RCBJ Retrospective: EB-5 Program Integrity – Separating Fact from Fiction By Peter D. Joseph

05.01.15 | Archived

pdjsEB-5 Program Integrity: Separating Fact from Fiction (Volume 3, Issue 1, March 2015, Pages 7-8) 

by Peter D. Joseph, IIUSA Executive Director

Supporters and stakeholders of the EB-5 Regional Center Program (the “Program”) often describe it as “win-win-win” proposition – American businesses secure financing for job-creating projects; local communities enjoy increased economic development and employment opportunities; and foreign investors gain the benefits of U.S. residency. These benefits are demonstrably true. According to IIUSA’s comprehensive peer-reviewed economic impact reports, the programcontributed $3.39 billion to U.S. GDP and supported over 42,000 U.S. jobs during fiscal year 2012. And projects are coming to fruition across the country, creating jobs and transforming neighborhoods.

Meanwhile, the Program’s critics claim it is an unregulated, fast-track to citizenship – false statements that ignore or misunderstand how the Program and the U.S. immigration system operate.

To continuing bringing jobs and economic benefits to American communities, we must do more to correct misinformation and increase understanding of how the EB-5 Program works and the policies and procedures that protect the integrity of the program.

Any discussion about EB-5 and program integrity must take into account significant changes that have been made in the last few years to how U.S. Citizenship & Immigration Services (USCIS) oversees the Program. There is no doubt that the Program is complex and that maintaining Program integrity requires commitment and resources. In the last two years, USCIS has demonstrated its commitment to strong oversight of the Program by creating a dedicated Investor Program Office (IPO) in Washington D.C., continually expanding its team of experts in immigration law, economics, business, national security and fraud detection, and appointing a Program chief who is a veteran opreviously served in the Treasury Department’s Financial Crime Enforcement Network.

USCIS has clarified its guidance for adjudicators with a comprehensive policy memorandum and has strengthened interagency relationships critical to Program oversight and implementation. At IIUSA’s Advocacy Conference in May 2014, Director Colucci said:

“One of the reasons the program was relocated to Washington, DC is to facilitate greater interaction among the interagency community. Just as the EB-5 program cannot be successful without [IIUSA’s] support, we need to build strong partnerships with other federal agencies who are likewise stakeholders in the program.”

This is particularly evident in new cooperation with the Department of Commerce as well as with enforcement and intelligence agencies including the Securities & Exchange Commission (SEC), Federal Bureau of Investigation (FBI), and the Fraud Detection and National Security Directorate (FDNS).

It is also important to recognize that EB-5 investors follow the same two-step immigration process – and are subject to the same series of background checks and national security screenings — as participants in any other visa category.

  1. Individuals first file a petition with USCIS to determine their eligibility to participate in a visa category. For EB-5, this petition must include information on the lawful source and path of funds to be invested through the Program along with other information documenting how the funds will be invested to create jobs required as required by the Program. The USCIS adjudication process for eligibility petitions includes a series of background checks and screenings, including verification of the source and path of funds, that goes beyond what is required for petitioners in moth other visas categories.
  2. Upon approval of the eligibility petition, immigrant investors must then file either a visa application with the Department of State, if they reside outside the U.S., or an adjustment of status application with USCIS, if they are already inside the U.S. on another visa. The National Visa Center, the State Department’s clearinghouse for applications in all visa categories, requests supporting documentation from the visa applicants before sending the completed file to the appropriate U.S. Embassy or Consulate.

Consular affairs officers at the appropriate Embassy or Consulate then determine if the individual is admissible to the United States and whether or not a visa will be granted. The determinations is based on in-person interviews, a review of the entire application and petition file, and additional background checks and national security screenings that may include independent and/or in-country investigations conducted in coordination with other federal intelligence and national security agencies before or after the interview.

Both of these steps must be successfully completed for an EB-5 investor to receive a conditional visa that allows the applicant to reside in the United States for two years. Before the end of that two-year period, the immigrant investor must file a new petition documenting that their investment through the EB-5 program has satisfied Program requirements and created a minimum of 10 U.S. jobs. If USCIS approves the petition, the conditions on the visa will be lifted. However, removal proceedings can be initiated even at this stage if USCIS finds that the applicant should be have inadmissible originally. Once they become green card holders, EB-5 investors are subject to the same rules for maintaining residence and becoming eligible to apply for citizenship that apply to other permanent residents – and are taxed on their worldwide income.

From start to finish, this is a long process – not a “fast track.” Average processing times for EB-5 eligibility petitions (I-526) are currently 14 months, and visa application processing can take months or years depending on investigations conducted by the Department of State. The industry would like to see processing times lower and is willing to pay higher filing fees to achieve that objective, but we support the federal government doing what it takes to fully vet each EB-5 investor petition. In addition, while there may be longer wait times for other visa categories, each category has its own limits on the number of visas issued annually and the wait times for one category do not impact other categories. With the EB-5 program reaching maximum capacity for the first time in 2014, and the popularity of the program growing, it is likely that wait times will increase unless the visa cap is lifted.

Those are the facts. EB-5 is highly regulated and there are processes and procedures in place to screen immigrant investors the same way that all immigrants seeking visas are screened.

IIUSA and its members welcome working with Congress and federal agencies to continue strengthening the integrity of the EB-5 program. That is why we supported a number of integrity measures included in legislation that passed the U.S. Senate last Congress. Proper oversight, transparency, compliance with – and enforcement of – all applicable laws and regulations are essential to maintain the confidence of all stakeholders and ensure that the program continues bring capital and job creation to American communities.

RCBJ Retrospective articles are reprinted from IIUSA’s Regional Center Business Journal trade magazine. Opinions expressed within these articles do not necessarily represent the views of IIUSA and are provided for educational purposes.

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