Shroff v. Kendall

KAIZAD P. SHROFF, Plaintiff, v. SARAH M. KENDALL, Chief, Immigrant Investor Program, United States Citizenship and Immigration Services, KENNETH T. CUCCINELLI, Senior Official Performing the Duties of the Director, United States Citizenship and Immigration Services, and CHAD F. WOLF, Acting Secretary, United States Department of Homeland Security, Defendants.

No. 4:20-CV-78 (CDL)

United States District Court, M.D. Georgia, Columbus Division

August 6, 2021

ORDER

CLAY D. LAND U.S. DISTRICT COURT JUDGE

United States Citizenship and Immigration Services (“USCIS”) operates a program that issues visas to qualified aliens who establish that they have invested at least $1, 000, 000 in a new commercial entity that will create at least ten jobs in the United States. Plaintiff sought such a visa, but his petition was denied because USCIS found that he had failed to satisfy the $1, 000, 000 investment threshold. Plaintiff appeals that decision through the present action, which he filed pursuant to the Administrative Procedures Act, 5 U.S.C. § 701 et seq. He maintains that USCIS's decision was arbitrary and capricious and unsupported by substantial evidence. Both parties now move for judgment in their favor. Finding that USCIS misapplied the law in its decision regarding the amount that Plaintiff invested in the new enterprise, the Court overturns the denial and remands this matter to USCIS for further consideration consistent with this Order. The Court does not find that Plaintiff is necessarily entitled to the visa. The Court's ruling simply directs USCIS to reconsider its decision in light of applicable law as explained in this Order.

USCIS categorically excluded from consideration all investments made through a limited liability limited partnership in which Plaintiff was a general and limited partner with a 50% ownership interest and three limited liability companies in which that partnership was the sole member. As explained below, that portion of USCIS's decision was based on an error of law. If Plaintiff presented sufficient evidence that he invested at least $1, 000, 000 of his personal capital into the LLLP and LLCs and that they used that capital to invest into the new enterprise, then USCIS should not have automatically excluded the investments from consideration simply because the final checks were not written from Plaintiff's personal checkbook. In light of this remand both pending motions for summary judgment (ECF Nos. 19 &amp 23) are terminated as moot.

ADMINISTRATIVE BACKGROUND

I. The EB-5 Visa Program

In 1990, Congress amended the Immigration and Nationality Act (“INA”) to create a new program for immigrants to obtain visas by investing in entities to create jobs in the United States. See Immigr. Act of 1990, Pub. L. No 101-649, § 121(b)(5), 104 Stat. 4978 (1990) (codified at 8 U.S.C. § 1153(b)(5)). The INA provides that “[v]isas shall be made available . . . to qualified immigrants seeking to enter the United States for the purpose of engaging in a new commercial enterprise [(“NCE”)] . . . in which such alien has invested . . . or, is actively in the process of investing, capital in an amount not less than the amount specified in subparagraph (C), and [] 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[.]” 8 U.S.C. § 1153(b)(5)(A). In 2017, the time of Plaintiff's initial petition, the requisite amount that Plaintiff had to invest under this program was $1, 000, 000. Id. § 1153(b)(5)(C).

Such visa petitions are called “EB-5 immigrant petitions.” 8 C.F.R. § 204.6(a). The former Immigration and Naturalization Service (“INS”) published regulations interpreting the EB-5 statute and established procedures for immigrants to file I-526 forms to obtain EB-5 visas. These regulations define capital to mean “cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the alien investor, provided that the alien investor is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness.” Id. § 204.6(e). “Invest means to contribute capital. A contribution of capital in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the alien investor and the new commercial enterprise does not constitute a contribution of capital for the purposes of this part.” Id. The regulations go on to explain what kinds of evidence a plaintiff may submit to support his petition. See Id. § 204.6(j).

II. Administrative Proceedings

Plaintiff, a citizen of India, filed his I-526 form seeking an EB-5 visa on October 27, 2017. Immigrant Pet. by Alien Entrepreneur 1, 4 ECF No. 14-3 at 2, 5. Plaintiff claimed the following investments in Rivertown Psychiatry, P.C.:

• $1, 000 in exchange for 100 shares of Rivertown stock in 2012;

• $53, 623 as a down payment for an office building located at 1520 22nd St., Columbus, Georgia through Smile Realty, LLC, a company that he co-owned with his wife, in 2014;

• $140, 000 as a down payment for a second office building located at 5700 Veterans Parkway, Columbus, Georgia through Smile Realty in 2017;

• $39, 173.99 to renovate the 5700 Veterans Parkway building in 2017;

• $175, 000 to purchase an airplane for Rivertown in 2016; and

• $750, 000 as a “cash investment.”

