Judgment Sought by EB-5 Applicants Over Alabama Hospital

March 30, 2017 by Kevin S. Kim, Esq.

A federal judge was sought to vacate a decision by U.S. Homeland Security that barred six Chinese investors from participating in the EB-5 visa program after an Alabama hospital project they invested in was denied recognition as a “troubled business.” By denying them access to the visa program, the investors claim that the DHS’s decision was “arbitrary and capricious,” and asked for it to be reversed.

In the case of Gan v. U.S. Department of Homeland Security et al, the investors argued that the DHS exceeded its authority by failing to recognize the overwhelming evidence of the troubled aspect of the Crenshaw Community Hospital, and by requiring the investors to show when and how the hospital would become profitable. The investors also pointed out that they met the requirements of the EB-5 program by creating sixty-one new jobs, ten per investor, as is the requisite minimum mandated for program participation.

The EB-5 Immigrant Investor Program is a U.S. visa program created under the Immigration Act of 1990. The program requires that foreign nationals invest a minimum of $500,000 into American projects that aim to save or create a minimum of ten jobs. The program allows investors to then apply for permanent residency for themselves and their family, provided all requirements of the program are met and verified.

In a statement to the U.S. District Court for the District of Columbia, the investors said that because the hospital qualifies as a troubled business, the all-cash capital contribution by the investors allowed them to pool the total jobs saved and created and distribute them among the six investors, therefore meeting the visa requirement. Based on this assertion, the investors asked the court to grant summary judgment.

The investors filed suit in April 2015, alleging the government failed to prove the hospital did not experience “serious losses.” The investors contend that the Crenshaw Community Hospital lost more than twenty percent of its total net worth in either 2011 or 2012. The filing went on to state that the government falsely claimed that the investors did not put their 2013 investment at risk.

According to the complaint, the government felt that the hospital was not a troubled business; therefore, the purported one hundred seventeen “saved” jobs do not qualify under the EB-5 requirement to create new American jobs, rather than simply saving jobs that may be in jeopardy.

The investors are asking the D.C. federal court to reverse the DHS’s determination that the hospital was not a troubled business, and to throw out their finding that their investor capital was not at risk. The investors are also asking the court to reverse the government’s decision denying them eligibility for the EB-5 visa program.