The New York Post reports on the latest case from the much-abused EB-5 “investor’s visa” program, which the open-borders lobby routinely insists is working just fine:
Port St. Lucie, a disparate series of residential developments and strip malls, had little to boast beyond its proximity to a nuclear plant and its fame as the spring training home of the New York Mets. Then Lily Zhong came to town, plunked down $500,000 for vacant land and promised to finally build a real downtown.
She produced renderings, showing modern, multistory buildings rising along wide, pedestrian-friendly streets, where people would shop, do business, dine out and attend special events, said Gregory Oravec, mayor of the city of 174,000. Home to thousands of retirees, Port St. Lucie sorely needed a gathering spot to bind the community, he said.
“The big idea was to create a sense of place, to put a ‘there’ there,” he said.
But instead of building that downtown, federal authorities say Zhong hoodwinked officials as part of an elaborate scheme to defraud investors using a special visa program that allows wealthy foreigners to become permanent U.S. residents by financing job-creating projects.
Zhong raised at least $8.5 million from Chinese investors through the U.S. EB-5 visa program and improperly used some of it on personal expenses such as luxury cars, a home and a boat, the Securities and Exchange Commission said in a civil complaint against her.
The SEC obtained a federal court order in November freezing Zhong’s assets. Through her lawyer, Zhong, who is of Chinese descent and holds New Zealand citizenship, has denied the allegations. She is not charged with any crime.
Despite this denial of wrongdoing, the New York Post goes on to describe case as “one of several around the country” in which EB-5 visas have been used to “defraud hundreds of investors out of tens of millions of dollars, from San Francisco to Chicago, by dangling a chance at U.S. residency.”
The idea behind the EB-5 program is that foreigners who agree to invest a certain amount of money in the United States, and create a certain amount of cards, get quickie green cards for themselves and their families, followed by a chance at permanent residency. The threshhold stipulated by Congress is $1 million investment for a project that creates at least 10 jobs, but some areas and industries have different levels. In Port St. Lucie, only a $500,000 investment was needed to qualify.
Other examples cited by the Post include a bogus convention center project in Chicago that soaked Chinese investors for a cool $11 million in “administrative fees,” and a $5 million operation that essentially sold EB-5 visas to Mexican, Egyptian, and Nigerian investors, but never delivered the desired documents.
The punch line to this example of our ramshackle immigration system is that no one in the U.S. government really does anything to verify the investment plans are legitimate. The whistle doesn’t get blown until someone yells fraud, and with huge construction projects, it can take a while before it becomes evident that work is more than just “behind schedule.”
Columnist Michelle Malkin has a full chapter on EB-5 abuse, which she dubs “America’s disastrous Cash-for Citizenship racket,” in her new book Sold Out: How High-Tech Billionaires & Bipartisan Beltway Crapweasels Are Screwing America’s Best & Brightest Workers. A full review of the book can be found here.
Malkin notes that the EB-5 program, which dates back to the 1990 Immigration Act, sounds like a very reasonable idea on paper. Why not lure foreign investors with the promise of visas and permanent residency, bringing both capital and entrepreneurial skill to America’s shores?
If the program was actually administered as promised, with aggressive verification and enforcement, it might have worked out as promised. Instead, as with so many immigration programs, it’s all smoke and mirrors, with the above-mentioned lack of serious enforcement, fanciful promises of performance, constantly shifting regulatory requirements, and the same kind of scam-tastic “metrics” that let Barack Obama claim to be a genius job creator by counting all the jobs he supposedly “created or saved.”
Another clever trick involves boastful claims attributing all of the jobs “created or saved” through a project to foreign investors, even if they only made up a small percentage of total investment in the project.
Enforcement is actually even more lax than the brief mention in the New York Post could convey.
Sold Out notes that when Senator Tom Coburn (R-OK) asked the Department of Homeland Security to verify the job creation claims from the EB-5 program, they told him it was impossible to do so, because they didn’t have the manpower. Coburn’s staff rolled up their sleeves and did it themselves… only to find over half of the “job creation centers” reported no EB-5 investments, or failed to respond to Coburn’s inquiry. Media organizations get similar responses when they ask the immigration bureaucracy for hard numbers on EB-5 performance.
Coburn concluded it was “unclear whether any economic benefit of the program justifies the criminal and national security risks.”
In Malkin’s book, she and co-author John Miano point out that the EB-5 program accounts for a positively miniscule portion of the foreign investment in the United States. They portrayed it as more of a boutique “corporate welfare” program, a pot of money for politicians to spend, tainted by corruption and abuse from its inception. (Your jaw will drop when you read Malkin and Miano’s account of how the EB-5 program was born, and which Democrat donor was a major player.)
EB-5 has been keeping Securities and Exchange Commission investigators busy for years, and the fresh stories related by the New York Post suggest there hasn’t been much improvement since the latest five-year renewal of the program. Whenever you combine boatloads of cash, ambitious politicians, duplicitous bureaucracy, and lax enforcement, wacky hijinks are bound to ensue.
Sold Out notes that Canada terminated a similar program after concluding it was simply a bad deal for Canadians, who were granting valuable citizenship and getting very little in return, while a host of lawyers and consultants skimmed off millions of dollars. There are probably a few Canadian tourists and seasonal residents living in Port St. Lucie who could share that story with the locals, as they contemplate empty fields where a fabulous shopping and entertainment district was supposed to be.