u.s. citizenship and immigration services€¦ · u.s. citizenship and immigration services notice...

U.S. Department of Homeland Security U.S. Citizenship and Immigration Services Notice of Action

A#

Application/Petition

I-924, Application For Regional Center Under the Immigrant Investor Pilot

Program

Receipt #

ID 1031910033 Applicant/Petitioner

Path America KingCo LLC Notice Date

December 24, 2015 Page

1 of 13 Beneficiary

Path America KingCo LLC

PO Box 13261

Everett WA 98206

Notice of Intent to Terminate

IMPORTANT: WHEN YOU HAVE COMPLIED WITH THE

INSTRUCTIONS ON THIS FORM, RESUBMIT THIS NOTICE ON

TOP OF ALL REQUESTED DOCUMENTS AND /OR

INFORMATION TO THE ADDRESS BELOW. THIS OFFICE HAS

RETAINED YOUR PETITION/APPLICATION WITH

SUPPORTING DOCUMENTS.

CSC _______ WS _____ DIV I

RETURN THIS NOTICE ON TOP OF THE REQUESTED INFORMATION

LISTED ON THE ATTACHED SHEET.

Note: You are given until January 26, 2016 to submit the information requested.

Pursuant to 8 C.F.R. 204.6(m)(6), you are provided thirty (30) days from receipt of this notice of

intent to terminate to offer evidence in opposition to the ground or grounds alleged. Failure to

respond within the time allotted may result in the termination of your designation for participation

as a regional center in the Immigrant Investor Program.

For more information, visit our website at www.uscis.gov

Or call us at 1-800-375-5283

Telephone service for the hearing impaired: 1-800-767-1833

You will be notified separately about any other applications or petitions you filed. Save a photocopy of this notice. Please

enclose a copy of it if you write to us about this case. Our address is: U.S. CITIZENSHIP AND IMMIGRATION SERVICES

IMMIGRANT INVESTOR PROGRAM

131 M STREET, NE

MAILSTOP 2235

WASHINGTON, DC 20529

Form I-797 (1/00)

PATH AMERICA KINGCO LLC/ ID1031910033

Page 2

Attachment to ITD Coversheet

NOTICE OF INTENT TO TERMINATE

Form I-924, Application for Regional Center Under the Immigrant Investor Program

Path America KingCo LLC

This notice is in reference to the approved designation of Path America KingCo LLC (the

“Regional Center”), as a regional center in the Immigrant Investor Program (the “Program”).1

The purpose of this notice is to notify the Regional Center that, pursuant to 8 C.F.R. §

204.6(m)(6), U.S. Citizenship and Immigration Services (“USCIS”) intends to terminate the

participation of the Regional Center in the Program because it no longer serves the purpose of

promoting economic growth.

The regulation at 8 C.F.R. § 204.6(m)(6) provides:

Termination of participation of regional centers. To ensure that regional centers

continue to meet the requirements of section 610(a) of the Appropriations Act, a

regional center must provide USCIS with updated information to demonstrate the

regional center is continuing to promote economic growth, improved regional

productivity, job creation, or increased domestic capital investment in the

approved geographic area. Such information must be submitted to USCIS on an

annual basis, on a cumulative basis, and/or as otherwise requested by USCIS,

using a form designated for this purpose. USCIS will issue a notice of intent to

terminate the participation of a regional center in the pilot program if a regional

center fails to submit the required information or upon a determination that the

regional center no longer serves the purpose of promoting economic growth,

including increased export sales, improved regional productivity, job creation, and

increased domestic capital investment. The notice of intent to terminate shall be

made upon notice to the regional center and shall set forth the reasons for

termination. The regional center must be provided 30 days from receipt of the

notice of intent to terminate to offer evidence in opposition to the ground or

1 Section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies

Appropriations Act, 1993, Pub. L. No. 102-395, 106 Stat. 1828 (1992), as amended by section 116 of Pub. L. No.

105-119, 111 Stat. 2440 (1997); section 402 of Pub. L. No. 106-396, 114 Stat. 1637 (2000); section 11037 of Pub.

