At Klasko Immigration Law Partners, we are proud to announce a significant victory for our client, a Korean investor whose EB-5 petition was initially denied due to questions surrounding the source of her investment funds. The decision, recently sustained by the Administrative Appeals Office (AAO), is not only a triumph for our client but also for Korean investors navigating the complexities of U.S. immigration law, particularly those using Jeonse in EB-5 investment cases.
The Challenge: Proving Lawful Source of Funds
USCIS questioned the Korean investor’s lawful source of funds because these funds were tied to a common Korean real estate financing arrangement known as Jeonse (also called Chonse or Chonsegeum). In this system, tenants pay a substantial lump-sum deposit to the landlord instead of monthly rent, with the understanding that the deposit will be returned at the end of the lease term.
USCIS applied U.S. leasing concepts, treated the Jeonse arrangement as a mere security deposit. Based on this interpretation, they ruled that the funds were not freely owned by the petitioner’s mother and thus could not be legally gifted to the investor.
The Appeal: Demonstrating the Legitimacy of Jeonse in EB-5
On appeal, our firm:
- Advanced comprehensive legal arguments showing that Jeonse is a well-established and legally recognized financial arrangement under Korean law.
- Demonstrated that the agency’s prior interpretation relied too heavily on U.S. legal concepts without adequately considering the unique features of Korean financial systems.
- Reframed the issue through the proper legal and cultural lens to show that Jeonse functions as a legitimate and transparent source of funds for EB-5 purposes.
AAO recognized that Field Office Director erred by mischaracterizing Jeonse under U.S. norms without properly considering Korean law.
The Outcome: A Win for Global Investors
The AAO sustained the appeal and approved the EB-5 petition. This ruling affirms that:
- Foreign financial practices must be evaluated within their legal and cultural context, not solely by U.S. common-law concepts.
- Jeonse is a legitimate source of funds for EB-5 investments when properly documented and explained.
- Korean investors can rely on Klasko’s expertise to bridge the gap between local practices and U.S. immigration requirements.
In recent years, Korean EB-5 investors who relied on Jeonse as their source of funds faced repeated denials from both USCIS and the AAO. This new decision represents a major shift, validating a financial system central to Korean households.
Why This Matters
This case is a breakthrough for the Korean investor community. Although it is a non-precedent decision, AAO has begun to recognize Jeonse as a legitimate financial mechanism for EB-5 purposes with sufficient legal arguments and supporting documents. It opens the door for many Korean nationals to pursue EB-5 investment using Jenose funds, which had previously faced greater scrutiny.
At Klasko, we remain committed to advocating for global investors, ensuring that cultural and legal differences do not become barriers to immigration opportunities in the United States. If you are interested in investment-based immigration services, particularly if you have a complex case or a case that may need a creative litigation strategy, please reach out to a member of the Klasko investor immigration team.
The material contained in this alert does not constitute direct legal advice and is for informational purposes only. An attorney-client relationship is not presumed or intended by receipt or review of this presentation. The information provided should never replace informed counsel when specific immigration-related guidance is needed.
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