Immigrant Investors
Small Number of Participants Attributed to Pending Regulations and Other Factors Gao ID: GAO-05-256 April 1, 2005In 1990, Congress established an investor visa category, referred to as EB-5, whereby immigrants are granted conditional residence and after 2 years, permanent residence status in the United States if they invest in a commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs. The Basic Pilot Program Extension and Expansion Act of 2003 (P.L. 108-156) mandates that GAO provide certain information regarding the EB-5 employment category. In response to the mandate, this report provides information on immigrant participation, including the number of participants, their countries of origin, and the number who sought U.S. citizenship. Also, this report includes information about the types of business established and where they were established.
The number of visas granted under the EB-5 category has been a small fraction of the approximately 10,000 allocated annually by the authorizing legislation. According to State Department records, a total of 6,024 visas have been issued to immigrant investors and their dependents since 1992. As of June 2004, 653 investors (not including dependents) had met this immigration category's requirements and received permanent legal resident status. The immigration officials and lawyers who represent immigrant investors that we interviewed attribute the low participation to the rigorous application process and the uncertainty of meeting the requirements that can result in the permanent residency benefit. They also cited, as a potentially negative impact on future applicants, the failure to issue implementing regulations to adjudicate hundreds of EB-5 permanent residence applications that have left investors in conditional resident status--some for as long as 10 years. In 2002, Congress mandated that the regulations be issued by March 2003. The regulations were initially drafted but continue to be under review by the Department of Homeland Security. DHS cited many difficult and competing demands associated with establishing the new department and meeting its mission challenges as reasons the regulations have not been completed. About 83 percent of investors and their dependents who were granted permanent resident status through the EB-5 category are from Asia. EB-5 participants have invested an estimated $1 billion in a variety of businesses (e.g., hotels/motels, manufacturing, restaurants, real estate, and farms). GAO estimates that 41 percent of the businesses were established in California.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-05-256, Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors
This is the accessible text file for GAO report number GAO-05-256
entitled 'Immigrant Investors: Small Number of Participants Attributed
to Pending Regulations and Other Factors' which was released on April
4, 2005.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to Congressional Committees:
United States Government Accountability Office:
GAO:
April 2005:
Immigrant Investors:
Small Number of Participants Attributed to Pending Regulations and
Other Factors:
GAO-05-256:
GAO Highlights:
Highlights of GAO-05-256, a report to congressional committees:
Why GAO Did This Study:
In 1990, Congress established an investor visa category, referred to as
EB-5, whereby immigrants are granted conditional residence and after 2
years, permanent residence status in the United States if they invest
in a commercial enterprise that will benefit the U.S. economy and
create at least 10 full-time jobs. The Basic Pilot Program Extension
and Expansion Act of 2003 (P.L. 108-156) mandates that GAO provide
certain information regarding the EB-5 employment category. In response
to the mandate, this report provides information immigrant
participation, including the number of participants, their countries of
origin, and the number who sought U.S. citizenship. Also, this report
includes information about the types of business established and where
they were established.
What GAO Found:
The number of visas granted under the EB-5 category has been a small
fraction of the approximately 10,000 allocated annually by the
authorizing legislation. According to State Department records, a total
of 6,024 visas have been issued to immigrant investors and their
dependents since 1992. As of June 2004, 653 investors (not including
dependents) had met this immigration category‘s requirements and
received permanent legal resident status.
Number of Visas Issued by Year, Fiscal Years 1992 through 2004
[See PDF for image]
[a] Since decisions for applications are not necessarily rendered the
same year they are received, numbers of visas issued in a year may be
from applications submitted in prior years.
[End of figure]
The immigration officials and lawyers who represent immigrant investors
that we interviewed attribute the low participation to the rigorous
application process and the uncertainty of meeting the requirements
that can result in the permanent residency benefit. They also cited, as
a potentially negative impact on future applicants, the failure to
issue implementing regulations to adjudicate hundreds of EB-5 permanent
residence applications that have left investors in conditional resident
status”some for as long as 10 years. In 2002, Congress mandated that
the regulations be issued by March 2003. The regulations were initially
drafted but continue to be under review by the Department of Homeland
Security. DHS cited many difficult and competing demands associated
with establishing the new department and meeting its mission challenges
as reasons the regulations have not been completed.
About 83 percent of investors and their dependents who were granted
permanent resident status through the EB-5 category are from Asia. EB-5
participants have invested an estimated $1 billion in a variety of
businesses (e.g., hotels/motels, manufacturing, restaurants, real
estate, and farms). GAO estimates that 41 percent of the businesses
were established in California.
What GAO Recommends:
To better achieve the economic benefits of the EB-5 visa category, GAO
recommends that the Secretary of the Department of Homeland Security
finalize and issue regulations necessary to provide final adjudication
to those cases dependent on these regulations.
In commenting on our recommendation, DHS stated that the regulations
have been, and remain a priority within the department.
www.gao.gov/cgi-bin/getrpt?GAO-05-256.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Paul Jones at (202) 512-
8777 or jonesp@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
EB-5 Participation Is a Small Fraction of the Visa Allocation:
Immigrant Entrepreneurs with Permanent Resident Status Have Invested an
Estimated $1 Billion in a Variety of Businesses, Primarily in
California:
Conclusions:
Recommendation:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology1:
Objectives:
Overview of Our Scope and Methodology:
Number of Immigrant Investors and Country of Origin:
Immigrant Investors and Their Businesses:
Processing of Immigrant Investor Visa Applications at the Two USCIS
Service Centers and Criteria Used for Approvals and Denials:
Views of Immigration Lawyers:
Data Reliability:
Appendix II: Immigrant Investor Program Application Process1:
Immigrant Investors' Initial Application:
Application for Conditional Resident Status:
Application to Change Conditional Residency Status to Permanent
Residency Status:
Application for U.S. Citizenship:
Appendix III: Comments from the Department of Homeland Security1:
Appendix IV: GAO Contacts and Staff Acknowledgments1:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: Number of EB-5 Visas Issued, by Country of Origin, Fiscal Year
1992 through 20041:
Table 2: Estimated Number of Immigrant Investors Who Have Sought U.S.
Citizenship, Fiscal Years 1992 through June 2004:
Table 3: Types and Estimated Number of Businesses Established by
Immigrant Investors with Permanent Resident Status, Fiscal Years 1992
through June 2004:
Table 4: States Where Immigrant Investors Established Business
Operations, Fiscal Years 1992 Through June 2004:
Figures:
Figure 1: EB-5 Application Process:
Figure 2: Number of Visas Issued by Year, Fiscal Years 1992 Through
2004:
Figure 3: EB-5 Application Processing Flow:
Abbreviations:
AAO: Administrative Appeals Office:
CLAIMS: Computer Linked Application Information Management System:
DHS: Department of Homeland Security:
DOJ: Department of Justice:
EB-5: employment-based visa category, fifth preference:
INS: Immigration and Naturalization Service:
IVAMS: Immigrant Visa Allocation Management System:
MFAS: Marriage Fraud Amendment System:
RFE: request for evidence:
USCIS: U.S. Citizenship and Immigration Services:
United States Government Accountability Office:
Washington, DC 20548:
April 1, 2005:
The Honorable Arlen Specter:
Chairman:
The Honorable Patrick J. Leahy:
Ranking Minority Member:
Committee on the Judiciary:
United States Senate:
The Honorable F. James Sensenbrenner, Jr.:
Chairman:
The Honorable John Conyers, Jr.:
Ranking Minority Member:
Committee on the Judiciary:
House of Representatives:
To promote job creation and encourage foreign investment in the United
States, Congress created an additional employment-based immigrant visa
category (preference benefit) as part of the Immigration Act of 1990,
P.L. 101-649, as amended. This category, commonly referred to as EB-5,
allows immigrant investors to receive conditional resident status in
the United States for a 2-year period upon the investment of $1 million
(or $500,000 in targeted employment areas) in a U.S. business that
creates at least 10 full-time jobs. If the investors meet the
requirements, they can apply for permanent legal resident status. The
EB-5 immigrant investor category began in 1992 and is administered by
the U.S. Citizenship and Immigration Services (USCIS), a component of
the Department of Homeland Security (DHS). Under the authorizing
legislation for the EB-5 category, approximately 10,000 immigrant
investor visas may be issued each year.[Footnote 1]
The Basic Pilot Program Extension and Expansion Act of 2003 (P.L. 108-
156), mandates that we provide certain information regarding the EB-5
category. In accordance with the mandate, this report provides
information on:
* the level of participation, including (1) the number of individuals
who have received immigrant investor visas in each year since the
category's inception, (2) their country of origin, and (3) the number
of immigrant investors who have sought U. S. citizenship, and:
* the businesses established by immigrant investors, including (1) the
types established, (2) their locations and whether they remained in the
same location, and (3) the number of jobs created.
