USCIS Unveils Stricter Sanctions and Penalties for EB-5 Program Violations

US Citizenship and Immigration Services (USCIS) issued new policy guidance on July 16, addressing noncompliance and sanctions under the EB-5 Program. The updated policies in Volume 6 of the USCIS Policy Manual incorporate statutory reforms included in the EB-5 Reform and Integrity Act of 2022 (RIA), which took effect on March 15, 2022.

The policy alert explains that “the reforms add new authority for USCIS to sanction regional centers at various levels for noncompliance with statutory requirements, such as paying the EB-5 Integrity Fund fee.” The new guidelines interpret these provisions related to sanctions, including terminations, debarments, and suspensions, for noncompliant regional centers, new commercial enterprises, job-creating entities, investors, and others.

The guidance update also clarifies what may be considered threats to the national interest, fraud, intentional material misrepresentation, deceit, and criminal misuse in the context of discretionary determinations that require USCIS to take adverse action on certain EB-5 petitions, applications, and benefits. It outlines special considerations for good-faith pre-RIA investors to retain eligibility under INA sec. 203(b)(5)(M) after USCIS terminates or debars their regional center, new commercial enterprise, or job-creating entity due to noncompliance.

Sanctions

The RIA authorizes USCIS to levy various sanctions, including suspensions, debarment, and termination, for noncompliance by various participants in the EB-5 program.

General Process

• If USCIS determines a violation has occurred and sanctions are appropriate, it issues a notice of intent to sanction to the affected individual or entity, including a summary of violations and a description of the sanction.
• USCIS typically provides 30 days for response and may issue sanctions to more than one party or multiple sanctions to the same party for a given violation.
• If USCIS determines sanctions are warranted after considering the response, it issues a final notice of sanction. Sanctioned parties may appeal to the Administrative Appeals Office (AAO).
• USCIS considers relevant factors like violation history, willfulness, cooperation, management awareness, due diligence, and impact on innocent parties when deciding sanction severity.

Types of Sanctions

• Suspensions: Temporarily disallow participation in some or all of the EB-5 program for a specified period or until the violation is remidied. The scope is determined case by case.
• Debarments: USCIS interprets its authority to terminate the participation of new commercial enterprises or job-creating entities as equivalent to debarment. Permanent debarment may apply to knowing participants in conduct leading to termination or debarment.
• Terminations: The regional center is no longer designated and may not file project applications or solicit investors. Upon notification, investors have 180 days to re-associate to another regional center.

Discretionary Determinations

USCIS denies or revokes approval of an EB-5 related petition, application, or benefit if it determines approval is contrary to the national interest for reasons relating to threats to public safety or national security, or if the petition, application, or benefit is predicated on or involves fraud, deceit, intentional material misrepresentation, or criminal misuse.

National Interest Grounds

• Threats to public safety may include aggravated felonies.
• National security concerns may include activities described in INA provisions related to general security, terrorist activities, or association with terrorist organizations.

Fraud and Related Grounds

• Fraud and intentional material misrepresentation: Knowingly making a false representation or concealing a material fact with intent to induce action or deceive. Broader than fraud or misrepresentation against the US government.
• Deceit: Intentionally leading another person to believe something untrue.
• Criminal misuse: Improperly using the EB-5 program or capital in connection with or furtherance of a crime, most likely financial crime.

Examples of triggering actions include:

• Financial fraud or crimes.
• Falsifying job creation or economic development claims.
• Misrepresenting or omitting required information.
• Falsifying responses to bona fide questions.
• Concealing source or path of funds.
• Presenting false derivatives.
• Assuming alternate identities to obtain benefits.

The USCIS revised policies “explain how good faith investors, including those who filed their petitions prior to the new law, may retain eligibility if USCIS terminates or debars the investor’s regional center, new commercial enterprise, or job-creating entity.” The policy update also “provides the process and factors USCIS generally considers when assessing sanctions, consistent with the plain meaning of the statute.”

The updated guidelines clarify that “USCIS does not sanction individuals or entities for pre-RIA actions, but may still consider significant or recurring pre-RIA violations for the purpose of evaluating the severity of sanctionable post-RIA violation.” The revised policies are effective immediately and supersede any related prior guidance.