Thousands of hard-working immigrants are getting deported every month. But unregulated private companies are offering a deal: for $500,000, you can get a green card.
According to center executives, they typically charge the investors a fee for facilitating the program they charge their clients. In some cases, the immigrant investors become part owners of a business enterprise; the investors and the regional center gets paid when the business turns a profit. But it's far more common for the regional center to lend the money for projects and collect the interest. Usually immigrant investors get paid only around 1 percent in interest and the regional center picks up the rest.
It's certainly worked for Liebman. He owns and runs 10 regional centers with offices throughout the United States and one in Tokyo. All his investments have gone into commercial real estate. "You don't get to be Bill Gates through EB-5, but it certainly raises your game," he said.
Yale-Leohr did say the program must be "done correctly" and that it's no piece of cake. "It is hard to set up a project that meets all immigration and securities-related requirements."
Everyone agrees that the program exists primary because it's supposed to create jobs. "There is a lot of scrutiny of job creation because that is the foundation of the program," Irazabal said.
But that scrutiny is actually limited.
It shouldn't be hard to determine if an investment is creating jobs in the community; either there are people working in a local business or not. But EB-5 experts told us that most of the EB-5 investment doesn't create direct jobs. Sharon Rummery, also a spokesperson for the Citizenship and Immigration Service, said she suspects most of the jobs are indirect. But after checking with agency staff, she told us there's no data.
The difference is critical. Say, for example, some investors build an electric car factory in a neighborhood with high unemployment. They hire 10 people to build cars, and create 10 direct jobs.
But when the workers go out to lunch and the deli counter down the street hires more help, that's indirect job-creation and how one specific investment creates other jobs is essentially guesswork.
Of course, the electric car factory has to buy materials and parts say, computer chips that might be made halfway across the country (and possibly in an area that doesn't have high unemployment). Those jobs count, too. According Irazabal, USCIS has "no requirement for the [indirect] jobs to be in the geographic area" that is struggling economically.
The geographic flexibility USCIS allows is interesting considering that, according USCIS rules, regional centers must have "plans to focus on a geographical region within the United States and must explain how the regional center will achieve economic growth within this regional area."
The most interesting question is whether any of the indirect jobs are ever really created. And the bottom line is, USCIS never checks.
Here's the process, according to USCIS officials. Regional centers create business plans. Then they hire consulting firms to evaluate how many indirect jobs will be created if the business plan all goes as projected. USCIS signs off on the report and the E-5 visas are approved.
The government never does its own studies or reports, never tracks actual indirect job creation, and rarely questions what the private consultants say.
Economist Peter Donahue, who runs PBI Associates in San Francisco, told us the job creation promises under EB-5 amount to a "parable." Models used to track indirect jobs "give the appearance of the science but its probably someone's best guess," he said.