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ENTREPRENEURS & INVESTORS: What Are Some Challenges Faced in Immigration?

By Joseph P. Whalen (Thursday, September 8, 2016)

Entrepreneurs and investors have long had specific avenues to pursue in order to

obtain immigration status under U.S. law. Some nonimmigrants may obtain a temporary

visa pursuant to INA § 101(a)(15)(E)(ii) [8 U.S.C. § 1101(a)(15)(E)(ii)] as a Treaty

Investor, classification code E-2. The E-1 visa is for Treaty Traders, but entrepreneurs

will far go beyond the import and export of goods or services; Treaty nonimmigrants

usually go through consular processing; and that is the last I will say on “E” visas herein.

§1101. Definitions

(a) As used in this chapter-

(15) The term "immigrant" means every alien except an alien who is within one of the following classes of nonimmigrant aliens-

(E) an alien entitled to enter the United States under and in pursuance of the provisions of a treaty of commerce and navigation between the United States and the foreign state of which he is a national, and the spouse and children of any such alien if accompanying or following to join him;

(i) solely to carry on substantial trade, including trade in services or trade in technology, principally between the United States and the foreign state of which he is a national;

(ii) solely to develop and direct the operations of an enterprise in which he has invested, or of an enterprise in which he is actively in the process of investing, a substantial amount of capital; or

(iii) solely to perform services in a specialty occupation in the United States if the alien is a national of the Commonwealth of Australia and with respect to whom the Secretary of Labor determines and certifies to the Secretary of Homeland Security and the Secretary of State that the intending employer has filed with the Secretary of Labor an attestation under section 1182(t)(1) of this title;

There is also an immigrant pathway for entrepreneurs and investors which leads

to lawful permanent resident (LPR) status (a “green card”). Today this pathway is known

as the EB-5 visa which is shorthand for employment-based, fifth preference. See INA §203

(b)(5) [8 U.S.C. §1153 (b)(5)]. EB-5 finds it origins in Pub. L. 101-649; the Immigration

Act of 1990 (IMMACT90). Before 1990, there was a pathway to LPR status which existed

through the regulatory provision which interpreted an ambiguous statutory provision in

Pub. L. 89-236, the Immigration Act of 1965 (the 1965 Act). The 1966, regulatory investor

pathway was actually an exemption to the requirement for a labor certification. This

option dried up in the 1980s when it became oversubscribed. In part, EB-5 was a

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replacement of the regulatory program, with significant changes, and incorporating

certain administrative precedential interpretations.

While not originally intended for entrepreneurs or investors, a few nonimmigrant

visas might be used by them. Through creative interpretations the L-1, H-1, O-1, B-1, or

the various student visa categories with curricular or optional practical training (CPT &

OPT), might be used successfully by entrepreneurs or investors. These pathways are

difficult which is probably why they are rarely pursued. There is also the possibility that

entrepreneurs or investors might pursue the immigrant categories: EB-1A, EB-1B, or EB-

2 with National Interest Waiver (NIW). Again, these avenues are sparingly pursued.

However, in November 2014, the Secretary of Homeland Security issued a series of

Memoranda1, infra. The memos are known generally as USCIS’ “Executive Actions on

Immigration”, see the webpage, see also DHS’ webpage devoted, in part, to Executive

Actions to improve and encourage business and high-skilled immigration. The memos

included a directive for USCIS to re-visit the existing interpretation of the NIW to see how

it might be used by inventors, researchers, and entrepreneurs of start-up enterprises.

In the interim, USCIS was also directed to examine and determine what criteria

would suffice for these same individuals noted above to be granted “Significant Public

Benefit Parole” if they would not yet qualify for an EB-2 NIW immigrant visa. As directed,

DHS via USCIS published a proposed “International Entrepreneur Rule” on August 31,

20162. The rule is extremely complex and challenging, but it is a start. I believe that it was

meant to weed out the many desperate people seeking to take advantage of any potential

way to come to the United States. The criteria are very demanding. Anyone seeking to

obtain parole will definitely need highly skilled and knowledgeable professional help. I

fear that there will be many “bad actors” out there who will make ridiculous promises “for

a fee” and there will be suckers from around the globe who will fall victim. Even so, the

proposed parole program for International Entrepreneurs will bring some true

innovators to the United States, and with that, it will have a modest but positive impact.

