In rapidly growing numbers, the immigrant investor program, or as it is more commonly referred to as “EB-5” visa is being used to secure green cards for permanent residence in the United States.
Essentially, in return for an investment of either $500,000 or $1 million — an individual and his family are granted permanent residence in the United States.
Up until the end of last year, the United States Citizenship and Immigration Services never came close to the 10,000 EB-5 visa limits. In fiscal year 2013, 8,564 EB-5 visas were issued. During fiscal year 2012, 7,641 visas were issued. The majority of the applicants of EB-5 visas were issued to Chinese nationals during these surges in activity. China accounts for more than 80 percent of all EB-5 investors overall.
Just to put things in perspective: During fiscal year 2003 — only a total of 65 EB-5 visas were issued.
EB-5 is a government sponsored “quid pro quo” method of buying your way into citizenship. On the surface, the program appears like a win-win for both America’s unemployed and rich foreigners.
The program, however, has demonstrated a lack of long-term jobs creation and is plagued with corruption and scandals. The EB-5 program was run so poorly in the 1990s that it was effectively shut down from 1998 to 2003. Canada has entirely halted their similar foreign investment visa program entirely since February this year.
An example that should hit close to home is the case of Jianwei Lei and two other wealthy Chinese businessmen who all wired $1 million each to a California firm that had promised to build a fine Chinese restaurant in San Bruno. The developer faked a heart attack in a karaoke bar and his associate concocted a story about his death, according to a Los Angeles Times article dated April 23, 2013, by Don Lee and Frank Shyong.
Take also the bizarre case of the El Monte regional “transit village” which had its designation as an EB-5 project revoked due to fraud, embezzling and a series of other bizarre circumstances resulting from this program. The organization barred from EB-5 visa application is still trying to acquire funds in mainland China and actively use the El Monte city seal in its documents and marketing materials, according to a Bloomberg article dated May 23, 2012, by Dune Lawrence.
There is little actual regulation of how promoters market visas to would-be immigrants and investors. In many cases, developers have misrepresented their projects and misspent funds collected.
I have written before about San Mateo County mayors’ junket to China sponsored by “nonprofit” China Silicon Valley Opportunities, which I believe is part of this larger issue of pandering to rich foreign investors.
Mayor Wayne Lee, in my hometown of Millbrae, has been actively lobbying for the establishment of a “trade center” with China. This “trade center” idea may actually end up being a USCIS approved regional EB-5 visa investment center.
Frankly, the individuals who stand to benefit the most from actively courting investors abroad are first and foremost the local politicians who control the primary approval barriers of entry for real estate projects.
We’ve seen firsthand the Millbrae Planning Commission approve Tai Wu restaurant despite having a full disclosure of the project’s parking shortcomings since 2011. Where are the checks and balances?
We have all seen a large increase in home and rent prices in San Mateo County skyrocket in part because of the technology industry and a significant portion due to speculative foreign real estate investment encouraged by programs such as EB-5. Our economy in San Mateo County is completely artificial, a plutocracy of the technology class and rich foreign investors. Where do the locals who grew up here fit in to the equation?
My own mother came to this country on refugee status from China without a dime in her pocket to escape Maoism. She attended the University of California at Berkeley and San Francisco State University while working. She later became an accounting controller and accomplished the “American dream” — by being granted an opportunity by working hard.
In modern America, people like my mother would never be given a visa to come here because she didn’t have the requisite half a million dollars and necessary “connections.”
Doug Radtke is a CPA candidate and November 2013 candidate for Millbrae City Council. He works in public accounting for one of the Big 4 CPA firms. Performing audits and assurance services for municipal and special district entities within the greater Bay Area started his active interest in local government. He can be contacted by email at email@example.com or phone (408) 868-8541.