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AAO Affirms Denial of I-829 for EB-5 Investor
[06/24/2011]

DISCUSSION
The Director, California Service Center, denied the petition to remove conditions. The matter is now before the Administrative Appeals Office (AAO) on certification pursuant to the regulation at 8 C.F.R. § 103.4. The director's decision will be affirmed in part and withdrawn in part. The petition will be denied.
 
The petitioner was granted conditional lawful permanent residency as an alien entrepreneur pursuant to section 203(b)(5) of the Immigration and Nationality Act (the Act), 8 U.S.C. § 1153(b)(5). The petitioner claimed eligibility based on an investment in a regional center pursuant to section 610 of the Judiciary Appropriations Act, 1993, Pub. L. 102-395 (1993) as amended by section 116 of Pub. L. No. 105-119, 111 Stat. 2440 (1997); section 402 of Pub. L. No. 106-396, 114 Stat. 1637 (2000) and section 11037 of Pub. L. No. 107-273, 116 Stat. 1758 (2002). The regional center is South Dakota International Business Institute (SDIBI), Dairy Economic Development Region (DEDR). U.S. Citizenship and Immigration Services (USCIS) designated SDIBIDEDR as a regional center on April 8, 2004. The petitioner invested in the regional center through the XXX. The petitioner now seeks to remove conditions on lawful permanent resident status pursuant to section 216A of the Act, 8 U.S.C. § 1186b.
 
The director determined that the 2.66 multiplier was not appropriate, that the petitioner could not include Mr. and Mrs. XXX as direct employees and that an attempt to verify the information on the Forms I-9 submitted revealed that several of the direct employees had not submitted legitimate documentation to establish that they are qualifying. The director denied the petition and certified the matter to the AAO. There is no appeal available for a denied Form I-829. The regulation at 8 C.F.R. §103.4(a)(5), however, allows the director to certify any decision to this office whether or not the case is appealable. The petitioner has submitted a brief on certification.
 
The two statutory requirements at section 203(b)(5) of the Act are exceedingly simple, mandating the provision of a visa to any investor who:
(1) Makes an investment of the requisite capital, and
(2) Creates jobs for at least 10 "U.S. citizens or aliens lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United States" other than the investor or the investor's spouse, sons or daughters. 
 
In this case, the petitioner has made the requisite investment, albeit into an enterprise that failed after the petitioner filed the Form I-829. However, the investor appears never to have employed the requisite number of qualifying workers. On that basis alone, the petition may not be approved.
 
The heart of the petitioner's request is that USCIS should remove conditions on his lawful permanent resident status on the basis of a failed enterprise with a workforce that is staffed almost entirely with aliens who are not "lawful authorized to be employed in the United States." 8 C.F.R. §204.6(e). According to the AAO's review, approximately 82 percent of the petitioner's workforce is not employment authorized. While the failure of the enterprise does not necessarily prohibit removal of conditions on the petitioner's lawful permanent resident status, USCIS is precluded by statute and regulation from removing conditions if the enterprise failed to create the requisite number of jobs for qualifying employees (i.e., U.S. citizens, lawful permanent residents, or other immigrants lawfully authorized to be employed in the United States).
 
For the reasons discussed below, the AAO will uphold the director's determination regarding who may be considered direct and qualifying employees of the new commercial enterprise. USCIS is statutorily precluded from approving the petition in this case because the petitioner has failed to employ the requisite number of qualifying employees during the conditional period or within a reasonable time thereafter. The AAO will withdraw the director's concerns regarding the use of multipliers that were disclosed in support of the approved Form I-526 petition. Nevertheless, the AAO concurs that allowing the application of a multiplier to non-qualifying jobs would likely produce an outcome that is inconsistent with Congressional intent. Finally, the AAO will make a separate finding of willful material misrepresentation because the petitioner submitted:
(1) unsupported Internal Revenue Service (IRS) Forms W-2 that are contradicted by other IRS tax reports as evidence for two of the claimed qualifying direct employees, and
(2) FormsI-9 and payroll records from an unrelated entity, XXX, as evidence of his own investment enterprise's compliance with section 203(b)(5)(A)(ii) of the Act. 
 
The AAO maintains plenary power to review cases on a de novo basis. Soltnrze v. DOJ, 381 F.3d 143,145 (3d Cir. 2004). The AAO's de novo authority has been long recognized by the federal courts. See, e.g., Dor v. INS, 891 F.2d 997, 1002 n. 9 (2d Cir. 1989). Moreover, this matter was certified to the AAO pursuant to 8 C.F.R. 3 103.4 for review of all of the unusually complex or novel issues.
 
I. The Law
Section 203(b)(5)(A) of the Act, as amended by the 21" Century Department of Justice Appropriations Authorization Act, Pub. L. No. 107-273, 116 Stat. 1758 (2002), provides classification to qualified immigrants seeking to enter the United States for the purpose of engaging in a new commercial enterprise:
(i) in which such alien has invested (after the date of the enactment of the Immigration Act of 1990) or, is actively in the process of investing, capital in an amount not less than the amount specified in subparagraph (C), and
(ii) which will benefit the United States economy and create full-time employment for not fewer than 10 United States citizens or aliens lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United States (other than the immigrant and the immigrant's spouse, sons, or daughters).
 