To perform our work, we reviewed applicable laws, including the
Immigration Act of 1990 and the 21st Century Department of Justice
Appropriations Authorization Act (P.L. 107-273 (2002)), as well as
studies, analyses, and other relevant literature covering the EB-5
category. Also, we reviewed USCIS and Department of State policies and
guidelines related to EB-5. We analyzed State Department data to
determine the number of visas issued under the EB-5 employment category
from 1992 through June 2004 as well as the immigrant investors' and
their dependents' countries of origin. USCIS electronic databases do
not include information on where immigrant investors established their
businesses, the extent to which the businesses remained in the original
location, the types of businesses established, the number of jobs
created, or the number of immigrant investors who applied for U.S.
citizenship. Therefore, to obtain this information, we conducted a
manual review of a random probability sample of 90 case files. We also
interviewed USCIS headquarters officials in Washington, D.C., as well
as USCIS service center officials in California and Texas to obtain
information about immigrant investor application processing procedures
and their opinions on other EB-5 issues. Further, to obtain
perspectives on the EB-5 category from nongovernmental sources, we
interviewed four immigration lawyers in the private sector who were
knowledgeable about the EB-5 application process. We did not
independently corroborate the opinions provided by USCIS officials and
immigration lawyers that we interviewed. Our selection of immigration
lawyers was based primarily on the recommendations of the American
Immigration Lawyers Association. We conducted our work from March 2004
to February 2005 in accordance with generally accepted government
auditing standards. Appendix I presents more details about our
objectives, scope, and methodology.
Results in Brief:
The number of visas granted under the EB-5 category has been
considerably less than the approximately 10,000 designated annually by
the authorizing legislation. According to State Department data, a
total of 6,024 visas have been issued to alien entrepreneurs and their
dependents since 1992. The annual number of visas issued peaked at
1,570 in 1997 and, since then, has declined. Our analysis of USCIS data
indicates that as of June 2004, an estimated 653 investors (not
including dependents) had met the EB-5 requirements and received
permanent legal residency. The USCIS officials and immigration lawyers
that represent EB-5 participants that we interviewed attribute the low
participation to a series of factors that led to uncertainty among
potential investors. These factors include an onerous application
process; lengthy adjudication periods; and the suspension of processing
on over 900 EB-5 cases--some of which date to 1995--precipitated by a
change in USCIS's interpretation of regulations regarding financial
qualifications.[Footnote 2] In 2002, Congress mandated in the 21st
Century Department of Justice (DOJ) Appropriations Authorization Act
(P.L. 107-273) that USCIS issue regulations to implement congressional
directives by March 2003 to address these pending cases. According to
USCIS officials, they initially drafted the regulations. However, the
regulations have been under review and revision primarily between USCIS
and the Department of Homeland Security, Office of General Counsel,
since March 2003. Many difficult and competing demands associated with
establishing the new Department of Homeland Security and meeting its
mission and management challenges were cited by DHS as a reason the
regulations have not been issued.
Our analysis indicates that about 83 percent of applicants approved for
the EB-5 category are from Asia, including Taiwan, South Korea, and
China. We estimate that about 38 percent of the immigrant investors who
have met the EB-5 requirements and been approved for permanent
residence applied for U.S. citizenship, although seeking citizenship is
not a requirement.
Immigrant investors invested in a variety of business types that have
generally remained at their initial locations. The immigrant
entrepreneurs invested primarily in hotels or motels, manufacturing
companies, real estate companies, domestic sales companies, farms,
import/export companies, restaurants, and technology companies. We
estimate that 41 percent invested in businesses in California. Very few
investors relocated their businesses to a state other than the one
listed on the investor's initial EB-5 application. Specifically, of the
653 investors who have met the EB-5 requirements and been approved for
permanent residence, we estimate that 644 (or 99 percent) of the
businesses remained in the same state. We also estimate that from
fiscal year 1992 through June 2004, immigrant entrepreneurs who
completed the EB-5 benefit requirements and attained permanent legal
residency, invested about $1 billion.
We could not determine a reliable estimate of the number of jobs
created by immigrant investors because, during the application review
process, USCIS adjudicators only ensure that each business created the
minimum requirement of at least 10 jobs but do not apportion the
creation of additional jobs between EB-5 investors and non-EB-5
investors. For example, if there are non-EB-5 investors involved or the
investment is part of a greater overall business expansion, USCIS
credits the individual immigrant investor with all the jobs created,
rather than trying to determine exactly how many jobs are attributable
to the immigrant investor's portion of the investment.
Delay in issuing implementing regulations has left hundreds of visa
holders in limbo for as long as 10 years, contributing to a negative
perception of the employment-based category and potentially limiting
investment in the United States.[Footnote 3] Therefore, we recommend
that the Secretary of the Department of Homeland Security finalize and
issue the regulations necessary to provide final adjudication in these
cases. In commenting on our recommendation, DHS stated that the
regulations have been and remain a priority within DHS, they are
working to resolve complex issues regarding the EB-5 implementing
regulations, and they are working with the Department of Justice.
Background:
Under the authorizing legislation for EB-5, approximately 10,000 visas
may be issued each year to investors and their dependents. One category
sets aside 3,000 visas for investors making investments in targeted
employment areas.[Footnote 4] Another category sets aside an additional
3,000 visas each year for a special pilot program.[Footnote 5] This
visa category is for alien entrepreneurs who make qualifying
investments in a business located within a "regional center."[Footnote
6] The remaining EB-5 visas are available to immigrant investors who do
not invest in a targeted area or a regional center. Any of the
approximately 10,000 immigrant investor visas not issued remain unused
and do not carry over to subsequent years.
Figure 1 provides an abbreviated description of the application process
immigrant investors must follow to be approved for the EB-5 category,
obtain conditional resident status to establish the business, and
complete the EB-5 requirements to attain permanent resident status.
While not shown, after 5 years from the date conditional resident
status is granted, the investor may apply to become a naturalized U.S.
citizen.[Footnote 7]
Figure 1: EB-5 Application Process:
[See PDF for image]
[A] Immigrant investors may choose to immigrate from abroad by applying
for a visa at the U.S. consulate in their home country. If the U.S.
consulate denies the visa, no further action is taken.
[End of figure]
Appendix II presents additional details about EB-5 processing
procedures and the criteria USCIS uses to make approval and denial
decisions.
EB-5 Participation Is a Small Fraction of the Visa Allocation:
The participation of immigrant investors (and their dependents) has
been well below the annual EB-5 visa category cap of approximately
10,000. Our analysis of State Department and USCIS data show that, as
of June 2004, 6,024 visas have been issued to immigrant investors
including their dependents and an estimated 653 investors (excluding
dependents) had met the EB-5 requirements and been approved for legal
permanent resident status. Most immigrant investors who have been
approved for the EB-5 category came from Asia.
The Number of Immigrant Investors Is Far Fewer than the Number of
Allocated Visas:
According to State Department data, a total of 6,024 visas have been
issued to immigrant investors and their dependents under the EB-5
category since its inception in 1992 through fiscal year 2004.
Approximately 10,000 EB-5 visas per year (potentially 130,000 visas
through fiscal year 2004) have been authorized to be issued to
individuals and their dependents if the principal investor agrees to
make the required investment, establish a business in the United
States, and create at least 10 full-time jobs. According to USCIS,
there is no way to determine the number of potential applicants or the
number of applicants who have applied for the category. Figure 2 shows
that the number of visas approved under EB-5 since 1992 is a small
fraction of the approximately 10,000 per year visa allocation set by
its authorizing legislation.
Figure 2: Figure 2: Number of Visas Issued by Year, Fiscal Years 1992
Through 2004:
[See PDF for image]
[A] Since decisions for applications are not necessarily rendered the
same year they are received; the number of visas issued in a year may
include applications submitted in prior years.
[End of figure]
Factors Contributing to Low Participation:
USCIS officials and immigration lawyers that represent EB-5
participants attributed the low participation to a series of factors
that contributed to uncertainty among potential investors. These
factors included the suspension of processing of hundreds of EB-5
applications in 1998 and the subsequent issuance of several precedent
setting decisions intended to clarify how adjudicators should interpret
EB-5 regulations.
USCIS Views:
USCIS officials cited several possible contributing factors as reasons
for the low participation and approval rates as follows:
* Rigorous nature of the EB-5 application process versus other
employment-based visa applications: According to agency officials, many
potential immigrants may have other options to achieve lawful permanent
resident status that are less difficult to qualify for, less expensive,
and more certain. For example, other employment based immigrant visas
do not require a substantial investment of money to establish a
business and hire employees. Also, other employment visas, such as
those for professionals with advanced degrees or priority workers
including persons who have a well-documented and extraordinary ability
in the sciences, arts, education, business, or athletics, may be easier
for immigrants to obtain because the immigrant's employer is
responsible for completing the application and complying with the
applicable USCIS regulations.
* Lack of expertise among adjudicators: USCIS officials said that prior
to 1998, EB-5 adjudicators were not sufficiently trained to properly
adjudicate EB-5 applications, which typically involve complex business
and tax issues. After the additional guidance (discussed below) was
issued, USCIS officials changed the EB-5 training curriculum to provide
adjudicators with training that addressed the complexities of EB-5
applications and helped to ensure that appropriate decisions would be
rendered in accordance with applicable statutes, regulations, and
agency policy. According to agency officials, the improved training may
have resulted in fewer applications being approved and, therefore,
contributed to a lower approval rate.
* Uncertainty of the outcome of adjudication: The statute provides for
a 2-year conditional residence period but does not guarantee investors
lawful permanent resident status at the end of the period. The required
investment and employment creation must be established to the
satisfaction of USCIS prior to approving the investor for permanent
legal resident status. Potential investors may be deterred by the
uncertainty that USCIS may determine that they did not meet the EB-5
terms. Agency officials said that the 1998 changes in the USCIS
interpretation of the EB-5 regulations (discussed below) have
contributed to this uncertainty. Further, the undetermined status of
hundreds of EB-5 applications waiting for promulgation of new
regulations may have a negative effect on attracting new applicants.