The proposed new program is intended for entrepreneurs rather than investors.

These entrepreneurs will need to serve in a critical role in the start-up enterprise. Mere

passive investment will not suffice. Also, the start-up will need to show concrete results,

quickly. Considering these constraints, USCIS’ low estimate of just under 3,000 potential

approved parolees annually seems reasonable, but I wonder how many additional

unqualified individuals will apply and be denied. I think it will be a large proportion of

the applicants which will likely be more than 3,000 initially. I think that there will be

many owners of marginal business that apply; only to be denied.

1 https://www.dhs.gov/sites/default/files/publications/14_1120_memo_business_actions.pdf https://www.dhs.gov/sites/default/files/publications/14_1120_memo_business_actions_1.pdf 2 https://www.justice.gov/sites/default/files/pages/attachments/2016/09/01/fr31aug16.pdf

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If USCIS is willing to take some suggestions, I suggest that they look to the past

and “mine” older I&N Decisions. One such decision is Matter of P-, infra., which

discusses two subjects relevant to the formulation of the proposed International

Entrepreneur Parole Program. Specifically, it interprets “intent” of a particular statutory

provision, and what was considered to be “in the public interest”. Matter of P-, 19 I&N

Dec. 823 (Comm. 1988),3 held, in pertinent part:

(7) For purposes of eligibility under section 245A of the Act, permissible waivers of excludability should be granted liberally.

(8) An alien who has contributed to a community financially by creating jobs and through public activities has established it would be in the public interest to grant his application for a waiver of grounds of excludability under section 245A(d)(2)(B)(i) of the Act and 8 C.F.R. § 245a.2(k)(2) (1988).

The most relevant point, from this case, to the present discussion is number eight

(8), for its recognition that it was found to be “in the public interest” when an alien had

“…contributed to a community financially by creating jobs and through public

activities…” There is no reason for USCIS to stray from that viewpoint. To elaborate:

“The term “in the public interest” is not defined in the Act or the regulations. However,

Congress contemplated that waivers under section 245A of the Act be granted liberally. “In

most cases, denials of legalization on the basis of the waivable exclusions should only occur

when the applicant also falls within one of the specified non­waiverable grounds of

exclusion.” H.R. Rep. No. 115, 98th Cong., 1st Sess. 69-70. In Matter of N-, supra, we noted

that “we are also mindful that Congress intended the legalization program to be ad­

ministered in a liberal and generous fashion.” Id. at 762.

The term “public interest” has been generally defined to mean “something in which

the public, the community at large, has some pecuniary interest, or some interest by which

their legal rights or liabilities are affected.” Black's Law Dictionary 1106 (5th ed. 1979).

However, there is no hard and fast rule for determining what is in the “public interest.” But

for the purpose of deciding the application for a waiver, we adopt the foregoing

definition.”

Id. at 828. Additionally, whereas, Congressional intent was clearly expressed as to the

“waivers” in question in Matter of P-, that intent being that they should be “liberally”4

granted, so too did the Secretary express his intent for the “NIW criteria” from Matter of

New York State Department of Transportation, 22 I&N Dec. 215 (AAO 1998) (NYSDOT).

The Secretary’s “executive intent” was for the NIW criteria to be re-examined in an effort

to make them more conducive to approval rather than to remain as harsh as they are now.

Also as shown in the excerpt is the definition of the term “public interest” from Black’s

Law Dictionary from the edition published in 1979. The current definition from Black’s

is as follows.

3 https://www.justice.gov/sites/default/files/eoir/legacy/2013/04/15/3090.pdf 4 See point seven (7) of the holding.

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“What is PUBLIC INTEREST?

