Feds: EB-5 Visas ‘Rampant with Fraud’

February 23, 2018 | Joe Guzzardi

Next month, in Ho Chi Minh City and Hanoi, two EB-5 investors’ conferences will convene. The events will include an impressive array of experts – immigration lawyers, securities attorneys and developers. Last year’s EB-5 gathering in Vietnam attracted a 400-strong audience. Little wonder then that EB-5 visas issued to Vietnamese have increased 62.5 percent over the last two years. The State Department predicts that Vietnamese demand for EB-5 visas will soon create a waiting list for that nation, a situation that to date is only true for Chinese applicants.

Although none of the assembled specialists in Vietnam or EB-5 advocates located elsewhere will say it aloud, the visa’s primary lure isn’t Americans business opportunities, but rather U.S. citizenship. A foreign national who invests in a government-approved U.S. business will receive lawful permanent resident status which will also eventually be granted to his spouse and minor children. The EB-5, with its annual 10,000 cap, is called “citizenship for sale” by its many critics.

Created by the Immigration Act of 1990, the “employment-based” EB-5 visa grants a green card to applicants who invest $500,000 for two years in a U.S. commercial venture. At the end of two years, the investor can withdraw his money and will receive green cards for the rest of the family. Found in the fine print of the description of the EB-5: The investor never has to visit the company, have any involvement in its operations or employ U.S. citizens.

Despite ample evidence that the EB-5 visa serves no essential purpose, Congress refuses to end the beleaguered, fraud-ridden program. A recent case involved an investor who misused $50 million in project funds for his personal use and another $30 million he received for projects never completed. Federal prosecutors called the scheme “rampant with fraud.”

When President Trump signed a two-year budget agreement for fiscal years 2018 and 2019 to prevent an extended federal government shutdown, the legislation also contained a short-term continuing resolution to fund the EB-5 Program which will continue without much-needed restructuring. Last year, a Trump family member, Jared Kushner’s sister Nicole Meyer, pitched an EB-5 investment in China, the country that receives more than 75 percent of the visas issued annually.

The Government Accountability Office reported that it couldn’t confirm that money used for EB-5 visas was not coming from “the drug trade, human trafficking or other criminal activities.” Other federal agencies are equally skeptical. In 2013, Homeland Security Investigations, an Immigration and Customs Enforcement division, said they were concerned that those who prepare overseas documents “may try to use increasingly sophisticated methods to circumvent” the program’s intention. In a memo, the agency suggested ending the EB-5 regional center program because “there are no safeguards that can be put in place that will ensure the integrity” of the regional center model.

When it conducted an internal, random sampling review of pending EB-5 visa applications, the United States Citizenship and Immigration Services fraud detection unit found numerous duplicitous documents. Despite the deep concerns the GAO, HSI and USCIS have expressed, the State Department continues to grind out EB-5 visas – visas that don’t necessarily create American jobs.

The EB-5’s long-term consequences must also be considered – added population growth both immediately and in the future when the minor children reach marrying age, start families, and through chain migration petition other relatives.

Among the dozens of employment-based visas that need an overhaul so that they benefit American workers, the EB-5 tops the list.

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