The EB-5 visa program is big business in Florida. A few years ago, four regional centers in the state were soliciting foreign investor money in exchange for U.S. citizenship. More than two dozen are doing so now.
Proponents say it’s been good for the state’s economy, but critics charge it’s nothing more than selling green cards.
With genuine results of the EB-5 program difficult to determine, questions loom about the jobs created and the apparent loss of investors’ money.
The U.S. Citizenship and Immigration Service sanctions the EB-5 visa program, designed to spur job creation. As long as 10 jobs can be created or saved within two years of a $500,000 investment, a green card will be rewarded. The jobs can be created directly or indirectly by the investment and, oftentimes, multiple foreign investors are associated with individual projects.
The seemingly low job threshold has had the recent effect of lining up green card seekers to pay big money, as business developers have expanded their courtship of foreigners as a way to secure cheap financing.
No Tracking of Investment Performance
Florida Watchdog contacted the USCIS to ask about job creation data and success rates of EB-5 projects, but the agency’s press secretary, Christopher Bentley, said the USCIS “does not track business ventures to see if they’ve been successful.”
At the direction of Bentley, Florida Watchdog then contacted the Florida Department of Economic Opportunity, the agency responsible for designating EB-5 investment areas within the state.
DEO’s press secretary, Jessica Sims, confirmed the agency does not keep job-creation statistics, information regarding immigrant investor residency, or data showing whether foreign investor funds are recouped.
An analysis of information provided by the USCIS regarding I-526 and I-829 forms, however, shows that of the 7,871 alien entrepreneur applications accepted over the past four years, only 2,424 were ultimately approved for permanent residency.
In other words, 7,871 immigrant investors paid $500,000 to $1 million depending on the project, and 2,424 actually received green cards. Additionally, far fewer jobs were created than expected, according to the data.
USCIS keeps no records as to whether foreign investor funds are returned after their petitions for residency are denied, nor does the agency monitor employment data after two years of accepting an EB-5 application.
Possible Conflicts With Securities Laws
Mohammed Shaikh, an Orlando-based certified fraud examiner with extensive EB-5 experience, has openly questioned the efficacy of the visa program. Shaikh raised concerns with Florida Watchdog about the state’s regional centers’ practice of soliciting cash abroad for risky domestic investments as potentially conflicting with U.S. securities laws.
“U.S. investors would never invest in many of Florida’s regional center ventures; that’s why they seek foreign cash,” said Shaikh.
The low number of green cards issued and subsequent jobs created is particularly troubling when considering EB-5 investors can receive credit for positive employment results even when other domestic investors contribute to the overall financing of a project.
Florida Watchdog asked Bentley whether the cheap EB-5 financing makes it easier to build businesses and create jobs, or if the funding simply alleviates risk for the developer. Bentley declined to answer but instead said, “in order to qualify for the program, the individual investor must put their $500,000 to $1 million fully at risk.”
No Visa Enforcement Data
The EB-5 investor can move to the United States on a two-year temporary visa, along with their spouse and children, once the initial visa application and investment money is accepted.
If the associated business venture fails to produce the necessary jobs, the onus to deport falls on the immigrant investor. USCIS keeps no data pertaining to self-deportation or instances in which individuals may have stayed past the terms of their temporary visa.
President Obama’s Council on Jobs and Competitiveness has called for the EB-5 program to be “radically” expanded to generate at least 40,000 jobs a year.
William Patrick ([email protected]) reports for FloridaWatchdog.org. Reprinted with permission.