Section 216A(a)(l) of the Act provides:
Conditional basis for status.-Notwithstanding any other provision of this Act, an alien entrepreneur (as defined in subsection (f)(l)), alien spouse, and alien child (as defined in subsection (Q(2)) shall be considered, at the time of obtaining the status of an alien lawfully admitted for permanent residence, to have obtained such status on a conditional basis subject to the provisions of this section.
 
Section 216A(c)(l)(A) of the Act provides that the alien entrepreneur must submit a petition which requests the removal of such conditional basis. Section 216A(d)(l) of the Act provides that each petition shall contain facts and information demonstrating that the alien invested or is actively in the process of investing the requisite capital, that the alien sustained the investment actions throughout the conditional residence period, and that the alien is otherwise conforming to the requirements of section 203(b)(5) of the Act. Section 216A(c)(3)(A) of the Act requires USCIS to make a determination "as to whether the facts and information described in [section 216A(d)(l) of the Act] and alleged in the petition are true." Section 216A(c)(3)(B) requires USCIS to remove conditions on the alien entrepreneur's status if it determines that the facts and information are true. Conversely, section 216A(c)(3)(C) of the Act requires USCIS to terminate the alien entrepreneur's status if it determines that the facts and information are not true.
 
The regulation at 8 C.F.R. § 216.6(a)(4) states that a petition for removal of conditions must be accompanied by the following evidence:
(i) Evidence that a commercial enterprise was established by the alien. Such evidence may include, but is not limited to, Federal income tax returns;
(ii) Evidence that the alien invested or was actively in the process of investing the requisite capital. Such evidence may include, but is not limited to, an audited financial statement or other probative evidence; and
(iii) Evidence that the alien sustained the actions described in paragraph (a)(4)(i) and (a)(4)(ii) of this section throughout the period of the alien's residence in the United States. The alien will be considered to have sustained the actions required for removal of conditions if he or she has, in good faith, substantially met the capital investment requirement of the statute and continuously maintained his or her capital investment over the two years of conditional residence. Such evidence may include, but is not limited to, bank statements, invoices, receipts, contracts, business licenses, Federal or State income tax returns, and Federal or State quarterly tax statement.
(iv) Evidence that the alien created or can be expected to create within a reasonable time ten full-time jobs for qualifying employees. In the case of a "troubled business" as defined in 8 CFR 204.6(j)(4)(ii), the alien entrepreneur must submit evidence that the commercial enterprise maintained the number of existing employees at no less than the pre-investment level for the period following his or her admission as a conditional permanent resident. Such evidence may include payroll records, relevant tax documents, and Forms I-9.
 
The regulation at 8 C.F.R. § 204.6(e) states, in pertinent part:
Employee means an individual who provides services or labor for the new commercial enterprise and who receives wages or other remuneration directly from the new commercial enterprise. In the case of the Immigrant Investor Pilot Program, "employee" also means an individual who provides services or labor in a job which has been created indirectly through investment in the new commercial enterprise. This definition shall not include independent contractors.
 
Qualifying employee means a United States citizen, a lawfully admitted permanent resident, or other immigrant lawfully authorized to be employed in the United States including, but not limited to, a conditional resident, a temporary resident, an asylee, a refugee, or an alien remaining in the United States under suspension of deportation. This definition does not include the alien entrepreneur, the alien entrepreneur's spouse, sons, or daughters, or any nonimmigrant alien.
 
Employees that meet the definition of "employee" quoted above constitute the "direct employees" of the new commercial enterprise. As the petitioner invested in a regional center, the petitioner may also rely on "indirect" job creation extrapolated through the use of reasonable methodologies. 8 C.F.R. § 204.6(j)(4)(iii). Where the petitioner relies on direct job creation, however, even if within a regional center, the petitioner must demonstrate that those direct employees are also "qualifying employees" as defined above.
 
II. The Procedural History
On September 9, 2005, the petitioner filed a Form I-526 petition XXX based on his investment in XXX, a partnership formed to invest in XXX. The petitioner asserted that the new commercial enterprise would invest in a dairy farm.
 
The petitioner indicated that the investment was in a rural area. Thus, the minimum investment amount is $500.000. Counsel's initial cover letter explained that XXX, an experienced dairy farmer from XXX the general partner of XXX the purpose of starting a dairy farm in South Dakota. On page 12 of counsel's cover letter, counsel stated that the multiplier for calculating indirect jobs would be 2.66. Counsel projected that the dairy would create 16 direct jobs, resulting in "total job creation" of 42.56 using the 2.66 multiplier. The director approved the petition without any further inquiry. The petitioner submitted an IRS Form SS-4. Application for Employer Identification Number (EIN) listing the EIN for XXX.
 
