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By Joseph P. Whalen (Sunday, April 30, 2017)
Everyone is in the dark when it comes to EB-5 site visits and Regional Center audits
because they have only just begun. USCIS is unlikely to be 100% sure of how to proceed
but they know, just as ‘We the Stakeholders’ know, that there must be increased oversight of
the EB-5 Regional Center Program. There is little doubt that any serious EB-5
stakeholder can justifiably disagree with this processual
development in EB-5 program administration. Remember
also that site visits will not be confined to Regional
Center-affiliated businesses alone. EB-5 direct investments,
regardless of whether they are truly “stand alone” or in
non-regional center affiliated “collectives”, are also going to
being checked through an in-person visit and inspection. It
is unclear if USCIS will seek to audit the non-RC businesses also, but they might.
One might wonder why USCIS is introducing EB-5 site visits and audits. Well, I think
that that question can be answered with one word and that word is “fraud”. Lies have
pervaded immigration ever since the very first controls were established in the form of
head taxes on boat loads of new arrivals, mainly from Europe but
there were also Asians arriving on the west coast. The head tax was
instituted when immigration was handled by the Secretary of the
Treasury, and the primary control was the head tax. Ship Captains
were the ones who paid the tax and not surprisingly, some lied about
the number of new arrivals they off loaded. Some may have made
clandestine It did not take very long for the government to figure out
about the lies. Along with the head tax, there was implementation of
reasons for excluding undesirables. The generally applicable
Immigration Act of 18821 levied a head tax of fifty cents on each
immigrant and blocked (or excluded) the entry of idiots, lunatics,
convicts, and persons likely to become a public charge.
1 Enacted on August 3, 1882.
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While the above cited Act applied to everyone, the Chinese Exclusion Act2 of 1882, for
the first time “targeted” a specific race/ethnicity/nationality when it suspended
immigration of Chinese specifically, initially for 10 years, and barred them from
naturalization. That Act was extended and eventually made permanent and remained in
place until 1943. In that the transcontinental railroad was officially complete with the
ceremonial driving of the Last
“Golden” Spike at Promontory
Summit (or Promontory
Point), Utah, on May 10, 1869,
the need for cheap Chinese
labor seemed to evaporate, it
merely shifted. It did not
matter to the “racial purists”
(racists) that the Chinese only comprised .002%
of the population, they were easy targets.
The Chinese laborers of the day were visibly
different and readily identifiable, often wearily
traditional Chinese clothing and hairstyles, they were
ready-made targets that no politician could resist
attacking in their
stump speeches.
Back then just like
today, when
Americans are out
of work, additional foreign labor is viewed as “not
required”, detrimental, and therefore undesirable, so
the U.S. tries to shut the door to it. U.S. politicians back
then would frequently “scapegoat” foreigners just so
they could point their fingers at some cause, other than
their own failed policies, whether real or imagined, and cast blame away from themselves.
Not a whole helluva lot has changed since then when it comes to blaming foreigners for
the political problem du jour! It is unlikely that any politician will ever freely take
responsibility for their own failings or give up an easy target in their campaign rhetoric!
However, after elected, they have to do more than bitch and complain.
2 Approved on May 6, 1882.
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Today, Chinese people are still easy targets for various factions. As
an American, I am ashamed to admit that there is no shortage of
hatemongering, anti-immigrant groups in America. When it comes to
those immigrant hating small minded pathetic boobs, EB-5 seems
like an easy target. They rant and rave about “citizenship for sale”
and the “cheap” route to buying a “family-sized set of green-cards” and in doing so, again
target Chinese nationals. Those bigots are either so stupid that they cannot understand
how EB-5 works or they trust that their audience is, or both. From another angle, I have
written previously about the problem of Affinity Fraud, whereby unscrupulous con
artists prey on people with whom they identify. In EB-5
investing, the Chinese market is the biggest.
Unfortunately, the largest number and percentage of
victims are Chinese, many of
whom fall prey to other
Chinese and Chinese-
Americans who promise them
the world and do nothing but steal from them. I suppose the
only good thing about the highly publicized cases where the
SEC or FBI (generally alerted by USCIS) have stepped in and brought enforcement actions,
both civil and criminal in nature, is that the potential pool of Chinese victims is not only
shrinking, but is drying up. While those who have been victimized already will increase
due diligence, so will a growing percentage of potential investors, thereby decreasing the
pool of potential victims.
Upon examining the EB-5 landscape, it appears to be
riddled with landmines and pitfalls. It makes sense to me that
USCIS is moving forward with audits and site visits now even
if with only loose plans, instead of waiting any longer. This
desperately needed extra layer of oversight can’t come too
soon in any investment process. While it might seem
impractical to some folks to waste much effort on well-
established business ventures that are paying returns and
have had I-829s approved, it is never too late to bother having
a look. Just because a venture is paying returns does not mean
it is profitable. Remember Ponzi? Remember Jay Peaks? And
there are more examples if you care to explore further.
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Since we do not yet know each and every
type of scam or fraud there is, neither can
USCIS. EB-5 Regional Center and EB-5
business audits and site visits cannot wait any
longer. The current uncertainty among EB-5
Regional
Centers,
NCEs, and
JCEs may
be uncomfortable but it is worth the anxiety. While
IPO’s “customers” have a right to some basic
information on what they might expect, and general
guidelines on the information they should have
readily available, a little mystery is not a bad thing.
If “bad actors” have too much information then they
might get
the upper hand. These “bad actors” have to be
kept guessing, and wondering when they will
give themselves away, and get caught. They
should be afraid. On the flipside of the site visit
and audit equation are the good guys. These
folks have nothing to fear from USCIS. They can
use their successful site visits and audits in their
EB-5 marketing campaigns!
