB5 Capital. We suggest all regional center operators follow this practice as it will reduce the risk of surprises and help prevent unnecessary delays or complications that may result from onsite workers or employees providing inaccurate or incomplete information to officers during their visits. At the time of inspection, construction for all three of our projects was complete, and the hotels were open to the public and fully operational. USCIS representatives were greeted by front desk employees who ultimately connected the officers to the respective hotels’ General Managers. EB5 Capital was not present during the site visits, and we do not believe it is imperative that a regional center representative attends the inspection as long as clear directions have been provided to on-site workers or employees on how to respond and proceed in the event of a project site visit. If sufficient notice is provided, it would certainly be preferable to have one of our team members present. Of the three site visits we have mentioned, one of them ended after the USCIS officer left the project site with no further communication. The other two involved post-visit phone and/ or email communications between EB5 Capital and the USCIS officers. In the post-visit communications, USCIS officers requested certain information and documents about each respective I-829 petitioner and their projects. The interactions with both officers were very pleasant and even somewhat informal. After the site visits, we consulted with our immigration counsel regarding the site visits and follow-up requests. We fully cooperated in providing responses and sought to foster a cooperative exchange with the USCIS officers. As a regional center operator, EB5 Capital performs all critical functions in-house, including deal sourcing, due diligence and project analytics, finance, IT, and marketing. While we have outside counsel oversee our deal, offerings, and immigration compliance, even those documents are initially drafted in-house. We make certain our team knows our projects, our project documentation, our investors, and our best practices. We have all the information we need at our fingertips. It is unclear whether the USCIS officers who visited the respective projects received and had the opportunity to review each petitioner’s file, as some of the documents and information required after the project site visits had already been provided to USCIS as part of the I-829 submission. In addition, the nature and scope of some of the inquiries led us to quickly realize that officers of the Fraud Detection and National Security Directorate may not be as well versed on EB-5-specific matters as one would anticipate. In the event of a project site visit, expect and be ready to clearly outline the role of the regional center and the project developer/operator with respect to managing the project, as well as tracking and reporting relevant EB-5 information, particularly as it relates to job creation. Over the years, EB5 Capital has developed strict Standard Operating Procedures that involve ongoing and timely collection and storage of information and documents from the developer about the EB-5 project. We strongly encourage all regional center operators to pay attention to these practices, as well as preemptively assign clear roles and responsibilities within their teams. Best practices in these areas will enable a regional center to effectively and efficiently address questions and requests that may arise after a project site visit. Although there is room for training and improvement by USCIS, overall, we have been satisfied with the site visit process and the post-visit results, which have included speedy I-829 approvals. In our view, each project site visit offers regional centers a chance to show USCIS and other EB-5 stakeholders the compliance measures in place and the tangible positive impacts achieved by the EB-5 Program. Both regional center audits and project site visits are unique opportunities to feel proud of what we are building and the way we are building it. We welcome and support all initiatives and ongoing efforts by USCIS developed in the context of the RIA to oversee the implementation of the EB-5 Program and ensure its long-term sustainability.