U.S. Citizenship and Immigration Services

MATTER OF 1-S-, INC.

APPEAL OF VERMONT SERVICE CENTER DECISION

Non-Precedent Decision of the Administrative Appeals Office

DATE: JULY 26, 2018

PETITION: FORM 1-129, PETITION FOR A NONIMMIGRANT WORKER

The Petitioner, which intends to export medical supplies to Central and South America, seeks to temporarily employ the Beneficiary as president of its new otlic_e1 under the L-IA nonimmigrant classification for intracompany transferees. Immigration and Nationality Act (the Act) section I0l(a)(IS)(L), 8 U.S.C. § l l0l(a)(lS)(L). The L-lA classification allows a corporation or other legal entity (including its affiliate or subsidiary) to transfer a qualifying foreign employee to the United States to work temporarily in a managerial or executi".e capacity.

The Director of the Vermont Service Center denied the petition, concluding that the record did not establish, as claimed, that the new office would support an executive position within one year after approval of the petition.

The matter is now before us on appeal. In its appeal, the Petitioner asserts that the Director erred because the Petitioner had previously submitted enough evidence and information to establish eligibility.

Upon de novo review, we will dismiss the appeal.

I. LEGAL FRAMEWORK

To establish eligibility for the L-1 A nonimmigrant visa classification in a petition involving a new office, a qualifying organization must have employed the beneficiary in a managerial or executive capacity for one continuous year within three years preceding the beneficiary's application for_ admission into the United States. 8 C.F.R. § 214.2(1)(3)(v)(B). In addition, the beneficiary must seek to enter the United States temporarily to continue rendering his or her services to the same employer or a subsidiary or affiliate thereof in a managerial or executive capacity. Id.

1 The term "new office" refers to an organization which has been doing business in the United States for less than one' year. 8 C.F.R. § 214.2(l)(l)(ii)(F). The regulation at 8 C.F.R. § 214.2(1)(3)(v)(C} allows a "new office" operation no more than one year within the date of approval of the petition to support an executive or managerial position.

Matter of J-S-, Inc.

The petitioner must submit evidence to demonstrate that the new office will be able to support a managerial or executive position within one year. This evidence must establish that the petitioner secured sufficient physical premises to house its operation and disclose the proposed nature and scope of the entity, its organizational structure, its financial goals, and the size of the U.S. investment. See generally, 8 C.F.R. § 214.2(1)(3)(v).

II. EXECUTIVE CAPACITY

When a new business is first established and commences operations, the regulations recognize that a designated manager or executive responsible for setting up operations will be engaged in a variety of low-level activities not normally performed by employees at the executive or managerial level and that often the full range of managerial responsibility cannot be performed in that first year. The "new office" regulations allow a newly established petitioner one year to develop to a point that it can support the employment of a beneficiary in a primarily managerial or executive position.

Accordingly, if a petitioner indicates that a beneficiary is coming to the United States to open a "new office," it must show that it is prepared to commence doing business immediately upon approval so that it will support a manager or executive within the one-year timeframe. This evidence should demonstrate a realistic expectation that the enterprise will succeed and rapidly expand as it moves away from the developmental stage to full operations, where there would be an actual need for a manager or executive who will primarily perform qualifying duties. See generally 8 C.F.R.

_, § 214.2(1)(3)(v). The petitioner must describe the nature of its business, its proposed organizational structure and financial goals, and submit evidence to show that it has the financial ability to remunerate the beneficiary and commence doing business in the United States. Id.

The Petitioner does not claim that it will employ the Beneficiary in a managerial capacity. "Executive capacity" means an assignment within an organization in which the employee primarily directs the management of the organization or a major component or function of the organization; establishes the goals and policies of the organization, component, or function; exercises wide

1 latitude in discretionary decision-making; and receives only general supervision or direction from higher-level executives, the board of directors, or stockholders of the organization. Section 101(a)(44)(B) of the Act.

Based on the statutory definition of executive capacity, the Petitioner must first show that the Beneficiary will perform certain high-level responsibilities. Champion World. Inc. v. INS, 940 F.2d 1533 (9th Cir. 1991) (unpublished table decision). Second, the Petitioner must prove that the Beneficiary will be primarily engaged in executive duties, as opposed to ordinary operational activities alongside the Petitioner's other employees. See Family Inc. v. USCIS, 469 F.3d 1313, I 3 I 6 (9th Cir. 2006); Champion World, 940 F.2d 1533.

