TRUE, WALSH & MILLER, LLP
Attorneys at Law
Peter J. Walsh The Commons Of Counsel
Sally T. True 202 East State Street, Seventh Floor
R. James Miller Ithaca, New York 14850 Fred Weinstein
John Moss Hinchcliff Constance E. Cook
Elena Salerno Flash Stephen Yale-Loehr
Rosanne Mayer Roger B. Sovocool
George R. Pfann, Jr.
David A. Tyler
Hilary T. Fraser Telephone: (607) 273-4200
Laurie M. Johnston Fax: (607) 272-6694
E-mail: syl@twmlaw.com
Adam R. Schaye Internet: www.twmlaw.com
Joanna R. Garrard
Carolyn S. Lee
Mary J. Schubert
December 1, 2011
Via email and regular mail
Efren Hernandez
Office of Program and Regulation Development
U.S. Citizenship and Immigration Services
Department of Homeland Security
425 Eye Street, NW (ULLICO Building third floor)
Washington, DC 20536
Re: EB-5 Retained Earnings Question
Dear Efren:
As you know, the CIS takes the position that an EB-5 investor cannot use retained
earnings from the corporation as part of his investment. A federal court upheld
this interpretation in 2003. Kenkhuis v. INS, Civil Action No. 3:01-CV-2224-N,
2003 U.S. Dist. LEXIS 3334 (N.D. Tex. Mar. 6, 2003). My question concerns investors
who invested retained earnings before the federal court decision. Nothing in the
EB-5 regulations explicitly prohibits using retained earnings as part of their
capital investment, so investors had no idea before 2003 that they were not
following the law. Now that they know the law, can they put in new, fresh money
to overcome the prior retained earnings money?
This most often will come up in I-829 petitions, as those are the investors who
originally made their investments before the CIS interpretation on retained
earnings became known. The I-829 regulations at 8 C.F.R. § 216.6(a)(4)(ii) do not
necessarily require that the full $1 million was invested as of the date the I-829
was filed; the regulations only require that the individual was “actively in the
process of investing the requisite capital.” Thus, I believe it should be
acceptable for an I-829 investor to put in new money to overcome disallowed prior
retained earnings.
I look forward to your views on this subject.
Sincerely,
Stephen Yale-Loehr
Pc: Morrie Berez