Also, a history of federal litigation prompted by the precedent
decisions where the courts have taken various positions may have
contributed to uncertainty regarding the future interpretation of EB-5
law and regulations.[Footnote 8]
* Public awareness and media attention: Publicity regarding EB-5 (also
discussed below) has been negative and may have contributed to
decreased interest in the EB-5 visa category and a resulting drop in
the number of alien entrepreneurs applying for EB-5.
Immigration Lawyers' Views:
All of the immigration lawyers we interviewed said that although
immigrants still want to participate in the EB-5 category, the
suspension of adjudications of hundreds of investors' applications has
deterred participation. They also cited subjectivity within the
adjudication process and the length of time it takes for USCIS to
adjudicate the various petitions as having contributed to the decline
in EB-5 participation. As a result the U.S. is not realizing the full
economic potential of EB-5. Specifically, these lawyers noted the
following:
* Requirements may be too restrictive: Overly restrictive and sometimes
ambiguous requirements are a significant deterrent to participation by
potential immigrant entrepreneurs. The 1998 decisions made it even
harder to obtain approvals of EB-5 applications and have resulted in
investors looking for other alternatives, such as other employment-
based visa options that are not contingent on capital investment and
job creation. Further, qualifying a person for EB-5 status is one of
the most complicated subspecialties in immigration law. A sophisticated
knowledge of corporate, tax, investment, and immigration law are
required. In many cases it may be more practicable for investors to
come to the United States through other visa categories or pursue
immigrant investor programs in other countries such as Australia and
Canada.
* Rigorous documentation requirements: The documentation USCIS requires
from investors seeking entry through the EB-5 category is extensive.
Potential investors are repeatedly required by the EB-5 adjudicators to
provide additional evidence, making the process more difficult. The
process of requesting and receiving additional evidence can add up to 4
months' processing time for each request.
* Lack of clear guidance: Some parts of the statute governing the EB-5
category are subjective and open to adjudicator interpretation. For
example, one of the EB-5 requirements is that the business must
"benefit the U.S. economy." However, the statute provides no guidance
on what types of investments meet this criterion. Thus, adjudicators
are generally left to their own judgement as to the value, or benefit,
of the proposed investment.
* The lack of timeliness in processing and adjudicating applications:
The lawyers said that, in their experience, it takes from 5 to 7 years
for their clients to complete a program that is often advertised as a 2-
year conditional residency program.
Precedent-Setting Decisions:
According to USCIS officials, one factor that has contributed to
reluctance of aliens to participate in the EB-5 employment category can
be traced to program changes in 1998. The changes resulted from a
series of events beginning in 1996 and 1997. During this period State
Department consular officers and then Immigration and Naturalization
Service (INS) EB-5 adjudicators began questioning the financial
arrangements in some EB-5 applications. As a result, the INS General
Counsel examined a sample of cases exhibiting the questionable
financial arrangements and on the basis of this review determined that
hundreds of EB-5 applications that had been approved contained the
following financial characteristics:
* The businesses were financed with debt and not equity investments in
the new business.
* The immigrant investor was not personally at risk for the required
investment of money.
* The full statutory amount of capital was not made available for use
by the business for employment creation or business operations.
* The promissory note used to meet the minimum capital requirement did
not have a fair market value equivalent to the statutorily required
investment amount.
* The guaranteed payment on the immigrant investor's cash contribution
in the plan was allowed to be used to make payments on the promissory
notes, resulting in an insufficient infusion of new capital into the
business.
In December 1997, the INS General Counsel issued an opinion finding
that the financial characteristics involving the debt arrangements and
other mechanisms designed to limit the investors' risk did not comport
with the statute and regulations governing EB-5. Further, the General
Counsel concluded that INS was not bound by its previous decisions in
adjudicating these EB-5 applications (i.e., Form I-526) and that it
could revoke previously approved applications containing the business
arrangements at issue.[Footnote 9] As a result of this opinion,
adjudicators were to determine if previously approved EB-5 applications
comported with the law and identify which applications, if any, should
be revoked. Also, the INS General Counsel opinion recommended that INS
establish guidelines for adjudicating applications with the
aforementioned business arrangements as well as future applications.
Hundreds of Prior Approved Applications Have Been on Hold for Years:
In March 1998, INS suspended EB-5 processing on about 900 cases with an
approved EB-5 application (i.e., Form I-526) and a pending application
for permanent resident status (i.e., Form I-829) that reflected the
business arrangements at issue. The suspension was to allow INS to
develop guidance on how adjudicators should interpret the EB-5
regulations. As part of this process, the Administrative Appeals Office
(AAO) selected a sample of the applications in question and adjudicated
them using the INS General Counsel's legal opinion and other case
law.[Footnote 10] On the basis of its review of these applications, AAO
determined that the financial arrangements included in hundreds of
applications did not comport with the statute and EB-5 regulations.
Therefore, in June and July 1998 AAO issued what has become known as
"precedent-setting decisions" that clarify how adjudicators should
interpret EB-5 regulations.[Footnote 11] From this point forward,
adjudicators were required to follow the new interpretation of the EB-
5 regulations as described in these decisions when adjudicating EB-5
applications.
In August 1998, INS removed the hold on application processing and EB-
5 adjudicators determined that most of the suspended applications
should be denied. However, according to USCIS officials, the majority
of the denial letters were never processed and the cases remained
pending.
By 2002, those investors whose cases were pending continued to remain
in conditional resident status waiting for action by USCIS. According
to USCIS officials, there has been an increase in litigation stemming
from delays in issuance of the implementing regulations. Many of the
affected aliens have filed legal actions against the department.
Further, investors who were affected by the changes resulting from the
1998 decisions lobbied Congress for help. In 2002, Congress addressed
the pending applications through a provision in the 21st Century
Department of Justice Appropriations Authorization Act[Footnote 12]
requiring USCIS to implement regulations that would allow those
immigrant investors whose initial EB-5 application was approved between
January 1995 and August 1998 to address deficiencies in their
applications for permanent residence and amend them to comply with
USCIS's new interpretation of the EB-5 regulations. Although the
implementing regulations were to be issued within 120 days of the
passage of the act (March 2003), as of March 2005, DHS had not issued
the regulations.
According to USCIS officials, they initially drafted regulations that
would allow the department to implement congressional directives in the
2002 act. These draft regulations have been under review and revision
primarily between USCIS and the Department of Homeland Security, Office
of General Counsel, since March 2003. A spokesman for the DHS Office of
General Counsel stated that the size and complexity of the government
reorganization necessary to establish the new Department of Homeland
Security and the resulting need to prioritize among competing demands
with limited staff has delayed work on the new EB-5 regulations.
Further, the DHS Office of General Counsel said that there are
outstanding issues regarding the promulgation of the regulations but
that these issues are considered to be ongoing internal department
deliberations which they would not discuss.
Until implementing regulations are established, the 2002 act does not
allow USCIS to deny any of the applications on hold for permanent
residency or place any applicant in removal proceedings. As a result,
according to USCIS officials, some immigrant investors have been in the
United States for over 10 years without completing the EB-5
requirements and being granted permanent legal resident status.
Further, immigration lawyers that we interviewed told us that failure
to issue the new regulations has deterred potential investors from
participating and caused hardships for some of the investors forced to
remain in conditional resident status. For example, to maintain their
conditional residency in this country, investors who had their cases
suspended must obtain an extension of their legal resident
documentation annually (commonly referred to as their green card) from
USCIS. According to these immigration lawyers, this in itself is not an
easy process.
Most Immigrant Investors Are from Asia:
Most EB-5 investors have immigrated from Asia. As table 1 shows, 39
percent of the EB-5 visas have been issued to individuals from Taiwan.
Overall, 83 percent of immigrant investor visas were issued to
individuals from Asia.
Table 1: Number of EB-5 Visas Issued, by Country of Origin, Fiscal Year
1992 through 2004:
Country (or geographical area) of origin[A]: Asia[B]: Taiwan;
Number: 2,323;
Percentage of total: 39%.
Country (or geographical area) of origin[A]: Asia[B]: South Korea;
Number: 839;
Percentage of total: 14%.
Country (or geographical area) of origin[A]: Asia[B]: China (mainland);
Number: 752;
Percentage of total: 12%.
Country (or geographical area) of origin[A]: Asia[B]: Hong Kong Special
Administrative Region (S.A.R.);
Number: 395;
Percentage of total: 7%.
Country (or geographical area) of origin[A]: Asia[B]: India;
Number: 130;
Percentage of total: 2%.
Country (or geographical area) of origin[A]: Asia[B]: Japan;
Number: 66;
Percentage of total: 1%.
Country (or geographical area) of origin[A]: All other Asia;
Number: 476;
Percentage of total: 8%.
Country (or geographical area) of origin[A]: Total for Asia;
Number: 4,981;
Percentage of total: 83%.
Country (or geographical area) of origin[A]: All other countries by
geographic area:
Country (or geographical area) of origin[A]: Europe;
Number: 546;
Percentage of total: 9%.
