Let's Talk: USCIS Announces Information Regarding EB-5 Regional Center Audits

Under the new provisions of section 203(b)(5)(E)(vii) added by the EB-5 Reform and Integrity Act of 2022 (RIA) to the Immigration and Nationality Act, we must audit each designated regional center at least once every five years. (Dr. Sakharov: I like the beginning. As if it should follow by "but...") This audit will include a review of any documentation required to be maintained by the regional center and a review of the flow of immigrant investor capital into any capital investment project. Regional center audits enhance the integrity of the EB-5 program by helping us verify information in regional center applications and annual certifications as well as associated investor petitions.

At any point during a site visit in connection with an audit, if the regional center representative expresses an unwillingness to participate in the site visit, we will cancel the visit. (Dr. Sakharov: Excuse me? Are you a government body or what? In 60 months petitioners will get a citizenship, what do you mean you will cancel the visit?) We will complete the audit report using the data available and indicate that we canceled the site visit at the request of the regional center.

If a regional center chooses not to consent to an audit or deliberately attempts to impede the audit, we will terminate the regional center’s designation. See INA 203(b)(5)(E)(vii)(III). We may consider noncompliance with a site visit to mean nonconsenting to an audit.

Except when a regional center does not consent to an audit or deliberately attempts to impede an audit, there are generally no direct adverse consequences to an EB-5 associated entity or petitioner solely because of the negative audit result. (Dr.Sakharov: Does that mean that as soon as a regional center is registered and investors brought in money, USCIS can punish the regional center but not the investor? Interesting. That explains those numerous hotels in the middle of nowhere.) However, we may use our findings to evaluate a regional center’s continuing eligibility to remain designated as well as compliance of associated applications, petitions, or other filings with applicable requirements.

Starting April 23, we will generally use Generally Accepted Government Auditing Standards, also known as the Yellow Book, when we audit EB-5 regional centers. (Dr. Sakharov: GAGAS was first introduced in 1972. Is it a 40th anniversary present?)

The Yellow Book provides standards and guidance for auditors and audit organizations. An audit using the Yellow Book standards will help us verify the information that designated regional centers provide in associated applications and petitions as well as annual statements. It also will help us assess a regional center’s compliance with applicable laws for purposes of remaining eligible for its designation. Generally using GAGAS standards does not remove the officer’s discretion in considering the results of the audit in connection with making adjudicatory decisions, nor does it create any substantive or procedural right or benefit that is legally enforceable by any party against the United States or its agencies or officers or any other person.

We have created a new EB-5 Regional Center Audits webpage with information for regional centers on the auditing process, including the role of the audit team, how to prepare for an audit, participating in an audit, and more.

(Dr. Sakharov: OK, now let me tell you why this topic bothers me at all. I was always told by the lawyers that EB-5 is an extremely tough program, heavily controlled by the US Government, et cetera. And that what I didn't find to be true observing all those inns and small hotels with a "significant" number of jobs created (two receptionists and a part-time janitor? really?). Now, this article proves to me that USCIS didn't much care to check what's going on after the money was wired into the country.

All my iodine projects are a perfect fit for the EB-5 Regional Center.

• They are located in Oklahoma, a TEA (Targeted Employment Area) outside of Oklahoma City and Tulsa.

• We are an industrial facility and can show people working for us at any time; that's just how our industry operates.

• We know the exact amount of direct jobs created from day one to the last day of the fifth year. No need for site visits at all! USCIS can just monitor that the facility is operating by checking  Oklahoma Corporate Commission stats. Easy-peasy!

• And, finally, we have to elevate personnel, instead of focusing on hiring a few very cheap janitors just for reporting purposes. We really need chemical and mechanical engineers with at least bachelor's degrees, which is a challenging task for any depressed TEA area. So we create not just any jobs but high-paying jobs, that adds a multiplicative effect on the whole area. And that's exactly what the EB-5 program was intended to do!

Perhaps an open discussion among EB-5 regional centers in Oklahoma regarding project types that best align with the program's goals would be beneficial. After all it's not about bringing in money, USA has enough actually, it's about fostering economic growth through high-quality job creation. What do you think?)