Last But Not Least Discussion on Recent AAO Regional Center Dismissals

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1. Last But Not Least Discussion On Recent AAO Regional Center Dismissals By Joseph P. Whalen (September 14, 2012)In this third and final installment, I will offer some…
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  • 1. Last But Not Least Discussion On Recent AAO Regional Center Dismissals By Joseph P. Whalen (September 14, 2012)In this third and final installment, I will offer some observations on the AAO non-precedent Regional Center Appeal Dismissal of November 10, 2010. This caseoffers an opportunity to first discuss economic analysis, misinterpretation of data,and extremely poor math skills by a non-economist who seems to have no sense.As an added bonus we can see some prohibited concepts and language in a LimitedPartnership Agreement. Let’s get started, we’re in for a bumpy ride.I’ve said it before and I’ll say again, it scares me to see such clueless people tryingto get into EB-5. There is actually someone out there that believed that it ishumanly possible for one person to work 167 hours per week. Do the math! 24 hours per day x 7 days per week 168 hours per week - 167 hours per week 1 hour per week of rest (time off) = 60 minutes ÷7 days = 8.571...That means this worker is allowed approximately 8 ½ minutes of rest per day!I am not kidding, someone really put forth the notion that one person could work167 hours per week and then based all their staffing requirements and jobprojections for a hypothetical motel on that bizarre premise! “Garbage in, garbageout” was never this easy to illustrate before this decision hit the USCIS website! “As an example, the analysis examines a proposed 65 room motel project. The size of the projected hotel is 43,968 square feet. Using the same DOE table referenced above, the analysis states: [T]he mean square feet per worker for lodging is 2,074. This means that the 43,968 square foot motel would support 21.2 direct employees each of whom work an average of 167 hours per week. Rather than one employee working an average of 167 hours per week, it is more realistic to have 4.8 (= 167/35) employees each of whom works 35 hours per week. Thus, the total number of direct employees that would be needed for the motel are 101.8 (= 21.2 x 4.8).” Page 1 of 3
  • 2. The non-economist who came up with these numbers pulled them off a table foundon the internet. Remembering that this decision is dated November 10, 2010, andgenerously assuming that it was prepared over one year prior that would mean thatthe “data” used as “input” was “found” in early 2009. The kicker is that the tablethat the misinterpreted numbers were pulled from is dated as of 2003. So, it wasover five (perhaps closer to six) years out of date in 2009.Having now seen the level of “quality” that USCIS was deluged with, maybe theEB-5 Stakeholder Community should cut them some slack. Does anyone want todefend this attempt to obtain Regional Center Designation? Is anyone willing topublicly take ownership of the Proposal upon which this particular AAO Decisionis based? I didn’t think so!Wait, it gets better, or worse, depending on if you are getting a laugh out of this ornot. This math wizard and frightful philosopher misconstrued several differentpieces of “data” that were pulled from the table (s)he found on the internet. AAOtried to explain what the table really indicated. Here is merely one small excerptfrom AAO on this topic. The title of the table references hours of operation and the table itself references mean hours per week. Thus, the mean hours per week must refer to the hours of operation rather than the mean number of hours per employee. Given that there are only 168 hours in a week, it cannot be concluded that the table demonstrates that the mean hours per week per employee is 167. Nothing on the table suggests that the square footage per worker represents square footage per worker during a given shift only rather than as a function of total employment.And now for something completely different, a man with three buttocks! {I am aMonty Python fan and any others out there will hopefully, “Get it”.}Seriously, let’s now turn to the added bonus of the “terms that raise concern” in theLimited Partnership Agreement. What could possibly be wrong with that? Beyond the decision of the director, the proposed limited partnership agreement has terms that raise concerns. First, the capital contributions section, 3(b), provides that limited partners may contribute "services." The regulation at 8 C.F.R. § 204.6(e) defines capital as "cash, equipment, inventory, other tangible property, cash equivalents" and certain indebtedness. The regulation at 8 C.F.R. § 204.6(j)(2) does not allow qualifying investor pursuant to section 203(b )(5) of the Act to establish an investment through the contribution of services. Page 2 of 3
  • 3. In addition, the full amount of the requisite investment must be made available to the business most closely responsible for creating the employment upon which the petition is based. Matter of Izummi,22 I&N Dec. 169, 179 (Commr. 1998). Section 3(c) of the limited partnership agreement allows any amounts "not required for purposes of its business, including reasonable reserves for contingencies" to be distributed. Section 5(b) provides for the distribution of funds unrelated to profits, which are discussed in section 5(c). These sections, which provide for distributions of funds above and beyond profits, raise concerns that the investors may not be placing the full investment amount at risk.For those who are still not clear on the basics, I will spell out a couple of keypoints.  The Regional Center exists ONLY within the Pilot Program.  The Pilot Program permits Regional Centers to exist for the purpose of concentrating pooled investments in larger projects.  Those pooled investments are meant to include a mix of domestic or other non-EB-5 funds (even institutional investors) funds, as well as EB-5 alien investors’ funds.  IF, and that is only IF, any “reserves” or “cash on hand” were needed, they should come out of the non-EB-5 investors’ share BECAUSE the non-EB-5 investors are NOT under a legal obligation to make a truly “at risk” investment of a statutorily prescribed minimum amount in exchange for an Immigrant Visa.  ALL jobs created by the WHOLE Project are freely available for allocation to the EB-5 investors alone BECAUSE the non-EB-5 investors don’t need them for purposes of lifting conditions from status; and probably couldn’t care less about them even if they tried.That’s my two-cents, for now.e-mail me at: joseph.whalen774@gmail.com Page 3 of 3
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