Country (or geographical area) of origin[A]: South America;
Number: 143;
Percentage of total: 2%.
Country (or geographical area) of origin[A]: Africa;
Number: 122;
Percentage of total: 2%.
Country (or geographical area) of origin[A]: North/Central America[C];
Number: 214%;
Percentage of total: 4%.
Country (or geographical area) of origin[A]: Australia/New Zealand;
Number: 18%;
Percentage of total: [D].
Country (or geographical area) of origin[A]: Total;
Number: 6,024;
Percentage of total: 100%.
Source: GAO analysis of Department of State data.
[A] Immigrant visas are numerically limited by category and by country
of origin, which in most cases is a person's country of birth rather
than his or her current citizenship.
[B] Turkey is included as part of Asia.
[C] North America excludes the United States but includes Canada,
Greenland, Mexico, all the countries of Central America, and the island
countries and dependencies of the Caribbean.
[D] Less than 0.5 percent.
[End of table]
Immigrant Investors May or May Not Apply for U.S. Citizenship:
As previously mentioned, seeking U. S. citizenship is not a requirement
of the EB-5 category. Also, USCIS does not track the status of
immigrant investors once they have completed the EB-5 requirements and
been approved for permanent residence. However, as shown in table 2, we
estimate that 38 percent of approved immigrant investors had applied
for U.S. citizenship, 61 percent had not applied, and 1 percent were
ineligible to apply, as of the time of our review.[Footnote 13] Our
methodology for these estimates is explained in appendix I.
Table 2: Estimated Number of Immigrant Investors Who Have Sought U.S.
Citizenship, Fiscal Years 1992 through June 2004:
Applied for U.S. citizenship;
Estimated number: 247;
Estimated percentages: 38%.
Did not apply for U.S. citizenship;
Estimated number: 399;
Estimated percentages: 61%.
Ineligible to apply for U.S. citizenship[A];
Estimated number: 7;
Estimated percentages: 1%.
Total;
Estimated number: 653;
Estimated percentages: 100%.
Source: GAO review of USCIS files.
[A] This estimate results from one case in our sample in which the
alien was ineligible to apply for U.S. citizenship because she had
previously renounced her citizenship. She reentered the United States
as an immigrant through the EB-5 category.
[End of table]
Immigrant Entrepreneurs with Permanent Resident Status Have Invested an
Estimated $1 Billion in a Variety of Businesses, Primarily in
California:
Over the life of the EB-5 employment category immigrant investors have
established a variety of businesses and on the basis of the sample of
cases we reviewed, we estimate that a total of $1.04 billion was
invested through 2004 by immigrant investors who have been granted
permanent residency. Of the estimated 653 investors who have met the EB-
5 requirements and been approved for permanent residence, most
maintained their business in the same state during the 2-year
conditional period, with 41 percent establishing their businesses in
California. USCIS officials did not have reliable data indicating the
total number of jobs created solely as a result of investments by EB-5
participants.
Immigrant Investors Established a Variety of Businesses by Investing an
Estimated $1 Billion:
Hotels and motels make up an estimated 19 percent of all businesses
created by immigrant investors granted permanent resident status (123
of 653 businesses). We classified the various types of businesses into
10 broad categories. Table 3 shows the estimated number of businesses
established in each category. To provide additional insights into the
types of businesses established under EB-5, we also recorded for each
broad category, where applicable, the types of products manufactured,
sold, imported or exported, or produced as well as the types services
offered.
Table 3: Types and Estimated Number of Businesses Established by
Immigrant Investors with Permanent Resident Status, Fiscal Years 1992
through June 2004:
Business category: Hotel/motel;
Estimated number: 123;
Estimated percentage of total: 19%.
Business category: Manufacturing;
Examples of business category components: Clothing, cabinets, computer
equipment, convertible beds, corrugated boxes, food, furniture, health
supplements, knit goods, rubber and plastics, telephone equipment,
textiles, woven bags;
Estimated number: 116;
Estimated percentage of total: 18%.
Business category: Real estate;
Examples of business category components: Property management,
development, construction;
Estimated number: 94;
Estimated percentage of total: 14%.
Business category: Domestic sales;
Examples of business category components: Clothing, airplane parts,
artificial turf, granite, new cars, pharmaceuticals, toys, hair salons,
retail food stores;
Estimated number: 65;
Estimated percentage of total: 10%.
Business category: Farms;
Examples of business category components: Almonds, fish, fruit;
Estimated number: 58;
Estimated percentage of total: 9%.
Business category: Import/export;
Examples of business category components: Airplane parts, clothing,
gems/jewelry, home appliances, household decorator goods, seafood,
textiles;
Estimated number: 58;
Estimated percentage of total: 9%.
Business category: Restaurants;
Estimated number: 44;
Estimated percentage of total: 7%.
Business category: Retirement homes;
Estimated number: 22;
Estimated percentage of total: 3%.
Business category: Technology;
Examples of business category components: Computer services, long-
distance telephone service provider, wireless cable television
development;
Estimated number: 22;
Estimated percentage of total: 3%.
Business category: Other businesses;
Examples of business category components: Car wash, child care center,
meat processing plant, nightclub, nursing home, security broker;
Estimated number: 51;
Estimated percentage of total: 8%.
Business category: Total;
Estimated number: 653;
Estimated percentage of total: 100%.
Source: GAO review of USCIS files.
[End of table]
To provide a measure of the EB-5 category's benefit to the U.S.
economy, we obtained information about the dollars invested by
immigrant investors. On the basis of the case files we reviewed, we
estimate that the total of investments made by the 653 immigrant
investors granted permanent resident status from fiscal year 1992
through June of 2004 is $1.04 billion. Using a 95 percent confidence
level, we estimate that the investment amount is between $784 million
and $1.3 billion.[Footnote 14]
Immigrant Investors with Permanent Resident Status Established Business
Operations Predominantly in California, and the Businesses Seldom
Relocated:
We estimate that 41 percent (265 of 653) of immigrant investors with
permanent resident status established their businesses in California.
Table 4 shows the states where approved immigrant investors established
their businesses as well as our estimate of the number of businesses
established in each state.
Table 4: States Where Immigrant Investors Established Business
Operations, Fiscal Years 1992 Through June 2004:
State: California;
Estimated number: 265;
Estimated percentage of total: 41%[A].
State: Maryland;
Estimated number: 71;
Estimated percentage of total: 11%.
State: Arizona;
Estimated number: 53;
Estimated percentage of total: 8%.
State: Florida;
Estimated number: 44;
Estimated percentage of total: 7%.
State: Virginia;
Estimated number: 44;
Estimated percentage of total: 7%.
State: Washington;
Estimated number: 35;
Estimated percentage of total: 5%.
State: Michigan;
Estimated number: 26;
Estimated percentage of total: 4%.
State: Colorado;
Estimated number: 18;
Estimated percentage of total: 3%.
State: Hawaii;
Estimated number: 18;
Estimated percentage of total: 3%.
State: Nevada;
Estimated number: 18;
Estimated percentage of total: 3%.
State: Georgia;
Estimated number: 9;
Estimated percentage of total: 1%.
State: Minnesota;
Estimated number: 9;
Estimated percentage of total: 1%.
State: Nebraska;
Estimated number: 9;
Estimated percentage of total: 1%.
State: New Jersey;
Estimated number: 9;
Estimated percentage of total: 1%.
State: Texas;
Estimated number: 9;
Estimated percentage of total: 1%.
State: Utah;
Estimated number: 9;
Estimated percentage of total: 1%.
State: Vermont;
Estimated number: 9;
Estimated percentage of total: 1%.
Totals;
Estimated number: 653;
Estimated percentage of total: 100%.
Source: GAO review of USCIS files.
Note: Estimated numbers and percentages may not total because of
rounding.
[A] The confidence interval in this case exceeds plus or minus 10
percent and is 30 percent to 51 percent.
[End of table]
We also found that few immigrant investors with permanent resident
status relocated their businesses during the 2-year conditional period.
Of the 653 approved investors, we estimate that 99 percent, or 644,
maintained business operations in the same state throughout the 2-year
conditional period. Specifically, we estimate that:
* 79 percent, or 515, of the immigrant investors' businesses remained
in same city and state;[Footnote 15]
* 20 percent, or 129, of the immigrant investors' businesses remained
in the same state, but moved to a new city;[Footnote 16] and:
* 1 percent, or 9, of the immigrant investors' businesses moved to a
new city and state.
The Number of Jobs Created by Immigrant Investors Could Not Be
Estimated:
We could not determine how many jobs immigrant investors have
established because of the way USCIS credits the number of jobs created
by an investor's business. During the adjudication process, USCIS
adjudicators ensure that each business creates the minimum requirement
of at least 10 full-time jobs. But if there are non-EB-5 investors
involved or the investment is part of a greater overall business
expansion, USCIS credits the single EB-5 investor with the total of all
jobs created even though many of the jobs are not the result of his
portion of the investment.[Footnote 17] In one such example, USCIS
credited a single immigrant investor with creating 1,143 jobs based on
a $1.5 million investment. While this investment did not create all
1,143 jobs, for adjudicative purposes, when the immigrant investor is
the only one seeking the immigration benefit, all jobs are attributed
to that investor, even if the capital of others is fueling the
enterprise. In this example, the immigrant investor's capital infusion
was only a small part of a multimillion dollar expansion of an existing
business that involved multiple franchises and other non-EB-5 investors.
