The EB-5 program was one of the major reasons I understood the dangers of fraud in hiring at the USCIS when the USCIS whistle-blowers contacted me in 2005. I saw the dangers and the faulty assumptions inherent in the program during the early 90s and I realized that it could be scammed quite easily.
When USCIS was recently assigned even more control and authority in administrating and monitoring this program, I and others tried once again to red flag EB-5 and the huge vunerability in the areas of counterintelligence, counterterrorism, and organized and not so organized crime which would arise by having USCIS in charge of a regional economic incentive program. The idea that the USCIS is involved in 226 regional centers, which are private companies or government development authorities, charged with financing projects within geographic regions is insane given the corruption and political manipulation of the agency by both parties.
Here’s more of the story we predicted would happen more than a year ago from today’s The Daily:
“Foreigners both in the U.S. and abroad must generally invest at least $500,000 to receive a temporary visa. If the investment creates 10 jobs after two years, the investors and their family members can apply for permanent residency, and eventually citizenship. If not, they face deportation. Regardless of the outcome, there is no guarantee of repayment.
Since the program was established 22 years ago, immigration officials have approved 12,904 investment visas; the investments have created an estimated 46,810 jobs.
Developers and immigration attorneys have turned the once-obscure EB-5 into a lucrative industry since the recession caused construction financing to dry up, drastically stepping up their recruiting efforts in far-away places, particularly China. The number of foreigners applying for the visa since the start of fiscal year 2008 totaled 12,201, compared with 9,475 in the previous 17 years combined, according to U.S. Citizenship and Immigration Services (USCIS), the visa granting arm of Homeland Security.
Jay Peak Resort in Vermont has used $200 million to transform itself into a year-round destination. And the developer of a new basketball arena for the Brooklyn Nets has collected $228 million to replace costly conventional financing.
But many projects have gone bust and some are in legal disputes that allege fraud, casting doubt on the immigration agency’s ability to effectively monitor the program. Lawsuits target, among others, a redevelopment effort sponsored by the city of New Orleans, a dairy farm in South Dakota, and a Chinese restaurant in California.
Last month, Homeland Security’s Office of Inspector General launched an investigation to determine if the program is “effectively administered and managed to detect and deter fraud, waste, abuse, while avoiding national security threats,” according to the internal announcement obtained by The Daily.
The inspector general has received at least one complaint this year asserting management routinely quashed concerns about fraud, according to a copy of the complaint.
And the SEC has requested “some 500 files” related to the program, said one immigration official, who requested anonymity for fear of reprisal.
“The goal is sanctions and penalties,” the official said, adding that the SEC requested the documents as USCIS attorneys were conducting their own review of whether the EB-5 program had been following securities regulations.
Attorneys discovered “a pattern of not following the rules,” the official said. “This is huge; this shuts down everybody.”
A confidential internal memo drafted by the attorneys, also obtained exclusively by The Daily, acknowledges the immigration agency is making no effort to determine whether these projects are adhering to securities law, and therefore “is potentially granting [investor visa] petitions based on patently illegal investments and/or investment schemes.””
I.E., US (USCIS) to Criminals: Having a tough time committing fraud in your native lands? America is open for business.