The EB-5 investor program remains troubled and controversial. In February, the Senate Judiciary Committee held a hearing to discuss the problems and whether they could be fixed.
Put simply, too many potential overseas investors write six-figure checks only to lose their money and end up not even qualifying for green cards.
What Is the EB-5 Investor Program?
We explain the workings of the EB-5 Investor Program here on our website. The program allows job creators from overseas to visit the United States with the aim of investing in new, local businesses.
There are certain stipulations. To qualify for an EB-5 visa, your company must preserve at least 10 full-time jobs for U.S. workers within two years.
Capital investors can also qualify. To meet this requirement you must invest more than $1 million of your own money. Capital investors can avoid the $1 million investment requirement if they invest at least $500,000 in a high-unemployment area or a specified rural area.
It sounds like a win-win, but the EB-5 program has made the wrong kinds of headlines over the last few years. The Securities Exchange Commission (SEC) has launched a series of investigations.
In December 2015, it announced widespread enforcement actions against lawyers across the United States who are charged with offering investments while not registered to act as brokers.
We are also seeing investors miss out on the opportunity to pump money into the U.S. economy, as well as losing their funds and the chance to work in the country. Indeed the Center for Immigration Studies reported that South Dakota lost $120 million in EB-5 funds.
There were numerous problems including high fees associated with the program. A massive beef slaughterhouse project funded by EB-5 money was one casualty. It went bankrupt denying scores of overseas investors from Asia of their money and their green cards
The system fails with an alarming regularity and overseas investors are often the victims. They fall foul of unscrupulous developers, promoters, officials and even white collar criminals. There is a need for more security and more protection for investors.
The program is so beset with pitfalls that The Seattle Times urged it to be scrapped in a June editorial.
It noted how American Life was recently fined $1.2 million for using unlicensed advisers to assist possible immigrants. Another EB-5 coordinator is facing a criminal investigation after claims that he defrauded Chinese investors.
The numerous pitfalls also call into the question the judgment of the legislators who appear to have failed to see how foreign investors, many of whom lack basic English skills, would have been taken advantage of.
Arguably, Congress should have realized that bureaucrats and securities law enforcers would not have been adequately equipped to promptly expose the abuses in the system.
If you are an overseas investor seeking to take advantage of the EB-5 program, it makes sense to hire experienced Austin immigration attorneys to ensure you don’t fall foul of the many potential pitfalls. You can contact us here for a consultation.