- The Washington Times - Monday, December 29, 2014

While President Obama’s grant of amnesty for nearly 5 million illegal immigrants is drawing furious criticism, a little-known visa program for wealthy foreign investors also is mushrooming on his watch despite a history of fraud and concerns in Congress about potential national security risks.

Since Mr. Obama took office, the number of immigrants entering the U.S. legally under the “EB-5” program has risen nearly 700 percent, from 628 in fiscal year 2008 to 5,115 in fiscal 2014. The number of foreign citizens applying for the visas has grown even faster, from 853 in 2008 to 12,453 in 2014.

“There’s been a major promotion,” said Louis Crocetti Jr., an immigration consultant who formerly led the fraud detection unit at U.S. Citizenship and Immigration Services. “Obviously, it’s very popular. It’s one that’s riddled with all sorts of problems. The agency keeps trying to correct them, but I do believe there’s just an increasing demand and increasing education of the investment opportunities.”

High-profile incidents of EB-5 fraud, and skepticism about the government’s claims of job creation, have led three Republican senators — Chuck Grassley of Iowa, Bob Corker of Tennessee and Tom Coburn of Oklahoma — to request a federal audit so Congress can evaluate the program before it comes up for reauthorization next year.

Mr. Grassley said whistleblowers have raised serious concerns with national security implications, and he wants to “sort through the vulnerabilities” of the program.

The Government Accountability Office said this month that it has begun the audit, which is expected to be completed by next summer.


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To obtain an EB-5 visa, a foreign citizen must agree to spend at least $500,000 on a project that will create at least 10 jobs in the U.S. Investments usually are pooled through “regional centers,” which also have grown exponentially, from fewer than 50 in 2008 to 600 this year.

More than 70 percent of the foreign investors are from China; in return for their investment, they and their family members gain access to permanent residence visas, also known as green cards. The program has become so popular that USCIS temporarily stopped approving applications from China last August because the quota had been reached for the first time.

Immigration lawyers say the program’s popularity began to increase during the deep economic recession of 2007-2009, because it became a source of cheap money for capital improvement projects at a time when government funding and bank loans were drying up.

Kyle Barella, an immigration lawyer in McLean, Virginia, who works with EB-5 applicants, said the program “really boosts the economy.”

“When these investors come here, they send their children to school, they pay their taxes, they buy houses,” he said.

But Mr. Barella said the president’s recent executive action to grant work permits to millions of illegal immigrants has caused enormous resentment among the foreign investors trying to get into the U.S. legally.

“It’s frustrating, and it sends a bad message about incentive,” Mr. Barella said. “Clients are asking, ‘Why should I spend this money the legal way when I can just come over here on a tourist visa, overstay, and in 10 years maybe I’ll get amnesty?’”

Leon Rodriguez, director of USCIS, told a group of stakeholders in the program this month that the applications for EB-5 visas in fiscal 2014 represent more than $5 billion in potential economic investments.

For example, agents of the heavily indebted Pennsylvania Turnpike Commission are seeking 400 wealthy foreign investors to provide $200 million for a $420 million highway construction project to link the turnpike to I-95 north of Philadelphia.

But along with economic benefits, there have been high-profile scandals in the unregulated program.

The Washington Times reported last year that the Obama administration overruled career Homeland Security officials and expedited visa applications for about two dozen foreign investors for a politically connected Las Vegas casino hotel after repeated pressures from Senate Majority Leader Harry Reid and his staff.

The move came despite concerns about suspicious financial activity involving some of the visa applicants from Asia, and it ultimately benefited several companies whose executives donated heavily to Democrats.

In August, a federal grand jury indicted Anshoo Sethi, a 30-year-old Chicago operator of an EB-5 regional center, on charges of fraud for allegedly conning 290 Chinese investors into contributing $160 million for a hotel and convention center near O’Hare International Airport.

His development project had no building permits or construction plans, and he allegedly duped Democratic Illinois Gov. Pat Quinn, U.S. Sen. Richard J. Durbin, Illinois Democrat, and Michael Axelrod, son of former White House adviser David Axelrod, to support the project by promising that it would create about 8,500 jobs. Michael Axelrod reportedly lobbied USCIS to approve visas associated with the project.

In Virginia, the EB-5 program became an issue in the governor’s race last year when the Securities and Exchange Commission subpoenaed records of electric car company GreenTech, co-founded by Democrat Terry McAuliffe. The company, together with a sister firm run by Hillary Rodham Clinton’s brother, Anthony Rodham, allegedly guaranteed EB-5 investors a return on their investments.

Despite the probe, Mr. McAuliffe won the election, and the SEC has refused to comment on the status of the investigation.

In 2013 the Inspector General for the Department of Homeland Security harshly criticized USCIS’s management of the EB-5 program, saying poor record keeping made it impossible to verify claims of jobs created, and rules don’t allow the agency to punish regional centers over instances of fraud.

Mr. Crocetti said USCIS has made “major improvements” to the program in the past year, including hiring economists to support the officers who decide on a project’s economic impact.

“They’re going in the right direction in the past year or so,” he said. “They’re trying to deal with the fraud to the extent they can with their limited capacity.”

Nicholas Colucci, chief of the USCIS Immigrant Investor Program, told the stakeholders earlier this month that his office’s goals for fiscal 2015 include improving customer service and outreach, maintaining quality of services and improving the program’s integrity. Despite the program’s problems and frustration with Mr. Obama’s executive action last month, Mr. Barella said the benefits of the EB-5 visas merit the program’s reauthorization.

“I hope it still has bipartisan support going forward. It benefits Americans, because we get the jobs that they create,” he said. “I hope to see it be made permanent. I don’t think [the program] will sunset; it brings in too much money. Even with the scandals, it does a lot of good.”

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