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Issues of corruption, fraud in investor-visa program date back two decades

Suspected abuses end up with 1 prosecution

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An investor-visa program Congress wants to permanently extend was rife with fraud and corruption from its start more than two decades ago, with hundreds of millions of dollars improperly diverted as government officials lamented a persistent lack of oversight and an inability to investigate or prosecute the perpetrators.

Internal documents obtained by The Washington Times about the EB-5 investor visa program called for investigations into a handful of companies that appeared to be abusing the system — though only one of those companies seems to have been prosecuted. One memo said a plan to launch a full investigation was derailed by a lack of resources and by the perpetrators' efforts to thwart it.

In a March 2002 Immigration and Naturalization Service memo, Senior Special Agent Elizabeth M. Goyer said the EB-5 program was dominated by a handful of private companies, most of them run by or closely associated with former high-ranking INS and State Department officials who were making money from being the middlemen on the visas.

"At least two of these companies were owned and operated by convicted felons who engaged such former officials to promote their fraudulent EB-5 schemes," Ms. Goyer's memo read, recommending that a task force be formed to conduct a full investigation and clean up the program.

More than a decade later, the EB-5 program is again under scrutiny after reports that high-ranking Democrats pressured U.S. Citizenship and Immigration Services, one of the agencies into which the INS split, to approve visas over the objections of career officers who deemed the applications to be unqualified.

The Homeland Security Department's inspector general is investigating the program and the former director of USCIS, Alejandro Mayorkas, whom President Obama has since promoted to be deputy secretary of Homeland Security.

The EB-5 program was designed to spur investment by rewarding rich foreigners who commit to at least $1 million in job-creating U.S. businesses — $500,000 in economically depressed areas — with green cards, signifying lawful permanent residency.

Applications associated with the EB-5 program traditionally have a low denial rate, meaning the government accepts most people who make claims based on the investor program.

Repeated warnings

As of the 2002 memo, Ms. Goyer said just one EB-5 promoter, Interbank, had been the subject of a full criminal investigation. Company leaders eventually were convicted on charges of immigration fraud, wire fraud and money laundering.

The Homeland Security Department said none of the foreign investors was complicit in the fraud, however, and in fact some lost the funds they invested and were denied green cards.

There is no evidence that any of the other companies Ms. Goyer and others thought should be investigated ever faced that sort of scrutiny.

A 2004 memo from U.S. Immigration and Customs Enforcement, another of the agencies that INS broke into after the Homeland Security Department was created, acknowledged that the previous effort had been sidetracked.

"Two years ago, the INS proposed an investigative initiative targeting six of the largest EB-5 promoters," the memo said. "Efforts to implement the plan were hampered by a lack of resources, by competing priorities, by the complexity and scope of these schemes, and by the continuous efforts by the EB-5 promoters and others to force the former INS (and then HOMELAND SECURITY DEPARTMENT) to abandon attempts to restore integrity to the program."

ICE "has been attempting to preserve the viability of these investigations by trying to ensure that legislative and regulatory changes, civil litigation, and policy decisions do not effectively render immaterial the misrepresentations in the EB-5 petitions of the targeted promoters," the memo said.

The agency then proposed that ICE "immediately implement and prioritize an investigative initiative targeting (initially) three of the most prolific/egregious suspect EB-5 promoters."

Unknown status

Asked for comment about the status of EB-5 and the investigations, USCIS referred questions to ICE, which did not provide answers Tuesday.

A spokesman for the Securities and Exchange Commission, which coordinates with USCIS on investigations but doesn't have autonomous authority to conduct related criminal probes, said Tuesday that it's agency policy to neither confirm nor deny the existence or nonexistence of any civil investigation unless and until an enforcement action is filed.

In February 2013, the agency charged an Illinois man with fraudulently selling more than $145 million in securities to more than 250 investors, primarily from China, purportedly to invest in a hotel and conference center near Chicago's O'Hare International Airport.

A husband and wife in Texas were charged in October with fraudulently raising at least $5 million by falsely promising that their money would be used as part of the investor program.

Almost all foreign investments in the EB-5 program are channeled through special companies called "regional centers."

Once their business plans are approved by immigration officials, the companies bundle investments into qualifying new businesses. Investors then can apply for EB-5 visas, and, if approved, can claim conditional green cards immediately upon entry to the U.S. After two years, the conditions are removed if the investment has created the jobs or looks likely to do so.

New cleanup efforts

USCIS is in the middle of a massive effort to tighten controls of the program. An inspector general report in December said the agency has faced headwinds in administering the program essentially because the enacting legislation does not give the bureau the authority to police itself or the program effectively.

In response, the agency plans to update regulations to provide clarity on establishing eligibility under the program and that within six months of the report, the agency would develop and implement a plan that includes collaboration with the Department of Commerce and the SEC, among other fixes.

A report released this month by the Brookings Institution found similar problems with a lack of oversight within the program, saying the U.S. Department of Commerce should supervise adjudication of regional centers and generate better public data to more effectively track the performances of the centers.

Separately, the inspector general is investigating whether Mr. Mayorkas improperly intervened in a batch of investor visas on behalf of Virginia-based financing company Gulf Coast Funds Management LLC.

Gulf Coast is run by Anthony Rodham, the brother of former Secretary of State Hillary Rodham Clinton, and is the finance arm of GreenTech Automotive, a company founded by longtime Clinton fundraiser Terry McAuliffe.

Mr. McAuliffe, who divested from the company after being elected governor of Virginia in November, has denied impropriety, as has Mr. Mayorkas and Gulf Coast officials. No evidence of criminal wrongdoing has been found.

The Times also reported in December 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 pressure from Senate Majority Leader Harry Reid, Nevada Democrat, and his staff.

Language to make fixes to the program — and indefinitely extend the authorization of regional centers that process the investments and visas — is contained in the comprehensive immigration bill passed by the U.S. Senate last summer. That bill is almost certainly not going to pass the House, though.

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