1800 REPUBLIC CENTRE 633 CHESTNUT STREET CHATTANOOGA, TENNESSEE 37450 PHONE: 423.756.2010 FAX: 423.756.3447 www.bakerdonelson.com ROBERT C. DIVINE Direct Dial: (423) 752-4416 Direct Fax: (423) 752-9533 E-Mail Address:rdivine@bakerdonelson.com U.S. Citizenship and Immigration Services Immigrant Investor Program 20 Massachusetts Ave., N.W. Mailstop 22355 Washington, DC 20529 October 29, 2015 Re: Response to Notice of Intent to Terminate Regional Center File No. 1031910140 South Dakota Regional Center Dear Officer: Enclosed please find the response to the above-referenced NOIT issued by your office on September 28, 2015. The primary document is a response letter from Aaron Scheibe, on behalf of the South Dakota Regional Center, which describes the persistent and ongoing efforts of the South Dakota Regional Center, operated by the State of South Dakota through its Governor s Office of Economic Development ( GOED ), to resolve alleged wrongdoing by SDRC, Inc., a private corporation that administered the regional center under contract with the State until GOED terminated the contract for cause in 2013. Since that time, GOED has made efforts to address issues in the regional center s administration and demonstrate it is still capable of responsibly promoting economic growth through the EB-5 program. The letter refers to a significant number of exhibits that supports GOED s position, including the agreement between GOED and SDRC, Inc., the notice of termination of the contract by GOED from September 2013, summons and complaints evidencing litigation initiated by GOED against SDRC, Inc., demand letters from GOED to SDRC, Inc. and to H & H law firm, and screenshots from GOED s website showing it makes no reference to a relationship with or endorsement of SDRC, Inc. These exhibits (labeled A through L) are attached according to the List of Exhibits following Mr. Scheibe s letter. The NOIT encompasses an extraordinary volume of factually specific and historic information. It is clear that the regional center has been the subject of an ongoing investigation spanning over five years based on requests for financial transactions from 2010 (e.g., p. 9 inquiring as to a promissory note signed on October 10, 2010 for one of the JCEs; p. 18 challenging a signature on a subscription agreement on or around August 20, 2010). GOED understands its role in managing the regional center and complying with the oversight and reporting requirements for its sponsored projects as required under 8 C.F.R. ALABAMA FLORIDA GEORGIA LOUISIANA MISSISSIPPI TENNESSEE TEXAS WASHINGTON, D.C.
Reponse to NOIT Page 2 204.6(m). It has continued to take steps to obtain control of documents and information necessary to take any necessary remedial measures from prior annual filings and to appropriately monitor projects going forward. Many of the challenged items in the NOIT are specific to a particular NCE or JCE, or investors filings, and would seem most efficiently resolved through the typical Request For Evidence issued to the I-526 or I-829 petitioner rather than a full-scale termination of the entire Regional Center that is not itself manager or general partner of the entities. It would be impossible to make a perfect and complete response to this NOIT in the 30- day response time allotted, but the GOED has addressed all issues in the NOIT with the information available to it and is aggressively pursuing channels to uncover and analyze the information to which it currently lacks access. The NOIT is the first notice from USCIS of the apparent deficiencies of the regional center s required reports. USCIS should first give a regional center notice of errors with an opportunity to correct and clarify the reports without the immediate threat of termination. Without adequate time to obtain records, research the correct information, and prepare a response, due process issues can arise. See Mathews v. Eldridge. 424 U.S. 319 (1976) (due process in administrative proceedings requires consideration of the risk of deprivation caused by the procedures used); 5 U.S.C. 554 ( [t]he agency shall give all interested parties opportunity for the submission and consideration of facts, arguments... when time, the nature of the proceeding, and the public interest permit ). These issues include those of fundamental fairness, given the significant ramifications of termination for regional center investors and the State of South Dakota. See Rodriguez v. Holder, 544 F. App x 335, 338 (5th Cir. 2013) (suggesting that fundamental fairness issues may arise when there is an inadequate opportunity to prepare [a] case and present available arguments ). Especially given the volume of the allegations, GOED should get more time than is allowed by the 30-day NOIT process to obtain the relevant records, research the correct information, and amend the forms. To terminate GOED s designation now would constitute punishment of the victims of SDRC, Inc. s alleged mismanagement, including innocent investors. Such action by USCIS could result in unfair denial of all the immigration benefits of all investors sponsored by the center. Furthermore, terminating GOED s designation would not further the goals of the program to foster national economic growth. The regional center has shown that it fosters national economic growth. It has sponsored a significant number of NCEs that placed capital with many JCEs that have had more than 1,000 investors causing the creation of thousands of jobs in the state. The FY2014 filing showed approval of 16 I-829 petitions by USCIS and 160 jobs created. The FY2013 filing showed that 172 I-829s were approved, for a total of 1,726 jobs. In addition to GOED s response to the NOIT, we are including information provided by SDRC, Inc. (marked as Attachment 1"). We received this information yesterday afternoon (October 28). Due to GOED s limited access to full information (the subject of litigation), neither GOED nor the undersigned counsel is in a position to meaningfully review or assess the accuracy or validity of the contents. This information, which because of the limitations noted above and those imposed by the USCIS deadline is not endorsed by GOED in its separate response, is provided to supplement the case record with no assurance or verification. At this point in time, SDRC, Inc. has access to the most information available to best address the
Reponse to NOIT Page 3 numerous project-specific, entity, investor, and financial fact allegations in the NOIT. The undersigned offers the statement of SDRC, Inc. into the record in the interest of efficiency and full transparency in order to facilitate USCIS understanding of SDRC s version of events in the NOIT, many of which stem from SDRC s self-appointed role as manager or general partner of the NCEs, not from GOED s administration of the regional center. We trust that these materials, combined with those materials already on file regarding the Regional Center, will overcome USCIS challenge that the regional center no longer serves the purpose of promoting economic growth and support the South Dakota Regional Center s continued eligibility as a designated regional center under the EB-5 Program. Respectfully, Robert C. Divine
Exhibit A December 2009 consulting contract between GOED and SDRC, Inc.