The petitioner's description of the job duties must clearly describe the duties to be performed by the Beneficiary and indicate whether such duties are in a managerial or executive capacity. See 8 C.F.R. § 214.2(1)(3)(ii). We also examine the company's organizational structure, the duties of a

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. Matter of 1-S-, Inc.

beneficiary's subordinate employees, the presence of other employees to relieve a beneficiary from performing operational duties, the nature of the business, and any other factors that will contribute to understanding a beneficiary's actual duties and role in a business.

The Petitioner had no employees at the time of filing, but stated that the Beneficiary would hire an administrator ($30,000/year) who would supervise an administrative assistant ($25,000/year) and a sales manager ($30,000/year) who would supervise two salespersons (each earning $25,000/year).

The foreign parent company stated that the Beneficiary will spend "approximately 80% of his work week" performing executive duties, paraphrased below:

Supervising the administrator and sales manager Establishing policies and sales goals Establishing monthly budgets Coordinating activities between departments Establishing and developing new markets Meeting and negotiating with distributors Setting prices

20% 10% 5%

10% 20% 10% 5%

,.

The Director denied the petition, stating that the Beneficiary's stated job duties "are general in nature and do not seem consistent with the expected nature, scope, and structure of [the Petitioner's] operation." The Director also noted that the Petitioner only described 80% of the Beneficiary's intended work schedule, but this gap is not inherently fatal to the petition as the Petitioner claimed that 80% of the Beneficiary's time would be spent performing executive duties. The Petitioner must only show that the Beneficiary's duties are primarily, rather than exclusively, executive.

On appeal, the Petitioner asserts that the Beneficiary's duties "will satisfy all four parts of the definition of 'executive capacity."' The Petitioner contends that the Beneficiary will satisfy the first prong of the definition, directing the management of the organization or a major component or function thereof~ by "supervising and evaluating the work performance of two professional and supervisory personnel." Supervisors and professionals are not inherently managers, and therefore the Beneficiary's intended authority over two first-line supervisors does not automatically rise to the level of directing the management of the company. The statute and regulations distinguish between managing a company or a portion thereof (the role of a manager) and directing that management (the role of an executive).

While it appears that the Beneficiary will have the necessary level of authority, the Petitioner has not shown that the Beneficiary's tasks will be primarily those of an executive. The Petitioner has asserted that the Beneficiary would spend an average of eight hours per week - 20% of a 40-hour work week - supervising the work of his two immediate subordinates, and another four hours per week coordinating activities between the company's two departments. The Petitioner has not explained how those activities would take up so much time in a company of such small size and organizational simplicity.

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Matter of 1-S-. Inc.

Furthermore, the staffing structure that the Petitioner described does not show who will perform ..... some low-level but necessary tasks for the company. As we will discuss in greater detail below, the

Petitioner bought over $286,000 worth of inventory in September 2017, including thousands of catheters and ';configured mobile devices for hospitals." The Petitioner did not explain who will handle the shipping and storage of this merchandise. There is no evidence that arrangements are in place for these materials to be shipped directly from the suppliers to the Petitioner's end clients. Rather, the invoice for the largest purchase specified "customer pick up" as the delivery method for over 16,000 mobile devices. The Petitioner indicates that its export business will be web-based, but the Petitioner has not identified any staff that would handle web maintenance and order fulfillment. The Petitioner's description of the company's intended structure appears to be incomplete at best.

The Petitioner has not established that the Beneficiary's position at the company will be primarily that of an executive within a year after approval of the petition.

III. BUSINESS PLAN

The regulations require the Petitioner to describe the new office's proposed nature, including its scope, organizational structure, and financial goals. 8 C.F.R. § 214.2(1)(3)(v)(C)(/). The Director concluded that the Petitioner "did not provide a business plan that forecasts the expansion of [the] business and provides documentation linked to timetables and actual business benchmarks to be achieved over the course of [its] first year." For the following reasons, we agree that the Petitioner has not submitted sufficient credib.le information to meet ihis requirement.

