D.C. Judge Rules Loan Proceeds Are Cash In Wang Case


Posted on 02/11/2019 by Mark A. Ivener, A Law Corporation

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U.S District Judge Trevor N. McFadden declared that a Chinese citizen’s investment of loan proceeds in the U.S. holds up as a cash investment and can be used to qualify her for for the EB-5 program. This determination was a direct rejection of the stance held by USCIS that loan money should be considered debt as opposed to cash, but fell closely in line with the ruling from a similar lawsuit, Zhang vs. USCIS, which also hinged on the interpretation of what can be defined as “cash”.  

Siqing Wang, a graduate student and Chinese citizen, was initially approved for the EB-5 visa after investing $500,000 into the renovation of a historic New Orleans hotel. The $500,000 came from loan proceeds, which were secured by property owned jointly by Wang and her father. Her father’s share in the loan proceeds were gifted to Wang so that she was able to take full ownership of the $500,000.

Two months after her approval, however, Wang received a notice to revoke from USCIS claiming her investment, because it came from a loan, counted as indebtedness rather than cash.

Wang proceeded to sue the government in Washington D.C. federal court in October of 2016. The filings of the summary judgement completed in June of 2018 are still not publicly available.

U.S. District Judge Trevor N. McFadden ruled on January 31 that the court was not obligated to defer to USCIS’ interpretation of EB-5 regulations, and that the loan proceeds Ms. Wang had invested should be defined as cash. Stating that “cash – even if obtained through a loan – is still cash,” the judge sent Ms. Wang’s case back to USCIS for reconsideration. He continued, saying the USCIS regulation briefing “appears to be nothing more than an agency’s convenient litigating position.”

This is the second time in recent months that we have seen a Federal judge rule that cash obtained through third party loans could be used in an EB-5 eligible investment. This is an interesting development as it gives new clarity on this particular issue, and may clear a path for some potential EB-5 investors to obtain the cash necessary for the program.

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