The EB-5 program has found itself embroiled in bad press amidst the COVID-19 pandemic, largely due to false rumors that President Trump would bring sweeping changes to the EB-5 program as part of a coronavirus relief bill. Though Senator Lindsey Graham, purported to have pushed for the changes, has vehemently denied the rumors, it was too late to save the EB-5 program from the barrage of negative press that followed. Now, the EB-5 program has fallen victim to another scheme: a May 7 letter to President Trump from four U.S. senators urging the suspension of many employment-based immigration programs, including the EB-5 program.
While the majority of the letter focuses on the temporary abolition of the H-1B, H-2B, and OTP programs, with the senators arguing that bringing in unnecessary foreign workers will prevent U.S. citizens and residents from obtaining much-needed jobs following the COVID-19 crisis, they also specifically touch on the EB-5 program near the end of the letter. In reference to Trump’s April 27 presidential proclamation to temporarily suspend most forms of immigration, the senators request that the president remove EB-5 investors from those exempted.
The senators—Tom Cotton, Ted Cruz, Josh Hawley, and Chuck Grassley—back up their argument to suspend EB-5 immigration using common misconceptions about the program: that it’s “plagued by scandal and fraud” and works as a “pay-for-citizenship scheme.” Fortunately for EB-5 investors, they’re completely wrong.
The EB-5 Program Employs Strong Anti-Fraud Measures
While there has been fraud in the EB-5 program before, the vast majority of EB-5 project developers are honest entrepreneurs looking for a way to foster their business. Unfortunately, the negative stories are the only ones that make it into the media.
To address the rare cases of fraud, United States Citizenship and Immigration Services (USCIS) has ramped up its anti-fraud measures in recent months. With extra training and more cooperation with external agencies, the Immigrant Investor Program Office (IPO) is working hard to wipe out fraud.
The introduction of the EB-5 Modernization Rule in November 2019 also helps ensure the EB-5 program fulfills the objectives for which it was created. The rule helps funnel EB-5 capital into the areas that need it the most with the intention of creating much-needed jobs.
EB-5 Is an Investment, Not a Purchase
The idea that the EB-5 program is a “pay-for-citizenship scheme” is not just purported by the four senators who penned this letter but is a common misconception among EB-5 critics. However, it is far from the truth.
EB-5 investors are required to keep their EB-5 investment capital at risk for the duration of the investment period, which has led to some investors losing significant portions or even all of their investment. Simply making an at-risk investment is not enough, either: To receive a U.S. green card, an investor must demonstrate that their investment will create or has created 10 new full-time jobs for U.S. workers.
Far from being a pay-for-citizenship scheme, the EB-5 program pours billions of dollars into the U.S. economy, fostering new businesses and creating new jobs. EB-5 investors have poured more than $37 billion in foreign capital into the United States since 2008, funding countless projects after the 2008 recession.
Only Successful EB-5 Investors Receive Green Cards
USCIS doesn’t hesitate to deny the petitions of investors who don’t fulfill EB-5 program requirements. In addition to demonstrating the creation of 10 new full-time jobs, investors must also provide evidence that they have sourced their EB-5 capital lawfully. That means the EB-5 program accepts lawfully earned foreign capital and uses it to create new jobs in the United States, boosting the economy at no cost to U.S. taxpayers.
EB-5 Investors Are the Best and Brightest
The people who immigrate to the United States through the EB-5 program are wealthy and successful. They bring their money to the United States through not only their EB-5 investment but also business activities they undertake in the United States. They are a boon to the U.S. economy even outside of their EB-5 investment.
The Senators Should Prop Up EB-5, Not Tear It Down
If the senators who signed the letter want the best for the U.S. economy and U.S. citizens, they should be propping up EB-5 instead. Fixing the visa backlog could revitalize the program, attracting more investors interested in adding their capital to the U.S. economy. The program would create countless jobs for U.S. workers at a time when they are desperately needed. The EB-5 program could be exactly what the United States needs in the aftermath of the pandemic, if only more senators recognized its many merits.