L. No. 107-273, 116 Stat. 1758 (2002); section 4 of Pub. L. No. 108-156, 117 Stat. 1944 (2003); section 1 of Pub. L.

No. 112-176, 126 Stat. 1325 (2012); and section 575 of Pub. L. No. 114-96, 129 Stat. 2193 (2015) (hereinafter

“Appropriations Act”).


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grounds alleged in the notice of intent to terminate. If USCIS determines that the

regional center’s participation in the Pilot Program should be terminated, USCIS

shall notify the regional center of the decision and of the reasons for termination.

As provided in 8 CFR § 103.3, the regional center may appeal the decision to

USCIS within 30 days after the service of notice.

I. Procedural History

A. Initial Designation

On August 6, 2013, USCIS designated Path America KingCo LLC as a regional center following

approval of its application to participate as a regional center in the Immigrant Investor Program

(RCW1031910033). The managing member of Path America KingCo LLC is Path America,

LLC.2 Based on the initial designation, the Regional Center obtained approval for the following

geographic area:

Name of State Counties

Washington King, Pierce and Snohomish County

B. Amendments

On July 13, 2015, the Regional Center filed an amendment to its designation seeking approval

for exemplar projects involving three new commercial enterprises (each an “NCE”), two of

which are the subject of several pending I-526 petitions. Each of the projects identified in the

amendment is discussed in Section C. below. This amendment request has not yet been

adjudicated.

C. Regional Center Projects

USCIS has received a total of 178 Forms I-526, Immigrant Petition by Alien Entrepreneur filed

by petitioners associated with the Regional Center based on investments in two Regional Center-

associated NCEs, as shown in the table below. Of these Form I-526 petitions, none have been

approved to date.

2 According to the Washington Secretary of State Corporations Division https://www.sos.wa.gov

https://www.sos.wa.gov/


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New Commercial

Enterprise Job-Creating Entity

Number of I-

526 Petitions

Filed

Number of I-526

Petitions Approved

to Date

Aggregate EB-5

Capital Received

Path America Tower, LP Potala Tower Seattle, LLC 162 0 $12,200,000

Path Tower Seattle, LP Potala Tower Seattle, LLC 16 0 0

Totals -- 178 0 $12,200,000

In connection with a Form I-526 filing, USCIS reviewed organizational and transactional

documents for a NCE, Path America Tower, LP (“Path America NCE”). This NCE planned to

pool $75.50 Million in capital investments from 151 EB-5 investors, and invest the funds into a

job creating entity - Potala Tower Seattle, LLC (the “JCE”). The JCE planned to use the funds to

the develop and operate a mixed-use property called “Potala Tower” that will have a 9-story

underground parking structure, a restaurant and wine bar, a 142-room hotel and a 344-unit

residential apartment complex. The project is located at 2116 4th

Ave, Seattle, Washington and a

total of 2,875 jobs are expected to be created as a result of the construction and operation of the

“Potala Tower” project. According to the Regional Center’s filings, this project is currently in

the early stages of development.

In connection with another Form I-526 filing, USCIS reviewed organizational and transactional

documents for another NCE, Path Tower Seattle, LP (“Path Tower NCE”). This NCE also

planned to pool $46.50 Million in capital investments from 93 EB-5 investors, and invest the

funds into the same JCE- Potala Tower Seattle, LLC, with the intention of financing the same

Potala Tower project.

Path America Tower, LP and Path Tower Seattle, LP are two of the three NCEs also identified in

the Regional Center’s aforementioned July 13, 2015 amendment request. The third NCE

contemplated by the amendment request is Path Shoreline, LP (the “proposed NCE”). This NCE

would pool $52.5 million in capital investment from 105 EB-5 investors and invest the funds into

a proposed job creating entity called “Potala Shoreline, LLC.”3 As such, Path Shoreline, LP

would finance a multifamily residential development in Shoreline Washington; specifically the

project was forecast to result in 329 residential units, 297 parking stalls and amenity space for

the residents. To date, no I-526 petitions associated with Path Shoreline, LP have been filed with

USCIS.

3 Potala Shoreline, LLC and Potala Tower Seattle, LLC are collectively referred to herein as the

“JCEs”.


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D. Annual Reports (Forms I-924A)

The Regional Center has filed 2 Forms I-924A, Supplement to Form I-924, and the table below

summarizes the information provided to USCIS in those forms regarding the aggregate amount

of capital investment from EB-5 petitioners, and the aggregate number of direct and indirect jobs

created and maintained as a result of those investments per year.

