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Chinese Investors Win Appellate Reversal of Investor Visa Denial

Aug. 21, 2020, 7:24 PM

U.S. Citizenship and Immigration Services unreasonably denied a group of investors’ petitions for EB-5 visas on the basis that their investment didn’t comply with the rules of the program, a federal appeals court in Washington ruled.

USCIS didn’t “reasonably explain” its visa denials to a group of five Chinese investors, and erred in its definition of “capital at risk,” the U.S. Court of Appeals for the District of Columbia ruled on Friday.

Overturning a lower court decision, the three-judge panel said the plaintiffs did show that their investment of $500,000 each in Mirror Lake Village LLC fit that description because the sell-back options in their EB-5 investment agreement were contingent on the nursing home’s available cash flow and thus “entirely subject to business fortunes.”

“The possibility that the business will succeed does not negate the risk of loss if it does not. If it did, even the purest stock investment would not be at risk because there is always the possibility (and the hope) that a business will succeed,” U.S. Circuit Judge Merrick Garland wrote. “In fact, as quoted above, the agency’s explanation directly contradicted its own definition of ‘at risk,’ as set out earlier in each USCIS decision under review.”

The EB-5 program allows immigrants to qualify for a green card if they invest either $500,000 or $1 million in a U.S. commercial entity that creates at least 10 jobs for U.S. workers. The process to obtain lawful permanent residence requires USCIS approval of two phases of petitions: EB-5 investors can first receive conditional green cards by submitting business plans that show the potential for job creation.

But to remain in the country permanently, they must show that those plans came to fruition.

The appeals court remanded the case with instructions to set aside the denials of the plaintiffs’ EB-5 petitions.

U.S. Circuit Judge Karen LeCraft Henderson wrote a concurring opinion. The third member of the appellate panel that heard arguments Feb. 4 was U.S. Circuit Judge Stephen Williams, who passed away earlier this month.

“Because he died before this opinion’s issuance, his vote was not counted,” according to a footnote in Garland’s ruling. “Judges Henderson and Garland have acted as a quorum with respect to this opinion and judgment.”

USCIS said it is reviewing the judges’ decision and declined to comment further. H. Ronald Klasko of Klasko Immigration Partners LLC represented the investors. The firm didn’t immediately respond to a request for comment.

The case is Mirror Lake Village LLC et al v. Wolf et al, D.C. Cir. App., No. 19-05025, opinion 8/21/20.

To contact the reporter on this story: Genevieve Douglas in Washington at gdouglas@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

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