So local leaders hired William Buck Johns, a prominent Orange County developer and Republican fundraiser, to help them set up an EB-5 regional center.
They traveled overseas seeking short-term funding to continue redevelopment work at the former George Air Force Base while the city secured permanent financing. Normally, such bridge loans carry high interest rates and are backed with collateral such as real estate.
Local EB-5 officials told foreign investors that Victorville would use their money to complete work on a power plant, a railway center, a wastewater treatment plant and other improvements to the former base, now called the Southern California Logistics Airport, according to interviews with city officials and documents obtained by The Times.
The USCIS green-lighted the plan. Investors flocked to the deal.
Last year, though, the USCIS said it received complaints about Victorville's regional center and began to investigate, uncovering a number of problems. A chief concern: Only the water treatment plant was viable, and it wouldn't create enough jobs to meet program rules.
The USCIS kicked Victorville out of the EB-5 program in October, the first time federal officials have decertified a regional center in the program's 21-year history. By then, 17 foreign investors had contributed $8.5 million.
As of June, the city had refunded a total of $2 million to four investors who demanded their money back. The status of the remaining funds isn't clear. Six immigrants applied for visas, and the USCIS granted one, according to federal court documents.
The USCIS and Victorville officials declined to say what happened to the rest of the investors. City officials said they did nothing wrong.
Victorville recently sued the USCIS and government officials, claiming that they had violated immigration law and exceeded their regulatory authority by decertifying the regional center. The city wants to be reinstated in the program.
Johns and his firm, Inland Group, were paid at least $850,000 for their role in the Victorville regional center, according to sources familiar with the deal.
Inland Group is now pitching the Victorville projects to potential investors under a new name: the High Desert Regional Center. A website registered to Inland Group calls the venture "the easiest and fastest way to live, work, study and play in the USA permanently!"
Johns did not return calls for comment.
The USCIS said the High Desert Regional Center isn't certified by the agency to be in the EB-5 program.
Congress created the program in 1990 to attract wealthy Hong Kong residents looking to flee the British colony before the 1997 transfer to communist China.
Australia, Canada and New Zealand were courting these emigres. To compete, U.S. lawmakers set aside 10,000 visas annually for immigrants, their spouses and unmarried dependents younger than 21 if they invested at least $1 million in a business that created 10 jobs. The amount was later reduced to $500,000.
Federal rules require that EB-5 applicants invest in projects operated by private businesses, public entities or private-public ventures, all known as regional centers. The USCIS vets both the regional centers and the projects they propose.
For years, EB-5 generated little interest, in part because the rules were complicated and the program proved vulnerable to fraud. Investor interest changed after Wall Street's 2008 meltdown. When bank financing dried up, business owners and real estate developers rediscovered the program and headed abroad looking for investors.
In 2007, just 11 U.S. groups were cleared by the federal government to offer visas in exchange for investment dollars. This year, as of mid-August, there were 171, and 48 are waiting for approval to launch or expand.
The agency has approved 43 regional centers to work on projects based in California, more than any other state.
One of the largest and oldest regional centers is CMB Export in Rock Island, Ill., which uses EB-5 money to revitalize mothballed military bases. In California, it has worked with city officials in San Bernardino, Loma Linda and Colton to redevelop the former Norton Air Force Base, now San Bernardino International Airport.
As of August, $96 million from foreign investors had been used to help improve the airport and surrounding area, including construction of a distribution and office complex for the Stater Bros. grocery chain.
Retailer Kohl's, toy maker Mattel and others also leased warehouse and manufacturing facilities in the area. More than 4,000 jobs have been created so far, according to San Bernardino city officials.
"When the meltdown happened, our unemployment shot up like a high temperature," said San Bernardino Mayor Patrick J. Morris. "That money helped us keep going.... EB-5 money is crucial to us, then and now."