Fiscal

Year Receipt No.

Date

Received

Aggregate EB-5

Capital Investment

Aggregate

Direct/ Indirect

Job Creation

Aggregate Jobs

Maintained

FY2013 RCW1400351596 12/31/2013 0 0 0

FY2014 RCW1435752243 12/23/2014 $27,200,000 0 0

E. Regional Center Principal

At the time of its designation, Mr. Lobsang Dargey was identified as the principal of the

Regional Center. According to the Regional Center website provided in the FY2014 I-924A

filing, Mr. Dargey continues to be the CEO of the Regional Center as of the date of this notice.4

F. United States Securities and Exchange Commission Civil Action

On August 24, 2015, the United States Securities and Exchange Commission (the “SEC”)

brought a civil action against the Regional Center, some of its related EB-5 entities5, and

Lobsang Dargey, among other named defendants (collectively referred to herein as

“Defendants”). The civil law enforcement action was brought against Defendants to “protect the

interests of current and future investors” from potentially millions of dollars of losses as a result

of Defendants’ violations of federal securities laws.

The SEC’s complaint (the “Complaint”) asserts that the Regional Center and Mr. Dargey

“exploited a federal visa program to defraud investors seeking investment returns and a path to

4 www.pathamerica.com

5 Path America Tower, LP, Path Tower Seattle, LP and Potala Tower Seattle, LLC are named as Defendants and

Potala Shoreline, LLC is named as a Relied Defendant in the referenced complaint. Note that Path Shoreline, LP

was not listed in the SEC’s complaint; however at the time the complaint was filed, Path Shoreline, LP had not

received any EB-5 funds.

http://www.pathamerica.com/


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United States residency.” 6

The Complaint goes on to say that “[m]ost of the direct victims of this

fraud are foreign nationals seeking residency in the United States.”7 The complaint further notes

“[a]s the fraud described is ongoing and likely to continue, and millions of dollars of investor

funds remain at risk of dissipation, the [SEC] seeks emergency ex parte relief in this action to

enjoin violations of the anti-fraud provisions of the federal securities laws, freeze assets, and

secure other equitable relief.”8

On August 24, 2015, the U.S. District Court for the Western District of Washington (the

“District Court”) entered a series of temporary restraining orders that enjoined the Regional

Center, some of its related EB-5 entities, and Mr. Dargey from participating in the routine

activities required to engage in day-to-day business operations; after hearing arguments from the

SEC and the defendants and considering papers and responses submitted by both sides, on

October 6, 2015, the District Court affirmed the August 24 temporary restraining orders by

issuing an order granting the SEC’s motion for a preliminary injunction and denying the

Defendants’ motion to modify the temporary restraining order.9 On October 6, 2015, the District

Court also issued a preliminary injunction for the duration of the civil action.10

In doing so, the

District Court found that the SEC had satisfied its burdens for a preliminary injunction and

demonstrated a likelihood of success on the merits of the civil action. The District Court found

good cause to enjoin the defendants, including the Regional Center, the Path America NCE, the

Path Tower NCE, the JCEs and Mr. Dargey, from “(1) directly or indirectly participating in the

issuance, offer, or sale of any security” or “(2) directly or indirectly soliciting any person or

entity to purchase or sell any security.”11

The District Court also entered a series of orders freezing the assets of the Regional Center, the

Path America NCE, the Path Tower NCE and the JCEs, and the related escrow accounts. On

August 24, 2015 and again on October 6, 2015, the District Court ordered that a freeze be placed

6 SEC vs. Path America, LLC, et al. Complaint ¶ 1. Civil Action No. 2:15-cv-01350. (W.D. Wash. filed Aug. 24,

2015). 7 Id. at ¶ 2.

8 Id. at ¶ 5.

9 SEC vs. Path America, LLC, et al. Order Granting Motion for Preliminary Injunction and Denying Motion to

Modify the Temporary Restraining Order. Civil Action No. 2:15-cv-01350. (W.D. Wash. filed Oct. 6, 2015). 10

SEC vs. Path America, LLC, et al. Order Granting Motion for Preliminary Injunction. Civil Action No. 2:15-cv-

01350. (W.D. Wash. filed Oct. 6, 2015). 11

SEC vs. Path America, LLC, et al. Temporary Restraining Order ¶ IV and V. Civil Action No. 2:15-cv-01350.

