ABC News recently published a Nightline investigation into the EB-5 immigrant investor visa program. The article that accompanied the television segment, "Whistleblowers: US Gave Visas to Suspected Forgers, Fraudsters, Criminals," sensationally details potential security risks in the program and alleges that it is specifically prone to fraud.
Most pointedly, the article misunderstands how the EB-5 program works. The article alleges that immigrant investors "can jump to the front of the line and obtain legal status to live in the U.S. for two years." This implies that immigrant investors take visas and a place in "line" from other immigrants who do not have the financial means to utilize the EB-5 program. This is simply inaccurate. Each visa category is distinct and separate from other categories, so the assertion that EB-5 applicants "leap ahead of legitimate applicants who lack the means," is simply not true. EB-5 visas are set aside for economic stimulation and do not take visas away from anyone attempting to enter the country via other immigration programs. There are 10,000 visas set aside for EB-5 investors each year, which accounted for less than 2 percent of the immigrant visas issued at foreign service posts in 2014, as reported by the U.S. Department of State Bureau of Consular Affairs.
The article also claims that "the program has become a magnet for those seeking to sidestep the scrutiny of the traditional immigration process." Again, this is an unfounded portrayal of the program. Applicants are not simply given a free pass to enter the U.S. upon making their investments; EB-5 investors go through the same Department of Homeland Security checks and protocols that all other green card applicants are subjected to.
The reality is that EB-5 immigrant investors go through a gauntlet of scrutiny. The process of verifying the investor's capital source is broken down into (1) evidence of how the investor obtained the funds, and (2) a clearly documented path of funds from the originating source to its destination in the U.S. In its review, the DHS routinely requests notarized employment letters, banking records, personal and corporate tax returns, purchase and sales agreements for the disposition of personal property, receipts for the purchase of household goods, and invoices for the purchase of office equipment.
Immigration attorney David Hirson explains that, "from there, the documents are reviewed for authenticity and accuracy, all while the DHS runs the EB-5 investor's personal information through State Department, IRS, Interpol, Office of Foreign Asset Control, and its own databases. It should be noted that this process routinely takes in excess of 18 months, and immigrant investors are granted no legal right to enter the U.S. until official approval. The documentation process is so detailed and arduous that prospective immigrant investors from countries with non-western banking practices often turn away from the program altogether."
The scrutiny that the investors are put through is far more intense than an IRS audit and certainly more stringent than the regulations imposed on banks by OFAC under the "know your customer regulations," Hirson said.
"Because of the high level of scrutiny, there is very little possibility that suspected 'forgers, fraudsters, or criminals' would use the EB-5 program to gain access to the U.S.," Hirson added about the thorough investigation EB-5 applicants go through. "These individuals would seek alternate routes into the country."
Furthermore, the Obama Administration has budgeted $60.9 billion for Department of Homeland Security in fiscal year 2015. The reality is that no one is legally entering the United States without a significant background check, regardless of which visa category they fall under.
As with any governing body, fraud typically stems from individuals, not the system, and the EB-5 program is no more systematically prone to exploitation than any other visa program. The program is not perfect, but the overwhelming evidence shows that right now, it is working. That being said, there are several pieces of legislation in the pipeline that would drastically improve it. The most notable bill is the American Entrepreneurship and Investment Act of 2015, co-authored by Congressmen Jared Polis (D-CO 2nd District) and Mark Amodei (R-NV 2nd District). The bi-partisan bill would make the regional center program permanent, and also set more rigorous standards for regional center operators and administrators. Legislation like Congressmen Polis' and Amodei's bill makes the program more secure and efficient, and would drive more money into the American economy and create more jobs for American workers.