USCIS held an informative session on Feb. 26, 2015 which went over common issues in a lawful source of funds analysis. Speaking from USCIS were three adjudication officers, two supervisors and Karen Harris, a division chief. USCIS stated its continued goal is to reduce I-526 petition processing times by streamlining adjudication.  To this end, the call was meant to provide information to the public about common issues that arise over the course of USCIS review that often leads to the issuance of requests for evidence. The following were areas of source of funds analysis that USCIS focused on during the call:

1. Earned Income

Typically, earned income will come from employment or investments. When earned income comes from employment, USCIS stated such employment income can be proven by including:

  • resumes,
  • month salary verification (i.e. paystubs),
  • employment certificates,
  • affidavits,
  • tax receipts, and
  • bank statements.

However, USCIS made clear that objective third party evidence carries more weight than first person or self-serving evidence. For instance, a bank statement demonstrating a deposit of salary of an employment certificate signed by an employer carries more weight than an affidavit from the petitioner. Furthermore, multiple pieces of evidence which demonstrate consistency in the information are also important.

2. Investment Income

When earning income from investment, USCIS noted that such evidence of that income could include:

  • stock certificates,
  • bank account statements,
  • documents relating to the initial purchase of stock or investment,
  •  income tax statements, and
  • documents showing the sale of the investment.

USCIS noted that it is important to demonstrate the investments were owned by the petitioner, that the funds used to purchase the investments were obtained lawfully, and the funds for the EB-5 investment actually came from the liquidation of investments.

3. Sale of Property

USCIS made it clear that when any property is sold for an EB-5 investment, the source of funds used to initial purchase the property must be provided. Evidence relating to sales of property can include:

  • ownership documents,
  • purchase documents,
  • documents evidencing payment of purchase price,
  • sale documents,
  • any payment or non-payment of tax documentation,
  • appraisals, and
  • that the EB-5 investment actually came from the sale of property.

USCIS did have a few notes regarding its analysis of the purchase and sale of a property. USCIS did state that it will take into account long ownership periods which can make it difficult to provide documentation regarding the purchase of a property. In these instances, evidence of the passage of time and lack of documentation (e.g. affidavit of petitioner, statement from a government agency) should be provided. However, USCIS noted that determining the actual price of the property is important to their analysis, and any inconsistency between the purchase contract (e.g. when individuals purchase a plot of land which will have a house built, and the final price is determined by the size of the house) and final sale price should be explained. Additionally, if a mortgage was used to purchase the house, USCIS needs to see documentation that such mortgage was paid off; otherwise it will presume a portion of the sale proceeds was used to pay off the mortgage and not for the EB-5 investment. Finally, USCIS will likely issue a request for evidence without objective third party documentation of a property sale (e.g. sale contracts, payment of taxes, appraisals, official title/ownership documents). Thus, merely providing an affidavit regarding a property sale is likely insufficient.

Mortgage of Property

USCIS noted that evidence for a mortgage of property is typically a loan contract, mortgage contract, lien documentation, appraisal, or other evidence showing value of the property and transfer of funds from lender to petitioner. USCIS then stated that if a petitioner obtains a loan based on an asset not owned by the petitioner, USCIS does not consider that capital under 8 C.F.R. 204.6(e).  A number of practioners, including Greenberg Traurig attorneys, voiced concerns that this assertion represents a departure from prior USCIS policy and seems to contravene both the regulations and binding AAO precedent decisions which USCIS is required to follow in their adjudication of petitions.  Noting the regulatory citations, as well those made to precedent case law, USCIS agreed to review the issue and revert to the EB-5 stakeholder community.  USCIS also noted, as it did frequently, that documentation be provided to show that the mortgage of funds was actually used as the source of funds for the EB-5 investment.

Loans from a Company

USCIS noted that much of this documentation regarding the company is similar to that which may be provided when one uses investment income. Such documentation can include ownership documents for the company, the specific loan documents, business license of the company, company tax receipts, financial audit reports for the company, bank statements from the company, capital verification reports and employment certificates (if the petitioner is employed by the company). USCIS did note that if the petitioner owns a portion of the company, the petitioner still needs to verify that he or she lawfully earned the funds to purchase a portion or all of the company.

USCIS closed the call with some helpful request for evidence tips. First, any inconsistencies should be explained. USCIS recognizes inconsistencies may occur in documentation but if they are not explained they will be detrimental to a petitioner. Second, if documents are unavailable, provide evidence of the unavailability, preferably from a third party source. Third, understand the probative value of evidence. As discussed above, evidence from objective third parties carries more weight than self-serving evidence (e.g. an affidavit of a petitioner or a petitioner’s family member). Lastly, all documents must be translated.

Question and Answer Section

USCIS did take a few questions; however, they did not provide substantial guidance since they believed much of the questions to be too case-specific to answer. As noted above, four separate attorneys including Greenberg Traurig’s Dillon Colucci who first raised the issue, challenged USCIS’ assertion that a petitioner who obtains a loan using a third party’s collateral and invests that loan has not met the definition of “capital” under 8 CFR 204.6(e).

USCIS did state it had no lawful authority to require a source of the administrative fee, but that if an individual wires less than the stated administrative fee, it needs to see documentation that the remainder of the administrative fee was not taken from the petitioner’s investment (i.e. a waiver from the new commercial enterprise stating it has accepted the reduced fee would suffice). This was an interesting statement, as it contradicted Requests for Evidence issued earlier this year by the Service in which they requested information regarding the source of administrative fees.

Finally, one interesting question was raised by a caller. The caller asked if a petitioner obtained a loan based on the mortgage of a property from an individual and not a bank, would the individual need to source the funds to provide the loan? USCIS did not answer, but stated it was aware of this situation and would be reviewing it.