There’s an irony in Fortune Magazine’s July 24, 2014, article “The dark, disturbing world of the visa-for-sale program.” The article accuses foreign EB-5 investors of being “ill-equipped (or disinclined) to assess the business risks” of projects and accuses the US Citizenship and Immigration Services (“USCIS”) of being “ill-equipped to review business plans, job-creation studies, and securities offerings.” The article’s focus on one high-profile EB-5 failure suggests that the entire program operates in similar fashion and is akin to presenting one high-end real estate project failure as proof that the entire industry is broken. The article lacked a cornerstone of journalism, independence to inform the reader rather than devotion to a certain outcome, making it ill-equipped to inform its readers about the entirety of the EB-5 program.
The article accuses developers of reaping the benefits of the EB-5 program without discussing that developers across the U.S. are creating new jobs and improving their communities through secured EB-5 funding. The EB-5 program provides significant injections of capital in the U.S. economy, resulting in the investment of more than $4.7 billion in qualified U.S. projects and the creation of more than 95,000 U.S. jobs since 2005 alone. In my experience, the list of those reaping the benefits of the EB-5 program is vast – ranging from construction workers; architects; painters; and engineers; to city, county and state governments that enjoy infrastructure improvements paid for by foreign investors and to the tens of thousands of permanent W-2 employees whose job was created at least in part by EB-5 program funds. The article also omits the perspective of those whose livelihood improved because of the new hotel, restaurant, convention center, or even the affordable home in which in they reside, that was built from EB-5 program funds.
The article advises that “EB-5 remains a wild and woolly realm.” This statement ignores the significant hiring by USCIS in recent years to meet the increased volume attributable to the popularity of the EB-5 program and its desire to increase scrutiny of projects, developers and regional center principals. In fact, USCIS has hired economists to vet EB-5 business plans closely and increased review of job creation projections to a fine-toothed comb level, as compared to earlier years. Further, the article omits the closer coordination between the USCIS and the Securities and Exchange Commission by USCIS’s initiative in recent years to enhance USCIS’s securities law compliance in the context of the EB-5 program.
The article’s purported concern for the overseas investors is mismatched against its failure to discuss interviews with investors who had themselves lost money. Further, had the article included interviews with any of the thousands of satisfied investors around the U.S., it may have reported a very different story. USCIS reported for both 2012 and 2013, 96% of EB-5 investor applicants received unconditional permanent residency status. Further, had the article included an interview with one of the many regional centers that enjoy stellar track records and reputations, the article would have revealed the considerable due diligence regional centers undergo before investing in projects. In short, the EB-5 program is working, although improvements are welcome and presently in progress.