(W.D. Wash. filed Aug. 24, 2015) and SEC vs. Path America, LLC, et al. Order Granting Motion for Preliminary

Injunction ¶ IV and V. Civil Action No. 2:15-cv-01350. (W.D. Wash. filed Oct. 6, 2015).


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on all monies and assets in all accounts at any bank, financial institution or brokerage firm, all

certificates of deposit, and other funds or assets, held in the name of, for the benefit of, or over

which the account authority is held by Mr. Dargey, the Regional Center, or the Path America

NCE, the Path Tower NCE or the JCEs.12

The orders further state that an immediate freeze shall

be placed on all monies and assets held in accounts at any bank or financial institution in

connection with escrow agreements relating to Path America Tower LP, Path Tower Seattle LP,

or Path America Farmer’s Market LP. 13

Finally, on October 22, 2015, the District Court granted the SEC’s motion to appoint a receiver

and ordered that a receiver be placed in charge of the Regional Center’s operations for the

purpose of “marshalling and preserving” all assets of the Defendants that (a) are attributable to

funds derived from investors or clients of the Defendants; (b) are held in constructive trust for

the Defendants; (c) were fraudulently transferred by Defendants; and/or (d) may otherwise be

includable as assets of the estates of the Defendants.14

II. Analysis

A. Failure to Promote Economic Growth

Under 8 C.F.R. § 204.6(m)(6), “USCIS will issue a notice of intent to terminate . . . upon a

determination that the regional center no longer serves the purpose of promoting economic

growth, including increased export sales, improved regional productivity, job creation, and

increased domestic capital investment.”

To ensure that a regional center continues to meet the requirements of section 610(a) of the

Appropriations Act, USCIS must be assured that the terms and conditions of the operation of the

regional center remain valid after the regional center receives designation for participation in the

Program. This includes the scope and nature of the projects used as the basis for the job creation

methodologies presented in the initial designation application or subsequent amendments. In

12

SEC vs. Path America, LLC, et al. Temporary Restraining Order ¶ VI. Civil Action No. 2:15-cv-01350. (W.D.

Wash. filed Aug. 24, 2015) and SEC vs. Path America, LLC, et al. Order Granting Motion for Preliminary

Injunction ¶ VI. Civil Action No. 2:15-cv-01350. (W.D. Wash. filed Oct. 6, 2015). 13

Id. at ¶ VII. 14

SEC vs. Path America, LLC, et al. Order Appointing Receiver Civil Action No. 2:15-cv-01350. (W.D. Wash. filed

Oct. 22, 2015); See also Sanjay Bhatt, Developer Dargey Loses Control of Everett Company Over Fraud Charges,

THE SEATTLE TIMES (October 23, 2015) available at http://www.seattletimes.com/business/real-estate/dargeys-path-

america-put-into-receivership/.

http://www.seattletimes.com/business/real-estate/dargeys-path-america-put-into-receivership/

http://www.seattletimes.com/business/real-estate/dargeys-path-america-put-into-receivership/


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addition, all regional centers must comply with EB-5 statutory and regulatory provisions in order

to maintain a regional center within which investors seeking to obtain permanent resident status

under section 203(b)(5) of the INA will be able to invest in a new commercial enterprise with a

qualifying investment that will benefit the United States economy and create jobs, including jobs

created indirectly through the new commercial enterprise.

USCIS has considered all evidence provided “for relevance, probative value, and credibility,

both individually and within the context of the totality of the evidence,” in determining whether

the Regional Center’s continued participation is justified under the regulations by a

preponderance of the evidence. See Matter of Chawathe, 25 I&N Dec. 369, 376 (AAO 2010).

For the reasons set forth below, USCIS has determined by a preponderance of the evidence that

the Regional Center no longer serves the purpose of promoting economic growth in compliance

with the Program.

1. Lack of Credibility Impacting Regional Center’s Ability to Promote Economic Growth

USCIS has determined, through the existing record and facts outside of the record detailed

below, that the Regional Center will not be able to promote economic growth in compliance with

the Program.

