United States District Court, W.D. Washington, Seattle
ORDER RE: MOTIONS FOR SUMMARY JUDGMENT
RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE
matter comes before the Court on the parties' Cross
Motions for Summary Judgment. Dkts. #49 and #53. Plaintiffs
in this case are 157 individuals seeking to immigrate to this
country under the EB-5 Visa Program; Defendants are those
government agencies and individuals who issued decisions that
have interfered with Plaintiffs' visa applications.
Plaintiffs filed this action challenging those decisions as
arbitrary and capricious under the Administrative Procedures
Act (“APA”). For the reasons stated below, the
Court GRANTS Plaintiffs' Motion and DENIES
Statutory Background on the EB-5 Visa
1990, Congress amended the Immigration and Nationality Act to
provide for classification of “employment creation
immigrants who invest capital in new commercial enterprises
in the United States that create full-time employment of
United States workers” (referred to as the “EB-5
program”). See Immigration Act of 1990, Pub.
L. No. 101-649, § 121(a) (Nov. 29, 1990) (codified at 8
U.S.C. § 1153(b)(5)). The amount of investment required
was originally set at $1, 000, 000, but foreign nationals may
qualify by investing at least $500, 000 in a “targeted
employment area.” 8 U.S.C. §§
1153(b)(5)(B)(ii), (C); 8 C.F.R. § 204.6(f). The
investment must “create fulltime employment for not
fewer than [ten] 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)(ii). If USCIS determines that a
foreign national's investment qualifies under the
employment creation program, the agency may then grant
permanent resident status to the qualifying foreign national
for a conditional two-year period. See 8 U.S.C.
1992, Congress further expanded this program by establishing
the regional center pilot program, which authorized
“regional center[s] in the United States … for
the promotion of economic growth, including increased export
sales, improved regional productivity, job creation, or
increased domestic capital investment.” See
Departments of State, Justice, and Commerce, the Judiciary
and Related Agencies Appropriations Act of 1992, Pub. L. No.
102-395, § 610(a) (Oct. 6, 1992) (8 U.S.C. § 1153).
This program allows economic entities to seek regional center
status with USCIS for the purpose of soliciting and pooling
funds from foreign national investors and other private or
public investors, to fund development projects in targeted
employment areas. See 58 Fed. Reg. 44, 606; 44, 608
(former Immigration and Naturalization Service
(“INS”)) (Aug. 24, 1993).
prospective EB-5 foreign national investor starts the process
by filing a Form I-526 with USCIS (“I-526
petition” or “EB-5 petition”). 8 C.F.R.
§ 204.6(a), (c). This petition must include evidence
that the petitioner has invested or is actively in the
process of investing “lawfully obtained capital in a
new commercial enterprise in the United States which will
create full time positions for not fewer than [ten]
qualifying employees.” 8 C.F.R. § 204.6(j).
Petitioners who invest in a new commercial enterprise
associated with an approved regional center still are
required to demonstrate that their investment will result in
the creation of at least ten full time positions, but they
may rely on indirect job creation. See 8 C.F.R.
§ 204.6(m)(7). Indirect jobs are those that are held
outside of the new commercial enterprise, but which are
created as a result of the petitioner's investment into
the new commercial enterprise. 8 C.F.R. §§
204.6(j)(4)(iii), (m)(3), (m)(7).
petitioners must demonstrate their eligibility throughout
adjudication. 8 C.F.R. § 103.2(b)(1). An I-526 petition
will not be approved if, after filing, the petitioner becomes
ineligible under a new set of facts or circumstances. See
Matter of Izummi, 22 I. & N. Dec. 169, 176 (Assoc.
Comm. 1998). USCIS may deny the petition if, inter
alia, an EB-5 investor fails to demonstrate that that
they have “placed the required amount of capital at
risk for the purpose of generating a return on the capital
placed at risk.” 8 C.F.R. § 204.6(j)(2). If the
regional center does not submit certain required information,
or the agency determines that it no longer serves the
purposes of the EB-5 program, USCIS may terminate the
regional center's designation. 8 C.F.R. §
204.6(m)(6)(ii). USCIS's termination of a regional
center's status results in the loss of EB-5 visas for the
foreign national investors associated with the terminated
to termination, USCIS will issue a “Notice of Intent to
Terminate” and give the regional center thirty days to
submit a response. 8 C.F.R. §§
204.6(m)(6)(iii)-(iv). After a termination, the applicant may
appeal to USCIS's Administrative Appeals Office
(“AAO”). See 8 C.F.R. §
204.6(m)(6)(v). If the AAO dismisses the appeal, the
applicant may file a motion to reopen and reconsider the
AAO's decision. See 8 C.F.R. § 103.5(a).
Nature of the Investment at Issue
case involves 157 EB-5 investors who contributed $78.5
million to build a mixed-use tower in downtown Seattle. These
investors made their individual $500, 000 capital
contributions through a regional center called Path America
KingCo, LLC (“Path America KingCo”).
SEC Complaint against Path America
August 24, 2015, the SEC filed a complaint in this district
court against Path America, several related entities, and
Path America's principal, Lobsang Dargey. See
Path America, No. 2:15-cv-1350. The SEC alleged defendants
sold securities to finance several specific real estate
development projects, but that Mr. Dargey then
misappropriated or diverted millions of dollars in investor
funds for other real estate projects or his personal use.
Id. In a September 2015 filing, the SEC argued that
Mr. Dargey's fraud had seriously jeopardized the Tower
Project. Id. In October 2015, the district court
froze the assets of Path America KingCo and its related
entities and appointed a receiver to manage those assets.
months later, on December 24, 2015, USCIS issued a Notice of
Intent to Terminate Path America KingCo's regional center
designation. Dkt. #40 (Certified Administrative Record,
herein “A.R.”), 3384-98. In the Notice, USCIS
discussed the district court's temporary restraining
order, asset freeze, preliminary injunction, and the
appointment of a receiver to manage Path America KingCo
following Mr. Dargey's diversion of investor funds for
personal use or other real estate projects. A.R. at 3384-98.
USCIS stated that all of this supported the conclusion that
Path America KingCo failed to fulfill its management
responsibilities as detailed in its regional center
designation approval letter. Id. The agency also
concluded that all of this indicated that Path America KingCo
no longer served the purpose of promoting economic growth.
Path America KingCo responded to the Notice on January 20,
2016. A.R. 3470-77.
March 23, 2016, USCIS terminated Path America KingCo's
regional center designation. A.R. 3479-3502. USCIS determined
that Path America KingCo (1) was no longer serving the
purpose of promoting economic growth, (2) had diverted funds
from job creating purposes, and (3) had not met the
monitoring and oversight responsibilities set forth in its
designation letter. Id. The agency also concluded