Conclusions:
At the time the 1998 precedent decisions were published, more than 900
EB-5 participants' applications were placed on hold, resulting in
immigrant investors residing in the United States for as long as 10
years under conditional residency status. According to immigration
lawyers, the failure to issue the new regulations is creating hardships
for the investors whose cases are on hold and has been a deterrent to
new investors, thereby limiting the economic benefit to the United
States. USCIS cannot act on the pending applications for permanent
resident status or place any of those applicants in removal proceedings
until the required regulations are promulgated. Despite a congressional
mandate in 2002 that USCIS and DHS provide implementing regulations by
March 2003 to address the pending applications, the regulations have
not been issued. Drafted regulations have been under review between
USCIS and DHS since March 2003. DHS officials stated that the
transformations of legacy agencies into its department and related
management and mission demands have contributed to the delay in issuing
the regulations. However, they could not provide any assurance when the
regulations would be issued.
Recommendation:
Given the undetermined status and potential hardships imposed on
hundreds of EB-5 applicants awaiting the promulgation of implementing
regulations and that 2 years have passed since Congress required DHS to
issue regulations for adjudicating these EB-5 applications, and to
better achieve the economic benefits of the EB-5 category, we recommend
that the Secretary of the Department of Homeland Security finalize and
issue these regulations.
Agency Comments and Our Evaluation:
We provided the Department of Homeland Security and the Department of
State with a draft of this report for review and comment. The
Department of State had no comments on the draft. In commenting on our
recommendation, DHS stated that the regulations have been, and remain,
a priority within DHS and that it is working with the Department of
Justice to resolve complex issues regarding the EB-5 implementing
regulations.
DHS also identified recent steps taken by USCIS to improve the
administration of the EB-5 foreign investor program. Steps cited were
the creation of the Investor and Regional Center Unit and plans to set
a standard for timeliness in processing EB-5 cases.
According to DHS, the Investor and Regional Center Unit will establish
a nationwide and coordinated program and will have oversight for all
policy and regulation development, field guidance, form design, case
auditing, and training regarding the EB-5 program. DHS said it believes
this new unit will strengthen and protect the integrity of the program
by guarding against past abuses and promoting the intent of Congress to
encourage investment and increase employment within the United States.
DHS said the objective of the timeliness standard is to provide a
reliable time frame from filing and adjudicating the petition to enter
the program through to the targeted adjudication of the subsequent
petition to remove conditions on the investor's residency.
DHS referred to the creation of the regional centers as a significant
change to the EB-5 category. However, the first EB-5 regional center
was approved in 1993, and the vast majority of regional centers were
approved prior to 1998. Also, the option for a foreign investor to make
a reduced investment of $500,000 in a targeted employment area, a rural
area, or an urban area of less than 20,000 people is not unique to the
regional centers. Foreign investors in regional centers are credited
with jobs created directly or indirectly as a result of their
investment whereas foreign investors in the regular EB-5 process must
create at least 10 jobs directly in their commercial enterprise. The
full text of DHS comments are provided in appendix III.
We are sending copies of this report to interested congressional
committees and subcommittees. We will also make copies available to
others on request. In addition, this report will be available at no
charge on GAO's Web site at [Hyperlink, http://www.gao.gov/].
If you or your staff have any questions about this report or wish to
discuss the matter further, please contact me at (202) 512-8777 or Bill
Crocker at (202) 512-4533. Other key contributors to this report are
listed in appendix IV.
Signed by:
Paul L. Jones:
Director, Homeland Security and Justice:
Appendix I: Objectives, Scope, and Methodology:
Objectives:
As mandated by the Basic Pilot Program Extension and Expansion Act of
2003 (P.L. 108-156), we reviewed the fifth employment-based visa
category (EB-5) for immigrant investors that was created in 1992 and is
currently administered by U.S. Citizenship and Immigration Services
(USCIS), a component of the Department of Homeland Security.[Footnote
18] Specifically, this report provides information on:
* the level of participation, including (1) the number of individuals
who have received immigrant investor visas in each year since the EB-5
category's inception, (2) their country of origin, and (3) the number
of immigrant investors who have sought U.S. citizenship, and:
* the businesses established by immigrant investors, including (1) the
types of commercial enterprises established, (2) the businesses'
locations and whether they remained in this location, and (3) the
number of jobs created by the immigrant investors' businesses.
Overview of Our Scope and Methodology:
We reviewed applicable laws, including the Immigration Act of 1990
(P.L. 101-649 (1990)) and the 21st Century Department of Justice
Appropriations Authorization Act (P.L. 107-273 (2002)), as well as
studies, analyses, and other relevant literature covering the EB-5
category. Also, we reviewed USCIS and Department of State policies and
guidelines relating to EB-5.
To obtain information on our objectives, we reviewed a random
probability sample of 90 approved EB-5 cases (discussed in more detail
below). We also conducted interviews and site visits with USCIS
headquarters officials as well as service center officials in
California and Texas--the two USCIS service centers that process
immigrant investor applications. Further, to obtain perspectives from
nongovernmental sources, we interviewed four immigration lawyers in the
private sector who were knowledgeable about the EB-5 category. We did
not independently corroborate all of the opinions provided by USCIS
officials and immigration lawyers that we interviewed. Our selection of
immigration lawyers was based primarily on the recommendations of the
American Immigration Lawyers Association.
More details about the scope and methodology of our work are presented
in the following sections.
Number of Immigrant Investors and Country of Origin:
USCIS's Computer Linked Application Information Management System
(CLAIMS), the initial source of data entry for information from EB-5
applications, has a documented history of unreliability.[Footnote 19]
Therefore, we obtained information on the number of immigrant investor
visas and country of origin from an alternative source--the Department
of State's Immigrant Visa Allocation Management System (IVAMS). The
State Department is required by statute to maintain a complete,
current, and accurate accounting of the number and origin of aliens
within all visa categories.
We obtained State Department data to determine the number of visas
issued (to both alien entrepreneurs and their dependents) under the EB-
5 category by year since the its inception in 1992 through fiscal year
2004. We also analyzed the data by the country of origin to determine
the countries with the most visas issued.
Immigrant Investors and Their Businesses:
Because reliable data for addressing these objectives were not
available in electronic format from either USCIS or the State
Department, we conducted a file review of EB-5 cases that had been
approved for permanent residence. Because of the labor-intensive nature
of the case file review, it was not feasible to individually review the
files for all approved immigrant investors since the EB-5 category's
inception in 1992. As a basis for selecting a sample, we obtained from
USCIS an electronic list of all EB-5 participants who have received
permanent residence approval since the category's inception in 1992 and
selected a simple random probability sample from these approved
applicants. We identified the sample cases from the agency's Marriage
Fraud Amendment System (MFAS)--an electronic database used to manage
and process EB-5 applications for permanent residence.[Footnote 20]
MFAS tracks EB-5 participants by name, file number, home address, and
other information.
At the time of our sample selection of case files, the MFAS database
reflected 1,893 EB-5 cases. Of these, according to USCIS data, 804 had
an approved application for permanent legal resident status (Form I-
829). Another 866 EB-5 cases were shown to have applications for
permanent legal residency in pending status. The remaining 223 cases
were primarily shown to be denied, closed, or otherwise terminated.
We planned to draw our sample from the population of 804 approved case
files. An initial review of the data showed that 93 files belonged to
dependents, so we eliminated these files from consideration leaving a
total population of 711 approved immigrant investors. Of the 711
approved investors, we randomly selected a probability sample of 111
case files for review.
The physical files are not maintained in one location. Some files may
be at the Texas or California service centers, while others may be
located at one of the 33 USCIS district offices across the country,
while still others may be located at the USCIS records storage facility
in Missouri. Therefore, USCIS officials agreed to locate and retrieve
the files we randomly selected as our sample and ship them to the Texas
Service Center for our review. In examining the files as they were
retrieved, still more files that the USCIS database showed were
investors were actually dependents of investors.
From our probability sample of 111 immigrant investor files, we
identified 8 ineligible files (4 of these files belonged to dependents
and 4 did not contain a Form I-829). From the remaining 103 files in
the sample, we obtained 90 usable files. This represented an overall
response rate of 87 percent. USCIS was not able to provide the
remaining 13 files during the course of our fieldwork. We were able to
get information from all 90 usable files on most of the items we
measured. For some items, we were not able to get information from a
small proportion of the 90 usable files. In conducting our analysis, we
assumed that missing information would be similar to information we
obtained on the items we measured. Our estimates may be biased to the
extent that the information differs. The response rates to individual
items varied among items. Considering the error rate in the MFAS
database regarding the proportion of files that were actually
dependents and not investors, we estimated that the total population of
approved immigrant investors is approximately 653.
With our probability sample, each member of the population had an equal
and nonzero probability of being selected. Each sampled application was
subsequently weighted in the analysis to account for selection
probabilities and nonresponse. Because we followed a probability
procedure based on random selections, our sample is only one of a large
number of samples that we might have drawn. Since each sample could
have provided different estimates, we express our confidence in the
precision of our particular sample's results as a 95 percent confidence
interval. This is the interval that would contain the actual population
value for 95 percent of the samples we could have drawn. As a result,
we are 95 percent confident that each of the confidence intervals in
this report will include the true values in the sample population.
