This article's lead section may be too long. Please read the length guidelines and help move details into the article's body. (June 2023)

The United States EB-5 visa, employment-based fifth preference category[1] or EB-5 Immigrant Investor Visa Program was created in 1990 by the Immigration Act of 1990. It provides a method for eligible immigrant investors to become lawful permanent residents—informally known as "green card" holders—by investing substantial capital to finance a U.S. business (known as a "new commercial enterprise") as long as it creates at least 10 new, full-time jobs for Americans and work-authorized immigrants.[2] The EB-5 program is intended to encourage both "foreign investments and economic growth."[3] The EB-5 Immigrant Investor Visa Program is one of five employment-based (EB) preference programs in the United States.[4]: 4 

Based on the EB‐5 Reform and Integrity Act, which was signed into law on March 15, 2022, the minimum investment requirement to qualify under the EB-5 program is $1,050,000.[5] The investment requirement is reduced to $800,000, however, if the investment is made in a qualifying infrastructure project or targeted employment area (TEA). Most immigrant investors who use the EB-5 program invest in a targeted employment area (TEA)[6]: 8 —a rural area or area with high unemployment rate in order to invest less capital.[7] Investors who make a TEA investment or an infrastructure investment for the $800,000 investment minimum qualify for EB-5 "set aside" visas, which are broken down intro three categories: infrastructure projects; projects in high-employment areas; and projects in rural areas.

Applicants have the choice of investing directly or through a "larger investor pool via regional centers (RCs)",[4]: 2  which are federally approved investment issuers that "connect foreign investors with developers in need of funding, and take a commission."[8][9][10][4] Regional centers are usually private, for-profit businesses that are approved by the U. S. Citizenship and Immigration Services (USCIS) which is part of the Department of Homeland Security.[10][11]

As of April 4, 2023, there are 640 USCIS-approved regional centers,[12] and as of March 2023, the "vast majority" of EB-5 visas were "granted through regional center[s]."[6]: 4  By 2015, the EB-5 program had become an "important source of capital for developers"[4] and for the regional centers.[10] If an EB-5 investment is made in a regional center, the jobs may be created indirectly through economic activity, as opposed to a direct investment. [13]

As of April 23, 2020, 78,278 investors have applied for the EB-5 program.[14] Most investors—about 80 percent—come from four countries: China, South Korea, Taiwan and the United Kingdom. Large numbers of applicants have also come from Vietnam, India, Brazil, Mexico, and Nigeria.[14] In 2014, 85% of the 10,692 EB-5 visas issued were for Chinese nationals, according to a study by Savills Studley, a "real estate services firm."[15][16] On December 20, 2019, President Trump signed a law extending the Regional Center Program through September 30, 2020.[17] On March 15, 2022, President Biden signed a law extending the regional center program through September 30, 2027.[18]

Overview

The EB-5 visa provides a method of obtaining a green card for foreign nationals who invest in a "new commercial enterprise"[4]: 2  in the United States. The EB-5 program "affords foreign nationals and their spouses and unmarried children under age 21 the ability to obtain a U.S. visa based solely upon a minimum investment in a for-profit enterprise that creates or retains a specified number of jobs".[4]: 1  To obtain the visa, individuals must invest $800,000 (TEA) or $1,050,000, creating or preserving at least 10 jobs for U.S. workers excluding the investor and their immediate family.[7]

If the foreign national investor's petition is approved, the investor and their dependents will be granted conditional permanent residence valid for two years.[19] Within the 90-day period before the conditional permanent residence expires, the investor must submit evidence documenting that the full required investment has been made and that 10 jobs have been maintained, or 10 jobs have been created or will be created within a reasonable time period.[19]

Commercial real estate projects result in job creation through construction work at first and eventually in the service industry, for example in hotels, restaurants, resorts and/or stadium development. For that reason, many of the EB-5 visa investments "target commercial real estate".[4]: 8 

According to a 2022 study, most recipients of EB-5 visas are Chinese millionaires. Individuals from less developed countries and from authoritarian states were more likely to obtain the visas. According to the study, these findings suggest that "investor visas are used by elites in less developed countries to hedge against the risks associated with authoritarian rule. Such elites perceive investor visas as a foothold in a stable and democratic country that can provide an insurance policy or exit option."[20]

2019 Regulation

The US Citizenship and Immigration Services (USCIS), published regulations making major changes in the EB-5 Immigrant Investor Program, effective November 21, 2019. The rules say that states can no longer designate regional centers; this duty now belongs to the Department of Homeland Security (DHS), which manages USCIS. This rule is intended to eliminate gerrymandering of TEAs.[21]

Sen. Chuck Grassley (R-Iowa), who, along with Sen. Patrick Leahy (D-Vermont), sponsored a bill in 2015 to curtail the fraud he found in the EB-5 program, supported the 2019 rule changes, particularly as the rule affected TEA designations.[22]

Barron's reported that the November EB-5 changes would "likely result in some developments moving from wealthy hubs into more rural and distressed areas," as the EB-5 program finances various high-end condominium developments. Barron's also reported that the program generated around $5 billion a year for 10,000 visas.[23]

EB-5 regional center investment projects

Hotel and multi-use developments financed with EB-5 investments include Hilton, Hyatt Hotels, Marriott's, Starwood's SLS Hotel & Casino.[4]: 8 

In 2016 Forbes cited Hudson Yards, Manhattan as a "fine example" of one of the "very successful projects" resulting from EB-5 investments.[24]

In southern California, EB-5 projects include Europa Village, in Temecula, the Hilton Garden Inn in El Monte, and the JW Marriott hotel at L.A. Live in downtown Los Angeles.[25]

One of the major infrastructure projects in the EB-5 program is the recently completed I-95/Pennsylvania Turnpike connector, which completed the longest north–south route in the Interstate Highway System. Interstate 95, running from Maine to Florida, serves over 110 million people and 10 percent of the total US land area. The development began as part of the Federal-Aid Highway Act in 1956.[26]

EB-5 direct investment projects

Select investors, especially from India, elect to invest in their own investment project.[27] EB-5 direct investment projects include franchised restaurants, hotels, healthcare providers, preschools as well as other independent businesses. Funds can be pooled but it is more common for investors to have a controlling, majority interest in the business. Demand for direct investment opportunities has significantly increased as of July 2021 due to the lowered investment amount of $500,000[28] and sunset of the regional center program.