The SEC allegations that the management of the Regional Center, including Mr. Dargey,

engaged in improper or illegal behavior, coupled with the District Court’s orders, undermine the

Regional Center’s credibility and cast considerable doubt on the credibility of all of its

operations.

As noted above, the District Court restrained the Regional Center, some of its related EB-5

entities, and Mr. Dargey from issuing, offering or selling any securities. The District Court also

entered a series of orders which freeze the assets of the Regional Center, the Path Tower NCE,

the Path America NCE and the JCEs, and their related escrow accounts. The series of orders also

prevent any assets of the Regional Center, the Path Tower NCE, the Path America NCE and the

JCEs, and their related escrow accounts from being used to facilitate the necessary day-to-day

business operations of the Regional Center. Furthermore, as noted above, on October 22, 2015,

the District Court granted the SEC’s motion to appoint a receiver and ordered that a receiver be

placed in charge of the Regional Center’s operations for the purpose of “marshalling and


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preserving” the assets of the Defendants rather than for the purpose of promoting economic

growth.15

Based on the District Court’s orders granting the asset freeze, the preliminary injunction and the

appointment of a court ordered receiver, considerable doubt is cast on the credibility of all of the

Regional Center’s operations. Moreover, this evidence calls into question whether the Regional

Center, the Path America NCE, the Path Tower NCE and the JCEs can continue to operate

financially or serve the purpose of promoting economic growth. The issues outlined above cast

considerable doubt on the credibility of the Regional Center and its operations and USCIS has

determined that it is more likely than not that the Regional Center no longer serves the purpose

of promoting economic growth in compliance with the Program.

2. Diversion of EB-5 funds

The allegations in the SEC’s filings indicate that EB-5 funds were used for purposes that are

inconsistent with the business plans submitted to USCIS by the Regional Center and in

furtherance of job creation.16

For example, evidence presented to USCIS does not demonstrate

how withdrawals at multiple casinos in Nevada or the purchase of a personal residence for Mr.

Dargey could be an appropriate use of funds for the business of constructing and operating a

hotel, restaurant and wine bar, and residential apartment complex in Seattle, Washington as

described in the business plans submitted to USCIS.17

Moreover, evidence provided to USCIS demonstrates that between May 2014 and August 2014

more than $5.5 million was diverted from Potala Tower Seattle, LLC’s account to an account for

Potala Village Kirkland, LLC. 18

And between October 2014 and May 2015 more than $7.2

15

SEC vs. Path America, LLC, et al. Order Appointing Receiver Civil Action No. 2:15-cv-01350. (W.D. Wash. filed

Oct. 22, 2015). 16

Specifically, as detailed to USCIS, the majority of job creation relating to the Potala Tower Project was based on

construction expenditures. The use of EB-5 funds for purposes unrelated to construction and the furtherance of job

creation not only casts considerable doubt on the legitimacy of the Regional Center’s operations predicated upon the

use of EB-5 funds in furtherance of job creation, but may also potentially impact the Regional Center’s investors

whose petitions must rely on the creation of such jobs for program eligibility. 17

Declaration of Michael D. Foley in Support of Plaintiff’s Motion of Temporary Restraining Order. Civil Action

No. 2:15-cv-01350. (W.D. Wash. filed Aug. 24, 2015), Ex. 10. In reviewing the record, USCIS finds the signed

declaration of Mr. Foley, who is licensed as a Certified Public Accountant in the State of California, credible,

probative and relevant. 18


No. 2:15-cv-01350. (W.D. Wash. filed Aug. 24, 2015), Ex. 14.


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million was diverted from a Potala Tower account to an account for Potala Shoreline, LLC.19

Both Potala Kirkland Village LLC and Potala Shoreline, LLC are businesses owned by Mr.

Dargey, which are unrelated to the business activities of either Path America Tower, LP or Path

Seattle Tower, LP.20

Evidence provided to USCIS also demonstrates that between July 31, 2014 and May 15, 2015

over $1.4 million was transferred from a Potala Tower account to a Path America Asia Limited

account, a Hong Kong account over which Mr. Dargey has sole control.21

Again these transfers

do not appear to be related to the business activities of Path America Tower, LP or Path Seattle

Tower, LP.

