Yes, he has to reveal the information about the arrest as well as any documents relating to it.
This is something that shouldn't be trifled with without the assistance of counsel.
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He has to provide certified copies of the arrest and booking report as well as a certified copy of the case disposition. He must do this for any and all arrests/criminal issues (even some citations, so do not assume that simply getting a citation means you do not have to provide the information). It is always better to err on the side of caution when it comes to criminal issues and immigration cases. Whether your brother has a serious issue that will prevent him from obtaining residency depends on many factors and he should definitely have an attorney's help with his case (one crime can make you inadmissible in many ways, so a conviction for something like what your brother was charged with could make him inadmissible for a CIMT, aggravated felony depending on the case, crime of violence, etc. - the crossover between criminal law and immigration law is very tricky and not to be taken lightly). These cases can and do become very complex very quickly because details matter, so while you think this may be his only issue the only way to be certain is consulting with an immigration attorney, which I highly recommend in this circumstance. It is very difficult to get an attorney's help once a case has become very hard (someone files application on their own, something goes wrong, now scramble to get attorney's help and this usually results in the attorney costing A LOT more money). You can save yourself a lot of headaches by getting the help BEFORE you apply for anything with immigration when you know you have potential issues.
Yes, he will need to reveal the arrest and provide documents certifying the outcome of the case. If the charges were dropped, he should be OK. Failing to reveal criminal history on an application could result in the denial of his permanent residence. It sounds like he could benefit from the help of an immigration attorney.
www.gassonlaw.com - Disclaimer: This a general answer to your legal question. Unless you have a signed engagement letter with me, you should not consider this information to be legal advice.