The welfare of the public as compared to the welfare of a private individual or company. All of society has a stake in this interest and the government recognizes 5 the promotion of and protection of the general public. This term is vague but the government will only let the public know what is in the publics’ best interest. It won’t release information that could cause riots and upheaval in the nation.”6

While entrepreneur parole is to be based upon “Significant Public Benefit” the

elements viewed favorably as being in the “public interest” in Matter of P- are in-keeping

with the desired benefits of entrepreneur parole. If one looks ahead towards the EB-2

waiver as being “in the national interest”, the task of elucidating7 appropriate criteria and

hallmarks is not insurmountable. In the relevant part of the November 20, 2014, Memo,

Part C., entitled: “Promoting Research and Development in the United States”,

the Secretary specifically made his executive intent very clear in the following statements.

“To enhance opportunities for foreign inventors, researchers, and founders of start-up enterprises wishing to conduct research and development and create jobs in the United States, I hereby direct USCIS to implement two administrative improvements to our employment-based immigration system:

First, the "national interest waiver" provided in section 203(b)(2)(B) of the Immigration and Nationality Act (INA) permits certain non-citizens with advanced degrees or exceptional ability to seek green cards without employer sponsorship if their admission is in the national interest. 5 This waiver is underutilized and there is limited guidance with respect to its invocation. I hereby direct USCIS to issue guidance or regulations to clarify the standard by which a national interest waiver can be granted, with the aim of promoting its greater use for the benefit of the U.S economy.

Second, pursuant to the "significant public benefit" parole authority under section 212(d)(5) of the INA,6 USCIS should propose a program that will permit DHS to grant parole status, on a case-by-case basis, to inventors, researchers, and founders of start-up enterprises who may not yet qualify for a national interest waiver, but who have been awarded substantial U.S. investor financing or otherwise hold the promise of innovation and job creation through the development of new technologies or the pursuit of cutting-edge research. Parole in this type of circumstance would allow these individuals to temporarily pursue research and development of promising new ideas and businesses in the United States, rather than abroad. This regulation will include income and resource thresholds to ensure that individuals eligible for parole under this program will not be eligible for federal public benefits or premium tax credits under the Health Insurance Marketplace of the Affordable Care Act.” … __________________

“5 INA§ 203(b)(2)(B), 8U.S.C. § 1153(b)(2)(B). 6 INA§ 205(d)(5)(A), 8 U.S.C. § 1182(d)(5)(A).”

Memorandum at pp. 3-4, [Emphasis added].

5 In original. Correctly spelled outside of the U.S. 6 Black's Law Dictionary Free 2nd Ed. and The Law Dictionary: What is PUBLIC INTEREST? Definition of PUBLIC INTEREST (Black's Law Dictionary) 7 elu·ci·date : to make lucid especially by explanation or analysis; : to give a clarifying explanation. For Examples, Synonyms, and More, see the full Dictionary Entry at Merriam-Webster.com. © 2016 Merriam-Webster, Incorporated

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It seems clear enough, to me, that the Secretary directed USCIS to clarify the NIW

criteria with an eye towards increasing its use by, among others8, entrepreneurs. The

Secretary’s other directive specifically involved a parole program that would, in part,

allow entrepreneurs to enter the United States so that they could build businesses that

could lead them to an EB-2 visa with a NIW.

In contrast, someone working towards an EB-5 visa might also seek to enter in

advance of filing but do not belong in the proposed parole program. EB-5 intending-

immigrants might be searching for an opportunity or seeking to verify what had been

presented abroad at some EB-5 event. However, the proposed parole program is not the

way to do that. Instead, a “prospective” EB-5 entrepreneur (or investor) who is either

seeking an EB-5 suitable business opportunity (or investment), or who is “in the process

of investing”; would probably be more suited to a B-1 “business” visa issued for a

“business trip” issued for up to one-year, at a time. Besides, the EB-5 program demands

that the alien use their own money while the proposed parole program uses other

people’s money.

Invested funds used for the new commercial enterprise (NCE) at the heart of the

EB-5 process must be that of the alien entrepreneur (or investor). The EB-2

entrepreneur will need to demonstrate that they are somehow “special” in order to qualify

for a National Interest Waiver. Perhaps USCIS should examine precedents generated

during the heyday of the former regulatory “investor exemption” program. Some of the

criteria required of the proposed parole program mirror the old regulatory program. Of

course the dollar amounts are much less but they were substantial at that time.

