In many ways the EB-5 visa program represents some of the best characteristics of the United States and its people. Under the program individuals who make investments into the United States can receive a green card for themselves and their qualifying family members. That is, entrepreneurial individuals who are willing to make investments into the country that will become their home, work hard to ensure job creation and other program requirements are met, and engage in an array of immigration legal processes can become permanent residents.
However, following a surge in the program’s popularity starting around 2013 or 2014, EB-5 visa applications have quickly and significantly outstripped demand. Furthermore, following terrorist attacks in San Bernardino and Paris Senators and security officials have been potentially sensitive to security risks despite the fact that most immigrants undergo thorough vetting. Unfortunately, due to these fears this useful program that allows deserving individuals to enter the country is again under attack despite negotiations over reform measures that would render this reactionary calls moot.
Representative, House Judiciary Members Call for Suspension of EB-5
On Thursday, February 11, 2016 Texas Republican Rep. Louis Gohmert expressed his fears that criminals and others engaged in unsavory dealings may be entering the country via the EB-5 visa program. While Representative Gohmert could cite no evidence upon which to base these fears, he stated that there are no assurances that Americans are safe. He further stated that he believes the program should be suspended.
Unfortunately, this sentiment has traction in the rather rancorous and acrimonious House of Representatives. House Judiciary Committee members also charged that “foreigners” are “taking advantage” of the program. It is again unclear as to what evidence this is based on since most fraud in the program has occurred at the project or regional center level and at the expense of EB-5 investors. Pennsylvania GOP Rep. Tom Marino reportedly stated that, “[United States Citizenship and Immigration Services (USCIS)] better get off their cans and fire somebody who should be doing these investigations.”
Potential Reform Provisions
Despite these inflammatory calls in the House of Representatives, members of the U.S. Senate have worked to reform the EB-5 program. While the exact nature of the reform is still being negotiated, the main areas of review include re-designation of TEAs, homeland security concerns, Securities and Exchange Commission (SEC) enforcement concerns, and potential retroactivity of the amendments to the EB-5 and regional center programs.
As for re-designating TEAs, Senate bill 1501’s supporters claim that this bill would address the Gerrymandering concerns that have been expressed. The gerrymandering concerns are essentially where developers bundle high-value real estate areas along with certain high unemployment and other disadvantaged development tracts. High-profile projects in New York City and Miami have benefitted from this practice. However, since people from the nearby economically depressed areas are able to travel to these new job-creating projects for work, it is unclear whether this approach is truly a problem. In any case, multiple proposals have been floated that would re-define Targeted Employment Areas (TEAs). In most cases this would reduce their availability meaning that the $500,000 investment level would cease to be as widely available. For EB-5 applicants in countries with strict capital controls, this may have the collateral effect of effectively prohibiting them from participating.
As for homeland security concerns, Senator Grassley has expressed concern regarding the expedited approval process EB-5 investors from China, Pakistan, Russia, and Malaysia receive. While security concerns may be justified in today’s climate, this bundling of nations seems rather suspect. Hopefully common sense and fairness will prevail regarding this element.
SEC enforcement and oversight of EB-5 investments is also a hot issue. The SEC has already taken enforcement actions against lawyers who improperly receive commissions for steering investors towards certain projects. Furthermore, the SEC and other financial regulators are already taking a hard look at private placements in light of previous abuse. The compromise proposes the creation of an “integrity fund” to minimize the risk of fraud that effects EB-5 investors.
EB-5 Investors Should Take Swift Action Due to the Proposed Changes
One aspect that has yet to be decided is whether these changes will be retroactive in nature. If EB-5 filers execute their applications before the changes are implemented and retroactivity is not applied, they will be able to operate under the more permissive rules. However, it is not yet clear how Congress will decide, but it may be prudent to preserve at least the chance of working under the old rules. If you wish to take action and potentially preserve your place under the current EB-5 rules contact the experienced Tampa immigration lawyers of Colombo & Hurd today by calling 800-659-7142 or contact us online.