Internal investigations conducted by the Department of Homeland Security have found allegations of intervention of a top DHS official into EB-5 projects backed by Virginia Gov Terry McAuliffe and Senator Harry Reid to be true.
The report prepared by the DHS Inspector General holds the deputy secretary of DHS guilty of creating the impression of favoritism and special access by helping projects supported by two Democrat politicians in their attempts to gain status as Investment Centers under the EB-5 visa program.
Deputy DHS Secretary, Alejandro Mayorkas, was also held responsible for influencing a project supported by former Governor of Pennsylvania, Ed Rendell. In all the three cases, the initial decision to reject the Investment Center requests was reversed.
The EB-5 program, which is the US investment immigration program, offers permanent residency to immigrants investing at least $500,000 in enterprises that create at least 10 jobs for American citizens. The program has attracted attention of federal agencies in recent years due to allegations of violation of security norms and instances of investment frauds.
In 2013, the Securities and Exchange Commission intervened in an alleged investment fraud involving almost 300 investors. A Chicago entrepreneur had falsely convinced investors to part with close to $160 million by promising permanent residency visas in exchange of backing his hotel project. The project was never concluded, and the promoter was indicted for fraud in 2013.
The current investigations of the DHS Inspector General commenced due to complaints by a whistleblower made in 2012. The investigation found the top official guilty after interviewing more than 15 individuals who had played a role in the implementation of the EB-5 visa scheme.
Apart from finding truth in allegations of special access and treatment to certain individuals and parties, investigations also revealed Mayorkas, who served as the director of the US Citizenship and Immigration Services until 2013, created special processes and made arbitrary revisions to policies applicable to the EB-5 program to accommodate interests of specific parties. The USCIS is responsible for running the EB-5 program.
Responding to the report, Mayorkas stated that he merely corrected agency errors, and simply ensured cases were decided as per provisions of established law. According to him, the EB-5 program was in poor shape when he joined the USCIS, and that he focused on issues like incorrect decisions and inadequate security vetting of cases to enhance the efficiency and performance of the visa program.
The program, which has been enforced for more than 20 years, has been criticized for its failure to create sustainable employment in the country. A 2014 report discovered that there was no clear proof that the EB-5 program was indeed contributing to the US economy.
Homeland Security Secretary Jeh Johnson has released an official statement in support of the actions of the Deputy Secretary. Further, the Secretary has instructed the General Counsel of the Department and the USCIS to establish a new protocol to reduce instances, perceived or real, of external influence affecting the functioning of the EB-5 program.
The EB-5 investment immigration program was originally introduced in 1990, and has, over time, been amended numerous times to make it easier for investor immigrants to obtain visas under the program. There has been a significant increase in the demand for EB-5 visas in recent times. In 2014, close to 10,700 permits were issued, which represented a 25% increase as compared to 2013, and a tenfold increase as compared to 2007. More than 85% of the EB-5 visas issued in the fiscal year of 2014 were allocated to investors from China.
Source: Bloomberg