A hat tip to Sophia Tang for her pointer to today’s very interesting case of the day, Fu v. Fu (Ill. App. Ct. 2017). The United States grants so-called EB-5 visas to “qualified immigrants seeking to enter the United States for the purpose of engaging in a new commercial enterprise … in which such alien has invested … capital” of at least $500,000. 8 U.S.C. § 1153(b)(5). In 2012, Pengbo Fu, a Chinese national who lived in China, entered into a “gift agreement,” drafted in Chinese and governed by Chinese law, in which he agreed to “make a free and unconditional gift” of nearly $600,000 to his son, Yongxiao Fu, so that the younger Fu could invest the money so as to qualify for a visa. The son first invested $500,000 in a hotel and conference center project in Chicago. In 2013, the SEC determined that the project had been a fraud, and Fu recovered his money. Fu then invested the $500,000 in Lake 1 LLC, which was to build a garment manufacturing and retain facility in Melrose Park, Illinois. But in 2016, the US government denied EB-5 approval for the project, but the funds remained in an escrow account for the project. Later in 2016, Fu agreed to invest $500,000 in a New York apartment complex. But by then his father had demanded his “gift” back, and so the escrow agent refused to release the funds.
The father then brought an action to revoke the “gift agreement” in a court in Shanghai, and a second action in Chicago. He argued that Chinese law governed the gift agreement and that a gift may be revocable under Chinese law. He suggested that the son had failed in his duty under Chinese law to support his father. The court dismissed the claim with prejudice, and the father appealed.
The court began by noting that the father had failed to prove the contents of Chinese law. Apparently in Illinois, foreign law is still treated as a fact that must be pleaded and proved. Okay. That’s not the rule in federal court, of course. It’s not really clear whether the father’s failure was just a failure of form or if he failed to put the relevant Chinese law before the court, period.
The more interesting point, though, was the court’s refusal to allow the father leave to replead to include the relevant Chinese law, on the grounds that any amendment to the complaint would be futile. Public policy, the court said, would not allow revocation of the gift, even if, under Chinese law, an apparently irrevocable gift is revocable. The gist was that in order to apply for the visa—which was the father’s apparent purpose in giving the gift—the son had to tell the government that the funds were really his. So the father cannot now say that the money was his all along. That would make the visa application a fraud.