On Friday, May 7, 2017, President Trump signed his first piece of major legislation. H.R. 244, or the Honoring Investments in Recruiting and Employing American Military Veterans Act of 2017 (HIRES Act of 2017), is better known as the Appropriations Act. The purpose of the bill was to keep the lights on and avoid a government shutdown. But buried in the bill is language focusing on something else altogether: visas. And the visa attracting the most attention is an immigrant visa known as the EB-5.
(You can read the law, which downloads as a PDF, here.)
The EB-5 visa program, named because it is the fifth preference employment-based visa, was created in 1990. It was, according to the USCIS, intended to “to stimulate the U.S. economy through job creation and capital investment by foreign investors.” Under the program, entrepreneurs, and their spouses and unmarried children under 21, are eligible to apply for a green card if they invest in a commercial enterprise that meets certain criteria. A green card grants an immigrant permission to remain in the United States indefinitely: green card holders and their families may apply for citizenship but they don’t have to.
And here’s why the visa is making news: just before the new law was signed, Nicole Meyer, the sister of Trump’s son-in-law and presidential adviser, Jared Kushner, flew to China to encourage investors to take advantage of the program by investing in Kushner Companies. Meyer drew fire for comments related to the program, suggesting that her family would be appreciative of their investment. According to a spokesman for the company, the inclusion was not intended to curry favor. Instead, “[i]n the course of discussing this project and the firm’s history with potential investors, Ms. Meyer wanted to make clear that her brother had stepped away from the company in January and has nothing to do with this project. Kushner Companies apologizes if that mention of her brother was in any way interpreted as an attempt to lure investors. That was not Ms. Meyer’s intention.”
The apology has done little to stem concerns over what some believe is a clear conflict of interest. It’s also an uncomfortable position for many on the Hill who find themselves in the position of defending a law that allows investors with money to enter the country on a fast track.
There’s a good reason why Meyer targeted China and not, say, the Philippines. With money to spend and a desire to enter the United States, the Chinese account for more than 80% of EB-5 visas issued. A trip to the U.S. Citizenship and Immigration Services (USCIS) page on EB-5 visas bears that out: the only foreign translation easily accessible on the page is Simplified Chinese.
How much money? For purposes of the EB-5 visa, the minimum qualifying investment in the United States is $1 million. However, if the investment is made in a high-unemployment area or rural area, the investment minimum is just $500,000. Critics allege that the criteria for “high-unemployment area or rural area” are often ignored and easily manipulated. For example, the development touted by Meyer is in Jersey City, a few miles away from Manhattan – and where Forbes offices are located.
Despite criticisms of the program, wealthy investors view it as a way to legally move to the United States – and there’s no requirement that those with the cash possess any specific skills or education, as with certain other visas. It is, some say, citizenship for sale. Jonathan Grode, an immigration attorney and U.S. Practice Director with Green and Spiegel, LLC, stresses that it’s not “buying citizenship.” If the investment fails and the jobs are not created, he notes, the investor is subject to deportation. “I’m not aware of any other program in the world that has that risk,” he says. “So any characterizations to the contrary are unfair.”
Grode says that the EB-5 is a good alternative for high net worth individuals “who want to control their own destiny.” The wait times, he explains, for certain categories of green cards can be extremely long and the E-B5 has no quota backlogs except for those individuals born in China.
The EB-5 visa is, however, not always a sure thing. If an investor doesn’t keep adequate records and the source of funds to be invested is too muddy, then the visa can be difficult to secure. Grode points out that many countries around the world transact in cash or hard currency (gold) and might not have verifiable bank statements: those applicants would need an experienced attorney to help prove that the funds are lawful.
The process can also be very expensive. A $500,000 investment needs to be at risk for loss for several years. According to Grode, additional administrative, government, and legal fees could run another $100,000.
Other visas may be better alternatives, depending on the circumstances. If someone has a U.S. citizen spouse, for example, that process will be far less intense and costly. In addition, for those that want to get to the United States faster and want to run their own business, Grode may suggest a look at other visa options such as the E-2 (treaty investor) and the L-1A (intracompany transferee) first.
Still, the EB-5 remains a viable visa option for those with money. But is it really a path to citizenship? Not exactly. Grode clarifies, “It’s a path to a green card.” According to Grode, EB-5 green card holders do not get any kind of preferential treatment for citizenship when they apply: they are in the same category as all other green card holders. Many, he says, won’t even apply if it puts their native citizenship at risk: they will just remain in the United States on a green card.
So why allow those who enter on an EB-5 visa to remain here indefinitely? The idea, of course, is that encouraging investment in the United States should be good for our economy. A Kushner Companies spokesman says that their project, the proposed One Journal Square project, “will provide $180 million in tax revenue for Jersey City over the next 30 years, more than 4,000 union construction jobs, and direct funding for a memorial plaza and local arts initiatives, among other benefits.” In a strapped economy, more tax dollars feels like a win but it’s been suggested that isn’t always the result of the EB-5 visa program. Specifically, concerns about fraud and gaming the system have been raised since the inception of the program and government coffers don’t always receive the promised benefit.
Grode agrees that there are issues with the current EB-5 program: reform has long been discussed. And, he notes, it’s not a panacea for those seeking entry into the country. “EB-5 is another tool in an immigration lawyer’s toolbox,” he says. “It works for some individuals, but certainly not for all.”