Summ. of Invs. in a New Com. Enter. ¶¶ 1-5, ECF No. 14-4 at 7-8.

USCIS sent Plaintiff a “Request for Evidence” on January 15, 2019. Req. for Evidence 1 (Jan. 15, 2019), ECF No. 15-6. It explained that Plaintiff had not established that he was eligible for an EB-5 visa and that it needed more evidence to assess his eligibility. Id. It found several discrepancies in his petition, but its primary problem was that an entity called “Maneck LLLP”- not Plaintiff-had transferred the relevant funds either to Smile Realty, LLC or Rivertown itself. Id. at 5-6. It also took issue with the airplane, pointing out that Plaintiff had provided no evidence that he transferred ownership of the airplane to Rivertown or how it was going to be used for Rivertown's business activity. Id.

Plaintiff responded to USCIS's request. Resp. to Req. for Evidence 1 (Apr. 11, 2019), ECF No. 15-7 at 14. He explained that Maneck Family, LLLP was his “personal investment account.” Id. at 2. He clarified that “Maneck Family[, ] LLLP is an investment partnership” in which he and his wife were equally general partners and limited partners, that Maneck was the sole owner of Smile Realty, LLC, and that Plaintiff, as general partner, had wide discretion to “distribute funds from the partnership on behalf of himself to invest for his personal or business interests.” Id. at 2-3. Pursuant to this discretion, Plaintiff directed Maneck “to distribute his share of the partnership's investment returns held in the Maneck Family[, ] LLLP account directly to the NCE's account.” Id.

He also indicated that Rivertown had a net income of $1, 575, 758.74 in 2017 and $2, 255, 777.18 in 2018 and that Rivertown had distributed its net income into his Maneck Family, LLLP account at his direction as the sole shareholder of Rivertown. Id. at 2. Specifically, he claimed that Rivertown had distributed as equity $550, 000 to Maneck on February 3, 2017, $250, 000 to Maneck on April 20, 2017, and $150, 000 to Maneck on May 16, 2017, for a total of $950, 000. Id. He then “invested his profits from Rivertown [] back into the company” by transferring “$750, 000 from Maneck Family[, ] LLP to Rivertown [] on October 24, 2017.” Additionally, Plaintiff noted that he directed Maneck to distribute $140, 000 of his partnership investment returns, which he legally owned, to Smile Realty to pay the down payment for the 5700 Veterans Parkway property and that he did the same with regard to the $39, 173.99 for renovations at that property. Id. at 3. He submitted evidence that Rivertown owned the airplane and a statement explaining the business purpose of the airplane. Id. at 3-4.

Plaintiff also provided a copy of Maneck's partnership agreement. Maneck Family, LLLP Agreement of Ltd. P'ship, ECF No. 15-7 at 24. That agreement stated that Plaintiff and his wife each held a one percent interest as a general partner and a 49 percent interest as a limited partner. Id. ¶ 9.1. The agreement further provided that the partnership would allocate income “in accordance with the Percentage Interests of the Partners.” Id. § 9.2. And it provided that the general partners, “in their sole and absolute discretion, ” could distribute proceeds and working capital that remained after paying the partnership's debts and liabilities to third-party creditors and partners “among the Partners in the same manner as net income and loss” as provided by the agreement. Id. ¶ 10.1(a)-(c).

In June 2019, USCIS sent Plaintiff a “Notice of Intent to Deny ” in which it again found that Plaintiff had not established that he was eligible for an EB-5 visa. Notice of Intent to Deny (June 11, 2019), ECF No. 16-4. USCIS took issue with the claimed renovations at 5700 Veterans Parkway because the evidence showed that Maneck had transferred $39, 173.99 to Smile Realty to purchase property in Opelika, Alabama-not for renovations at the 5700 Veterans Parkway property as Plaintiff had previously claimed. Id. at 6. Regarding the claimed $750, 000, USCIS noted that bank statements did show that Maneck had transferred that amount to Rivertown on October 24, 2017 “for its operational money for new offices.” Id. But the same bank statements also showed that Rivertown transferred that exact...