On June 2, 2008, the petitioner filed the Form I-829 at issue in this proceeding. Counsel asserted that the dairy created 16 direct jobs and, by using the 2.66 multiplier, 42.56 indirect jobs. Counsel then added the direct and indirect jobs to conclude that the dairy created 58.56 jobs total. The petitioner claimed that Mr.XXX and his wife are two of the 16 direct employees.
 
The petitioner initially submitted the following documentation relating to XXX employees:
● Forms I-9, Employment Eligibility Verification, and
● Internal Revenue Service (IRS) Form W-4 Employee's Withholding Allowance Certificates for employees.
 
The petitioner also submitted the following documentation relating to XXX
● IRS Form 943, Employer's Annual Federal Tax Return for Agricultural Employers, listing total wages of $463,013.88 in 2007;
● Form 1065, U.S. Return of Partnership Income, showing guaranteed payments to partners of $26,800 and labor costs of $646,393 on Schedule F for 2007;
● A 2007 XXX Form W-3, Transmittal of Wage and Tax Statements, indicating the partnership issued 39 Forms W-2 and listing total wages of $464,392.88; and
● Thirty-nine Forms W-2, none of which are issued to Mr. or Mrs.XXX
 
On February 20, 2009, the director issued a request for additional evidence (RFE). In response tothe RFE, the petitioner submitted 27 IRS Forms for 2008. The petitioner submitted quarterly wage and withholding reports for XXX and XXX. Mr. and Mrs. XXX are listed as the sole employees of XXX. The petitioner also submitted 2007 and 2008 IRS Forms W-2 for Mr. and Mrs. XXX. The IRS Forms W-2 issued to Mr. and Mrs. Winter bear the name of “XXX” and the EIN 56-2528810.
 
In response to an August 11, 2010 notice of intent to deny (NOID), counsel, consistent with the initial Form I-526 filing, asserts that the creation of 16 direct jobs results in 42.56 "direct and indirect jobs."
 
On December 6, 2010, the director denied the petition and certified her decision to the AAO. The director determined that the petitioner had not demonstrated that the multipliers used to calculate indirect job creation were appropriate, and that the majority of the direct employees were not "qualifying" as defined at 8 C.F.R. §204.6(e). In addition, the director determined that the general partner's founder and his wife could not be included among the direct employees created by the petitioner's investment because they are listed as employees of XXX in the quarterly returns rather than as employees of XXX the new commercial enterprise.
 
On certification, counsel submitted a brief and additional evidence.
 
On February 17, 2011, the AAO advised the petitioner of derogatory evidence. The AAO also advised the petitioner of its intent to make a finding of material misrepresentation.
 
First, the AAO notified the petitioner that a bank foreclosed on the regional center after June 2, 2008, the filing date of the petition.
 
Second, the AAO advised that the 2007 Form W-2 wages for Mr. and Mrs. XXX are not reflected within the 2007 IRS Form W-3 wages that XXX reported to the Internal Revenue Service. 
 
Third, the AAO noted that the XXX IRS Forms W-2 are visibly different from the other Forms W-2 that issued in 2007 and 2008. Specifically, the XXX IRS Forms W-2 contain a different number code under the year, list the company name as XXX instead of XXX and the employer name and address are single spaced rather than double spaced.
 
Finally, the AAO noted that the Forms I-9 the petitioner submitted in response to the director's request for additional evidence and the accompanying quarterly payroll records did not relate to the new commercial enterprise.
 
The AAO advised that it is incumbent upon the petitioner to resolve any inconsistencies in the record by independent objective evidence, and attempts to explain or reconcile such inconsistencies, absent competent objective evidence pointing to where the truth, in fact, lies, will not suffice. Matter of Ho,19 I&N Dec. 582,591-92 (BIA 1988).
 
Counsel responded to the AAO's notice with a statement and additional evidence. 
 
First, counsel asserts that the petitioner sustained his investment for two years and the business' subsequent failure is not a consideration. 
 
Counsel further asserts that a letter from the employer's accountant explains the discrepancies between the IRS Form W-3 and the two extra IRS Forms W-2. Counsel acknowledges for the first time that the second set of Forms I-9 and payroll records relate to a different business but asserts, again for the first time, that the petitioner submitted this evidence “to illustrate the possible extension of interpretation of USCIS policy relating to a 'successor-in-interest.”'
 
Finally, it is counsel's position that a good faith effort to comply with Form I-9, Employment Eligibility Verification, paperwork requirements for purposes of section 274A of the Act is sufficient to demonstrate compliance with the statutory job creation requirement at section 203(b)(5)(A)(ii) of the Act and the implementing regulation at 8 C.F.R. 5 204.6(e), even where USCIS possesses information that the petitioner has not complied with the statutory and regulatory requirement.
 
ORDER
The director's decision of December 6, 2010 is affirmed. The petition is denied with a separate finding of willful misrepresentation of a material fact on the part of the petitioner, XXX.
 
FURTHER ORDER
The AAO finds that the petitioner, XXX, willfully misrepresented evidence that he submitted in an effort to mislead USCIS and the AAO on an element material to his eligibility for a benefit sought under the immigration laws of the United States.

EDIT: Immigration Express
Source: AILA
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