It is possible to invest in a franchise for the E2 visa (for as little as $100,000) then convert to an EB-5 visa as long as the job requirement and investment thresholds are met.

History

1990-1999

Congress created the employment-based fifth preference category (EB-5) visa program in 1990 to "create jobs for U.S. workers and to infuse new capital into the U.S. economy".[1]: 528  At that time the program was directed towards "alien entrepreneurs" who would not only invest $1 million or $500,000 in a "new commercial enterprise" but would also "engage in the management of the new enterprise" creating ten full-time jobs for U.S. citizens or lawful permanent residents.[1]: 528  In order to make the program more investor-friendly, Congress enacted the 1993 Appropriations Act which amended the EB-5 program to create the "Pilot Immigration Program" — the Immigrant Investor Pilot Program (IIPP).[1]: 528 [29] Under the IIPP, foreign nationals could invest in a pre-approved regional center, or "economic unit [referred to as regional centers], public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, or increased domestic capital investment".[29][1]: 529  Investments within a regional center provide foreign nationals the added benefit of allowing them to count jobs created both directly and indirectly for purposes of meeting 10-job creation requirement.[29] This was intended to help potential investors to meet "the program's stringent requirements" through passive investment.[1]: 529  With the IIPP, the EB-5 visa became an investor's visa as opposed to an entrepreneur's visa.[1]: 530 

In c.1995 former Immigration and Naturalization Service (INS) officials formed a company called AIS that acted as an intermediary between INS and immigrant entrepreneurs in the EB-5 program. Whereas EB-5 required an investment of $500,000 AIS only required $125,000 cash with the rest — $375,000 in the form of a promissory note. AIS claimed the promissory note would "be forgiven once the immigrant's permanent residency application was approved". The U.S. immigration agency, which was then known as the Immigration and Naturalization Service (INS), had interpreted the regulations regarding financial qualifications in a way that accepted this arrangement until c. 1998 when they were under investigation by the Government Accountability Office (GAO). There were allegations that the INS was giving preferential treatment to AIS in EB-5 matters. The INS (now USCIS) changed their "interpretation of regulations regarding financial qualifications"[30] as a result of the probe. In 1997 and 1998 two owner-operators of Interbank, Herndon, Virginia had "filed 320 false [EB-5] applications on behalf of 270 EB-5 immigrant investors.[31] The INS raided Interbank in August 1998.[31] The EB-5 program was temporarily suspended.[6]: 11 

2000-2009

Although no one in AIS or INS was charged, in 2000 the two Interbank operators were arrested, then convicted and imprisoned on dozens of counts of "money-laundering and fraud" in the largest case of EB-5 fraud.[6]: 11  INS District Director Warren A. Lewis said, "Visa fraud whether done on the streets by selling fraudulent cards or through an elaborate financial scheme is against the law and will be investigated and prosecuted." Hundreds of the immigrant investors "lured" to the United States had their permanent residency applications denied.[32] Because of the INS investigation, the processing of 900 EB-5 cases was suspended, leaving immigrant families in limbo for years.[32][1]: 527  When the GAO tabled their report in 2005 they concluded that immigrant investors were not utilizing the program because of the 900 EB-5 suspended files—some of which dated to 1995—as well as the "onerous application process" and "lengthy adjudication periods".[30]

According to a Brookings Institution and Rockefeller Foundation 2014 report, starting in 2008 there was a renewed interest in the "under-utilized" EB-5 visa program as the number of "wealthy investors" and "ultra-wealthy individuals" in emerging markets abroad increased and the access to "traditional domestic financing" in the United States had decreased because of the Great Recession.[6]

2010-2021

By 2010, foreign investors' use of the EB-5 program was far less than Congress had originally anticipated.[33] In 2011, USCIS began making a number of changes to the program in hopes of increasing the number of applicants.[34] By the end of the 2011 fiscal year, more than 3,800 EB-5 applications had been filed, compared to fewer than 800 applications in 2007.[35]

Initially, under the first EB-5 program, the foreign investor was required to create an entirely new commercial enterprise; however, under the Pilot Program investments can be made directly in a job-generating commercial enterprise (new, or existing - "Troubled Business"[19]), or into a regional center - a 3rd party-managed investment vehicle (private or public), which assumes the responsibility of creating the requisite jobs. Regional centers may charge an administration fee for managing the investor's investment and a "percentage of what they raise from the developers" which amounts to millions on large projects.[10]

Since 2010, the US Securities and Exchange Commission (SEC) has become more aggressive in regulating the program, prosecuting individuals not complying with regulations. At the same time, USICS has provided information on investors' expectations, reporting requirements, and added audits and site visits. Overall, participants in the program have developed their own best practices as well as educational initiatives to promote better understanding of legal parameters in immigration, financial matters and securities for those managing investor funds. EB-5 is one of the few government programs that creates jobs in the US without taxpayer costs.[36]

The program reached capacity for the first time in August 2014 when the State Department stopped issuing EB-5 visas until the beginning of the next fiscal year, October 2014.[37] By 2014, the number of EB-5 visas granted had more than doubled since 2009.[10]

In 2019, under the Trump administration, new rules for the program went into effect and the US Congress extended the program throughout the remainder of the year. The new rules increased the investment amount from $1 million (US) to $1.8 million (US), from $500K (US) to $900K (US) in Targeted Employment Areas. In order to counteract the uncertainty of the EB-5 program's being continued in an unpredictable fashion, and to extend the program until 2024, Senators Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vermont) introduced the EB-5 Reform and Integrity Act of 2019, S. 2540. The bill would give DHS more authority over the program, establish and fund a system of audits and site visits, require more disclosures and oversights, and improve transparency and accountability.[38]

