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EB-5 Loans: Zhang v. USCIS et al.November 2, 2020

On October 27, 2020, the United States Court of Appeals for the District of Columbia upheld the lower court’s ruling in Zhang v. USCIS, et al from November 2018, ruling that loan proceeds constitute “capital” under the EB-5 Program’s requirements, even if the loan proceeds were not secured by the petitioner’s own assets.

Writing for a unanimous panel, Judge Gregory G. Katsas sided with the plaintiffs, Huashan Zhang and Masayuki Hagiwara, who challenged the USCIS’ interpretation of qualified capital under EB-5 law.

The plaintiffs obtained the proceeds for their investments through loans and then invested the cash proceeds of those loans into new commercial enterprises.  However, neither of the loans was secured by the plaintiff’s personal assets. Each of the plaintiffs had filed a petition applying for an EB-5 visa under the EB-5 Program, but had their petitions denied by the USCIS because under the USCIS’ interpretation of capital, these proceeds were not cash but rather indebtedness which did not constitute “capital” as required by EB-5 law.

The court disagreed with the USCIS’ interpretation of capital, holding that cash secured through a loan, which is later invested into a new commercial enterprise, is cash and not indebtedness under EB-5 law, meaning that the plaintiffs’ petitions should not have been denied.

When the trial court’s ruling was released in late 2018, CMB Regional Centers had notified each of its limited partners that may have been affected by the court’s decision and suggested that they discuss the implications with their immigration counsel.   CMB is continuing to monitor the developments in this case and will provide further updates as the matter progresses.


About CMB EB-5 Regional Centers

With 23 years of experience, CMB is one of the oldest active regional center operators in the EB-5 industry. CMB represents over 5,700 investor families from 102 countries.

CMB has helped over 1,400 families achieve I-829 petition approval or permanent green card to permanently live and work in the United States and has returned capital to over 1,700 investors. Few EB-5 regional centers have come close to achieving this level of success for their EB-5 investors.

CMB engages Prevail Capital, LLC, a broker-dealer registered with the SEC and a member of FINRA and SIPC, to be the administrative placement agent for all CMB EB-5 partnerships. If you would like to learn more about the EB-5 Investor Visa Program, please contact CMB Today.
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