EB-5 Investors Must Document the Complete Path of Their Investment Funds:
One of the most important requirements in an EB-5 immigrant investor petition is proving the lawful source and path of the investment capital.
A March 4, 2025 decision from the USCIS Administrative Appeals Office (AAO) demonstrates how demanding this requirement can be. The case also provides an important warning for investors who previously obtained an E-2 visa and later seek permanent residence through the EB-5 program.
Practical Lesson: EB-5 Source of Funds Requires a Chain of Evidence
The strongest takeaway from this decision is simple:
EB-5 source-of-funds documentation requires a chain of evidence, not merely proof that money or assets existed.
For example, if an investor claims that $500,000 came from accumulated business income, it may not be enough to provide tax returns showing that the investor earned substantial income and then provide a later bank statement showing $500,000 being transferred.
The evidence should connect the entire path:
lawful income → investor/business ownership → accumulation of funds → bank account → intermediate transfers, if any → EB-5 investment
Any unexplained gap in that chain can create a source-of-funds problem.
Similarly, when investment capital consists of inventory, equipment, or other property rather than cash, the investor should be prepared to establish:
- ownership of the property;
- how and when the property was acquired;
- the lawful source of the money used to acquire it;
- the identity of the specific assets;
- the value and fair market value of the assets; and
- the actual transfer of those assets into the new commercial enterprise.
Simply demonstrating that an investor or a related company previously possessed valuable assets may not be sufficient.
The EB-5 Case
In Re: 33767857, decided March 4, 2025, the petitioner sought EB-5 immigrant investor classification through Form I-526.
The petitioner claimed that she had invested more than $1 million in a new commercial enterprise in Florida. Her claimed investment included cash, checks, and approximately $890,000 in inventory transferred from another business.
USCIS denied the petition, finding problems with the amount of qualifying investment, the lawful source of the investment capital, and the job-creation requirement. On appeal, the AAO dismissed the case.
Bank Statements Alone Did Not Prove the Lawful Source of Funds
The petitioner claimed that approximately $52,779 in cash and $80,000 in checks came from personal savings accumulated through employment and business income.
She submitted some tax returns and bank records. However, the AAO found that the evidence did not sufficiently demonstrate how the income was accumulated, maintained, and ultimately transferred into the EB-5 business.
Significantly, some bank deposits appeared shortly before transfers were made, but the records did not adequately identify the source of those deposits.
The AAO relied on established EB-5 decisions, including Matter of Ho and Matter of Izummi, for the principle that merely showing deposits into the new commercial enterprise does not establish a lawful source of funds.
The investor must be able to trace the path of the investment back to its lawful source.
This distinction is critical.
A bank statement can establish that money was in an account. It does not necessarily establish where that money came from.
The $890,000 Inventory Investment Was Also Insufficiently Documented
A substantial portion of the petitioner’s claimed EB-5 investment consisted of approximately $890,000 in inventory.
The petitioner submitted an inventory table listing 97 items with a claimed total value of approximately $890,000. She also provided substantial supporting documentation, including sales invoices and bills of lading concerning merchandise purchased and shipped from India.
The problem was not simply whether the earlier business had engaged in legitimate commercial activity.
The problem was connecting those historical transactions to the specific inventory claimed as the EB-5 investment.
The AAO found insufficient evidence demonstrating that the goods purchased years earlier were preserved and later transferred to the new commercial enterprise as the petitioner’s EB-5 investment. The evidence also did not adequately establish the identity, ownership, purchase cost, and fair market valuation of the assets claimed as investment capital.
The decision emphasizes an important evidentiary principle: under the preponderance of the evidence standard, the amount of documentation is not necessarily decisive. The quality and connection of the evidence matter.
Your Company’s Money Is Not Automatically Your Money
Another important lesson from this EB-5 decision concerns investors who own businesses.
The petitioner relied in part on assets and financial information associated with companies in which she held ownership interests.
The AAO emphasized that a corporation and its shareholder are separate legal entities.
Therefore:
A company’s bank account is not automatically the investor’s personal bank account, and company inventory is not automatically the investor’s personal property.
An investor who wants to use funds or property originating from a corporation may need to document how those assets lawfully moved from the corporation to the individual investor and then into the EB-5 enterprise.
The AAO found that the financial condition of a corporation, money held in its accounts, or inventory owned by it could not simply be treated as the petitioner’s personal investment capital.
An Approved E-2 Visa Does Not Prove EB-5 Source of Funds
This may be one of the most important aspects of the decision for investors considering moving from E-2 to EB-5.
The petitioner argued that much of her evidence had previously formed the basis of an approved E-2 nonimmigrant visa. She argued that the prior U.S. government approval supported her position that the investment funds came from a lawful source.
The AAO rejected this argument.
The AAO explained that E-2 nonimmigrant classification and EB-5 immigrant classification have different statutory and evidentiary requirements.
Therefore, approval of an E-2 case does not establish that an investor has satisfied the EB-5 requirements.
USCIS must evaluate the EB-5 petition independently based on the evidence submitted and the requirements applicable to EB-5 classification.
Moving From E-2 to EB-5? Review Your Source of Funds Again
An investor should therefore not assume:
“USCIS accepted my investment for E-2, so my source of funds is already proven for EB-5.”
That assumption can be dangerous.
Before pursuing EB-5, an E-2 investor should carefully review whether the evidence can establish the complete lawful source and path of the EB-5 capital under EB-5 standards.
Historical bank statements, tax returns, business records, corporate ownership documents, loan documents, property-sale records, gift documentation, inheritance records, foreign exchange records, and transfer documentation may become important depending on how the investment was funded.
The Investor Bears the Burden of Proof
The petitioner also argued that lengthy USCIS processing made older documents increasingly difficult to obtain because banks and businesses may close or dispose of historical records.
The AAO nevertheless emphasized that the burden remained on the petitioner to establish eligibility for the immigration benefit sought and to demonstrate that the capital belonged to the investor and was obtained through lawful means.
This makes early source-of-funds planning particularly important.
Investors should consider collecting and preserving supporting financial documentation before records become difficult or impossible to obtain.
Why the EB-5 Appeal Was Dismissed
Ultimately, the AAO concluded that the petitioner had not adequately established the lawful source of her investment funds and had not demonstrated that she had invested, or was actively in the process of investing, the required amount of qualifying capital.
Because those findings were sufficient to resolve the appeal, the AAO did not need to decide the remaining issues concerning the claimed goodwill investment and job creation.
The appeal was dismissed.
What EB-5 Investors Can Learn From This Decision
The central lesson is not simply that an investor must prove that they have money.
They must prove:
Where did the money come from?
Who legally owned it?
How was it earned or acquired?
Where was it held?
How did it move from its original lawful source to the investor?
How did it ultimately reach the EB-5 enterprise?
For non-cash investments, additional questions arise concerning ownership, valuation, acquisition, and transfer of the assets.
A strong EB-5 source-of-funds submission should therefore tell a coherent financial story and support each significant step in that story with reliable documentation.
Considering an EB-5 Investment?
EB-5 petitions can involve complicated source-of-funds and path-of-funds issues, particularly where the investment originates from business income, corporate assets, property sales, gifts, loans, foreign accounts, or assets accumulated over many years.
Investors who previously obtained an E-2 visa should also understand that their previous E-2 approval does not automatically establish eligibility for EB-5.
Contact YA Law Corporation to discuss your U.S. immigration options and the documentation required for an EB-5 investor petition.