In 2020, Sen. Lindsey Graham (R-SC) co-sponsored a bill that would allow foreign investors to get involved outside of low-employment areas, lower the minimum investment needed to be made and allow some of the participants to move to the US during the period they waited for their visa. Co-sponsors were Sens. Chuck Schumer (D-NY), M. Rounds (R-SD) and Cornyn (R-TX). Related Companies of New York was one of the biggest users of EB-5 funding, particularly for its Hudson Yards project, and spent over $280,000 in EB-5 related funding.[39] The massive Hudson Yards project, which opened in 2019, had its roots in a little-remembered document, the Report of the Group of 35. The Group of 35 was a "wonky" urban policy consortium founded by Sen. Schumer calling for New York City to get more involved in commercial development. The Report, issued in 2001, recommended the development of Commercial Business Districts (CBD) as a strategy to remain competitive. The new CBDs were to be in downtown Brooklyn and Long Island City, but the "...most radical idea...." was the positioning of a new CBD in Manhattan, now the site of Hudson Yards.[40]

In March 2021, Grassley and Leahy introduced the EB-5 Reform and Integrity Act of 2021 to correct the "...fraud-plagued EB-5 foreign investor program." Leahy was particularly concerned with Vermont's Jay Peak Ski Resort fraud where developers were accused of taking hundreds of millions of investors' dollars. The bill calls for regular audits by the Department of Homeland Security and new disclosure regulations to protect investors and insure compliance with EB-5 directives.[41] The Act also reauthorizes the EB-5 Regional Center program which was due to lapse in June 2021.[42] Statutory authorization related to the regional center portion of the EB-5 Program expired at midnight on June 30, 2021, after an attempt to extend and improve the program was blocked by the U.S. Senate.[43]


2022

On March 15, President Biden signed a law that includes authority for an EB-5 Immigrant Investor Regional Center Program and various implementation effective dates for the program.[44] There were three major changes to the program in the new bill, including more regulation and government oversight. First, the bill authorizes EB-5 for five years, until September 2027. Previous versions were short-term renewals and last-minute extensions. Second are security provisions that preclude participants from taking advantage of the program; e.g., regional centers must act more transparently and comply with regulation from DHS. The third change is a “grandfather” clause that protects participants from being put into abeyance should the program expire during the term of their “good faith” investment.[45] Additionally, investors were historically required to invest $500,000 plus a $50,000 administrative into an EB-5 project. The new requirement is an investment of $1,050,000 or $800,000 into a high-unemployment area.[46]

Increased interest from China

According to the Savills Studley 2015 report, in 2011 out of a total of 3,463 EB-5 Visas granted, 2,408 of them — representing 69.5% — were from Chinese nationals. By 2014 out of a total of 10,692 EB-5 Visas granted, 9,128 of them — representing 85.4% — were from Chinese nationals.[4]: 4 [16] The authors of the report conclude that the "increase in the number of applicants to the EB-5 program has stemmed from an increase in interest from mainland Chinese".[4]: 6  As Asia's economy flourishes, there's an increase of new money in China. In 2012 there were 1.5 million, by 2013 there were 2.4 million which is more than new money in Japan.[4]: 6 

In 2020, members of both houses of the US Congress called for the Trump administration to initiate a federal review of the EB-5 program. They called for the US Government Accountability Office (GAO) to investigate the involvement of the Chinese Communist Party (CCP) in exploiting the program. Critics[which?] pointed out that almost 80% of the visas issued from 2012 to 2018 went to citizens of the People's Republic of China and that a large majority of EB-5 investor backlog is made up of Chinese citizens. Some[which?] financial experts have observed that the encouragement of foreign investment intrinsic to the program is precisely what the US needs to recover from the COVID-19 pandemic, providing funding, for example, for the $1 trillion (US) infrastructure proposal being devised by the Trump administration. The US Department of Transportation would utilize the funding for traditional bridges and roads but would also preserve resources for rural broadband development and 5G wireless networks.[47]

Targeted Employment Areas

Main article: Targeted Employment Area

The original EB-5 law required investment in a Targeted Employment Area.[48] This meant that the area for potential investment had to be either rural or have a "jobless rate" representing "150% of the national average".[49] However, over time regions and states that wanted both the development and the employment, and developers became more skilled in "crafting" an acceptable targeted area (TEA)s, an "essential part of gaining USCIS approval". A June 2014 Fortune article claimed that, "after years of industry pressure, it's now USCIS policy to automatically accept any state designation of a TEA, even though states routinely approve gerrymandered districts that tack on distant high-unemployment tracts to allow EB-5 endeavors in wealthy areas".[49]

By 2011 there were concerns raised about areas in New York that had been "strangely gerrymandered" in order that "relatively upscale and wealthy locations could qualify for TEA status" according to an article in The New York Times in 2011. A proposed China City program in that area received "pushback from locals against an EB-5-funded program" there.[50][51]

Marriott EB-5-funded construction projects have been criticized for acquiring TEA status for wealthy and well-off regions including in Washington D.C., contradicting the original spirit of the TEA designation.[8][49] In June 2014 when the $520 million-Marriott Marquis convention center hotel—D.C.'s new largest hotel—was officially opened on June 10, 2014, by Mayor Vince Gray, who announced Air China's maiden first direct flights between D.C. and Beijing.[8] and hoped the Air China passengers would "stay in the Marriott Marquis".[8] In a June 27 article Washington City Paper reported that it was "fitting" that Air China passengers stayed in the Marriott Marquis because they invested $5 million through the federal EB-5 visa program "earning green cards in the process".[8] In the same article, other recent "major D.C. development projects using EB-5 funds" including Shaw's CityMarket at O development that "used $97 million of EB-5 funding" and earned "green cards for nearly 200 foreigners".[8] A top priority of Mayor Gray's administration was to nurture a "stronger business relationship with China, the primary source of EB-5 funding in D.C. and nationally".[8]

By 2014 the process by which an area could qualify for TEA status had eased considerably[8] as reflected in the simplified description of the qualifying requirements published by the American Immigration Lawyers Association, "Each immigrant investor must create 10 US jobs with an investment of $500,000 or more".[52]

If the location of the proposed new business is not a TEA, the investor has the option to gather the relevant publicly available state or federal statistics on their own and submit it with their petition for USCIS to have a new TEA determination made. In California, the investor may petition the state government for designating a particular subdivision of the area as an area of high unemployment (over 150% the national average); however, this designation is not made by USCIS.[53]

There have been significant recent changes to how project locations may qualify as TEAs. The EB-5 Immigrant Investor Program Modernization regulation was published by Department of Homeland Security (DHS) in the Federal Register on July 24, 2019, went into effect on November 21, 2019.[54]

There is no centralized list of targeted employment areas. California,[53] Florida,[55] and Washington [9] maintain lists of TEAs. The Washington State Employment Security Department designates which areas have high unemployment rates (HUAS) that qualify for EB-5 visa.

