WAC-00-004-52478 (April 13, 2001) (Full text [777kb, PDF] | Summary)
WAC-98-231-54300 (AAO, March 30, 2001) (Full text [1.4mb, PDF] | Summary)
WAC-99-109-52543 (AAO, March 22, 2001) (Full text  [1.5mb, PDF] | Summary)

Failure to Demonstrate Proper 
Origin of Funds Leads to Denial
Surf Beach, WAC 00 004 52478 (AAO, April 13, 2001)

Petitioner filed an I-526 petition at the INS California Service Center (CSC) based on an investment to develop, construct, and operate Surf Beach Hotel. The CSC denied the petition. INS's Administrative Appeals Office (AAO) affirmed the denial based on the petitioner's failure to show capital at risk or a lawful source of funds.

The CSC Director had stated that cancelled checks do not prove payments have been made; the AAO disagreed. The AAO found that Petitioner demonstrated his investment of $1 million. However, the maximum expenditures in the record were not clearly attributed to petitioner's funds and they accounted for less than one third of the total capital investment. The AAO concluded that Petitioner failed at the time of filing to show that the full $1 million was at risk or that it was reasonable to expect he would be able to complete the project.

Citing Matter of Izumi and Matter of Ho, the AAO held that Petitioner must document the path of funds. He cannot establish the lawful source merely by submitting bank letters or statements documenting the deposit of funds. The AAO concluded that Petitioner failed to establish his claim that the funds originated from the sale of his property in China.

Improper Filing Scrubs
Investment in Car Wash
Ming Ming Investment, Inc., WAC 98 231 54300 
(AAO, March 30, 2001)

Petitioner filed an I-526 petition based on an investment in Ming Ming International, Inc. (MMII), a company that operates a car wash in Azusa, CA. The CSC denied the petition. 

The AAO affirmed the denial, holding that Petitioner failed: (1) to show the path of his personal funds and an at-risk investment in the reconstruction of the commercial enterprise; (2) to show an adequate business plan that MMII would create additional 30 new jobs to support three alien entrepreneurs; (3) to show that the business reorganization had already taken place before the date of filing; and (4) to properly file the petition with signature of the petitioner/investor.

Petitioner failed to demonstrate $438,000 of investment of capital he claims were paid for shares purchased. Citing Matter of Ho, AAO found inconsistencies in the record, together with Petitioner's failure to submit audited financial statements and income statements for MMII, requested by the CSC. Instead, the petitioner submitted only unaudited financial statements and a corporate tax return containing inconsistencies. Moreover, records in the stock ledger did not considerably indicate $438,000 of claimed paid-in capital. 

Petitioner submitted a certificate evidencing he had a balance of $520,000 in a Chinese bank account. The AAO held, however, that there was insufficient evidence to show that the income was earned within five years from the date of filing the petition, or that Petitioner worked in a certain occupation through which he accumulated the capital over time. Nor, it held, was there evidence of the path of the funds. 

The AAO agreed with CSC that the business plan failed to show that the new enterprise would create 30 new full-time jobs to enable three investors to qualify for EB-5 status. The petitioner failed to demonstrate the number of employees that were employed before the purchase of the business. Also, Forms I-9 and Forms 941-Employers Quarterly Federal Tax Returns-were not sufficient enough to indicate whether the new 30 employees all worked at one time.

Petitioner claimed to have created a new commercial enterprise by reorganizing a preexisting business. However, without balance sheets for the employment-creating business before and after the sale or payroll documentation before and after the sale, the AAO concluded that Petitioner failed to demonstrate it expanded the net worth of or employment at the business by 40 percent. Thus, it held, Petitioner failed to show a new commercial enterprise was created. 
Finally, the petition was signed and filed by the president of the company, not the alien investor. The AAO held that it could not approve a petition for classification as an alien entrepreneur when it was not filed properly by the alien on his own behalf. 

EB-5 Petitioner Unable 
To Debug Investment in Cyber Café 
CNC and CyberSurf Café Ride, WAC 99 109 52543 (AAO, March 22, 2001)

Petitioner filed an I-526 petition based on an investment in a cyber café in Hawaii. The CSC had denied the petition for failing to prove that: (1) the investment qualified for reduced investment in a targeted employment area; (2) requisite capital was at risk; and (3) the petitioner's funds were lawfully obtained.

The AAO added more reasons for denying the petition, including: an insufficient minimum investment; investment of capital not at risk; insufficient management; insufficient source of funds; no establishment of a new commercial enterprise; and no business plan to demonstrate employment requirements or timetable for hiring new staff.

The CSC found Petitioner failed to establish lawful source and path of funds because he did not submit evidence of his assets or of his income for the past five years. On appeal, Petitioner submitted U.S. bank statements and foreign language tax documentation for 1995 through 1998, but did not include English certified translations. The AAO found, however, that the untranslated documents failed to constitute evidence.

On the employment creation issue, Petitioner claimed to have six employees but did not submit quarterly wages, withholding reports, or payroll records. Petitioner submitted eight I-9 forms indicating CNC as the employer. The remaining I-9 forms indicated CyberSurf Café Ride as the employer. Citing Matter of Ho, the AAO found Petitioner did not satisfy the employment creation requirement because he failed to show the required full-time employees or submit a comprehensive business plan.