EB-5 Program: U.S. Citizenship For Sale For $1M, Or Only $500K With Loophole Discount

Posted: 1:02 am EDT
[twitter-follow screen_name=’Diplopundit’ ]

 

The EB-5 visa program was designed to provide entry visas–and a path toward American citizenship–to immigrants who invest at least $1 million, or $500,000 in high unemployment or rural areas, to create or preserve at least 10 jobs.

Early this year, the Seattle Times asks, “how does downtown Seattle, the job center of the nation’s fastest-growing big city, become Detroit on paper?” The report says that the EB-5 rules has a loophole that cuts the price of a green card to $500,000 if foreigners invest in a rural area or urban one with high unemployment. “The rules allow them to string together several areas of high unemployment with one of low unemployment, like Manhattan or downtown Seattle, then build their project in the more prosperous area.” The Seattle Times which did a series on the EB-5 program in the Pacific Northwest says that  “EB-5 capital backs at least $2 billion in current projects in the Puget Sound region.”  

In 2013, the SEC alleged that a McAllen, Texas, company with government approval to participate in the EB-5 program pocketed investors’ cash and never got anyone a visa. Judge Randy Crane of the U.S. District Court for the Southern District of Texas issued an injunction restricting the company, USA Now, from raising funds from prospective immigrants.

That same report notes that the SEC had also filed a lawsuit against a Chicago developer who allegedly duped dozens of Chinese investors out of close to $150 million by pretending to build a hotel and convention center through an EB-5 regional center.

This past August, Lobsang Dargey, reportedly an impoverished Tibetan monastery student once who has become a well-to-do real-estate developer in Washington state faced civil fraud charges related to the EB-5 program. The Securities and Exchange Commission (SEC) accused him of misappropriating anywhere from $17 million to more than $50 million of the would-be Chinese immigrants’ money for his personal use or unapproved expenditures.

Early this month, the National Law Review reported that a civil action was also filed by the SEC against EB5 Asset Manager, LLC and its owner Lin Zhong in the United States District Court of Southern Florida. The SEC alleges that since at least March 2011, Zhong has used several entities that she owns and controls to exploit the EB-5 program, defrauding at least 17 investors out of $8.5 million.

Excerpt from LAT:

 [T]he private firms that get federal permission to create regional centers design their own districts, which Feinstein’s office argues has led to gerrymandering by tethering high-unemployment neighborhoods to wealthy ones. Remember, EB-5 visas are available for $500,000 invested in high-unemployment or rural areas; otherwise, the investment must be $1 million. So the gerrymandering allows wealthy immigrants to gain Legal Permanent Resident status by making what amounts to a two-year, $500,000 loan to an investment pool building a high-end hotel in a ritzy part of town that is connected, on paper, to a neighborhood with more risk and a higher need for investment. It’s hard in that scenario not to see the program the way Feinstein does — as selling citizenship.

The EB-5 program will expire on December 11 unless extended by Congress.  On November 4, Sen. Dianne Feinstein (D-CA) penned an op-ed saying the program should not continue.  “The bottom line is that the EB-5 regional center program sends a message that American citizenship is for sale, and the program is characterized by frequent fraud and abuse.”

#

 

2 responses

  1. You listed only four of the EB-5 fraud cases and I believe you will find that there are at least ten at this time. And they are crimes of huge proportion (e.g. Lobsang Dargey is alledged to have created a $125 MILLION FRAUDULENT SCHEME.

    Plus the SEC states that they are investigating 56 EB-5 Regional Centers that they believe have made fraudulent offerings or have used the funds in a fraudulent manner.

    If our government reauthorizes this program which we now know is an easy means of stealing from foriegners, then this is more than selling American Citizenship.

    It would be US Government authorizing crime against people from other countries.

    • Having 56 of the Regional Centers under investigation is huge (nearly 10% of all Regional Centers).

      This makes this clearly the most abused government program to date.

      USCIS, the entity charged with oversight has informed both the US House of Representatives and the US Senate that they do not have the means to oversee, track and/or enforce the rules of this program and penalize those who abuse it.

      Sounds like an open statement to any would be fraudsters that there is a program that is ripe for abuse.