What Is the EB-5 Program?
The EB-5 program came into existence with the passing of the Immigration Act of 1990. The Act expanded the visa program with regard to employment-based visas. The number of categories was increased from two to five (EB-1, EB-2, EB-3, EB-4, and EB-5). The number of potential visas available yearly was also increased to 140,000 skills-based workers. The EB-5 category set aside 10,000 of the 140,000 visas available yearly to “alien entrepreneurs.” Initially, these entrepreneurs were required to invest a minimum of $500,000 in a new business that generated at least ten jobs. The program was not initially popular, and the rules were changed in 1992 to allow entrepreneurs to invest their money into approved regional centers, who then gathered the money and invested the money locally. When this changed, the type of person looking to utilize this system changed from an entrepreneur to an investor. Even with this change, the program still awarded less than 1,000 visas each year. During the 2008 financial crisis, big developers found it difficult to finance their projects and the EB-5 program became a way to easily source financing from foreign investment, while giving investors green cards. A focus on Chinese investment has been consistent with EB-5 green cards, as at least 70% of the green cards awarded through the EB-5 program have been to Chinese Investors since 2011.
HOW THE EB-5 PROGRAM IS BEING USED ILLEGALY
The carrot of a green card became the selling point for scam artists operating in the United States. Wealthy foreign investors are targeted and convinced to invest money in large-scale projects which never materialize and are actually a form of immigration crime. The purpose of the EB-5 program is to attract those who will invest in designated “targeted employment areas” where unemployment is at least 1.5 times the national average. States, however, have authority from the federal government to certify “targeted employment areas” that include distressed areas that are next door to financially strong areas. This has led to a practice not too different from political gerrymandering, where areas are carved out to be eligible to receive funding that would not qualify otherwise, completely distorting the original purpose of the EB-5 program. All of these moving parts have led to enormous confusion and anger as foreign investors have been duped into shady and fraudulent investments. Others have seen this program as a “green card for sale” program, where people can buy their way into the United States.
HOW DOES THIS AFFECT ME?
If you are associated with a company who receives foreign investment through the EB-5 program, then this can affect you directly. If you are a foreign investor interested in investing into the EB-5 program, then you must also be aware of the risky and often fraudulent dealings with developers looking to take advantage. As this current administration’s contempt for the country of China grows, the more likely it is that programs such as this will be affected due to its popularity with wealthy Chinese investors. If you have been defrauded by a developer into investing money into the EB-5 program, then it is important that you seek the advice of an experienced federal immigration and federal civil attorney immediately. Regional centers that are promoting questionable projects will likely face stiffer oversight and penalties as the focus on fraud associated with the EB-5 program grows. Seemingly every category within the area of immigration has been affected or changed to make immigration into the United States more difficult under the current administration; the federal EB-5 “alien entrepreneur” category is no different.
