EB5 Investors Magazine Volume 1 Issue 2 | Page 24

Continued from page 22 No cases have been decided with respect to transferability. Thus, we turn to the instructions of Form I-924, which state that an amendment “may be filed to seek approval of changes to the Regional Center’s … organizational structure or administration,” and that “Designated Regional Centers must notify USCIS within 30 days of a change of … principal(s), contracting agents or similar changes in the operation or administration of the Regional Center” (emphasis mine). Such notification is simply made via email, per the instructions. Lastly, the most recent policy memorandum of May 30, 2013, was silent as to the transferability of a designated RC or the designation itself. Transferability The author believes that one must address two specific scenarios: i) the transfer of the designation, and ii) the transfer of the ownership of the designated RC entity. Transfer of the Regional Center Designation The author notes that there is no specific prohibition in the law as it relates to the transferability of an RC or its designation. However, because USCIS has the absolute authority to designate an entity as a “Regional Center,” it would stand to reason that one could not sell the designation (the asset) between entities, as by doing so the seller would, in effect, be designating a new entity as an RC, which it does not have the authority to do. Correspondence between the author and USCIS, in respect to a specific attempt to transfer designation to another entity, supports this position: 24 The issue in this case is whether or not a regional center can sell its regional center designation as an asset to a separate entity … the regulations do not indicate or support that a regional center can sell its regional center designation as an asset to a separate entity. After receiving such correspondence, the parties agreed to restructure the transaction and sell membership units in the entity originally designated as an RC. The membership purchase agreement was submitted to USCIS along with the canceled and rescinded original agreement to sell the RC designation. USCIS reviewed the new membership purchase agreement and stated that “an application shall be denied where evidence submitted in response to a request for evidence does not establish eligibility at the time the application is filed.” USCIS also stated that the “applicant submitted documents (Membership Interest Purchase Agreement) that did not exist at the time of filing the I-924 application in order to make an otherwise deficient application approvable under a new set of facts,” (emphasis mine). The author would note that the applicant in the case above was simply attempting to navigate a complex and unclear area of EB-5. The author would argue that USCIS should have given the applicant the right to make changes necessary to the application when dealing with an area of the law that lacks clarity. It would appear that not even USCIS had contemplated whether an RC designation could be sold—there is no regulatory or policy guidance on the issue. To punish an applicant in such a scenario seems unfair. Nonetheless, USCIS “determined that the regulations do not support that a regional center can sell its regional center designation as an asset to a separate entity.” E B 5 I n v e s to r s M ag a z i n e