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During the past 20 years, the author has watch China move from being a developing country into an industrial superpower
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In March, Senator Patrick Leahy (D-Vt.) introduced legislation to make the centers permanent, which he says “will provide entrepreneurs and investors with certainty and predictability.” Leahy also plans to introduce legislation this fall to give immigration authorities more oversight of the centers. Another proposal, the StartUp Visa Act of 2011, sponsored by Senator John Kerry (D-Mass.) and Representative Carolyn Maloney (D-N.Y.), would steer some of the unused visas from EB-5 to immigrant entrepreneurs who create at least three domestic jobs and land at least $100,000 from qualified investors or show $100,000 in revenue. The change “would attract additional talent by providing an allowance to young entrepreneurs with significant investment backing here in the United States,” Kerry wrote in an e-mail.
The EB-5 program hasn’t always been considered a success. In the 1990s it gained notoriety for companies that falsified job creation numbers. Now some critics say the regional centers, which charge investors $30,000 to $50,000, are misrepresenting their ability to help foreigners get residency. “There are so many regional centers now, and a number of business brokers in other countries are promising people things they simply can’t deliver,” says Anthony Korda, an immigration attorney in Naples, Fla. “[They’re] giving many investors a false idea of what’s to be expected,” says Korda, who last year obtained permanent residency via the EB-5 program. The London native is among 400 investors from 56 countries who have helped Vermont ski resort Jay Peak raise roughly $200 million since 2006.
Regional centers often invest alongside the foreigners after vetting projects to be certain they will create enough jobs. And they ensure that paperwork is filled out correctly: Each deal requires hundreds of pages of documentation, and mistakes can mean that investors don’t get their green cards. From October 2004 through March 2011, immigration officials denied 500 petitions for permanent residency. “You’ve gotta get the right project,” says Tom Rosenfeld, president of CanAm Enterprises in New York, which runs regional centers in four states. “You get the wrong project and then these investors get screwed.”
Other critics say the officials administering the EB-5 program are too slow. It takes about six months for each of the two approvals investors need, according to Immigration Services. This fall the agency’s director, Alejandro Mayorkas, expects to hire more staffers to speed up decisions and to offer investors an option to pay $1,200 to cut processing time to just 15 days on some projects. “Investors with this type of capital have options available to them,” says Mayorkas. “We think the program’s potential could be better realized if we as an agency move more quickly.”
The bottom line: A program giving foreigners green cards in return for investment in U.S. companies that create jobs has won $1.5 billion.
Leiber is Small Business editor for Businessweek.com, Entrepreneurs editor for Bloomberg.com, and covers small business for Bloomberg Businessweek.
