When applying for U.S. investment immigration, many EB-5 investors choose so-called 100% risk-free EB-5 projects promoted by immigration agencies. Do such projects actually exist? In fact, those familiar with the EB-5 program know that the EB-5 Act explicitly requires that EB-5 investment funds must be 'at risk'. How is this phrase defined?
The requirement that an investment be 'at risk' is set forth in 8 C.F.R. § 204.6(j)(2). This regulation requires that the investment capital be at risk, such that the gain or loss from the investment capital is also at risk.
The precedent decision Matter of Izummi, 22 I&N Dec. 169 (1998), reinforces the 'at risk' requirement by prohibiting guaranteed returns on investment capital and unconditional contractual guarantees of repayment.
In summary, the law (regulations and precedents) does not permit the reinvestment of funds into any investment vehicle that provides guaranteed returns or is free from any risk of loss or gain, including accounts or securities guaranteed by the federal government.
On June 14, 2017, USCIS revised its Policy Manual to clarify various policy issues related to the sustainment requirements for investors. The three key points are as follows:
1. After the sustainment period ends, investor funds may be returned even if the I-829 application has not yet been adjudicated. For Chinese investors, this refers to the 10-12 year sustainment period following the initial I-526 filing date.
2. Throughout the entire sustainment period, the investor's investment must be maintained in an 'at risk' state. The Policy Manual provides a detailed explanation of the new 'at risk' standards, including methods such as 'engaging in commercial activity' and 'within the scope of the new commercial enterprise's operations'.
3. Before or after the necessary jobs are created in the original JCE, the NCE may reinvest, but this must be done within a reasonable period after the initial investment is repaid.