Based on the order granting the SEC’s motion for preliminary injunction and denying

Defendants’ motion to modify the restraining order, evidence also demonstrates that

approximately $9.3 million and $2.3 million in EB-5 investor funds were diverted and used to

pay commissions to agents in China and for expenditures marked as “direct overhead fees”,

respectively.22

These uses of investor funds are inconsistent with the business plans and

organizational documents submitted to USCIS by the Regional Center.

For example, according to the Path America Tower, LP and Path Tower Seattle, LP Private

Placement Memoranda, any commissions or other fees paid to any party in connection with the

offer and sale of interests in these NCEs are not to be paid out of the EB-5 investors’ funds.23

19

References to a “Potala Tower account” are to the bank account for Potala Tower Seattle, LLC which received

funds from both the Path America NCE and Path Tower NCE. 20

Even though Potala Shoreline, LLC was identified as a proposed job creating entity associated with the Regional

Center (through the proposed NCE Path Shoreline, LP), Potala Shoreline, LLC was not associated with Potala

Tower Seattle, LLC -- the JCE for the Potala Tower project. The diversion of funds from the Potala Tower project

to Potala Shoreline, LLC was contrary to the Regional Center’s representations to USCIS regarding funds for both

the Potala Tower project and Potala Shoreline, LLC. 21


No. 2:15-cv-01350. (W.D. Wash. filed Aug. 24, 2015), Ex. 17. 22

SEC vs. Path America, LLC, et al. Order Granting Motion for Preliminary Injunction and Denying Motion to

Modify the Temporary Restraining Order. Civil Action No. 2:15-cv-01350. (W.D. Wash. filed Oct. 6, 2015). 23

Page 14 of each of the PPMs states, “Any such commissions or other fees paid to any party in connection with the

sale of Interest pursuant to this Offering, both currently and in the future, shall not be paid out of the proceeds of

Capital Contributions of Limited Partners. The Company and Borrower intend to pay such commissions, if any,

from proceeds of the Administrative Fee, profits from the Borrower operations, and other non-EB-5 financing, as

available.” The defined terms in the forgoing quote have the meanings assigned in the referenced PPMs.


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Based on the allegations set forth in the SEC’s complaint and the court’s findings in the order

granting the motion for preliminary injunction and denying the motion to modify the temporary

restraining order, it appears that EB-5 funds were diverted and used for purposes unrelated to the

business activities of Potala Tower Seattle, LLC and the Potala Tower project.24

This diversion

of EB-5 funds away from job creating purposes casts considerable doubt on the Regional

Center’s operations. As such, USCIS has determined by a preponderance of the evidence that

the Regional Center no longer serves the purpose of promoting economic growth.

3. Lack of Regional Center due diligence, monitoring and oversight

The Regional Center’s letter of designation, dated June 6, 2011, specifically stated that the

Regional Center:

…must monitor all investment activities under the sponsorship of your regional

center and to maintain records, data and information in order to provide the

information required on the Form I-924A supplement.

As such, the Regional Center bears responsibility for mismanagement of EB-5 funds and any

failure to oversee deployment of such funds because the Path America NCE and the Path Tower

NCE were managed and controlled by the Regional Center, and the Regional Center

management, including Mr. Dargey, also managed and controlled these NCEs, serving as the

general partner of each. By engaging in or failing to stop the diversion of investor funds, the

Regional Center failed to ensure that the EB-5 funds were made available for job creation

purposes and in promotion of economic growth. Here, according to the SEC’s allegations of

fraud and misappropriation and based on statements from Defendants conceding that they did not

use funds as disclosed in documents submitted to USCIS, the Regional Center and its

management seem to have actively participated in the diversion of investor funds.

Additionally, according to the partnership agreements for the Path America NCE and the Path

Tower NCE, the general partner for each of these NCEs is the Regional Center.25

As noted in

Section 4.2 of the partnership agreements for both Path America Tower, LP and Path Seattle 24

SEC vs. Path America LLC, et al. Complaint. Civil Action No. 2:15-cv-01350. (W.D. Wash. filed Aug. 24, 2015)

(alleging that “Defendants engaged in the scheme to defraud through the misappropriation of investor funds

knowingly or recklessly.”). SEC vs. Path America, LLC, et al. Order Granting Motion for Preliminary Injunction

and Denying Motion to Modify the Temporary Restraining Order. Civil Action No. 2:15-cv-01350. (W.D. Wash.

filed Oct. 6, 2015). 25

Agreement of Limited Partnership of Path America Tower, LP dated October 11, 2013 and Agreement of Limited

Partnership of Path Tower Seattle, LP dated April 16, 2014.