EB-5 Regional Centers

This section may contain information not important or relevant to the article's subject. Please help improve this section. (July 2020) (Learn how and when to remove this template message)
This section contains content that is written like an advertisement. Please help improve it by removing promotional content and inappropriate external links, and by adding encyclopedic content written from a neutral point of view. (July 2020) (Learn how and when to remove this template message)

"The EB-5 Regional Center Program creates jobs and spurs capital investment in communities across the nation."[56]

The 1993 Appropriations Act amended the EB-5 program to create the Immigrant Investor Pilot Program (IIPP),[1]: 528 [29] which allowed foreign nationals to invest in an economic unit called a regional center, or "economic unit" [referred to as regional centers]. RCs promote economic growth, "including increased export sales, improved regional productivity, job creation, or increased domestic capital investment".[29][1]: 529  Private entities or states can apply to become regional centers.[6] Investments within a regional center provide foreign nationals the added benefit of allowing them to count jobs created both directly and indirectly for purposes of meeting the 10-job creation requirement.[29] The EB-5 Regional Center Pilot Program (RC) program, which was "enacted in 1993 for a period of five years", allows investors to "pool their investments into a larger project assembled by a regional center, for which indirect jobs may be counted".[4]: 2  The five-year pilot program has been regularly reauthorized ever since.[56] USCIS maintains a list of approved (but not necessarily endorsed or guaranteed) EB-5 regional centers by state, but without specific details.[12]

RCs are USCIS-approved third-party entities, usually for-profit, private intermediaries, that "connect foreign investors with developers in need of funding, and take a commission".[8][9][10][4][11] The RC approvals are decided by the U. S. Citizenship and Immigration Services (USCIS) which is part of the Department of Homeland Security.[10][11] By May 1, 2017, the USCIS 883 RCs were USCIS-approved.[12] The USCIS — the agency that administers the program, the regional centers and the immigrant investor form the three prongs of the regional center program interaction.[6]: 10  The Brookings-Rockefeller report included the program's "missteps" that "illustrate the vulnerability of a system dependent on the relationships between USCIS, regional centers, and investors".[6]: 11 

In 1994 the first two regional centers were established and by 2007 there were 16. As the banking crisis worsened and access to capital became difficult, the number of approved regional centers proliferated. For example, at the end of FY 2007 there were only 11 USCIS-approved regional centers.[12] In 2008 the RCs "nearly doubled" and their numbers have mushroomed since then.[6]: 5  By February 2, 2015, there were approximately 630[4]: 9  and by May 1, 2017, there were 883.[12] Many of them operate in multiple states.[4]: 9 

By 2015 the RC program had "generated billions of dollars in capital investment and created tens of thousands of jobs across the country".[56] By 2015, RC applications represented over 95% of all EB-5 investments.[4]: 2  EB-5 investors who use RC intermediaries do not have to actively manage a business,[4]: 2  but they lose on the rate of return. The Savills Studley 2015 report recommended that investors who are concerned about maximizing profits benefit from investing individually.[4]: 2 

In June 2015 Senators Patrick Leahy (D-Vt) and Chuck Grassley (R-Iowa) introduced legislation to "extend and significantly improve the job-creating immigrant investor visa program" and re-authorize the "EB-5 Regional Center program".[note 1] Senator Leahy said that, since 2005, the EB-5 program had "create[d] jobs and provide[d] access to capital in communities in Vermont and throughout the country, all at no cost to American taxpayers".[56] Senator Grassley added, "The EB-5 regional center program was created to benefit American communities through investment and job creation. In many instances the program has helped combat a stagnant economy."[56]

Vermont's Regional Center has been a successful private-public partnership between the State of Vermont and an increasing number of Vermont businesses, bringing economic development and job growth to the state since 1997. Vermont's projects have drawn business and tourism to the state, fueling local economies and creating jobs.

— Senator Patrick Leahy (D-Vt) 2015

EB-5 Funding has helped rebuild the Las Vegas economy. The city had seen a boom in using regional centers and EB-5 funding to build new casino projects. In 2013 the first EB-5 project - the Downtown Grand was built followed by SLS, formerly the Sahara Hotel. Additional new casino projects obtaining EB-5 funding on the Las Vegas Strip included the Lucky Dragon Hotel and Casino, Dynasty Hotel Casino, Clarion Hotel, and Resorts World Las Vegas.[57] Foreign investors are also being solicited to invest in Las Vegas' SLS Hotel & Casino.[58]

The Pennsylvania Turnpike Commission entered into a partnership with the Delaware Valley Regional Center (DVRC) in 2014 to raise half of the $416 million needed to construct the interchange between the turnpike and I-95. The EB-5 program will allow the Turnpike Commission through the DVRC to save about $35 million over traditional borrowing costs over five years.[59][better source needed] The total project generated over 5,300 permanent, full-time jobs which productively affected the region. The turnpike effort was supported by all levels of government affected. Pennsylvania Turnpike Commission's involvement enabled the DVRC to solicit and subscribe the needed 400 investors in the undertaking in 10 months.[22]

Major developers formed their own regional centers with the goal of soliciting EB-5 investments. Other projects that have received EB-5 regional center funding include the Hudson Yards Redevelopment Project, the George Washington Bridge Bus Terminal, and the New York Wheel.[4]

Regulatory bodies

Securities and Exchange Commission (SEC)

The investment remaining at risk throughout conditional residency is a fundamental program requirement, and the petitions of those investors who cannot provide evidence that they met this requirement will be denied.

