America’s investor-visa program is ripe for fraud, a new investigation finds — but an immigration expert says the government’s proposed fixes fall far short of tightening security.
“If one is worried, as I am, about the fundamental problem of selling visas to aliens, which the EB-5 program does, then any modification of it is like putting lipstick on a pig,” said David North, senior fellow at the Center for Immigration Studies.
Among the findings by the Government Accountability Office:
- The U.S. Citizenship and Immigration Services has difficulty figuring out the source of some of the invested funds, which are supposed to come from lawful sources.
- The agency’s reliance on “paper-based documentation” undercuts its ability to weed out fraud and abuse.
- The agency does not appropriately track the economic impacts of the EB-5 program.
Stunningly, GAO investigators found that USCIS does not 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 rarely conducts site visits to determine if the claimed economic activity is actually under way and never interviews investors before the green cards are issued.
Written in what North calls “ultra-cautious” style, the GAO report did not identify any of the controversial EB-5 projects, such the SLS casino venture promoted by Sen. Harry Reid, D-Nev.
Instead, the report gently suggested that USCIS is not well versed in evaluating the financial complexities of EB-5 operators.
North noted: “There was no attempt to lay out with any specificity the threat scenarios that need to be addressed, from the hoodwinking of alien investors to the attempts by other alien investors to use the program to buy into such sensitive areas as the construction of a field office for the FBI.”
Sen. Charles Grassley, R-Iowa, has introduced legislation aimed at shoring up EB-5 security. The American Job Creation and Investment Promotion Reform Act:
- Provides increased authority to Department of Homeland Security to deny or terminate regional centers or visas where there is fraud, criminal misuse, or a threat to public safety or national security.
- Requires background checks of regional center and project developer principals.
- Requires Homeland Security to vet EB-5 projects earlier in the process, before foreign nationals apply for visas or invest in projects.
- Enhances DHS’ ability to investigate the source of funds from foreign investors and limits the use of loaned or gifted funds.
- Strengthens the definition of “Targeted Employment Area” so more investment goes to high-unemployment zones and rural regions, as Congress originally intended.
- Raises the individual investment threshold to $800,000 for TEAs and $1.2 million for non-TEAs.
- Requires for the first time that foreign investors prove the creation of direct jobs, in addition to verifiable indirect jobs, before they are granted permanent residence.
Rep. Dave Brat, R-Va., an economist and member of the House Small Business Committee, told Watchdog.org:
“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.”
Due to expire this year, the logistically challenged but politically popular EB-5 program is almost certain to be reauthorized by Congress, North predicted.
“The improvements in the Grassley bill are real, but only in the context that the extension of the program is just about assured,” he concluded.
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