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Tower, LP “[t]he Regional Center shall have the exclusive right and power to manage, operate,

and control the NCE and to do all things and make all decisions necessary or appropriate to carry

on the business and affairs of the NCE. In addition to the specific rights and powers herein

granted to the Regional Center, the Regional Center shall possess and enjoy and may exercise all

the rights and powers of a General Partner under the Washington Uniform Limited Partnership

Act, including the full and exclusive power and authority to act for and bind the NCE.”

Therefore the Regional Center, both in its approval letter from USCIS and in the organizational

documents of these two limited partnerships that it sponsored, bears responsibility for the actions

of these limited partnerships (the Path America NCE and the Path Tower NCE). Accordingly,

the diversion of NCE funds, as well as the alleged violation of federal security laws, indicates a

lack of management and oversight by the Regional Center.

Given the District Court’s approval of the temporary restraining order, the asset freeze, the

preliminary injunction, and the appointment of a receiver, USCIS has found that the Regional

Center failed to fulfill its management, monitoring and oversight responsibilities as detailed in

the Form I-924 Instructions and its designation approval letter.

Moreover, due to the temporary restraining order, the asset freeze, the preliminary injunction and

the appointment of a receiver, the Regional Center has insufficient control of its own operations

to properly engage in future management, monitoring and oversight as required by the Program.

As stated above, such failure casts considerable doubt on the credibility of all of its operations.

Thus, USCIS has determined, by a preponderance of the evidence, that the Regional Center no

longer serves the purpose of promoting economic growth.

III. Conclusion

USCIS has determined that the Regional Center does not serve the purpose of promoting

economic growth, including increased export sales, improved regional productivity, job creation,

or increased domestic capital investment. Therefore, USCIS intends to terminate the Regional

Center’s participation in the Program.

In accordance with 8 C.F.R. § 204.6(m)(6), within 30 days from receipt of this notice, the

Regional Center may offer evidence in opposition to the ground or grounds alleged above.

Failure to respond to this notice of intent to terminate will result in termination of the regional

center designation based on the above stated reasons.


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Please mail any evidence you wish to provide in opposition to the grounds alleged in this notice

of intent to terminate to the address noted below and include a copy of this letter on top of your

submission.

U.S. Citizenship and Immigration Services

Immigrant Investor Program Office,

131 M Street NE, Mailstop 2235

Washington, DC 20529

1800 R E PUB L I C CE N T RE

633 CHE ST N UT ST R E ET

CHAT T AN OOG A, T E NN ESS EE 37450

PHONE: 423.756.2010

FAX: 423.756.3447

www.bakerdonelson.com

ROBERT C. DIVINE

Direct Dial: (423) 752-4416 Direct Fax : (423) 752-9533

E-Mail Address:[email protected]

ALABAM A • FLORIDA • G EORG IA • LOUISIAN A • MISSISSIP P I • TEN N ESSEE • TEXAS • WASH IN G TON , D.C .

January 20, 2016 U.S. Citizenship and Immigration Services

Immigrant Investor Program 131 M Street, NE Mailstop 2235 Washington, DC 20529

Re: Response to Notice of Intent to Terminate Regional Center File No. 1031910033 Path America KingCo LLC

Dear Officer:

The above-referenced NOIT issued by your office on December 24, 2015 gives three reasons for terminating the regional center designation for Path America KingCo LLC (the “Regional Center”). First, it alleges that the Regional Center may no longer be able to promote economic growth in compliance with the EB-5 Program. Second, it alleges that EB-5 funds were

diverted and used for purposes inconsistent with the business plans submitted by the Regional Center and in furtherance of job creation. Third, it alleges that the Regional Center failed to conduct appropriate due diligence, monitoring, and oversight. As the District Court and court-appointed Receiver decide on the most appropriate course of action, the Regional Center seeks

USCIS’ forbearance and responds to each of the NOIT’s allegations as follows.