— SEC Reuters interview May 12, 2017

USIF said the firm was "committed to strict adherence to securities and all applicable laws,"

The Securities and Exchange Commission (SEC) considers some "EB-5 offerings" to be securities covered under U.S. securities laws. "[C]ompanies and individuals that sell EB-5 investments cannot "defraud investors, make false claims or fail to mention relevant information".[60] However, the SEC has limited ability to "bring fraud claims where the funds solicited and the investors are based overseas".[60]

U. S. Citizenship and Immigration Services (USCIS)

The U. S. Citizenship and Immigration Services (USCIS) sets guidelines for EB-5 projects and monitors compliance with immigration rules. Under EB-5 visa guidelines, "investors must put their capital at risk and the green card is not guaranteed". The USCIS also evaluates approvals for regional centers.[10][11]

SEC 2013 investor alert

In 2013, the U. S. Securities and Exchange Commission (SEC) issued an investor alert to warn investors about an increase in fraudulent investment scams that exploit the EB-5 visa program.[61] The SEC listed "warning signs of fraud" such as automatic, timely and/or guaranteed "promises of a visa or permanent resident status"[61] and established the SEC Whistleblower Program to offer a monetary award for "exposing EB-5 fraud". Under the SEC Whistleblower Program, individuals are eligible to receive a reward for providing the SEC with original information about securities fraud, including EB-5 fraud. If the SEC uses the individual's information to bring a successful enforcement action, he or she is eligible to receive 10% to 30% of the monetary sanctions collected as an award. A whistleblower's tip about a $147 million EB-5 scheme has already resulted in a $14.7 million SEC award.[62]

EB-5 under scrutiny and fraud cases

On August 24, 2015, the SEC filed civil fraud charges against Lobsang Dargey for his misuse of the EB-5 Visa program[63] by misappropriating about $136 million from Chinese investors through his Path America entity. The SEC received a settlement offer in January 2017 that "signaled "a possible resolution to the high-profile case".

By 2016 scrutiny of the EB-5 program had increased as "investigators uncovered numerous cases of fraud, discovered individuals with possible ties to Chinese and Iranian intelligence using fake documents and learned that international fugitives who have laundered money had infiltrated the program."[2] In that year Senator Charles E. Grassley (R-Iowa), a longtime critic of EB-5, described the program as one that had "long been riddled with corruption and national security vulnerabilities.[2]

In March 2016 Taylor Johnson, a special agent with Immigration and Customs Enforcement, who had questioned the "vetting of individuals involved in a [EB-5] development project in Las Vegas" was fired. In response to her complaints, the Office of Special Counsel and the Department of Homeland Security's Office of the Inspector General undertook an investigation.[2]

Vermont's EB-5 program was "burned" with the "massive eight-year fraudulent scheme" in which the owners of Jay Peak Ski Resort in Vermont[24] misappropriated funds for a $350 million EB-5 project.[24][64] It was the "most followed EB-5 fraud case" according to Forbes.[24] Foreign investors lost their investments in "Jay Peak, Burke Mountain and related projects in the NEK".[65]

Jay Peak was one of the original grandfather regional centers that was a very vocal proponent of the program. For this to happen, it's kind of a black eye.

— Samuel Newbold, attorney for investors cited in Forbes 2016

In June 2015 Senators Patrick Leahy (D-Vt) and Chuck Grassley (R-Iowa) introduced the "American Job Creation and Investment Promotion Reform Act" to "extend and significantly improve the job-creating immigrant investor visa program" and to "address fraud and national security concerns".[56][2] In September 2016, House Judiciary Chairman Bob Goodlatte (R-VA) and Ranking Member John Conyers (D-MI) introduced legislation to "reform and reauthorize the EB-5 Regional Center program".

In February 2017 Senators Dianne Feinstein (D-CA) and Grassley, a critic of EB-5, introduced a bill in February 2017 to terminate the program.[15] In a joint statement they claimed that, "The EB-5 program is inherently flawed. It says that U.S. citizenship is for sale. It is wrong to have a special pathway to citizenship for the wealthy while millions wait in line for visas."[15] Grassley and Feinstein say that "there is no reliable or verifiable way to measure how many jobs are created" and that "many of the wealthiest parts of the country have been incorrectly labeled as "high unemployment."[2]

In April 2017 the EB-5 visa "cash-for-residency scheme" was under investigation by the FBI with a specific focus on the California Investment Immigration Fund because of its "alleg[ed] connection[s] to "abuses of the "controversial" program.[66] The FBI raided a Los Angeles-area business in April, 2017 in which a father and daughter team were suspected of "orchestrating a $50 million" EB-5 visa fraud scheme.[67]

Supporters of the foreign investor visa include Senator Chuck Schumer (D-New York), along with some in the Obama administration. They say that the program "delivered billions of dollars into the American economy: $8.7 billion and 35,140 jobs since October 12".[2] According to federal auditors the numbers were "not valid and reliable".[2]

They "have capitalized on a lucrative government program that critics say has little oversight and loose rules".[68]

Kushner Companies May 2017 controversy

Starting on May 6, 2017, a number of major media outlets began raising concerns about ethical implications regarding the way in which the EB-5 program was promoted to potential Chinese investors by Kushner Companies, because of Jared Kushner's pivotal and influential role in the Presidency of Donald Trump, his father-in-law. Chinese investors were shown a photo of Pres. Trump in a marketing slide show, suggesting the ease of getting a green card.[69][70][71] The Independent headlined with "Trump and Kushner exploitation of presidency 'unlike anything we have ever seen before'.[72]

Effects

A 2015 study found that the EB-5 investor visa program boosted investment in the United States during the Great Recession of 2008 to 2012.[73] The study found "that Chinese wealthy private business owners are mainly participants in EB-5 for acquiring a U.S. green card on behalf of their young adult children. The rate of return of the EB-5 program for investors is a low-priority item, less important than return of capital."[73]

See also

Notes

  1. ^ The proposed Leahy-Grassley legislation, — The American Job Creation and Investment Promotion Reform Act — was intended to address challenging issues in EB-5, such by " strength[ing] oversight, ensur[ing] greater accountability and transparency, discourag[ing] fraud, and provid[ing] a higher priority for national security ... The bill bolsters the Department of Homeland Security's authorities to administer the program, and provides investors with greater protections and more information about their investments. It also increases transparency and oversight and provides DHS the ability to proactively investigate fraud, both in the United States and abroad, using a dedicated fund paid for by certain program participants. The bill would also raise the amount of investment required and help to restore the program to its original intent, by ensuring that much of the capital generated and jobs created occur in rural areas and areas with high unemployment." According to The New York Times, "Supporters of the EB-5 program, including real estate developers, spent as much as $3 million to help defeat [the Grassley-Leahy legislation] intended to address fraud and national security concerns."