Exhibit B GOED September 2013 letter terminating contract with SDRC, Inc.
Exhibit C Summons and Complaint, January 2015; GOED October 2015 letter demanding answer
Exhibit D GOED negotiation termination letter, October 2015
Exhibit E Summons and Complaint October 2015
Exhibit F Correspondence from GOED asking SDRC, Inc. to cease representing itself as having any ongoing responsibility for the South Dakota Regional Center
Exhibit G GOED October 2015 Letter to SDRC, Inc.; SDRC, Inc. s response; GOED reply
Exhibit H Screenshots from SDRC, Inc. s website
Exhibit H Screenshot www.sdrc-eb5.com (accessed 10/16/2015)
Exhibit H Screenshot www.sdrc-eb5.com (accessed 10/26/2015)
Exhibit H Screenshot www.sdrc-eb5.com (accessed 10/19/2015)
Exhibit H Screenshot www.sdrc-eb5.com (accessed 10/26/2015)
Exhibit I Communications between GOED and H & H law firm, formerly Hanul Professional Law Corp., regarding access to investors files.
Exhibit J GOED January 2015 letter to USCIS
Exhibit K USCIS March 2015 response letter
U.S. Citizenship and Immigration Services Immigrant Investor Program Office Washington, DC 20529 SENT VIA U.S. MAIL AND EMAIL TO AARON.SCHEIBE@STATE.SD.US March 4, 2015 Mr. Aaron P. Scheibe Deputy Commissioner Governor s Office of Economic Development Director, South Dakota Regional Center 711 East Wells Avenue Pierre, SD 57501 Dear Mr. Scheibe: We have received your letter dated January 22, 2015 relating to pending I-526 and I-829 petitions affiliated with the South Dakota Regional Center. Our office has also received the attachment to your letter, Exhibit A containing the names, receipt numbers and priority dates of certain petitioners. Thank you for your letter and attachment and for expressing your concerns. Although various legal restrictions, including the Privacy Act and DHS policy requirements regarding the disclosure of information, prevent us from responding to you with regard to any specific petitions, we can confirm that at least a portion of these petitions are actively being reviewed by a USCIS officer. Petitioners may check the status of a pending Form I-526 at any time through My Case Status (https://egov.uscis.gov/casestatus/landing.do). In addition, individuals who have filed petitions and would like to request expedited processing may submit a request for expedite processing and provide supporting evidence. All expedite requests are reviewed on a case-by-case basis, and are granted at the discretion of the Director. The burden is on the applicant or petitioner to demonstrate that one or more of the expedite criteria have been met. Please see the USCIS Expedite Criteria page (http://www.uscis.gov/forms/expeditecriteria) for additional information. While our processing times of certain cases are currently beyond what we would like, USCIS has taken steps to increase capacity and is striving to ensure our commitment to our customers is being met. Our goal at USCIS is to administer the Immigrant Investor Program in a fair and efficient manner that maintains the integrity of the program, and thus realize Congress s intent to promote the immigration of people who invest their capital in new commercial enterprises that create or preserve jobs in the United States. Thank you again for your letter and for your interest in the Immigrant Investor Program. Sincerely, Nicholas Colucci Chief, Immigrant Investor Program
Exhibit L Screenshot from GOED s website
Exhibit K Screenshot www.sdreadytowork.com (accessed 10/26/2015)