Danger: Avalanche of EB-5 Petitions May Prompt Calls for Program Expansion

David North | Center for Immigration Studies Nervous Chinese millionaires and multi-millionaires, sensing that the rock-bottom level of investment now set by the U.S. government for a handful of immigrant visas ($500,000) is about to increase, have, along with others, filed enough EB-5 petitions to meet the program’s ceiling for five years to come. It is the Obama administration’s dream come true — there is so much demand for these visas that it can now argue for an expansion of the program beyond the decades-long ceiling of 10,000 visas a year. Currently, a rich alien can pledge $500,000 for an EB-5 investment and then, if it is approved, get a set of visas for the investor, for the investor’s spouse, and for all of their children under the age of 21. The investment thus does not create a single visa, it creates on average 2.5 to 3.0 of them; hence the 10,000 visas translates to some three to four thousand investments. (These are usually lavished on expensive urban real estate development, although the program’s original design was to bring investments to poor and rural areas.) Despite the advocates’ arguments about job creation — and there is a little of that, particularly for lawyers — the EB-5 program has morphed into an arrangement by which money is transferred from rich Chinese to rich American middlemen while swelling this nation’s population. Most of the EB-5 funds are used to top off the financing of already-funded real estate projects, with the Chinese getting .5 or 1 percent interest, which is a godsend to American capitalists who would otherwise have to pay 10 to 20 times as much for borrowing the money. According to an account in trade publication The Real Deal, at the end of 2015 there were 21,988 EB-5 applications pending. Even though these petitions have a much higher chance of being rejected than most Homeland Security immigration petitions — there is a whole lot of fraud in the program — the level of filings means that new applicants will have to wait about five years for their visas. The administration may try sleight-of-hand to increase the cap; it will say “we do not want to increase the ceiling from 10,000, all we want to do is to stop counting dependents in the ceiling,” thus exploding the ceiling to something like 25,000 visas a year. Unfortunately Congress is not very adept at seeing through such gambits. Meanwhile, rich Chinese remain antsy about what will happen to them in the future. They have to cope with a dictatorial government without a reliable system of justice as well as a slowing economy; many of their children, including grown ones, want to move to the West. In addition to those continuing factors, there is the threat that the EB-5 program will either die on September 30 (possible but unlikely) or that a newly extended EB-5 program will lift the minimal investment from the paltry half-million, which has been in place for more than 20 years, to $800,000, as proposed by Sens. Chuck Grassley (R-Iowa) and Pat Leahy (D-Vt.), the current and past chairmen of the Senate Judiciary Committee. This is a much more likely outcome. Given these factors, and despite the numerous scandals that have dogged the program, it was predictable that the number of applications would rise. The administration’s numerous moves to relax the program’s standards, as we have been reporting for years have only made the program that much more attractive to both honorable EB-5 players and to dishonorable ones. SOURCE: CENTER FOR IMMIGRATION STUDIES]]>

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