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Popularity of immigrant investment visa draws scrutiny

The ability to gain a visa in the United States is often linked to the background or circumstance of the applying individual, such as employment, family or asylum. Recently, one type of employment-based visa has drawn scrutiny because of its popularity-the EB-5 visa. In exchange for a significant investment in a business and the creation or preservation of a certain number of jobs in the U.S., an individual may apply for an EB-5. The recent popularity of the visa and potential problems for applicants has led some to question the underlying policy of the visa type and also demonstrates the importance of seeking qualified immigration counsel when seeking application.

The EB-5 program was created in 1990 as a way to stimulate investment and to create jobs in the U.S. In short, any non-citizen who contributes at least $500,000 to a business project in the U.S. may apply to the program. At its creation the visa program drew criticism as a way to sell U.S. citizenship. According to Fortune, since that time, that criticism still exists but has been overshadowed by bi-partisan support and the endorsement of influential American businessmen, such as Bill Gates and Warren Buffet, who believe the program benefits both immigrants and American business. According to a study cited in Fortune, the program supported 42,000 jobs and contributed $3.4 billion to the economy in 2012. Though, those statistics have been challenged by other studies.

The jump in applications in the EB-5 program is linked to the downturn in lending that occurred after the financial crisis of 2008. Without banks lending, some businesses turned to the program for capital, and today some turn to it for cheaper capital in comparison to lending rates from banks. Because the program is an avenue for business investment, those who make an investment through the EB-5 program are exposed to the risks of any business investment, such as not obtaining a return on investment or fraud. A recent federal investigation demonstrates the potential financial risk that EB-5 applicants may encounter without good representation to vet the investment opportunity. At the end of August, federal authorities brought criminal charges against a 30-year-old Chicago promoter who raised $160 million through the EB-5 program to build a large hotel and convention center near O'Hare airport but allegedly spent the money on luxury goods for himself, family and friends. The federal indictment alleges the man lied about his business experience, commitments from other hotels, and lied and forged documents concerning the government permits and financing for the project. Those critical of the program say it is greatly under-regulated and that applicants are too willing to accept a nominal financial return because applicants are more concerned with obtaining the visa.

Despite the potential risks to investment, the program remains extremely popular among those who can pay, however there is limited availability. The EB-5 program is limited to 10,000 individuals per year, which includes visas for the applicant's spouse and children. The program is incredibly popular with Chinese nationals who now make up more than 80 percent of EB-5 visas issued. In fact, the demand from China is so great that the U.S. Department of State announced near the end of August 2014 that EB-5 visas would no longer be available for Chinese nationals until October 1, 2014. The State Department implemented the decision to better manage the availability of the visas for other foreign nationals. Many Chinese apply to the program to seek shelter from increasing pollution, to obtain greater freedom or to help send their children to colleges in the U.S.

If you are a foreign national who wishes to work or invest in the U.S., contact an experienced immigration lawyer to better understand the requirements and risks of the EB-5 program and other employment-based visa programs.

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