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EB-5 Investor Visa Program Scrutinized by Financial and National Security Regulators

file0001996506733.jpgThe EB-5 investor visa program, which allows foreign nationals to obtain green cards for themselves and their families if they meet certain benchmarks for investment and job creation, has been the subject of recent scrutiny from several federal agencies. The Securities and Exchange Commission (SEC) filed suit against a Chicago man in connection with an allegedly fraudulent investment scheme targeting prospective immigrant investors. It has also issued subpoenas to companies that have raised capital through the EB-5 program. The White House has generally expressed its support for the EB-5 program and other programs that attract immigrant entrepreneurs and others, as a means of boosting the economy. It is not yet clear whether the current EB-5 controversy will amount to anything, or if it will be yet another political feud in the larger process of immigration reform.

Prospective immigrants may petition for an employment-based immigrant visa under the EB-5 program if they meet four major criteria:
1. Investment of at least $1 million in a “new commercial enterprise,” or at least $500,000 in some circumstances;
2. “New commercial enterprise” is generally defined as a for-profit business, however organized, formed after November 29, 1990;
3. The immigrant must play an active role in managing the enterprise; and 4. The investment must create at least ten new full-time jobs for authorized workers, not including the investor or the investor’s immediate family.

U.S. Citizenship and Immigration Services (USCIS), which manages the EB-5 program, has authorized the establishment of Immigrant Investor Regional Centers (IIRCs) to assist investors with various EB-5 processes. Ten IIRCs have opened in New Jersey so far.

Senator Chuck Grassley (R-IA) has raised concerns about aspects of the EB-5 program affecting national security. These concerns remain rather vague, aside from allegations that officials approved EB-5 petitions without completing full criminal background checks and other security inquiries. The SEC has issued subpoenas to several companies, including GreenTech Automotive, Inc., a company formed using money from foreign investors that sought to build an automobile plant in Mississippi. GreenTech has not yet begun production, giving detractors of the EB-5 program an opportunity for broad criticisms. The SEC has not disclosed the specific information sought by the subpoenas, but it appears to relate to compliance with securities laws in solicitations of foreign investors.

The SEC brought charges against a Chicago man earlier this year for alleged securities fraud through the EB-5 program. The defendant, according to the SEC, sold over $145 million in fraudulent securities to foreign investors, mostly in China, through a IIRC he controlled, for a nonexistent convention center in Chicago. The IIRC allegedly received about $11 million in administrative fees for processing EB-5 applications.

The EB-5 program is likely to remain controversial, but still offers an opportunity for prospective immigrants with the means to make a substantial investment in a U.S. business to obtain a green card. If the program’s recent scrutiny offers any lesson for prospective EB-5 immigrants, it is the importance of due diligence.

Immigration attorney Samuel C. Berger represents immigrants and prospective immigrants who seek visas to come to the New York and New Jersey areas, or who have made their home in one of these places already. Applications for immigrant visas and other benefits require careful planning and knowledge of the complex federal immigration laws. We help businesses and families petition to bring their immigrant employees and loved ones to the U.S. To schedule a confidential consultation, contact us today online or at (212) 380-8117.

More Blog Posts:

Requesting Expedited Processing of an EB-5 Immigrant Investor Visa Petition, New York & New Jersey Immigration Lawyer Blog, May 15, 2013
USCIS Issues Draft of Policy Memorandum for EB-5 Visa Program, New York & New Jersey Immigration Lawyer Blog, March 21, 2013
U.S. Senate Passes Extension of EB-5 Investor Visa Pilot Program, New York & New Jersey Immigration Lawyer Blog, September 7, 2012
Photo credit: CarolinaJG from morguefile.com.