All percentage estimates from the sample have been rounded to the
nearest percent and have margins of error of plus or minus 10 percent
unless otherwise noted. The 95 percent confidence interval for the
estimated total of $1.04 billion invested ranges from $784 million to
$1.3 billion.
We used a data collection instrument in our file review to record
information from the following USCIS forms filed by the EB-5
applicants:
* Form I-526 (Immigrant Petition by Alien Entrepreneur) is an
application submitted to USCIS by an entrepreneur who is applying for
the EB-5 category.
* Form I-485 (Application to Register Permanent Residence or Adjust
Status) is an application submitted to USCIS by an immigrant who is
residing in the United States and who wishes to obtain permanent
resident status. If USCIS approves this form, the immigrant is issued a
conditional green card. In the case of the EB-5 category, USCIS places
a 2-year condition on the resident status to give the investor
sufficient time to establish his business in accordance with the EB-5
requirements.
* Form I-829 (Petition by Entrepreneur to Remove Conditions) is
submitted to USCIS by a conditional resident who obtained such status
through the EB-5 category and who wishes to apply for permanent
resident status as a result of satisfying all the EB-5 requirements.
* Form N-400 (Application for Naturalization) is an application
submitted by immigrants who wish to become U.S. citizens.
For a small proportion of the 90 case files, some data items were not
filled in. In those few cases we assumed that the missing data, if
filled in, would be proportional to similar data available in the
universe of case files. Therefore, our estimates may be biased to the
extent that the actual data, if available, may have differed.
Where Immigrant Investors Established Business Operations and whether
the Business Remained in That Location:
Where immigrant investors established their businesses and whether the
businesses remained in these localities was determined from the
business addresses listed on two forms that applicants file during the
EB-5 process. We recorded the city and state of the business at (1) the
time the applicant applied for the EB-5 category using the Form I-526
and (2) the time the applicant applied for permanent residence using
the Form I-829. Using these business addresses, we determined the
cities and states where applicants established their businesses when
they applied for EB-5 status and whether the applicants' businesses
remained in these locations while completing the EB-5 requirements. Our
analysis is limited by the fact that this conditional period typically
lasts 2 years and does not cover the time period after immigrants have
been approved for permanent residency. Using this information, we
statistically projected the tendency of all businesses established by
EB-5 applicants to remain in their original locations.
Types of Commercial Enterprises Established, Investment Amounts, and
Number of Jobs Created:
We determined the types of commercial enterprises established, the
dollars invested, and the number of jobs created based on the
information supplied by applicants on Form I-829 (Petition by
Entrepreneur to Remove Conditions) and various supporting documents
(such as bank statements, federal or state income tax returns,
quarterly tax statements, payroll records, and employment tax
documents).
Number of Immigrant Investors Who Have Sought Permanent U.S.
Citizenship:
USCIS computerized systems (CLAIMS) had data on the number of EB-5
applicants who have been approved for permanent U.S. citizenship.
However, as mentioned previously, information in the CLAIMS database
was not always accurate. Therefore, during our file review, we
determined if applicants sought U.S. citizenship by the presence of a
Form N-400 (Application for Naturalization) in the file and whether
this application was approved by USCIS. We statistically projected
these results.
Processing of Immigrant Investor Visa Applications at the Two USCIS
Service Centers and Criteria Used for Approvals and Denials:
To determine how immigrant investor visa applications were processed,
we interviewed USCIS managers and EB-5 adjudicators; reviewed relevant
statutes, policy guidance, and training manuals; and visited the USCIS
service centers in California and Texas. During the site visits, we
paid particular attention to differences, if any, between the two
service centers regarding processing procedures and the criteria used
for approvals and denials.
Views of Immigration Lawyers:
To obtain perspectives on the EB-5 category from nongovernmental
sources, we interviewed four immigration lawyers in the private sector
who were knowledgeable about EB-5 application process. Our selection of
interviewees was based primarily on the recommendations of the American
Immigration Lawyers Association. Because we interviewed a
nonprobability sample of immigration lawyers, the views and opinions of
these lawyers cannot be regarded as representative of the views and
opinions of all immigration lawyers.
Data Reliability:
To assess the reliability of State Department data on the number of
individuals who have received visas under the Immigrant Investor
Program and their country of origin, we interviewed knowledgeable
agency officials about the data and electronically tested the data to
identify obvious problems with completeness or accuracy. On the basis
of these steps, we determined that the State Department visa data were
sufficiently reliable for the purposes of this report.
To examine the reliability of the data contained in USCIS EB-5 files,
we conducted independent checks of selected data from 20 immigrant
investor files that were pending USCIS review by undertaking online
searches on the respective firms in the Lexis-Nexis and Dunn and
Bradstreet databases. We also visited four of the investor businesses
and interviewed the alien entrepreneurs who had met the EB-5
requirements and been approved for permanent residence to verify the
veracity of the information contained in the files that we used in the
report. We also interviewed knowledgeable agency officials about the
data. To ensure accurate recording and entry of the EB-5 file data into
our database, each entry was double-checked against the relevant case
file by an analyst who had not initially entered the data. We
determined that the EB-5 case file data were sufficiently reliable for
the purposes of this report.
[End of section]
Appendix II: Immigrant Investor Program Application Process:
To participate in the Immigrant Investor Program--or EB-5 employment
category----an individual must seek and obtain approval from the U.S.
Citizenship and Immigration Services.[Footnote 21] Participation in the
program occurs after approval at three major steps in the application
process.
* First, the immigrant investor applies for the EB-5 category (while
either residing abroad or residing in the United States) by submitting
USCIS Form I-526.
* Second, the immigrant investor applies for conditional resident
status after the Form I-526 is approved either by submitting a Form I-
485 or by filing paperwork with the State Department. After obtaining
conditional resident status, immigrant investors have a 2-year
probationary period to establish their business and meet the EB-5
requirements.
* Finally, the immigrant investor applies for permanent resident status
by submitting USCIS Form I-829. When eligible, immigrant investors may
apply for U. S. citizenship. However, this is not a requirement of the
program.
Figure 3 shows the application process for the Immigrant Investor
Program.
Figure 3: Figure 3: EB-5 Application Processing Flow:
[See PDF for image]
Legend of USCIS forms:
Form I-526 (Immigrant Petition by Alien Entrepreneur):
Form I-485 (Application to Register Permanent Residence or Adjust
Status):
Form I-829 (Petition by Entrepreneur to Remove Conditions):
Form I-290B (Notice of Appeal to the Administrative Appeals Office):
Form I-551 (Alien Registration Card):
[A] The Administrative Appeals Office adjudicator can deny (dismiss)
the appeal, approve (sustain) the appeal by overturning the service
center's decision, return (remand) the appeal to the service center if
new issues surface during the appeal review, or reject the appeal if it
is not submitted by the deadline.
[B] Adjustment of status refers to the USCIS procedure allowing
individuals in the United States to apply for permanent residence by
filing Form I-485.
[C] The Department of State's National Visa Center is the central
processing point for immigrant visas issued abroad.
[D] Lawful permanent residents are immigrants who are legally allowed
to reside permanently in the United States.
[End of figure]
Processing of immigrant investor applications occurs at two of USCIS's
service centers--the California Service Center, located in Laguna
Niguel, California, and the Texas Service Center, located in Dallas,
Texas. Adjudicators review the pertinent forms and make approval and
denial decisions at each step in the process. We found that both the
California and Texas service centers use the same processing procedures
and review criteria when reviewing immigrant investor applications. The
following narrative provides more detail on the information
adjudicators consider when reviewing EB-5 applications.
Immigrant Investors' Initial Application:
The initial application Form I-526 must be accompanied with additional
documentation supporting (1) the business proposal, (2) the investment
of money, (3) the number of full-time jobs to be created, and (4) the
applicant's management role in the business.
* Business proposal--The application should clearly outline and
describe the type of business, where it is to be located, how it is to
be financed, the investor's banking relationships, and information
about the business (e.g., its customer base, number of employees, and
source of inventory or raw materials). Although the immigrant investor
is not required to submit specific supporting documents, USCIS officers
will likely require a comprehensive business plan or other documents
outlining the business proposal with Form I-526. Also, if the business
already exists, articles of incorporation, a set of audited financial
statements, or, if in the proposal stage, pro forma financial
statements should be part of the proposal package.
* Investment of money--Documents supporting the investment must show
evidence that the investor has the funds to meet the program's
requirement, $1 million (or $500,000 for investment in targeted
employment areas).[Footnote 22] Speaking anecdotally, an adjudicator
said this requirement is often the weakest part of the proposal. The
documents need to show the source of the funds and that the immigrant
investor is personally at risk for the money. In addition, the investor
must show that the money is from legitimate sources, such as a lending
institution. Investors may also be expected to provide copies of past
income tax returns, including tax returns from their country of origin,
to show their history of financial resources. Other documents
supporting this section of the proposal would include personal bank
statements; sales documents if, for example, the money was being
obtained from the sale of other property; documents showing the
transfer of money; and letters of reference from financial
institutions. An officer noted that many of the applications he sees do
not adequately document the investment criterion. For example, many
investors find it difficult or are unwilling to show the source of
funds. Also, some immigrant investors structure the financing
arrangements so that the financial risk is to the business and not the
immigrant investor himself. Finally, some immigrant investors fail to
show investment or proposed investment of the required amount of funds.
