08 Feb Federal Courts Side with EB-5 Investors in “Cash vs. Indebtedness” Debate
Washington, D.C. – February 8, 2019: Federal Courts Side with EB-5 Investors in “Cash vs. Indebtedness” Debate
In a January 31, 2019 ruling, the U.S. District Court for the District of Columbia determined that EB-5 investors can use loan proceeds from co-owned real estate as “cash” investments. This overruled the U.S. Citizenship and Immigration Services’ (USCIS) characterization of certain property loan proceeds as “indebtedness” which is subject to stricter requirements.
For years, the USCIS has challenged EB-5 cases where the funds came from a property loan – especially one where the property was not 100% owned by the Investor or a donor. This focus on 100% ownership led to counterintuitive situations, such as where an Investor owning part of the collateral was considered to be less valid than an Investor owning none of the collateral at all.
January’s ruling comes shortly after a November 30, 2018 federal court approved an EB-5 class action lawsuit, which also challenged USCIS’ denials based on cash vs. indebtedness.
I.A. Donoso & Associates, LLC, is a law firm based in Washington, D.C., and is recognized as a leading immigration law firm with recognized expertise in visas for EB-5 investors, professionals and academics. The firm prevailed on its first “indebtedness” challenge to an I-526 petition in April 2015.