References

  1. ^ a b c d e f g h i j Lin, Annie Anjung (February 16, 2015). Splitting the EB-5 Program: A Proposal for Employment-Based Immigration Reform to Better Target Immigrant Entrepreneurs and Investors (PDF). Chapman Law Review (Report). Vol. 18. pp. 527–552. Archived (PDF) from the original on January 26, 2018. Retrieved May 9, 2017.
  2. ^ a b c d e f g h Ron Nixon (March 15, 2016). "Program That Lets Foreigners Write a Check, and Get a Visa, Draws Scrutiny". The New York Times. Archived from the original on April 5, 2021. Retrieved May 9, 2017.
  3. ^ "Targeted Employment Areas". State of Wisconsin. May 5, 2017. Archived from the original on March 16, 2017. Retrieved May 9, 2017.
  4. ^ a b c d e f g h i j k l m n o p q r s Heidi Learner (March 16, 2015). "EB-5 Investment and the Impact on Commercial Real Estate" (PDF). Savills Studley. p. 15. Archived from the original on March 14, 2017. Retrieved May 7, 2017.
  5. ^ Butler, Jim (April 18, 2022). "What the revitalization of EB-5 financing means for real estate developers and entrepreneurs". Reuters. Archived from the original on December 22, 2022. Retrieved December 22, 2022.
  6. ^ a b c d e f g h i Singer, Audrey; Galdes, Camille (February 2014). Improving the EB-5 Investor Visa Program: International Financing for U.S. Regional Economic Development. Brookings Institution (Report). Brookings-Rockefeller Project on State and Metropolitan Innovation. Washington D.C. p. 26. Archived from the original on October 13, 2019. Retrieved October 13, 2019.
  7. ^ a b "EB-5 Immigrant Investor Program". USCIS. U.S. Citizen and Immigration Services. Archived from the original on July 20, 2020. Retrieved July 18, 2022.
  8. ^ a b c d e f g h i "Green Construction: How Rich Foreign Investors are Financing D.C.'s Building Boom, in Exchange for Legal Status in the US". Washington City Paper. June 27, 2014. Archived from the original on May 7, 2016. Retrieved May 8, 2017.
  9. ^ a b c "Washington targeted employment areas". Washington State. The targeted employment area designation encourages foreign investments and economic growth by reducing the requirements for obtaining an EB-5 immigrant-investor visa. The minimum qualifying investment for investors within a TEA area is $500,000. In general, the minimum qualifying investment is $1 million. The investor must demonstrate that his or her investment will benefit the economy and create a required number of full-time jobs for qualified people in the United States. Note, this program is being reviewed by the US Congress in the coming months and these requirements may change after April 2017.
  10. ^ a b c d e f g h Peter Elkind; Marty Jones (October 14, 2014). "The tangled past of the hottest money-raiser in America's visa-for-sale program". Fortune. Archived from the original on May 9, 2017. Retrieved May 7, 2017.
  11. ^ a b c d "2017 Targeted Employment Area request instructions" (PDF). Washington State and United States Citizenship and Immigration Services (USCIS). April 2017. Archived (PDF) from the original on January 26, 2018. Retrieved May 8, 2017. USCIS contact Robert Haglund
  12. ^ a b c d e "Approved EB-5 Immigrant Investor Regional Centers". USCIS. Immigrant Investor Program. April 5, 2023. Retrieved June 26, 2023. This page in Simplified Chinese. (PDF, 152 KB)
  13. ^ "InvestAmerica | EB-5 Green Card Program". InvestAmerica LLC. Retrieved November 17, 2023.
  14. ^ a b Insider, Investment Migration. "The United States EB-5 Program". Investment Migration Insider. Archived from the original on April 29, 2020. Retrieved April 24, 2020.
  15. ^ a b c Chris Fuchs (February 3, 2017). "New Legislation Introduced to End EB-5 Immigrant Investor Program". NBC News. Archived from the original on May 1, 2017. Retrieved May 9, 2017.
  16. ^ a b "Jared Kushner's Trump Card". Bloomberg. 2016. Archived from the original on April 7, 2020. Retrieved May 8, 2017.
  17. ^ "About the EB-5 Classification". USCIS. January 2020. Archived from the original on February 13, 2020. Retrieved February 29, 2020.
  18. ^ Jeffries, Hakeem S. (March 15, 2022). "H.R.2471 - 117th Congress (2021-2022): Consolidated Appropriations Act, 2022". www.congress.gov. Archived from the original on May 29, 2015. Retrieved May 22, 2022.
  19. ^ a b c "EB-5 Immigrant Investor Process". USCIS. February 2017. Archived from the original on October 8, 2013. Retrieved May 9, 2017.
  20. ^ Harpaz, Yossi (2022). "One foot on shore: An analysis of global millionaires' demand for U.S. investor visas". The British Journal of Sociology. 73 (3): 554–570. doi:10.1111/1468-4446.12940. ISSN 0007-1315. PMC 9322028. PMID 35561108.
  21. ^ Riley, Kim (June 28, 2019). "New federal rulemaking makes major changes to EB-5 Immigrant Investor Program". Transportation Today. Washington DC: Macallan Communications. Archived from the original on July 30, 2019. Retrieved July 30, 2019.
  22. ^ a b Riley, Kim (August 29, 2019). "Bad actors force reform of fraud-plagued EB-5 investor program". Transportation Today. Washington DC: Macallan Communications. Archived from the original on May 11, 2020. Retrieved September 19, 2019.
  23. ^ Barron's Archived November 12, 2019, at the Wayback Machine. Retrieved November 12, 2019.
  24. ^ a b c d Ellen Sheng (August 1, 2016). "Foreign Investors Defrauded Through U.S. EB-5 Visa Program". Forbes. Archived from the original on May 9, 2017. Retrieved May 7, 2017.
