Masami Hibino

Recent ruling of the DC Circuit Court of Appeals ruling on loans

Could you please elaborate on the recent ruling of the DC Circuit Court of Appeals ruling on loans to fund the required EB-5 Capital?


Marko Issever
November 06, 2020 01:02 PM  Marko Issever

Sure. This development is probably the most interesting one that has happened in the last week. On behalf of H. Zhang and M. Hagiwara, their attorney Ira Kurzban argued that not only loans should be admitted as permissible to fund the EB-5 capital but that the loans did not have to be collateralized. Up until this ruling, we have always recommended our clients that, while they could borrow money from different sources by pledging their assets such as real estate or marketable securities, unsecured loans were not permissible.
Kurzban successfully argued that USCIS advances several conflicting policy arguments. He said, “According to the agency, if the proceeds of unsecured loans qualified as capital, then wealthy third parties could buy visas for foreigners unlikely to create jobs, and foreign investors could qualify for visas by investing domestic funds. The plaintiffs respond that the statute sets forth requirements for the enterprise (not the investor) to create jobs, and it does not prohibit investments (secured or otherwise) involving the U.S. funds of foreign investors. We need not engage these arguments, for we cannot disregard the plain meaning of a regulation based on policy considerations, Mercy Hosp., Inc. v. Azar, 891 F.3d 1062, 1070 (D.C. Cir. 2018). Likewise, given the clarity of the governing regulation, we cannot defer to the agency’s contrary interpretation, Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019). Text, structure, and regulatory context show that the term “cash,” as used in 8 C.F.R. § 204.6(e), unambiguously includes the proceeds of third-party loans. Because USCIS’s contrary construction is impermissible, we affirm the district court’s decision to set aside the denial of the plaintiffs’ petitions."
We need to wait and see, based on this ruling, whether USCIS will retract their current position of accepting only secured loans.


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