"FREEDOM IS NOT FREE" is a timeless American phrase that hits at the core of the costs, both monetary and personal, required to enjoy the freedoms of democracy. (1) Today, however, freedom has a cost of about USD 500 thousand to USD 1 million for foreign nationals trying to become U.S. citizens, depending on where and how their money is invested. (2) While the EB-5 Program was created under an auspice of encouraging foreign investment, the current provisions disenfranchise other foreign nationals going through the typical naturalization process in favor of those with deeper pockets. (3)

    The program has also been criticized as having a relatively minor impact on the U.S. economy while welcoming in wealth whose origins are often difficult to trace and potentially unsavory. (4) Without a permanent approval from Congress, the initiative is constantly at a crossroads that teeters on future importance or repeal. (5)

    This Note primarily considers whether the regional center initiative of the EB-5 Immigrant Investor Program, offering visas for investments of USD 500 thousand and creation of ten jobs, has been worth the significant influx of foreign investment dollars, inherent risks, and evidenced fraud. (6) Part II will discuss the history of the EB-5 program from its inception in 1990 through its temporary renewal in December 2015. (7) Part III will discuss various audits of the program and recent legislative attempts at reform. (8) Part IV of this Note will analyze the above to assess the effectiveness of the EB-5 Program and argue that the program should be eliminated, if not drastically reformed. (9) Part V of this Note will conclude by providing a final conclusion based on the above finding. (10)


    Becoming a legal permanent resident in the United States grants foreign nationals the right to live in the United States for an unlimited time period. (11) Since 1965, one avenue to become a legal permanent resident has been through investment in the United States. (12) Early investor visa program policies did not, however, carry with them the same preference that present day programs allow. (13) Policies in 1965 created an investment visa option for foreign nationals, but there was no allocation of visas for this category; applicants were put into the general pool with all other non-preferred applicants which limited the usefulness of such a program. (14) Generally, before the late 1980s, immigration policies in the United States largely focused on preventing illegal immigration and promoting the reunification of families, rather than encouraging legal immigration. (15)

    Global developments in the mid-1980s began to change the immigration conversation in the United States. (16) The Canadian and Australian governments began to roll out immigration investment visa programs "primarily to attract wealthy Hong Kong residents" who were concerned with the Chinese government's increasing control of the colony. (17) The programs proved to be a great success in their early inception; the Canadian program in particular had raised an estimated CAD 2 to 4 billion per year from Hong Kong immigrants. (18) By the late 1980s, the United States began consideration of substantial immigration reforms that included a preference-based investor visa program as a central component. (19)

    1. Early Opposition for Preference-Based Investor Visa Implementation

      Opposition to a foreign investment visa centered on the morality of putting a price on immigration. (20) Rather than encouraging immigration for political freedoms and patriotism, this program permitted entrance to aliens that were motivated by economic profits and their own bottom line (21) There was also concern about the source of foreign funds and whether they may have immoral or illegal origins. (22) By creating an exception to immigration policies, an investor visa program became "an outrageous opportunity for fraud and evasion of the law." (23)

    2. Proponents Make Case for Preference-Based Investor Visa Implementation

      Proponents of the preference-based investor visas argued that the United States would have to attract foreign capital if they wished to remain competitive in a global economy. (24) Foreign investment was argued to have numerous positive impacts on the United States economy; not only contributing to the growth and competitiveness of domestic businesses, but also through its ability to generate significant revenues. (25) Consideration of the EB-5 Program came at a time when numerous U.S. industries were reeling. (26) Immigrant entrepreneurs had the opportunity to play a special role in the rejuvenation of the U.S. economy if enabled to invest their money domestically. (27) Additionally, similar immigrant investor programs being offered at the time in Canada and Australia spurred Congress to act (28) Trading citizenship for foreign investment was quickly becoming a popular concept for providing economic stimulation relatively cost-free. (29) As a result of bipartisan efforts, The Immigration Act of 1990 (the Act) was enacted on November 29, 1990. (30)

