In Defense of the EB-5 Program

When there is misinformation in the public about the EB-5 program, attorneys in the trenches of this area have a duty to set the record straight.  To permit otherwise leaves our clients – investors and regional centers – having to defend themselves against individuals and organizations maligning the EB-5 program for other ends.

I have an individual in mind.  The Internet has given this person a wide-reaching forum to vent his ire against a large urban development project.  His medium is his blog. As with many projects of this scale, this one involves a partnership of private and public funds.  EB-5 capital is a component.  In a down economy hostile to immigration, the EB-5 program has become an easy target for this individual, who is dedicated to the downfall of the overall project and who has latched onto the EB-5 part of the project for his latest criticism.

Valid criticism is helpful.  Attorneys in the EB-5 bar have offered passionate well-reasoned critiques of USCIS’s administration of the EB-5 program.  The goal has been to inform USCIS of the harmful effects of some of its interpretations, unfounded in the law.  So the larger goal of what I’d call “valid criticism” is to improve the EB-5 program by bringing clarity and predictability, consistent with the law and regulations. 

In contrast, the individual I have in mind criticizes the general EB-5 program as a way to deter a particular project.  Not surprisingly, many things he has said about the program are false. These false and ill-informed statements, however, have real impact. They taint the public’s perception of the EB-5 program, which the federal government reported as bringing an estimated $1 billion into the U.S. economy back in 2005 (see the 2005 GAO Report at http://www.gao.gov/new.items/d05256.pdf).  

They paint USCIS as lax guardians of immigration, when more astute observers have criticized the Service for its undue and arguably unlawful restrictions of the EB-5 program.  They undermine investors’ confidence in the program, deterring capital and job creation in rural and high unemployment areas.  Finally, they smear the reputations of conscientious regional center operators who work hard do everything right with one hand tied behind their back, partially blindfolded on treacherous terrain. 

The regional center unfairly smeared in this instance is the New York City Regional Center, a client my firm has worked with closely for the past three years to obtain initial designation and subsequent amendments.

Here are just some things the blogger has gotten wrong:

1. “Not only does it look like the United States is selling visas, but the terms are easier than in other countries.”

Wrong.  For example, the federal Canadian investor program has three basic requirements: (1) business experience, (2) minimum net worth of CN$800,000 (US$560,000), and (3) investment of CN$400,000 (US$281,000).  There is no requirement that any jobs be created.  The Canadian government holds the money for five years, after which it is returned to the investor without interest.  The low threshold is responsible for the vast oversubscription of the Canadian investor program, resulting in a current three-year backlog. 

2. “The EB-5 controversy.”

Wrong again. In a Congress notable for partisan bickering, the EB-5 program is among the few that both Republicans and Democrats endorse.  Senator Patrick Leahy (D-VT), Senator Jeff Sessions (R-AL), Representative Zoe Lofgren (D-CA) and Representative Steve King (R-IA) are all on record as EB-5 supporters.  No one in Congress has criticized the EB-5 program. 

3. He quotes with disapproval an unnamed person related to the project who purportedly said or wrote that “[t]he costs of using investment funds are relatively lower than the costs of bank loans. … [W]e are in pursuit of profit maximization.”  The blogger adds a condemning gloss: “That may impress potential investors, but sure seems to contradict the spirit—and perhaps the letter—of the EB-5 program.”

Wrong again.  The law requires the EB-5 new commercial enterprise to seek a profit.  Nonprofits are barred as proper recipients of EB-5 money in the regulatory definition of “commercial enterprise.”  So both the spirit and the letter of the EB-5 program embrace the profit-making drive and in fact require it.

4. “That’s why the USCIS and the rest of the press should give this ‘project’ serious scrutiny.”

He apparently doesn’t know that USCIS did give this project serious scrutiny.  The USCIS approved the project in an amendment filed by the regional center in question – a filing called an “exemplar” I-526 petition for pre-approval of a project.  Or perhaps the blogger thinks that The Wall Street Journal is not serious enough press? The Journal recently covered the development project in an article dated May 10, 2010, including the EB-5 component.

Everyone involved in the EB-5 program – regional center operators, investors, attorneys, advisors, and the USCIS– have much at stake in the proper administration of this program.  When there are inaccuracies about the program, or the program as applied to certain projects, it harms everyone doing their best to contribute to a clean system.  It’s one thing if we have disagreements about what the program should look like.  It’s another thing when someone tries to tear down the program to further another agenda.  Let’s at least agree to resist the latter.
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Carolyn S. Lee (csl@millermayer.com) is a partner at Miller Mayer, LLP in Ithaca, NY. She graduated cum laude from Williams College and received her J.D. from Cornell Law School. She is a member of the American Immigration Lawyers Association (AILA) EB-5 Committee and the AILA EB-5 Investor Conference Committee. Carolyn is the 2008 recipient of AILA's Joseph Minsky Young Lawyer Award and is also listed in the International Who’s Who of Corporate Immigration Lawyers.

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USCIS EB-5 eb5 visa New York City Regional Center Miller Mayer EB-5 program I-526