Program That Lets Foreigners Write a Check, and Get a Visa, Draws Scrutiny

New York Times

By Ron Nixon

March 15, 2016

Program That Lets Foreigners Write a Check, and Get a Visa, Draws Scrutiny 

The easiest way to gain entry into the United States is not to walk across the border in the dead of night. It is to write a check.

A visa process enacted by Congress in 1990 to create jobs and pump billions of dollars into the economy has evolved into a program that federal investigators and some prominent lawmakers say has become a risk to national security and an easy mark for abuse, particularly from China.

The program, called EB-5, allows wealthy foreign investors, for a price ranging from $500,000 to more than $1 million, to put themselves on a path to United States citizenship. The money must be used to finance a business in this country and eventually employ — directly or indirectly — at least 10 American workers in economically depressed areas.

But EB-5 has been the subject of increasing scrutiny since investigators uncovered numerous cases of fraud, discovered individuals with possible ties to Chinese and Iranian intelligence using fake documents and learned that international fugitives who have laundered money had infiltrated the program.

The Senate Homeland Security Committee on Tuesday will hold a hearing on the United States visa programs at which members are expected to highlight flaws in the EB-5 program.

“It’s no secret that the program has long been riddled with corruption and national security vulnerabilities,” said Senator Charles E. Grassley, Republican of Iowa, and a frequent critic of the program.

A number of Democrats echo his criticism, in large part because while most visa applicants must meet education or work requirements, the primary requirement for the EB-5 program is a “lawful source of investment income,” one Department of Homeland Security memo said.

“I don’t believe that America should be selling visas and eventually citizenship,” said Senator Dianne Feinstein, Democrat of California, who wants to terminate a part of the program that allows foreign applicants to invest through regional development centers that pool investor money. “The right to immigrate should not be for sale.”

The Department of Homeland Security, led by Secretary Jeh Johnson, said it was taking steps to address the issues raised by senators like Mr. Grassley and Ms. Feinstein.

“The secretary has spoken to Chairman Grassley personally about this,” said Marsha Catron, a spokeswoman for the department. “Chairman Grassley asked him to take executive action to further strengthen the security of the EB-5 program. The secretary intends to do all he can within his legal authority to do so.”

The foreign investor visa does have its defenders, like Senator Chuck Schumer, Democrat of New York, along with some in the Obama administration who say it has delivered billions of dollars into the American economy: $8.7 billion and 35,140 jobs since Oct. 12. But federal auditors have found that in many cases those numbers are “not valid and reliable.”

Peter Joseph, executive director of the Association to Invest in the U.S.A., a Washington-based coalition of developers, immigration lawyers and EB-5 regional centers, said the national security concerns were overstated. The group and other supporters of the EB-5 program, including real estate developers, spent as much as $3 million to help defeat legislation co-sponsored by Mr. Grassley and Senator Patrick J. Leahy, Democrat of Vermont, intended to address fraud and national security concerns.

New criticism of the program surfaced recently when a former federal investigator, Taylor Johnson, a special agent with Immigration and Customs Enforcement, said she was fired after raising questions about the vetting of individuals involved in a development project in Las Vegas. She filed a complaint with the Merit Systems Protection Board, a quasi-judicial agency that protects whistle-blowers, saying she was fired because she exposed national security concerns. Immigration and Customs Enforcement said Ms. Johnson’s termination was unrelated to her EB-5 investigation.

But her accusations have prompted investigations by the Office of Special Counsel, an independent agency that protects federal employees from reprisal, and the Department of Homeland Security’s Office of the Inspector General. She testified before the Senate Homeland Security Committee about abuses in the program.

Foreign investors can gain green cards by investing $1 million in a new business or $500,000 through one of nearly 800 regional development centers across the country that pool EB-5 money and are certified by the federal government. Most EB-5 visa seekers — about 95 percent — invest through these regional centers, which are largely unregulated. In some cases, the investors can also gain citizenship.

The program has grown rapidly, to nearly 9,000 conditional visas last year, of which 80 percent were issued to Chinese investors, from 64 EB-5 visas in 2003. Investigators have found that security risks have risen rapidly with the growth.

A Government Accountability Office report released in August found that the agency could not be sure that money used for the visas was not coming from “the drug trade, human trafficking, or other criminal activities.”

Officials at Homeland Security Investigations, a division of Immigration and Customs Enforcement, said they were concerned that those who prepare overseas documents “may try to use increasingly sophisticated methods to circumvent” the program. In a 2013 memo, the agency suggested that the EB-5 regional center program end because “there are no safeguards that can be put in place that will ensure the integrity” of the regional center model.

An internal review by the fraud detection office at United States Citizenship and Immigration Services found numerous fraudulent documents when it conducted a random sampling of pending visa applications. Officials at the agency said they did not have the authority to shut down a regional center that has received money from foreign investors solely because of possible criminal or national security concerns.

Court records and law enforcement documents show that several individuals with questionable backgrounds have used the program to launder money and gain entry to the United States.

Last year the law enforcement authorities arrested a Chinese national, Zhao Shilan, who they say obtained a visa using money stolen from a grain storage house in China, where her husband, Qiao Jianjun, was director. According to court records, the couple, who had divorced in China, said they were still married. Over a period of months, they sent money stolen from the storage facilities to banks in Canada and Hong Kong. Mr. Qiao then submitted false immigration and financial documents to immigration officials. The couple later used the money they stole to buy property in Washington State, including a four-bedroom home worth nearly $700,000, according to court records.

Ms. Zhao pleaded not guilty during a court appearance last year. Mr. Qiao remains a fugitive and is listed on Interpol’s “most wanted” list.

In another case, court records show that in 2011, Héctor Javier Villarreal Hernández, the former treasurer of the Mexican state of Coahuila who was accused of embezzling about $6.5 million, was granted an investor visa shortly after being released on bail in Mexico. He lived in the United States for months and was later arrested and charged with money laundering.

A growing concern among United States intelligence and law enforcement officials is that foreign government agents might be trying to infiltrate the program to conduct economic espionage or gain access to critical technology that is banned from export.

A 2013 Homeland Security investigation found that an individual involved in the EB-5 program who was later arrested in connection with exporting electronics to Iran, had ties to Iranian intelligence operatives who might try to abuse the programs to enter the United States.

Officials from Citizenship and Immigration Services acknowledged that the EB-5 program has had problems, but they said the agency had made a number of changes to address them, from centralizing oversight of the program in Washington from California to working with law enforcement and intelligence agencies and shutting down regional centers that engaged in fraud or that failed to use investors’ money as intended. The agency said it has shut down 35 centers since 2014.

And Homeland Security officials said they were being more proactive in tracing the sources of foreign investor income, including establishing working relationships with Chinese government officials and conducting overseas visits to verify applicants’ sources of income.

“These measures all contribute to our increased ability to validate the evidence submitted by potential investors to demonstrate a legitimate source for their investment funds,” Citizenship and Immigration Services said in a statement.

Mr. Grassley, the chairman of the Senate Judiciary Committee, said he was not convinced the changes were enough.

“My quest to either have EB-5 reformed or to end the program has just begun,” Mr. Grassley said. “This is not the end, this is just the beginning.”

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