Lack of Credibility Impacting Regional Center’s Ability to Promote Economic Growth

The NOIT suggests that former chief executive officer of the Regional Center Mr. Lobsang Dargey’s allegedly improper or illegal behavior in managing the Regional Center,

coupled with the District Court’s orders freezing Regional Center assets and appointing a Receiver to take charge of operations, casts doubt upon the credibility of the Regional Center’s operations and calls into question whether the Regional Center can promote economic growth. Terminating the Regional Center’s designation, however, would not further the goals of the

program to foster national economic growth. The court-appointed Receiver, Mr. Michael Grassmueck, whose statement is included in the NOIT response, currently is reviewing the status of the Regional Center’s projects, the funds available and recoverable, and other possible sources of financing, to determine whether the projects can be completed and under what arrangements.

It is not likely that the Regional Center will sponsor any additional projects, but if given the opportunity to finish current projects, the Regional Center may fulfill its purpose of promoting

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national economic growth. Promotion of economic growth does not involve only setting up new projects but includes completion of projects already started.

The Regional Center is under the care of its Receiver, Michael Grassmueck, who was appointed by the court based on substantial experience in financial workouts including service as

a receiver. There seems to be extremely little risk of any further misbehavior by regional center management. Thus, termination to stop such alleged behavior is unnecessary at this time.

It is too early to determine whether the Regional Center is able to promote economic growth by completing the Potala Tower project. To terminate the Regional Center before it has

the opportunity to complete its project would be premature and unnecessary. Instead, USCIS should allow time for the Receiver and other parties to take appropriate action, including finishing the current project if able to do so. The Receiver commits to provide to USCIS periodic updates including copies of his reports to the Court about the findings, proposals and

actions of the Receiver along with any court orders reflecting Potala Tower project operations or disposition.

Diversion of EB-5 Funds

Section II.A.2. of the NOIT alleges that EB-5 funds were used for purposes inconsistent

with the business plans submitted to USCIS by the Regional Center and in furtherance of job creation. The Receiver is currently investigating these matters and cannot refute the allegations in the NOIT. However, the alleged perpetrator, Mr. Dargey is no longer in control of the relevant entities, and, therefore, cannot engage in any improper behavior. Per the U.S. District

Court’s Order, only the Receiver has the power and authority to make decisions and take actions concerning the Regional Center now. The Receiver is currently reviewing its options to seek to restore the diverted funds through recovery or replacement by other funds and to complete the Potala Tower project. Termination on this basis, as discussed above, is unnecessary and

premature at this time.

Lack of Regional Center Due Diligence, Monitoring, and Oversight

The NOIT suggests that the Regional Center failed to fulfill its management, monitoring, and oversight responsibilities as detailed in the Form I-924 Instructions and its designation

approval letter. The Receiver understands the Regional Center's role in complying with the oversight and reporting requirements for its sponsored projects as required under 8 § C.F.R. 204.6(m). The Receiver filed Form I-924A for the Regional Center for FY2015 and in the process amended the Form I-924A for FY2014 based on findings thus far. The Receiver

continues to investigate these matters. Again, the Regional Center is not likely to sponsor any more projects, and per the District Court’s Order, the Receiver, rather than Mr. Dargey, is in control of the Regional Center. Thus, there will be no further problems or additional harm. The Regional Center should, however, be given the opportunity to finish current projects that can

promote economic growth, should the Receiver decide that is the best course of action.

In addition, terminating the Regional Center appears likely to result in denial of all the immigration benefits of all investors sponsored by the Regional Center. Thus, USCIS’ termination of the Regional Center’s designation would constitute punishment of the victims of

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Mr. Dargey’s alleged mismanagement, including innocent investors. The possibility remains that diverted funds can be recovered or replaced and used to complete the Potala Tower project. It is premature for USCIS to take the drastic action of termination, especially because it will unfairly harm so many innocent investors.

In conclusion, we request that USCIS refrain from terminating the regional center designation and first give the Regional Center the opportunity to finish its projects and fulfill its purpose of promoting economic growth if such action is deemed best by the Receiver and the Court.

Respectfully,

Robert C. Divine

u.s. citizenship and immigration services€¦ · u.s. citizenship and immigration services notice...

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