* Creation of jobs--Immigrant investors must document that the proposed
business venture will generate at least 10 full-time jobs. Current
regulations allow for job sharing. However, the number of full-time
positions must still equal 10. If the business is operating at the time
the application is submitted, the immigrant investor should provide
documentary evidence of employment with submission of payroll records,
state employment records, and copies of Internal Revenue Service Form I-
9, Employment Eligibility Verification, for each employee.
* Applicant's role in the business--Immigrant investors must be
actively involved in managing their businesses. Documentation proving
this role would include, for example, copies of board minutes
appointing the immigrant investor to a management position, copies of
stock certificates, copies of tax records, or copies of articles of
incorporation.
According to USCIS officials, because of the wide differences in the
types and sizes of businesses involved, there is no single checklist or
procedure to follow in reviewing petitions. However, as noted above,
adjudicators stressed that the review of the application focuses on a
feasible plan for the business, the immigrant investor's investment in
the business meeting the required dollar amount, the creation of the
required number of jobs, and the immigrant investor's role in the
management of the business. A significant part of the training for
adjudicators for reviewing petitions for this program centers on
knowledge of business principles.
Throughout the application review process, if deficiencies in the
petition or supporting documents are noted, the adjudicator summarizes
them in a memo, a request for evidence (RFE), which is sent to the
investor after the initial review is completed. The immigrant investor
is granted 12 weeks plus 30 days to respond to the RFE. While waiting
for the response, the case is placed on hold. Once the RFE is returned
to USCIS with the information needed, the adjudicator completes the
review of the petition. According to USCIS officials we interviewed,
most Forms I-526 require that an RFE be sent to the investor.
If an application is to be denied, the adjudicator prepares a letter
(signed by the service center director) describing the reason for
denial and mails it to the investor. The letter details the specific
reasons for the denial decision and cites the applicable sections of 8
C.F.R. § 204.6 (the regulations governing adjudications of Form I-526)
that the investor's petition violated.
If the immigrant investor's application is denied, the investor may
appeal the decision by filing Form I-290B, Notice of Appeal to the
Administrative Appeals Office, to the service center that made the
unfavorable decision. The appeal is forwarded to the AAO at USCIS
headquarters for review. AAO adjudicators use the same criteria when
reviewing immigrant investor applications as those used by service
center adjudicators. The AAO unit may approve, deny, or remand the case
to the service center, or reject the case if the appeal is filed
untimely. If the appeal is denied, there are no further appeal rights
within USCIS. The only remaining appeal option for the immigrant
investor is through the U.S. court system. If the appeal is remanded,
the AAO directs the service center adjudicator to review the case
again. The remanded case would be reviewed again following the same
procedures as if it were initially received.
If the immigrant investor application is approved, the Form I-526
allows the immigrant investor to indicate his preferred option for
applying for a conditional 2-year visa. One option is applicable if the
immigrant investor is already in the United States under some other
legal status. In this case, the immigrant investor may apply for
"Adjustment of Status," with submission of Form I-485. The second
option, consular processing, is available if the immigrant investor
applied from abroad or chooses to go abroad and obtain a visa from the
State Department.
Application for Conditional Resident Status:
As previously mentioned, immigrant investors can choose how they wish
to obtain their conditional resident status either by completing Form I-
485 and submitting it to USCIS or by completing a State Department visa
application at a U.S. consulate abroad.
Form I-485 Processing:
After the immigrant investor application is approved, the immigrant
investor submits Form I-485 and supporting documents to the applicable
USCIS service center. This procedure allows an eligible applicant to
become a lawful permanent resident of the United States without having
to go abroad and apply for an immigrant visa. The application process
for Form I-485 is not exclusive to the Immigrant Investor Program
because it is used to apply for adjustment of status under all types of
visas.
The adjudicator in reviewing the Form I-485 and accompanying
documentation (e.g., medical records, biographical information, the
Federal Bureau of Investigation background check results, and the Form
I 526, in the case of immigrant investors) may require an interview
prior to application approval or denial. An adjudicator may request an
interview for reasons such as evidence of criminal activity or unlawful
residence status. USCIS policy requires that district offices handle
all face-to-face contact, so these cases are referred to the USCIS
district office with jurisdiction over the area where the investor
applicant resides. After the interview, the district office makes a
determination to approve or deny the Form I-485. If the Form I-485 is
denied, the process is terminated and alien removal proceedings begin.
If Form I-485 is approved, the investor is issued a conditional Form I-
551, Alien Registration Card, which allows the investor 2 years'
conditional residence to establish the business and meet the EB-5
requirements.
Throughout the review process, if deficiencies in the petition or
supporting documents are noted, the adjudicator summarizes these
questions in a memo, an RFE that he sends to the immigrant investor.
The immigrant investor is granted 12 weeks plus 30 days to respond to
the RFE. While waiting for a response, the case is placed on hold. Once
USCIS receives the response to the RFE, the adjudicator finalizes the
review and makes the approval, denial, or referral decision.
Consular Processing:
Investors who choose to apply for an immigrant visa abroad use consular
processing. With consular processing, the investor does not submit an I-
485. Under this procedure, the State Department forwards a visa
application to the immigrant investor, who completes the application
and submits it to the U.S. consular office in the country of residence.
A U. S. consular officer interviews the immigrant investor and
determines whether to approve or deny the application. If the
application is denied, the process is terminated and the immigrant
investor is not allowed to enter the United States. If the visa is
approved, the investor is issued travel documents that are presented to
U. S. immigration authorities upon arrival in the United States.
With approval of a conditional visa (either with an approved Form I-485
or through consular processing), the immigrant investor is granted 2
years of conditional residency. During the conditional period,
immigrant investors are expected to initiate their business venture (if
they have not already done so) and meet the expectations set out in
their approved Form I-526.
Application to Change Conditional Residency Status to Permanent
Residency Status:
Within 90 days immediately preceding the second anniversary of the date
that the immigrant investor was granted conditional status, the
investor is to submit Form I-829. Otherwise, if immigrant investors do
not file the application within the required time period, they will
lose their conditional status, and removal proceedings will begin
requiring the immigrant to leave the United States.
With the petition to remove conditions, the applicant must provide
evidence that the enterprise met the terms of the originally approved
Form I-526. Filing this application extends the investor's conditional
status for 1 year while the petition is processed. The Form I-829 must
be accompanied by evidence that the immigrant investor made (or is in
the process of making) the required investment and created (or will
create within a reasonable time) 10 full-time jobs. The immigrant
investor must also show that these actions were sustained during the 2-
year conditional period. This evidence should:
* verify that the investor invested or was actively in the process of
investing the required capital (either $1 million or $500,000) in a
commercial enterprise;
* show that the investor sustained the enterprise and the investment in
the business throughout the period of conditional permanent residence;
and:
* verify the number of full-time employees at the beginning of the
investment and at present.
The immigrant investor should include other available documentation if
it is relevant to the commercial enterprise.
Throughout the review process, if deficiencies in the petition or
supporting documents are noted, the adjudicator summarizes these
questions in an RFE that he sends to the immigrant investor. The
immigrant investor is granted 12 weeks plus 30 days to respond to the
RFE. Once the USCIS receives the response to the RFE, the adjudicator
finalizes the review and approves or denies the application. According
to USCIS officials we interviewed, most Form I-829s require that an RFE
be sent to the immigrant investor.
If the adjudicator determines that the case should be denied, a
memorandum of recommendation of denial is sent to the USCIS district
office with jurisdiction over the immigrant investor's residence. The
memorandum is a detailed description of why the adjudicator believes
that the petition should be denied. The memorandum details the specific
reasons the petition should be denied and cites the applicable sections
of 8 C.F.R. § 216.6 (the regulations governing adjudications of Form I-
829) that the investor's petition violated.
Once the district receives the memorandum of recommendation of denial,
a district office adjudicator prepares the denial letter (based on the
memorandum), which is signed by the district director. Once the
immigrant investor receives the letter, removal proceedings begin. The
immigrant investor may appeal the denial before the immigration judge
who presides over the investor's removal proceedings. If the
immigration judge does not overturn the USCIS decision, the immigrant
investor's only other appeal option is through the U.S. court system.
If the adjudicator approves Form I-829, the immigrant investor is
granted permanent resident status, indicating the immigrant investor is
a lawful permanent resident with no further obligations under EB-5.
USCIS no longer tracks the immigrant investor after he or she becomes a
lawful permanent resident.
Application for U.S. Citizenship:
Five years from the date of approval of the Form I-485 or the date the
investor entered the United States (if the investor chose consular
processing), the immigrant investor is eligible to apply for
citizenship if the Form I-829 is approved. If the investor wants to
become a naturalized U.S. citizen, a Form N-400, is submitted to USCIS,
and if it is approved, the immigrant investor is granted citizenship.
Immigrant investors are not required to apply for citizenship.
[End of section]
Appendix III: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
March 18, 2005:
Mr. Paul L. Jones:
Director, Homeland Security and Justice:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Jones:
RE: Draft Report GAO-05-256, Immigrant Investors: Small Number of
Participants Attributed to Pending Regulations and Other Factors (GAO
Job Code 440281):
The Department of Homeland Security (DHS), including U.S. Citizenship
and Immigration Services (USCIS), appreciates the opportunity to
comment on the Government Accountability Office's draft report and is
pleased to report recent steps taken to improve the administration of
the EB-5 foreign investor program.
