EB-5 Challenge to Third Party Funding Source

Year: 2020
Nationality: Chinese
Applicant: Ms. Liu
Application Type: EB-5 Immigrant Investor

Point in time.
12/09/2015 I-526 petition filed
09/24/2020 Receipt of USCIS Replacement Letter (RFE)
12/14/2020 Submit a Retroactive RFE Response
01/13/2021 Retroactive letter approval

BACKGROUND
• Ms. Liu filed her EB-5 petition in 2015 and only received her retroactive letter (RFE) nearly 5 years later, making it more difficult to retroactively file the petition when the data was retained for so long.
• Ms. Liu’s EB-5 investment funds were exchanged with a third party, and there is no record of funds being exported out of mainland China, and Ms. Liu’s EB-5 investment process lacks a complete capital chain.
• The RFE focuses on the legal source of the third party’s funds; the third party only helped to exchange dollars, not the EB-5 petitioner, and did not expect to help Ms. Liu to make up the documents, and did not keep the relevant information; how the third party, as an intermediary, legally obtained these dollars is quite difficult to prove.
• Due to foreign exchange control, the US dollars provided by the third party are also exchanged through many relatives, friends and employees several times and remitted to Hong Kong in multiple times, which makes the flow of funds more confusing.
• Ms. Liu’s account for receiving third party USD is in Hong Kong; the bank account in Hong Kong has been closed due to a long period of non-use, and the account data cannot be obtained; due to the epidemic, Ms. Liu cannot go to Hong Kong to restart this bank account. The account data is very important and missing would have a great impact on the replacement.
• Ms. Liu decided to change her attorney midway and turned to Tsang & Associates, PLC in an emergency when she had only 1 month left to meet the filing deadline. Faced with the above-mentioned difficulties, it was almost impossible to complete the filing within 1 month.

Ms. Liu applied for an EB-5 green card in December 2015, and after a long wait, finally received a notice from USCIS in September 2020 after all other investors had received approval, but a supplemental letter (RFE) asking her to explain the source of funds for the immigrant investor. This is because Ms. Liu initially sought a third party to exchange the RMB required for the investment immigration to the third party’s RMB account in China, and the third party then remitted the equivalent value of USD from the Hong Kong account to the account Ms. Liu opened in Hong Kong. Now the INS requires proof of the legal source of the funds in the third party’s Hong Kong account.

Ms. Liu felt that she had already proven the legal source of her investment funds, but now she had to prove the source of the third party’s funds. She immediately went to her EB-5 attorney to discuss the matter, but after waiting for almost 2 months, there was still no progress from the EB-5 attorney, and Ms. Liu still did not know how to prepare the supplemental documents and how to ask the third party to cooperate. Since she was only given a total of 3 months to prepare the supplemental documents, Ms. Liu was as anxious as an ant on a hot pot.

Finally, on the recommendation of a friend, Ms. Liu approached Tsang & Associates, PLC for urgent help, hoping to complete the filing by changing lawyers at the last minute. Originally, we did not agree with Ms. Liu’s approach of changing her lawyer at the last minute, but in the face of Ms. Liu’s almost desperate expression, we finally agreed to take over the filing.

Through a detailed conversation with Ms. Liu, we learned that the process of finding a third party to exchange the U.S. dollars she held was very complicated, as the third party had asked friends and relatives to remit the U.S. dollars for a period of five years (2010-2015); moreover, these funds came from the third party’s accumulation of various income over the years, and the income items were complex. Because Ms. Liu and the original EB-5 attorney did not consider the USCIS request for additional third-party information, they did not prepare for it before and now could not get the proof at once.

KEYS TO SUCCESS
1. Identify the main sources of revenue for third-party funding.
After detailed verification of the third party’s income, we targeted several large amounts of the third party’s income and, after determining the nature and source of the income, instructed the third party and its workplace to prepare the necessary data. Due to the time constraint, Zang Dikai’s legal team basically worked 24*7. Mr. Chen, who is familiar with domestic regulations and has experience in investment immigration, was ready to answer Ms. Liu’s and the third party’s questions and provided strong professional support to prove the third party’s legitimate income earned in China.


2. quickly and accurately completed the data and information collection, preparation of the attorney’s letter in response to the replacement.

The team of Zang Dikai attorneys worked together to complete a 15-page letter of explanation and over 400 pages of supporting documents before the filing deadline, ensuring complete proof that the third party who helped Ms. Liu exchange money was legally sourced and entered the Hong Kong account legally, which then provided Ms. Liu with enough dollars to remit to the EB-5 project.

OUTCOME
Tsang & Associates, PLC sent Ms. Liu’s replacement package by FEDEX on December 13, 2020, and received the news of USCIS approval one month later. Ms. Liu was thrilled to learn about the approval and was very grateful to the team of lawyers at Tsang & Associates for working overtime to help her complete the supplemental documents at her most critical moment, and finally achieving success! The 5-year wait for her and her family was not in vain, and she achieved a crucial victory towards the goal of a green card.

Lawyer Comments:
From 2015 to 2016, as China’s foreign exchange controls became stricter, the “ant move” method of exchange that was used by EB-5 investors in large numbers was gradually discouraged, and some investors (applicants) turned to the “knock-off” method, which involves finding a third party (individual or company) to exchange EB-5 funds. Some investors (applicants) have turned to the “knock-off” method, which involves finding a third party (individual or company) to transfer the EB-5 funds. However, the USCIS is likely to question the legitimacy of the third party’s source of funds for this type of operation. Once the third party is required to prove the legitimacy of the funds, the investor is often caught off guard. If you encounter this difficulty, be sure to seek an experienced and professional attorney to develop a strategy and preparation as early as possible to avoid wasting valuable supplemental time.

*To protect customer privacy, customer names are pseudonyms.