The rot is deep: The corrupt EB-5 immigration racket you're not hearing about
Cash, passports and visas.

The rot is deep: The corrupt EB-5 immigration racket

Posted January 03, 2017 12:00 AM by Nate Madden Cash, passports and visas.
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U.S. citizenship is a cherished birthright for some and the end goal of a hard-earned life’s journey for others. However, for a wealthy few, it’s up for sale, thanks to a little-known product of America’s insane immigration system.

The culprit here is the EB-5 Immigrant Investment Program, a government-sanctioned cash-for-visa scheme. In a recent episode of “Michelle Malkin Investigates” on CRTV,  Conservative Review Senior Editor Michelle Malkin dives into how the program puts U.S. citizenship up for sale, wrecks local economies, and puts our national security at risk.

Created by the Immigration Act of 1990, and renewed over a dozen times since, the goal of the program is to incentivize foreign direct investment in troubled economic areas in the U.S. More Americans get jobs, foreign cash flows into American bank accounts, and the investors get a green card to show for it.

Win-win, right? Well, no.

First, the program is plagued by a massive design problem. According to the current relevant statute, a foreign investor with enough money to burn can get on the fast track to a U.S. green card by creating as few as 10 American jobs, investing $1 million in a business, or investing $500,000 into a regional “targeted economic area” (TEA).

Ergo, for the not-so-hefty price of employing two shifts of people at a trendy burger joint, you can use your bank account to get around that pesky residency/naturalization process that everyone else has to go through.

After all, becoming a permanent resident or a naturalized citizen the old-fashioned way (you know … learning the language, learning U.S. history, assimilating to the culture and customs, etc.) is for the poors anyway.

"This provision is an unbelievable departure from our tradition of cherishing our most precious birthright as Americans,” said Rep. John Bryant, D-Texas, on the House floor when problems with the EB-5 program were first exposed some two decades ago. "Have we no self-respect as a nation? Are we so broke we have to sell our birthright?"

And Bryant had a point; just ask our neighbors to the north. Canada had a similar program it cancelled in 2014 after the government realized it "undervalued Canadian permanent residence" and provided "little evidence that immigrant investors as a class are maintaining ties to Canada or making a positive economic contribution to the country."

As it turns out, treating de facto citizenship as a commodity that can be bought and sold actually cheapens the concept of citizenship as a whole. Who could have guessed?

The program also created a golden opportunity for foreign investors to capitalize on America’s economic woes. As Michelle Malkin points out, the year before the 2008 financial crisis, there were only 700 or so visas issued. In the years following, it skyrocketed until the program hit its total 10,000-visa quota in 2014.

“This may sound like a win-win for America’s unemployed and rich, visa-seeking foreigners,” explains Malkin. “In practice, the program was benefitting opportunists and fleecing anyone who stood in its path.”

And it gets worse; when a commodity as precious as permanent residency is up for sale, you can bet that others are going to want to cash in where they can. As a result of the largely unchecked nature of the system, a side industry of fraudsters and swindlers has sprung up around the EB-5 program.

“The aliens defrauding the United States, the middlemen particularly defrauding the aliens, the middlemen defrauding each other, lawyers sometimes doing bad things,” says David North, fellow at the Center for Immigration Studies, in Episode 4 of MMI. “This is a very complicated program — needlessly complicated.”

In a racket that looks like a high-tech, high-stakes version of the “Music Man” con from Franklin Lacey and Meredith Wilson — where the slimy Harold Hill poses as a band leader to con the citizens of a small town in Iowa with fake purchases and such — fraudsters walk out flush with foreign cash, while American cities and citizens are left holding a bag of failed developments and promises.

Here’s how EB-5 scams usually go down:

  1. The con men usually promise some new development or large investment project to a community in a targeted economic area. These are, ostensibly, poor, rural zones with high unemployment, but have typically been gerrymandered to include affluent urban areas as well.
  2. While the townspeople are preparing for the influx of capital by making investments in their own businesses, the scammers start soliciting funds from wealthy foreigners by dangling the promise of a guaranteed green card.
  3. As the money rolls in, the scammers line their pockets with investment cash. Meanwhile, vendors don’t get paid, buildings never get built, projects fall apart, people lose their money, and communities end up with only long, drawn-out court investigations to show for it.

This is exactly the sort of thing that happened in Newport, Vt., Port St. Lucie, Fla., and dozens of other cities and towns across the United States (The Center for Immigration Studies maintains a map that outlines dozens of federal, state, local, and civil cases involving EB-5 visa scandals that have rocked towns across the country.)

The lack of oversight of the EB-5 program is not only a fertile breeding ground for all kinds of fraud, it is much more than wasted taxpayer dollars — it also creates potential problems for America’s national security.

“Between ISIS creating the worst refugee crisis since World War II and cyber threats from Russia and China, there’s plenty of justified homeland insecurity,” says Malkin in the episode. “So when we have a government-sponsored money-for-visa strategy without basic oversight that could facilitate terrorist travel, narcotics trafficking, money laundering, or espionage, it’s easy to see why some view the program as a threat to the safety of Americans.”

Some politicians have sounded the alarm about the program’s glaring pitfalls, seeking to investigate and reform it. A March 2016 story at The New York Times highlighted efforts by a bipartisan group of senators to tackle the problems resulting from the federal scheme.

“It’s no secret that the program has long been riddled with corruption and national security vulnerabilities,” Senator Chuck Grassley, R-Iowa (D, 66%) told the Times.

“I don’t believe that America should be selling visas and eventually citizenship,” Senator Dianne Feinstein, D-Calif. (F, 0%) added. “The right to immigrate should not be for sale.”

Other critics see that the only real fix to the troubled EB-5 program is to completely get rid of it, as Canada has already done.

“Once you engage in green-card social engineering, where you go and you take a scarce commodity of citizenship, and you don't make it about a broad American policy … you make it about benefiting special interests,” Conservative Review’s Daniel Horowitz explains to MMI. “Sure you could try to regulate it, but that in itself breeds corruption.”

While the Department of Homeland Security has pledged to do everything within its legal authority to combat the problems, the money-for-visa program still exists. And without a concerted effort from Congress, it will likely continue on (as it has for the past two-and-a-half decades), leaving a trail of fraud and insecurity in its wake.

“Michelle Malkin Investigates” is available now on CRTV.



Nate Madden is a Staff Writer for Conservative Review, focusing on religious freedom, jihadism, and the judiciary. He previously served as the Director of Policy Relations for the 21st Century Wilberforce Initiative. A Publius Fellow, John Jay Fellow, Citadel Parliamentary Fellow and National Journalism Center alumnus, Nate’s writing has previously appeared in several religious and news publications. Follow him @NateMadden_IV.