    3. Understanding the EB-5 Foreign Investment Visa

      1. Regulators of the EB-5 Program

        Prior to passage of the Act, the Immigration and Naturalization Service (INS) was tasked with administering U.S. immigration policies. (31) The EB-5 program initially languished due to regulatory uncertainty borne from a lack of operative regulations, which were not passed by INS until 1997. (32) In March 2003, the U.S. Citizenship and Immigration Services (USCIS) was created by dismantling INS into three components under the Department of Homeland Security (DHS). (33) USCIS is now tasked with overseeing lawful immigration into the U.S. as well as naturalization of new American citizens, including administration of the EB-5 Program. (34)

      2. Regulating the EB-5 Program Generally

        The Act amended U.S. foreign policy to establish a new preference for employment-based immigrants based on employment creation criteria. (35) The regulation carves out 10,000 of the 40,000 annually-available visas issued by the United States to be set aside for employment-based immigration. (36) To qualify, alien investors have to be applying for citizenship for the purpose of establishing a new commercial enterprise that creates or preserves ten or more jobs by a minimum capital investment of USD 1 million, or USD 500 thousand if investing in a targeted employment area. (37) Applicants may also qualify by investing in an existing business if their investment expands the business's "net worth or number of employees" by forty percent. (38) The investment must also be at risk with no guarantee of return. (39) The program was generally intended to attract foreign investment, while the targeted employment area provision was intended to breathe new investment into especially distressed rural communities. (40)

        While there are no stipulations regarding the industry or enterprise whereby the requirements are met, the Act does require a foreign investor to demonstrate that the capital was obtained by lawful means. (41) Successful applicants are then granted a provisional visa for themselves and their immediate family for two years. (42) At the end of the two years, their job-creation and investment figures are evaluated for purposes of awarding permanent residency visas. (43)

      3. Regional Center Program

        Shortly after passage of the EB-5 Program, Congress expanded access through enactment of the Regional Center Program to encourage use of the EB-5 visa. (44) The legislation set aside 3,000 of the allocated 10,000 visas for those investors whose money is allocated to designated regional centers, which would run along with the original EB-5 program. (45) The regional center framework differs from the previously established EB-5 Program in that investors do not have to personally manage their investment entity. (46) Instead, the Regional Center Program allows investment in third-party "regional centers" that can pool foreign investments in order to meet threshold job requirements. (47)

        A regional center acts as a service agent organization that marries foreign investors seeking citizenship under the EB-5 Program and project developers seeking funding. (48) Regional centers facilitate the model of investment with developers and foreign investors based on the needs and economic interests of the investment or parties involved. (49) Regional centers can be created as a private or public economic entity regardless of their motivation for seeking funds. (50) Regional centers must be approved by the USCIS. (51)

        A marked difference for investors qualifying under the Regional Center Program, rather than through the EB-5 Program, is the ability to meet job creation requirements by showing indirect job creation. (52) Further, regional center applications may include either hypothetical or actual projects. (53) The ability to include hypothetical projects is an important distinction because they can be approved with fewer details and generalized economic predictions. (54)

    4. Expanded Use of the Regional Center Program

      The Regional Center Program has proven to be popular among EB-5 investors; between ninety-seven and ninety-eight percent percent of visas issued through the EB-5 program in 2012-2014 were done through targeted employment areas and the Regional Center Program. (55) Since President Obama has taken office and instituted several reforms to expand and clarify the Regional Center Program, the number of EB-5 visas granted has grown 700-percent and applications have grown even faster. (56) To that end, the USCIS has approved over 745 regional centers as of October 5, 2015. (57) The program was granted a temporary extension in September 2012 until September 2015, with an additional temporary extension given to authorize the program until September 2016. (58) While having been reauthorized on numerous occasions, the long-term stability of the program remains...

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