The original version of 8 CFR § 212.8(b)(4) stated:

(b) Aliens not required to obtain labor certifications. The following members are not considered to be within the purview of section 212(a)(14)9 of the Act and do not require a labor certification: .......

(4) an alien who will engage in a commercial or agricultural enterprise in which he had invested or is actively in the process of investing a substantial amount of capital.

[31 FR 10021, July 23, 1966; 31 FR 10355, Aug. 22, 1966, as amended at 34 FR 5326, Mar. 18, 1969]

Effective January 12, 1973, the regulation was amended, see 38 Fed. Reg. 1380,

to require that the alien invest capital totaling at least $10,000 in the commercial

enterprise and establish that he has at least one year's experience or training qualifying

him to engage in it. Effective October 7, 1976, the regulation was further amended to

require an investment of at least $40,000 in an enterprise in which "he will be a principal

manager, and that the enterprise will employ persons in the United States who are United

8 The Secretary named three groups but the proposed parole program only addresses one of them. 9 Now covered under INA § 212(a)(5)(A)(i).

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States citizens or aliens lawfully admitted for permanent residence, exclusive of the alien,

his spouse and children." Greater detail can be found in an earlier study found here10.

I believe that those who do not learn from the past are doomed to repeat it. Please

look to the previous forays by I.N.S. into this benefit type. Please steal the best and dump

the rest. I have produced an independent study (linked above) of the administrative

precedents dealing with the challenges faced, and interpretations made in the prior

regulatory “investor exemption” program, please use it. It is free to download and full of

hyperlinks that will make further research easier. Please take this warning. The proposed

International Entrepreneur Parole Program is intended as a prelude to a Self-

Petitioner filing an I-140 for an employment-based, second-preference immigrant visa

(EB-2), with a request for a national interest waiver (NIW). The proposed program is

not a prelude to a Self-Petitioner filing an I-526 for an employment-based, fifth-

preference immigrant visa (EB-5). I predict some confusion by potential EB-5

entrepreneurs and especially EB-5 investors. I also predict a small amount of fraud,

especially affinity fraud against both groups of potential Self-Petitioners. You can quote

me on that!

That’s My Two-Cents, For Now!

Joseph P. Whalen Independent EB-5 Consultant

EB-5 Advocate, Mentor, Trainer and Advisor Buffalo, NY 14207

Phone: (716) 768-6506 E-mail: joseph.whalen774@gmail.com

web http://www.slideshare.net/BigJoe5 or http://eb5info.com/eb5-advisors/34-silver-surfer

DISCLAIMER: The opinions expressed in my training materials & articles are those of me only. That is to say that they are opinions of a layperson, non-attorney, non-economist, non-accountant, non-FINRA or SEC registered broker or adviser. Any information or consultation that seems like

“incidental investment advice” is intended merely as educational, coaching, and mentoring11. Opinions are based on work experience as an Adjudications Officer within INS and USCIS with

particular involvement in the revitalization of USCIS’ EB-5 Program, especially that portion dealing with Regional Centers. I wrote the “Unofficial Instructions” on how to apply for Regional Center

Designation which later formed the basis for the I-924 Form Instructions. I am an outspoken advocate for improved adjudications at USCIS. Lastly, I have been published in various immigration

law outlets with over 250 scholarly articles and opinion pieces widely circulated as well as a published contributing author in three EB-5 Law Books; co-editor in the most recent.

Training is available for any subject under immigration and nationality law. NAICS Code: 611430 Professional and Management Development Training

10 http://www.slideshare.net/BigJoe5/a-survey-of-the-immigrant-investor-visa-1966-2011-june-27-2011-jw 11 See: 15 U.S.C. §80b–2. (a)(11) or go to: http://uscode.house.gov/view.xhtml?req=(title:15%20section:80b-2%20edition:prelim)%20OR%20(granuleid:USC-prelim-title15-section80b-2)&f=treesort&edition=prelim&num=0&jumpTo=true