  25. ^ Masunaga, Samantha (May 8, 2017). "Jared Kushner's sister puts EB-5 visas back in the spotlight. Here's what they are". Los Angeles Times. Archived from the original on May 8, 2017. Retrieved May 9, 2017.
  26. ^ Meyer, Robinson (January 20, 2018). "After 61 Years, America's Busiest Highway Is Almost Complete". The Atlantic. Washington DC: Emerson Collective. Archived from the original on July 30, 2019. Retrieved July 30, 2019.
  27. ^ Sangani, Priyanka. "EB-5 investor programme on pause as deadline to re-authorise it ends". The Economic Times. Archived from the original on July 4, 2021. Retrieved July 3, 2021.
  28. ^ "EB5 Visa Direct Investment". D'Alessio Law Group. Archived from the original on July 9, 2021. Retrieved July 3, 2021.
  29. ^ a b c d e f U.S. Citizenship and Immigration Services. "EB-5 Regional Center". USCIS. Archived from the original on November 23, 2011. Retrieved November 17, 2011.
  30. ^ a b United States Government Accountability Office (2005). "Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors" (PDF). Archived (PDF) from the original on June 27, 2011. Retrieved December 13, 2011.
  31. ^ a b Masters, Brooke A. (August 12, 2000). "2 Accused of Immigration, Investment Fraud". The Washington Post. Archived from the original on August 28, 2017. Retrieved May 9, 2017.
  32. ^ a b Kelleher, James; Matz, Karin; Lee, Melanie (December 22, 2010). "Special report: Overselling the American dream overseas". Reuters. Shanghai and Chicago. Archived from the original on April 1, 2017. Retrieved May 9, 2017.
  33. ^ Thiele, Leslie K. L.; Decker, Scott T. (2010). "Residence in the United States through Investment: Reality or Chimera?". Albany Government Law Review. 3 (1): 103–147.
  34. ^ U.S. Citizenship and Immigration Services (2011). "A Work in Progress: Towards A New Draft Policy Memorandum Guiding EB-5 Adjudications" (PDF). Archived (PDF) from the original on January 8, 2013. Retrieved December 13, 2011.
  35. ^ McGeehand, Patrick (2011). "Rules Stretched as Green Cards Go to Investors". The New York Times. Archived from the original on May 21, 2020. Retrieved December 21, 2011.
  36. ^ Riley, Kim (July 20, 2020). "EB-5 Regional Centers require improved oversight, immigration lawyer says". Transportation Today. Washington DC: Macallan Communications Inc. Archived from the original on July 22, 2020. Retrieved July 30, 2020.
  37. ^ "Immigrant Statistics: China Employment Fifth Preference" (PDF). Bureau of Consular Affairs via United States Department of State. Archived from the original (PDF) on October 13, 2014.
  38. ^ Schield, Brian (November 22, 2019). "EB-5 Programs Update, New Legislation Introduced". National Law Review.com. Western Springs IL: National Law Forum, Inc. Archived from the original on November 23, 2020. Retrieved July 30, 2020.
  39. ^ Putzier, Konrad (January 14, 2020). "Graham Backs a Bill Friendly to Real-Estate Industry". The Wall Street Journal. New York NY: Dow Jones and Co. Archived from the original on April 10, 2021. Retrieved March 31, 2021.
  40. ^ Samuelian, Michael (January 15, 2020). "Where did Hudson Yards come from". Gotham Gazette. Staten Island City NY: Citizens' Union Foundation. Archived from the original on February 26, 2023. Retrieved March 31, 2021.
  41. ^ D'Ambrosio, Dan (March 25, 2021). "Leahy co-sponsors legislation to clean up EB-5 visa program". Burlington Free Press. Burlington VT: Gannett. Archived from the original on February 26, 2023. Retrieved April 13, 2021.
  42. ^ "Leahy introduces EB-5 investor visa integrity reform bill". VermontBiz. South Burlington VT: Vermont Business Magazine. March 18, 2021. Archived from the original on April 13, 2021. Retrieved April 13, 2021.
  43. ^ "EB-5 Reform and Extension Blocked on Senate Floor". CIS.org. June 25, 2021. Archived from the original on July 9, 2021. Retrieved July 8, 2021.
  44. ^ "EB-5 Immigrant Investor Program Update". USCIS.gov. Archived from the original on July 20, 2020. Retrieved February 6, 2021.
  45. ^ "EB-5 Industry Prepares for a Restart Amid New Rules". Wealth Management. March 21, 2022. Archived from the original on August 7, 2022. Retrieved August 23, 2022.
  46. ^ Keays, Alan J. (March 10, 2022). "Leahy, former booster of scandal-plagued EB-5 program, revives it with reforms". VTDigger. Archived from the original on August 23, 2022. Retrieved August 23, 2022.
  47. ^ Riley, Kim (July 26, 2020). "NES Financial expert calls for EB-5 expansion amid lawmakers' concerns". Transportation Today. Washington DC: Macallan Communications Inc. Archived from the original on July 16, 2020. Retrieved July 30, 2020.
  48. ^ "§ Sec. 204.6 Petitions for employment creation aliens". Title 8 of Code of Federal Regulations (8 CFR) \ 8 CFR PART 204 -- Immigrant Petitions. USCIS. Archived from the original on January 18, 2012. Retrieved May 8, 2017. USCIS defines a Targeted Employment Area (TEA) as an area which, at the time of investment, is a rural area (not within either a metropolitan statistical area (MSA) (as designated by the Office of Management and Budget) or the outer boundary of any city or town having a population of 20,000 or more), or an area within an MSA or the outer boundary of a city or town having a population of 20,000 or more which has experienced unemployment of at least 150% of the national average rate.
