Investigations Propose Need for EB-5 Regulation

Immigration authorities in the United States are facing some tough questions about the administration of a popular visa program.

The EB-5 visa program was established in 1990 and has created much discussion during recent debates over immigration reform. Under the program, in exchange for securing U.S. visas for themselves and their families, foreigners must invest $500,000 in an American business project, according to The New York Times. These visas can be converted to permanent green cards after two years if the investment created at least 10 jobs.

According to the U.S. Citizenship and Immigration Services’ website, each of the investments must serve either a community that has unemployment rates at 150 percent rate of the national average, or a rural area. Because the projects will be located in these struggling communities, the program was set up so that foreign investors would have little to gain from the investment, beyond acquiring their visas.

However, recent reporting by The New York Times found that some EB-5-financed projects are located in some of the wealthiest neighborhoods in the country. One example is the Battery Maritime Building, which is located near Wall Street in the affluent area of lower Manhattan. According to the newspaper, that building project has qualified for EB-5 backing because it is located in a development zone that includes both wealthy areas of Manhattan and impoverished neighborhoods in Brooklyn, across the East River. The Times described the zone as similar to a “gerrymandered political district.”

“The question is, are the state authorities adhering to the spirit of the law?” Alejandro Mayorkas, director of USCIS, told the paper. “Are the people from the areas of high unemployment being employed?… If they’re not being hired from those areas, then the question is justified.”
The program, which provides many American-based companies with an additional source of funding, has largely gone unregulated during its more than 20 years. Foreign companies that undertake marketing for the program have promoted unrealistic claims, according to a Reuter’s report, “Overselling the American dream overseas.” Some imply that investments are insured or government-backed, while other marketing outfits have claimed that green cards are guaranteed to investors.

While the program might be coming under some justified scrutiny, and while prospective immigrant entrepreneurs would be well-advised to do their homework before putting down any money, there’s no doubt that the program has been hugely popular. More than 3,800 applications were submitted during the 2011 fiscal year, four times the number which were received only two years previous, according to The New York Times.