The immigration program for wealthy investors — the Employment-Based Fifth Preference Immigrant Investor Program or EB-5 — is vulnerable to fraud, new a Government Accountability Office report reveals.
The EB-5 Program provides visas to foreign nationals who invest $1 million — or $500,000 in high unemployment areas — in a commercial enterprise and create at least 10 full-time jobs.
The GAO reports, however, that the program is a source of unique, constantly evolving risks, that U.S. Citizenship and Immigration Services’ assessments of the economic benefits may not be accurate, and that its data collection methods are incomplete. Further new information systems to collect more data are years away.
Such fraud risks include uncertainties about the sources of investor funds, questions about the legitimacy of EB-5 investment entities, and political favoritism.
The GAO report, released Wednesday, notes that Securities and Exchange Commission officials have identified fraudulent investment schemes and from 2013-2015 “reported receiving over 100 tips, complaints, and referrals related to possible securities fraud violations and the EB-5 Program” with over half resulting in further investigation. As of May, there were 59 open investigations into EB-5 investment schemes.
Senate Judiciary Chairman Chuck Grassley (R-IA), who has sounded the alarm about fraud in the program, reacted to the report saying the “status quo is unacceptable.”
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