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In U.S. visa program, money talks

The little-known federal EB-5 visa program lets would-be immigrants invest their way into the U.S.

September 03, 2011|P.J. Huffstutter, Los Angeles Times
  • John McGlade, city engineer for the city of Victorville, leads a tour at Victorville's new wastewater treatment plant, in which foreign money was invested.
John McGlade, city engineer for the city of Victorville, leads a tour at… (Daily Press, James Quigg )

David Joyce marched his way to the front of the U.S. immigration line using his pocketbook, sinking half a million dollars into a Vermont ski resort.

The British citizen had spent years in a futile effort to secure green cards for himself, his wife and their 9-year-old son so they could relocate to sunny Florida. Then, a fellow emigre tipped him off to a little-known federal program that helps foreigners gain permanent U.S. residency by investing in American businesses.

Graphic: Number of investors' visas to U.S.

"In six months, we had our green cards," said Joyce, 51. "Considering everything we've been through, this was easy."

Joyce is one of thousands of foreigners speeding through the U.S. immigration labyrinth — for a price.

Those who invest $500,000 in a U.S. enterprise that creates at least 10 jobs in a rural area or a community with a high unemployment rate are eligible for special visas that put them and their families on the fast track to becoming permanent residents.

For some wealthy immigrants lacking the family ties or special skills required for traditional U.S. visas, it's the fastest way to establish permanent residency apart from marrying a U.S. citizen. Investors aren't required to work in the business or participate in its management; some never even see the enterprises they buy into.

The federal program, known as EB-5, is relatively small, capped at 10,000 visas annually. But applications have skyrocketed since 2006 as entrepreneurs and cash-strapped towns have begun aggressively wooing wealthy foreigners as a low-cost source of capital.

In San Bernardino, the city is tapping EB-5 funds to redevelop its downtown theater district. In Jupiter, Fla., overseas money is fueling the construction of an outdoor amphitheater, marina slips and entertainment hub. In Philadelphia, it was used to expand a hospital complex and improve a school for disabled children.

Once the federal government gives preliminary approval to a project and conducts background checks, the would-be immigrant can invest in the deal and apply for the visa.

But the government's initial approval doesn't always lead to desired results.

Some immigrants have faced deportation when their investments failed to create enough jobs or otherwise didn't comply with program rules. Others have secured their green cards but lost their entire investments when projects foundered.

Yet the prospect of U.S. residency has proved so enticing that some are willing to take the chance. Once approved for the program, the investor can apply for a conditional green card, good for two years. If the investment creates 10 jobs during that time, he or she can apply to live in the U.S. permanently.

Applications from mainland China have soared in recent years, fueled by well-off parents eager to get their children into U.S. schools.

"They can afford to do this," said Zhang Runan, an immigration attorney in Washington.

Proponents laud the program as a way to boost struggling local economies while rewarding immigrant risk-takers.

In the hamlet of Jay, Vt., where Englishman Joyce was part of a $215-million investment pool, EB-5 money has helped finance luxury condos and a new ice hockey arena. Up next: an indoor water park, a golf complex and a hotel aimed at attracting more visitors to the ski town hit hard by the recession.

"We tried going to banks, but the lending environment was impossible," said Bill Stenger, chief executive of the Jay Peak Resort. "There is no way we could have done this without EB-5."

But some critics contend this is little more than a cash-for-visa program, one that is more beneficial to project promoters than the depressed communities it's supposed to help. A cottage industry of middlemen has emerged to introduce investors hungry for permanent U.S. residency to American developers and communities eager for money.

A flurry of EB-5-related websites has popped up with pitches written in Chinese, Korean, Spanish and Arabic. Promoters regularly offer seminars in hotel ballrooms in China, as well as in the U.S., proffering deals and collecting hefty fees.

U.S. Citizenship and Immigration Services, the federal agency that administers the program, can't say how many net new jobs have been created.

Under USCIS rules, the projects don't even have to hire 10 workers. Instead, an investor's money can be used to preserve 10 jobs that economic models show, and the government concludes, would otherwise disappear without such funding.

"Immigration visas should be precious," said David S. North, a research fellow with the Center for Immigration Studies, a conservative think tank in Washington, who has written extensively about EB-5. "The government is selling access to this country and what are we getting in return? Very little."

No city has encountered more strife with the program than recession-ravaged Victorville. Foreclosures sprouted on nearly every street. Unemployment soared past 16%.

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