On Feb 12 2015 by H. Ronald Klasko

The ABC Fallout – Time for the EB-5 Industry to Take the Offensive

The EB-5 Reform and Integrity Act of 2022 brought many changes to the EB-5 program. For the latest information, please click here.

Once again the EB-5 industry has been slammed by a major media source. Once again the “news” is not news at all but rather rehashing of discredited stories that are years old.

Once again the EB-5 industry is put in a position to react defensively to justify a program that should be held on a pedestal as a sample of how a Congressionally-established government program can really work to further a public interest at no cost to the public.

Unfortunately, this cycle will likely continue unless the EB-5 industry mounts an offensive in a concerted fashion to make the public aware how the EB-5 program has contributed billions of dollars to the U.S. economy and hundreds of thousands of jobs to the U.S. workforce. Sure, there have been some positive press in local media. However, major national and international media, such as Fortune Magazine and ABC News, feature negative stories about EB-5 that resonate with the public, with the media, with government officials, with investors overseas, with banks providing financing on projects with EB-5 money, with developers considering using EB-5 money.

I suggest that, right now, this is among the most urgent issues confronting the EB-5 community. It is past time for regional centers, project developers, local community officials, regional centers and developers to mount a major media offensive telling the easily-told stories of how EB-5 has contributed to the economy, to job creation, to community development. This may take some commitments of money and resources. It is not something that can be done by attorneys. The EB-5 industry fails to do it at its own jeopardy. Rest assured, Senator Grassley and other opponents of the program will continue their efforts to bring the program down.

The ABC “expose” focuses on allegations made by Senator Grassley in 2012 and 2013 in his ongoing attacks against then-USCIS Director Mayorkas for his support and leadership of the agency administering the EB-5 program. Senator Grassley’s allegations at that time – and ABC News’ recounting of those allegations years later – focuses mostly on the SLS Hotel in Las Vegas, one of the largest EB-5 projects. I was proud to be immigration counsel for that project for which EB-5 money was an important part of the capital stack used to build the largest new casino hotel on the Las Vegas strip.

Senator Grassley’s allegations in 2012 and 2013 – repeated almost verbatim by ABC News in 2015 – revolves around two issues:

  • That there is something somehow illicit about USCIS granting an expedite request; and
  • That Director Mayorkas forced USCIS officials to approve EB-5 investor petitions for investors with serious criminal or security problems in their background.

There is no basis whatsoever for either allegation.

First, let’s look at the expedite issue. There is nothing illicit about an expedite application being made or being approved. USCIS has long had published expedite criteria for all applications filed before it – not just EB-5. USCIS has long approved many such expedite applications for many different types of visas and permanent resident applications. In my opinion, the SLS application requesting an expedite was one of the strongest expedite applications that I have seen, and it was not at all surprising that it was approved. Senator Grassley was obviously disturbed that Majority Leader Reid actively supported the expedite. There is nothing either wrong or unusual about a Senator or Congressman supporting an expedite request.

What does an expedite mean? It means that certain applications will be reviewed in advance of other applications. It does not mean that the review will be less extensive than otherwise would be – just sooner.

It certainly doesn’t mean that security checks will be circumvented. In fact, in every expedite of every type of immigration application, full security checks are completed before adjudication.

In fact, in the SLS case, the review was very thorough. USCIS issued a very extensive RFE, which received a very thorough and extensive response. The so-called “expedite” resulted in EB-5 petitions being approved seven months after filing. Interestingly, the expedites took longer than the normal I-526 processing time only a few short years ago, which remain the USCIS target for I-526 processing time.

The ABC News account details the allegations of anti-Mayorkas “whistleblowers”, who stated that they were pressured to approve investors with criminal backgrounds, fraudulent documents and unlawful immigration histories. Again, there are at least two problems with these allegations, neither of which are discussed by ABC News.

The first problem is that these allegations resulted in scores of approved EB-5 petitions being returned from the National Visa Center to USCIS to reconsider the approvals to consider the published allegations. In 100% of the applications, a further review resulted in re-approvals of the applications.

Even more troubling is the fundamental misunderstanding of the immigration process manifested in the ABC News story. The story makes it seem that EB-5 is a convenient way to short circuit normal security and criminal processing that bars unsavory immigrants from U.S. shores. In fact, the EB-5 program has more levels of review of an immigrant’s background than any other method of immigrating to the U.S. With family and employment-based immigration, there is only one level of criminal/security review, which occurs at the time of application for adjustment of status to permanent residence or application for immigrant visa at a U.S. Consulate. For EB-5 immigrants, the security review process is far more extensive. First, USCIS performs a meticulous review of the investor’s lawful source of funds. USCIS also performs security reviews prior to approving an I-526 petition. When the I-526 is approved, the U.S. Department of State conducts extensive criminal and security checks as part of its admissibility review for issuing the conditional immigrant visa to the investor. With EB-5 – unlike with most immigrants – there is yet a further security check at the condition removal stage before the immigrant becomes a full permanent resident of the U.S.

The “expedite” only relates to the I-526 petition. There is no expedite procedure for the criminal and security checks performed by the U.S. Department of State after the I-526 petition is approved.

The allegations of the whistleblowers simply make no sense. Even if one could believe that USCIS knowingly approved the EB-5 petitions on the first level of review despite available evidence of criminal problems, fraud problems and security problems, and even if one could believe that USCIS re-approved after re-review the very same petitions, there is no conceivable way that an independent agency – the U.S. Department of State – purposely overlooked or disregarded the supposed discoveries of the “whistleblowers” in issuing immigrant visas in 100% of the cases.

It’s getting a bit old defending a win-win-win government program (a rarity in itself) and continuing to find the EB-5 industry on the defensive. It is well past the time for the EB-5 industry to tell its story loud, clear and with pride.