The EB-5 program allows foreigners to invest $500,000 to gain citizenship!

  I stumbled into a link posted by my FB friend Lisa Covarrubias on Monday.  It was an article about a bumbling councilman that voted for something he didn’t know he voted for.  Seems the city of Victorville needs to build a waste treatment plant and is using the EB-5 program to raise $25 million dollars.  So what on the heck is the EB-5 program?

Congress created the EB-5 immigrant investor visa category in the Immigration Act of 1990 in the hopes of attracting foreign capital to the US and creating jobs for American workers in the process. There are 10,000 visas available in the category each year, 5,000 of which are reserved for people who participate in a EB-5 pilot program designed to target low employment areas such as the program featured on this website.

There are three basic requirements for an EB-5 visa:

First, the alien must establish a business or invest in an existing business that was created or restructured after November 19, 1990  Second, the alien must have invested $1 million (only $500,000 when investing in a USCIS designated regional center) in the business.  Third, the business must create full-time employment for at least 10 US workers.  EB-5 Investment.  The EB-5 visa investment can be in the form of cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien provided that he or she is personally and primarily liable and the assets of the new commercial enterprise are not used to secure any of the indebtedness. The definition specifically excludes capital acquired by unlawful means.

The basic EB5 Visa investment amount is $1 million. The required investment is $500,000 for a business established in a “targeted employment area.”  Targeted employment areas include: rural areas, defined as any area other than one within a metropolitan statistical area or within the boundary of a city or town with a population of 20,000 or more; and areas having an unemployment rate that is at least 150% of the national average.  Each state notifies the INS of the qualifying areas within the state. The current regulations set the required investment for a targeted employment area at $500,000.00.

Aliens can invest the required amount alone, create the qualifying business with another immigrant investor, or even create the business with US citizens or other people not seeking classification as an immigrant investor. In such cases, each person seeking classification as an immigrant investor must have invested the required amount, but each person can use the same employees to reach the required 10 new positions.

EB-5 Visa Job Creation. The EB-5 Visa investment must create at least 10 full-time jobs for US citizens, lawful permanent residents or other immigrants lawfully authorized to be employed in the United States.    The 10 positions must be full time.  

Conditional Permanent Residence.  In order to deter fraud, EB-5 Visa immigrant investors, their spouses and dependent children are subject to conditional permanent residence for a two-year period. The EB-5 alien must file a petition to remove the conditions during a 90-day period prior to the second anniversary of the alien’s lawful admission as a permanent resident. The INS will examine the business at the end of the two-year period to determine whether or not the alien has complied with all of the requirements.

Basically if you invest $500,000 into an area designated by the Government you gain citizenship in 2-5 years.

So what are communities doing with the money?

Jay Peak Resort in Vermont.  $17.5 million from 35 investors 350 jobs.  Founded in 1955, Jay Peak has expanded from a winter ski resort to a three-season retreat. To fund further growth, it’s tapped the EB-5 program to help raise $100 million.

Aberdeen, S.D. Meat processing plant. $35 million from 70 investors 700 jobs. Intended to process 1,500 cattle a day, this planned plant is more than two years overdue and still under construction. Weather and financing problems have plagued the project. Contractors’ liens for unpaid work are approaching $8 million, the local newspaper reported in April.

Many more projects are going on in the following states.

List of EB-5 Investment States

Alabama, California, District of Columbia, (Washington, DC), Florida, Hawaii, Illinois, Iowa, Kansas, Louisiana & Mississippi, Nevada, New Jersey, New York, Pennsylvania, South Carolina, South Dakota, Texas/Oklahoma, Vermont, Washington, Wisconsin.

Now let me add some color commentary regarding this program and ask some pertinent questions.

1.  You have to be rich to do this program

2.  I cannot find any safeguards to determine where the money is coming from.  Is it   dirty, blood or drug money?  Is this a money laundering scheme for foreigners?

3.  Who is monitoring the money once it gets here,  the INS?

4.  Do we truly want to ‘sell’ our citizenship?

5.  Are we forcing communities and states so hard pressed for financing that they are delving into the international scene in which all sorts of issues could be raised that they are not equipped to handle?

6.  Who is guaranteeing the return on the investment?  Me or you?

7.  Is this a sellout to a foreign entity/government in disguise?

If any of you have some expertise in this program please shed some light on this.  I haven’t determined for myself if I am for or against this program yet.  I need more information and some first hand reports.  When millions of dollars are at stake, there are a lot of grey areas that could come up in these investments.   Since the economy has tanked more communities are seeking ways to finance projects.  I hope this program is running correctly and the proper oversight has been established.  I will look more into this program as time will allow.

The Paul Smith for Congress website is www.PaulSmithforCongress.org 
Republican Candidate for the 5th Congressional District (Sacramento)