07 Jun What is the Evidentiary Standard for EB-5 Business Plans?
In order to determine the outcome of an EB-5 case, adjudicators review all of the evidence presented applying the necessary standard of proof. Pursuant to section 291 of 8 U.S.C. 1361, the burden of proof is upon the applicant to present sufficient evidence to demonstrate his/her claim. The question that remains is what is the standard of proof used in EB-5 petitions and applications? According to Matter of Chawathe, 25 I&N Dec. 369, 375-376 (AAO 2010)[1], the petitioner or applicant must establish each element in question through a preponderance of the evidence.
The preponderance of the evidence standard dictates that the evidence submitted must show what is claimed is at least 51 percent more likely than not true. As such, not all doubt needs to be removed. Thus, even if some doubt is left with the adjudicator regarding the verity of the evidence, provided that a substantial volume of credible evidence was submitted to show to demonstrate that the claim is probably true then the standard has been met. The standard of “Preponderance of the evidence” is a much lower standard of proof than what is required in a criminal case, wherein the prosecution needs to prove the case beyond a reasonable doubt.
EB-5 Visas are granted to applicants who invest the minimum required ($500,000 or $1,000,000, depending on the location in which the business is located – please inquire for further details) capital into a New Commercial Enterprise that creates (or preserves, if the business qualifies as a “troubled business”) at least 10 full-time jobs for qualifying U.S. workers within two years of the investment.[2] In order to demonstrate that the New Commercial Enterprise will create at least 10 full-time jobs, sufficient evidence by way of a comprehensive, detailed, and credible business plan demonstrating the need for the jobs and a timetable for hiring employees should be submitted.[3]
According to Matter of Ho, 22 I&N Dec. 206 (Assoc. Comm’r 1998)[4], a comprehensive business plan as contemplated by the regulations should contain (1) a business description; (2) the business structure; (3) a marketing plan with target market analysis; (4) personnel experience; (5) competitive analysis; (6) required licenses and permits; (7) a timetable for hiring; (8) job descriptions; and (9) budget and financial projections. Clearly, a Matter of Ho-compliant business plan is essential in order to satisfy the threshold burden required to be established by a preponderance of the evidence. However, it is not mandatory that the Business Plan include all of these required elements, but rather that the burden of proof is satisfied by way of the elements that are included. USCIS must be confident that the business plan will be executed and the jobs will be created in order to accept it.
However, in order to understand how a comprehensive business plan can make or break an EB-5 case, it is best to review an actual Administrative decision. The petitioner’s initial application was filed on December 4, 2012 including: (1) documents relating to the source of the petitioner’s claimed investment in the NCE; (2) the NCE’s corporate documents, including documents showing the petitioner’s claimed investment in the NCE; (3) documents from the U.S Census Bureau relating to Texas; and (4) the NCE’s business plan. An RFE was issued in March of 2013 requesting evidence: (1) that the NCE was located in a TEA; (2) that the petitioner’s requisite capital had been placed at risk in the NCE in light of LLC’s obligation to secure $2 million to invest in the NCE and the NCE’s obligation to redeem the petitioner’s interest in the NCE; (3) that the capital the petitioner invested in the NCE was obtained through lawful sources; and (4) that the NCE would meet the job creation requirements. Ultimately, the appeal was denied on May 27, 2013 because the petitioner could not meet the burden of establishing the proof by a preponderance of the evidence.
In conclusion, it is clear that the business plan originally submitted did not contain many of the required elements especially an adequate market analysis or budget and financial projections. A quality team consisting of knowledgeable business plan writers (attorneys), a CPA, a PhD., an MBA, and others experienced in the EB-5 process will assist you to determine what is necessary to comply with the Matter of Ho requirements, whether or not all of the required elements are present.
[1] http://www.justice.gov/eoir/vll/intdec/vol25/3700.pdf
[2] http://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/eb-5-immigrant-investor
[3] http://www.justice.gov/eoir/vll/intdec/vol22/3362.pdf
[4] Id