If you're rich enough, and you want to want to live in the United States badly enough, you don't have to cross a border in the dead of night. You can buy your way in. You can apply for an "investor visa" -- properly known as an EB-5 award.
The federal Immigrant Investor Program works like this: A foreign national who invests $500,000 to $1 million in a U.S. business -- and can prove his investment created at least 10 jobs -- gets a permanent green card.
The U.S. has an annual allotment of 10,667 of these visas.
Sounds simple enough, right? It isn't.
Poor oversight of the program and some highly publicized scams have led the North American Securities Administrators Association, an advocacy group, to label EB-5-related fraud as one of the top new threats to investors.
According to a recent Government Accounting Office report -- a report to which Watchdog.org's Kenric Ward gave a more public airing on Monday -- the program is wide open to immigration shenanigans on a number of fronts:
- Invested funds are supposed to come from lawful sources. But do they? U.S. Citizenship and Immigration Services (USCIS) hasn't got a handle on where they come from, says the GAO.
- The agency is entirely reliant on “paper-based documentation,” which the report says undercuts its ability to weed out fraud and abuse.
- The agency does not appropriately track the economic impacts of the EB-5 program.
- Nor does it record basic information "such as the name, address and date of birth of the petitioners for regional centers, the middleman agencies that recruit foreign investors and use their capital, ostensibly to create American jobs."
- USCIS lets follow-ups slide. Its agents rarely conduct site visits to make sure the claimed economic activity is actually under way. Green cards are so automatic agents never interview investors before the cards are issued.
Controversial EB-5 projects not only exist, they have been cited in a number of news stories in recent months. For example, Breibart.com revealed that U.S. Sen. Harry Reid, D-Nev., pressured federal officials to expedite 230 visa applications for a Las Vegas casino project that benefited his family.
The EB-5 program, popular in Washington, is due to expire this year. But the consensus is that Congress is almost certain to reauthorize it.
How popular is the program among the world's wealthy? The number of applicants vying for the visas has doubled nearly every year since 2009. Last year, for the first time in the program's 25-year history, the annual allotment of 10,667 EB-5 visas ran out. No more visas could be distributed until the beginning of the fiscal year in October.
It will take infinitely longer with procedural changes for the program in the works. Investors' families were waiting about three months for their visas. That wait will grow to as long as three years.
An estimated 85 percent of the EB-5 funds in 2014 have come from China, where concerns about the country's environmental and economic health have led many wealthy families to consider migration.
Steven Yale-Loehr, an immigration professor at Cornell University, told the Los Angeles Times he expects the EB-5 investment boom to now slow down considerably.
"It's been like a four-lane expressway and now it's going back down to two," he said.
He said, because the visa program serves as a funding mechanism for local development projects, the prospect of longer waits for visas could reduce EB-5's usefulness for developers on tight deadlines to complete their projects.
Long delays could also kill the incentive for many Chinese immigrants, who are mainly applying to guarantee their children U.S. residency, Julie Oliver-Zhang, an immigration attorney in Washington, D.C., told the L.A. Times.
People older than 21 aren't eligible for green cards. If it takes up to three years to process an application, many offspring could be too old.
"Most of the people who want to do this are wealthy and they're doing it for their kids," Oliver-Zhang is quoted as saying.
Nevertheless, says Watchdog.org, Sen. Charles Grassley, R-Iowa, has introduced the American Job Creation and Investment Promotion Reform Act, legislation aimed at shoring up EB-5 security.
It adds considerable oversight and is likely to add more green-card delay.
Among a host of "fixes," Grassley's bill requires for the first time that foreign investors prove the creation of direct jobs -- that's in addition to verifiable indirect jobs -- before they are granted permanent residence.
Congressman Dave Brat, R-Va., an economist and member of the House Small Business Committee, told Watchdog.org's Ward this:
“It is incumbent on USCIS to ensure that EB-5 applicants do not have criminal histories, have legitimate funding sources, and are following all the rules of the program, including investing in legitimate U.S. businesses. Otherwise, the program is simply selling green cards to the highest bidders, including criminals and national security risks.”
Reach Nancy Smith at nsmith@sunshinestatenews.com or at 228-282-2423. Twitter: @NancyLBSmith