  49. ^ a b c Elkind, Peter; Jones, Marty (July 24, 2014). "The dark, disturbing world of the visa-for-sale program". Fortune. Archived from the original on March 13, 2015. Retrieved March 10, 2015. paraphrased in Targeted Employment Area
  50. ^ McGeehan, Patrick; Semple, Kirk (December 19, 2011). "Rules Stretched as Green Cards Go to Investors". The New York Times. Archived from the original on February 26, 2023. Retrieved March 10, 2015.
  51. ^ Walsh, George M. (January 19, 2014). "Skepticism surrounds China City plan for upstate New York". The Washington Post. Archived from the original on April 2, 2015. Retrieved March 10, 2015.
  52. ^ "Basic Background about the EB-5 Program". American Immigration Lawyers Association (AILA). Archived from the original on April 6, 2017. Retrieved May 8, 2017.
  53. ^ a b "Certified List of Targeted Employment Area (TEA) in California". California Governor's Office of Business and Economic Development. Archived from the original on September 18, 2016. Retrieved September 22, 2016.
  54. ^ "Targeted Employment Area". uscis.gov/eb-5. Archived from the original on November 20, 2017. Retrieved July 1, 2020.
  55. ^ "Florida targeted employment areas". Archived from the original on February 24, 2012. Retrieved February 8, 2012.
  56. ^ a b c d e f Leahy & Grassley Introduce Legislation To Improve & Extend Job-Creating Foreign Investment Program, Washington, June 4, 2015, archived from the original on July 11, 2017, retrieved May 9, 2017((citation)): CS1 maint: location missing publisher (link)
  57. ^ "Why China loves Las Vegas". Las Vegas Sun. May 11, 2014. Archived from the original on December 11, 2014. Retrieved December 11, 2014.
  58. ^ Berzon, Alexandra; Hudson, Kris (February 13, 2013). "Closed Casino Banks on U.S. Program". Wall Street Journal. WSJ. Archived from the original on July 2, 2016. Retrieved April 13, 2015.
  59. ^ Welitzkin, Paul (December 2, 2014). "Chinese investors helping build major US road link". China Daily (USA). New York NY: New Media. Archived from the original on July 30, 2019. Retrieved July 30, 2019.
  60. ^ a b Harney, Alexandra (May 12, 2017). "Behind Kushner Companies, a Chinese agency skirts visa-for-investment rules". Reuters. Shanghai. Archived from the original on May 12, 2017. Retrieved May 12, 2017.
  61. ^ a b "Investor Alert: Investment Scams Exploit Immigrant Investor Program". SEC. Investor Alerts and Bulletins. October 1, 2013. Archived from the original on April 20, 2017. Retrieved May 7, 2017.
  62. ^ Peter Elkind; Marty Jones (July 23, 2014). "Whistleblower unmasked as partners battle over $14.7 million award". Fortune. Archived from the original on May 31, 2017. Retrieved June 1, 2017.
  63. ^ Sanjay Bhatt (October 24, 2015). "Ambitious developer's fast climb snagged by claims of deception". The Seattle Times. Archived from the original on April 13, 2017. Retrieved May 7, 2017.
  64. ^ "SEC v. Queros" (PDF). SEC. April 12, 2016. Archived (PDF) from the original on March 4, 2017. Retrieved May 7, 2017.
  65. ^ "Leahy welcomes bipartisan House bill to reform EB-5 program". Vermont Biz. September 13, 2016. Archived from the original on September 16, 2016. Retrieved May 9, 2017.
  66. ^ Edward Helmore (April 7, 2017). "Immigrant investor program under fresh scrutiny as Chinese president visits US: FBI raided Chinese-focused cash-for-residency scheme linked to EB-5 visa that has been used by developers such as Jared Kushner before Trump met Xi Jinping". The Guardian. New York. Archived from the original on May 7, 2017. Retrieved May 7, 2017. FBI raids were focused on the California Investment Immigration Fund, a business allegedly connected to abuses of the controversial EB-5 program
  67. ^ Laurel Wamsley (April 5, 2017). "Feds Raid Suspected $50M Visa Fraud Ring Near Los Angeles". NPR. Archived from the original on May 8, 2017. Retrieved May 7, 2017.
  68. ^ Hernández, Javier C.; Drucker, Jesse (May 19, 2017). "How to Woo Chinese Investors: With Visa Offers and the Trump Name". The New York Times. Beijing. Archived from the original on May 19, 2017. Retrieved May 20, 2017.
  69. ^ Trump Looms as Kushner Companies Courts Investors in China Archived August 5, 2017, at the Wayback Machine By Keith Bradsher, Ailin Tang and Jesse Drucker May 7, 2017
  70. ^ Emily Rauhala and William Wan (May 6, 2017). "In a Beijing ballroom, Kushner family pushes $500,000 'investor visa' to wealthy Chinese". The Washington Post. Beijing. Archived from the original on May 6, 2017. Retrieved May 7, 2017.
  71. ^ "Reporters barred from Kushner Companies' event in China". Reuters. May 7, 2017. Archived from the original on July 19, 2017. Retrieved July 2, 2017.
  72. ^ "Trump and Kushner exploitation of presidency 'unlike anything we have ever seen before', Obama's ethics lawyer says: Norm Eisen tweeted remark while sharing link to story about Jared Kushner's sister highlighting family ties while wooing Chinese investors Samuel Osborne". Independent.co.uk. May 7, 2017. Archived from the original on May 7, 2017. Retrieved May 8, 2017.
  73. ^ a b Simons, R. A.; Wu, J.; Xu, J.; Fei, Y. (2016). "Chinese Investment in U.S. Real Estate Markets Using the EB-5 Program". Economic Development Quarterly. 30 (1): 75–87. doi:10.1177/0891242415620009. S2CID 155869742.

External links

United States nonimmigrant visas
Categories