A controversial government program allows wealthy foreigners to buy their way into this country. Some critics said it amounts to citizenship for sale. Action News Investigates has learned the program has Pittsburgh connections.
Immigrants who want to live in the U.S. are forced to wait as long as a decade to get a green card. But a government program called EB-5 allows wealthy immigrants to jump to the front of the line if they can pay $500,000.
The program has been hit with allegations of fraud and abuse, and now some in Congress say it needs to go.
Newly minted American citizens celebrated last month at a naturalization ceremony in Pittsburgh. For some, it was a long journey.
“I came to the states in 1992, so it's a quarter of a century, so it's a pretty special day,” said Katie Cheung.
For Zhong Zhuang, owner of a Chinese restaurant in Squirrel Hill, the wait for a green card was much shorter. His family got him into the EB-5 program and paid $500,000. Within two years he had a green card -- and that was considered a long wait for someone using EB-5.
Zhuang was asked about whether he thought he was buying his citizenship.
“It's not like you're buying citizenship," he said. "You need to create jobs."
He's right. The program does require that investors create 10 jobs for each $500,000 payment.
EB-5 money has been used to finance Bakery Square in Pittsburgh -- the home of Google -- and UPMC East hospital in Monroeville, and even several movies filmed in Pittsburgh.
Also, a shopping center in South Fayette that got $500,000 from the family of a Chinese college student in Arizona. An estimated 200 jobs were created.
The financing was brokered by the Idea Foundry in Oakland, which runs an EB-5 center.
Michael Matesic, executive director of the Idea Foundry, was asked if the program sends the message that citizenship is for sale.
“Short answer? That's exactly what the program looks like," Matesic said. "The reality is, it's not just about the money. It's about the creation of the jobs. That's the essential component."
A 2013 report by the Department of Homeland Security inspector general found U.S. Citizenship and Immigration Services was "unable to demonstrate the benefits of foreign investment into the U.S. economy" from EB-5.
And the government's method for calculating jobs and economic benefit was "not valid," according to a 2015 Government Accounting Office report.
David North, of the Center for Immigration Studies in Washington, D.C., is an EB-5 critic.
“You're supposed to create 10 jobs for half a million dollars. Well, half a million dollars in this town doesn't even buy you a house,” North said.
While the program was supposed to benefit impoverished areas, North said most of the money has gone to glitzy real estate developments in big cities, including a New Jersey high-rise overlooking midtown Manhattan whose owners include President Donald Trump's son-in-law, Jared Kushner. It got $50 million from Chinese immigrants in the EB-5 program.
“There are some very rich people, very powerful people, particularly in the city of New York, who are making oodles on this program,” North said.
The program has also been hit with fraud allegations. Last year, the SEC accused the owners of a Vermont ski resort development of misusing $200 million raised through the EB-5 program. And there have been multiple other cases.
"There's enormous opportunities for corruption of one kind or another or crookedness,” North said.
Zhuang, the Squirrel Hill restaurant owner, said he was also a fraud victim.
He said a Pittsburgh broker convinced him to put down $100,000 toward a $1 million investment to build a hotel at an indoor water park in Ohio. Zhuang said he was promised “a green card and some return” in exchange for his investment.
In a lawsuit, Zhuang said the broker, Paul Liang of Fortune Group Realty, made "false and misleading" statements about the project and then refused to refund Zhuang's money when the project was abandoned. The lawsuit was settled last year.
Liang and his attorney did not return multiple calls from Action News Investigates.
Zhuang eventually got his green card through another EB-5 investment.
Like most immigrants, Ashwin and Andrea Pereira could not afford to spent a half-million dollars on green cards. So right after getting married, they had to split, spending two years on opposite sides of the world -- Ashwin in Pittsburgh, and Andrea in India.
“We literally went through the first two years of our marriage on Skype,” Ashwin said. “It was terrible. It was emotionally draining.”
He does not think it’s fair for the government to give preferential treatment to immigrants just because they have money.
“Because a green card is a green card. It should not be like somebody who has the money can jump the line,” he said.
A spokesperson for U.S. Immigration and Customs Enforcement said they have strengthened the EB-5 program in the wake of the fraud and abuse allegations.
Still, legislation filed last month by Sens. Charles Grassley, R-Iowa, and Diane Feinstein, D-California, would eliminate the controversial program.
- BAKERY SQUARE
- U.S. Citizenship and Immigration Services
- UNITED STATES SECURITIES AND EXCHANGE COMMISSION
- Chuck Grassley
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