USCIS’s definition of "capital” for EB-5 purposes excludes “assets acquired, directly or indirectly, by unlawful means (such as criminal activities)” 8 C.F.R. §204.6 (e). Specifically, 8 C.F.R. §204.6(j)(3) requires either “foreign business registration records”; corporate, partnership and personal tax returns filed within 5 years; “evidence identifying any other source of capital”; or documentation of court judgments or pending court cases. However, in practice, USCIS requests all of the listed categories of documents and, in most cases, significant additional documentation.
Thus, this is one area of the law where simply following the regulations will not be sufficient. For instance, in many cases, tax returns may not reflect a level of income commensurate with the investment being made. In these cases, substantial additional documentation will be required. It can be especially difficult in countries where full disclosure of revenues and profits on tax returns are uncommon in reality. Where tax returns are not required to be filed, this should be documented. Where tax returns are required to be filed but the individual’s tax returns show very little income, the documentation of the source of funds should provide overwhelming evidence to counter the negative implication that comes from a review of the tax returns. As with other types of cases -- L-1, for example, -- the quantity of documentation required might be greater in suspected high-fraud countries or countries for which the US has national security concerns.
The good news is that it is only necessary to prove where and how the investor obtained the $500,000 or $1,000,000 required to be invested. It is not necessary to prove where the investor obtained every dollar that he now has or ever had.
In many EB-5 cases, documenting the lawful source of funds can be the most arduous and time consuming part of the process. A good rule of thumb is that if the attorney can understand, through the documentation, where the money came from, the chances of being able to satisfy USCIS should be greatly enhanced.