The Petitioner submitted bank documentation showing that the foreign parent company transferred $200,000 to the Petitioner in June 2017, a month before the petition's filing date. In an August 2017 request for evidence (RFE), the Director asked for evidence of the foreign entity's capitalization of the Petitioner's new office. The Petitioner's response shows the subsequent transfer of an additional $90,000 in October 2017. A business plan also submitted in the response indicated that "the parent company has already invested $290,000.00," which "was the complete amount needed to open and operate this business." This figure includes the $90,000 transferred after the RFE was issued, indicating the Petitioner prepared the business plan after receiving the RFE.

The planned first-year expenses in the business plan included $350,000 to purchase merchandise. The business plan did not specifically identify the merchandise to be purchased, or otherwise break down this figure. The Petitioner submitted invoices documenting three purchases, all between September 22 and 29, 2017 (after the RFE):

Vendor Merchandise

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Cost $12,768 $23,748

$250,000

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·Matter({/ 1-S-, Inc.

Although the Petitioner asserted that $290,000 would be sufficient "to open and operate" the company, the three invoices indicate that the Petitioner spent 98.8% of that amount over the course of about a week, leaving less than $4,000 to cover rent, salaries, distribution, and the other inventory that the Petitioner claimed it would carry, including "syringes, surgical sutures, surgical gloves ... , gauzes and compresses."

The plan also includes financial figures, but here the information is minimal. The Petitioner projects first-year expenses of $559,230 and gross profit of $600,000, but the record does not identify any source for the latter figure. The Petitioner did not explain how $290,000 in startup capital would be sufficient for a company that expected to incur nearly $560,000 in costs during its first.year.

Beyond the deficiencies of the financial information, the narrative portion of the business plan is unreliable for the reasons discussed below.

The undated business plan appears to be a generic template, customized with identifying information (such as the names of the petitioning company and competitors) as necessary but still consisting mostly of general statements with no meaningful details. For example, the section headed "Sourcing and Fulfillment" stated: "All aspects of fulfillment have been considered, evaluated and highlighted," but said nothing about what those arrangements are. Likewise, the section headed "Explained Long-Term Plans" did not actually explain any long-term plans; it simply asserted that the company "believes that its long-term prospects for a very successful company are excellent."

The business plan stated that the company "has done extensive research and investigation of all the aspects of the competitiveness of the existing market," and has "a vast network of industry resources featuring well established connections," but the record does not substantiate these claims.

The plan referred to the "durability" of the Petitioner's "core products," but many of those products are single-use medical products such as syringes, surgical gloves, and gauze. The business plan also stated: "we maintain an efficient and reliable operation designed to streamline the shipping process and expedite product delivery to our customers." In addition to being a present-tense reference to a business operation that does not exist yet, this quotation presumes a' shipping and delivery infrastructure not reflected in the company's projected organizational chart. Similarly, although the' Petitioner has not yet hired any personnel or even identified the most likely candidates to fill the vacant positions, the business plan stated that the company's "exceptional personnel" give the company an advantage over its competitors.

On appeal, the Petitioner lists the transactions detailed above, and states that the foreign parent company "intends to transfer additional capital if needed during [the Petitioner's] first year of business activity," but the Petitioner has not explained or justified its prior assertion that $290,000 "was the complete amount needed to open and operate this business." Given that the Petitioner spent almost all of that initial sum over a matter of days, mostly on two types of products, the true initial costs appear to be substantially higher than the Petitioner's estimate. If this is the case, then the Director was correct to find that the Petitioner's business plan was deficient.

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Matter of 1-S-, Inc.

We note that, according to a balance sheet in the initial submission, the foreign entity's net assets were 24,393, I 05 Venezuelan bolivars as of December 31, 2016. Under the exchange rate in effect at the time of filing in July 2017, this amount was worth about US$2.4 l million.2 It is not evident how much more the foreign entity could afford to invest in the petitioning company while remaining viable on its own.

The Petitioner has not shown that its business plan accurately reflects the company's plans and financial outlook. As such, the business plan lacks sufficient evidentiary weight to meet the Petitioner's burden of proof

IV. CONCLUSION

The Petitioner did not establish by a preponderance of the evidence that its new office will support an executive position within one year after approval of the petition.

ORDER: The appeal is dismissed.

Cite as Matter <f 1-S-. Inc., ID# 1484613 (AAO July 26, 2018)

2 Exchange rate information is available at https://www.xe.com/currencytables/?from=VEF&date=2017-07-11 (lasted visited July 25, 20 I 8).

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