The Government Accountability Office (GAO) recommended that DHS
finalize and issue regulations that implement provisions of the
Department of Justice Appropriations Authorization Act (P.L. 107-273)
related to the EB-5 immigrant investor program. Those regulations have
been, and remain, a priority within DHS. DHS is working to resolve the
complex issues that must be addressed in the regulations, and is
working with the Department of Justice with respect to their
anticipated companion rulemaking.
On January 19, 2005, USCIS created the Investor and Regional Center
Unit (IRCU), which will establish a nationwide and coordinated program.
Given the documented past abuses in the alien investor program and the
complexity and sensitivity of the issues and factors relating to
investor cases, there is a need for centralized oversight and
coordination, and uniform standards governing all aspects of EB-5
matters. DHS and USCIS believe this new unit will strengthen and
protect the integrity of the program by guarding against past abuses,
and promoting the intent of Congress to encourage investment and
increase employment within the United States.
The IRCU has oversight for all policy and regulation development, field
guidance, form design, case auditing and training regarding the EB-5
program. To carry out its mission, the IRCU will work closely with
other offices within USCIS and the Department of State's Bureau of
Consular Affairs in the administration of the law as well as in
clarifying processing procedures regarding the adjudication of Form 1-
526, Immigrant Petition by Alien Entrepreneur, and related Form I-829,
Petition by Entrepreneur to Remove Conditions. The IRCU will also work
with USCIS' Office of Fraud Detection and National Security to best
ensure EB-5 and regional center program integrity, fraud detection and
prevention.
Although not covered within the scope of GAO's review, a significant
change to the program was the creation of 26 Regional Centers. Of the
10,000 investor visas available annually, 3,000 are set aside for those
who apply under a pilot program involving a USCIS "Regional Center."
The foreign investor must demonstrate that a qualified investment is
made in a new commercial enterprise located within an approved Regional
Center and show that 10 or more jobs are created either directly or
indirectly by the new commercial enterprise. In addition, the foreign
investor may only have to devote $500,000 if the capital investment is
in a Targeted Employment Area, a Rural Area, or a small urban area of
less than 20,000 people within the Regional Center. Finally, USCIS is
in the process of setting a standard for timeliness in processing EB-5
cases, with the objective of providing for a reliable time frame from
filing and adjudicating the Form I-526 petition through to the targeted
adjudication of the subsequent Form I-829 petition to remove conditions
on the investor's residency. We believe such improvements will
facilitate growth in the use of the EB-5 visa as intended by Congress.
Sincerely,
Signed by:
Steven Pecinovsky:
Director:
Departmental GAO/OIG Liaison Office:
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Paul L. Jones, (202) 512-8777:
William W. Crocker III, (202) 512-4533:
Staff Acknowledgments:
In addition to the above, James D. Ashley, David P. Alexander, Leo M.
Barbour, Grace A. Coleman, David S. Dornisch, Ann H. Finley, Kimberly
Michael, Miguel A. Salas, Jerome T. Sandau, and Ellen Wolfe made key
contributions to this report.
[2] At this time, USCIS functions were carried out by the Immigration
and Naturalization Service (INS), an agency within the Department of
Justice. As of March 1, 2003, INS ceased to exist, and its functions
were transferred to the U.S. Customs and Border Protection (CBP) and
Immigration and Customs Enforcement (ICE) within the Department of
Homeland Security's Directorate of Border and Transportation Security
as well as USCIS. See Homeland Security Act of 2002, P.L. 107-296
(2002).
FOOTNOTES
[1] Under the law, this preference category allots up to 7.1 percent of
the worldwide level of immigration (approximately 10,000 visas
annually) to qualified investors and their spouses and children. The
allocation is not a target or a goal. See 8 U.S.C. §1153(b)5.
[2] At this time, USCIS functions were carried out by the Immigration
and Naturalization Service (INS), an agency within the Department of
Justice. As of March 1, 2003, INS ceased to exist, and its functions
were transferred to the U.S. Customs and Border Protection (CBP) and
Immigration and Customs Enforcement (ICE) within the Department of
Homeland Security's Directorate of Border and Transportation Security
as well as USCIS. See Homeland Security Act of 2002, P.L. 107-296
(2002).
[3] According to USCIS, the majority of the investors and their
dependents can retain conditional resident status while their
application for permanent resident status is pending, but they have to
apply for an extension every year.
[4] 8 U.S.C. 1153(b)(5)(B). Section 8 C.F.R. § 204.6(e) defines a
targeted employment area as an area that, at the time of the
investment, is either a rural area or an area that has experienced
unemployment of at least 150 percent of the national average rate.
[5] In 1992, P.L. 102-395 required the Secretary of State, together
with the Attorney General, to establish this pilot program with an
original allocation of 300 visas. In 1997, Congress expanded the number
of permitted visas from 300 to 3,000 per year and in 2003, extended the
program to October 1, 2008. Department of Commerce, Justice, and State,
the Judiciary, and Related Agencies Appropriations Act of 1998, P.L.
105-119 (1997) §116 (a); and the Basic Pilot Program Extension and
Expansion Act of 2003, P.L. 108-156, §4(b).
[6] Section 8 C.F.R. § 204.6(e) defines a regional center as any
economic unit, public or private, that is involved with the promotion
of economic growth, including increased export sales, improved regional
productivity, job creation, and increased domestic capital investment.
A regional center seeking USCIS approval must submit a proposal showing
how it plans to focus on a geographical region within the United States
and to achieve the required growth.
[7] Under the Immigration and Nationality Act, a legal permanent
resident who has resided continuously in the U.S. for five years is
eligible to apply for citizenship. 8 U.S.C. § 1427.
[8] There has been extensive litigation in the courts regarding the
government's denial of applications for both participation in the EB-5
category and permanent resident status upon completion of the
category's requirements. In R.L. Investment Limited Partners and
Wanxuan Zou v. INS, 86 F. Supp. 2d 1014 (D.C. Hawaii 2000) (RLILP),
affirmed 273 F.3d 874 (9th Cir. 2001), the court upheld the
government's denial of an application for an EB-5 application for the
program that was virtually identical to certain applications approved
before the issuance of the precedent decisions. In Chang v. U.S., 327
F.3d 911 (9th Cir. 2003), however, the court held that INS could not
automatically apply its more restrictive interpretation retroactively
to investors who had already received conditional resident status and
who were trying to have those conditions removed. Instead, the court
ruled that the agency must allow these investors an opportunity to show
how such a retroactive application would hurt them. The court noted
that the immigrant investors in Chang were not similarly situated to
the RLILP plaintiffs, because, in Chang, prior to the issuance of the
precedent decisions, their applications for the EB-5 category had
already been approved and the investors had made significant
commitments.
[9] The opinion concluded that INS failed to understand the true nature
of the investment plans it reviewed and that it, therefore, misapplied
its own statute and regulations. The opinion reasoned that the fact
that INS had, in the past, favorably adjudicated a number of petitions
involving the business plans at issue did not, as a matter of law,
prevent INS from denying future petitions involving such plans.
Memorandum, David A. Martin, General Counsel, December 19, 1997,
reprinted in 75 Interpreter Releases 332, 343, 345 (March 9, 1998).
[10] AAO is the appellate body that considers cases under the appellate
jurisdiction of the Associate Commissioner for Examinations. As such,
AAO can overrule, modify, and distinguish a prior precedent.
[11] Under INS regulations, decisions relating to the administration of
immigration law may be designated as precedents in future proceedings.
Precedent decisions are binding on all service employees in the
administration of the INA. They are to be published and made available
to the public. 8 C.F.R. § 103.3(c).
[12] P.L. 107-273 (2002).
[13] All percentage estimates from the sample have been rounded to the
nearest percent and have margins of error of plus or minus 10 percent
unless otherwise noted.
[14] Additional money was invested by alien entrepreneurs who
ultimately did not complete the EB-5 benefit process or have yet to
have their petition for permanent legal resident status approved. We
did not obtain investment data on immigrant investors who had not met
all of the EB-5 requirements at the time of our review.
[15] As a result of data limitations, the confidence interval for this
estimate exceeds plus or minus 10 percent and is 68 percent to 88
percent.
[16] As a result of data limitations, the confidence interval for this
estimate exceeds plus or minus 10 percent and is 11 percent to 31
percent.
[17] 8 C.F.R. 204.6(g)(2) states that the number of full-time positions
created for qualifying employees shall be allocated solely to those
alien entrepreneurs who have used the establishment of the new
commercial enterprise as the basis of a petition on Form I-526. No
allocation need be made among persons not seeking classification under
section 203(b)(5) of the act or among non-natural persons (e.g.,
corporations), either foreign or domestic.
[18] Aliens are allowed to enter the United States under immigrant and
nonimmigrant visas. Immigrant visas are for those who wish to obtain
permanent resident status in the United States and are categorized as
either family or employment visas. Within each category, USCIS
established a preference whereby certain visas are processed before
others. For example, the first priority of employment-based visas (EB-
1) refers to those deemed by USCIS to be priority workers--that is, a
person who has a well-documented and extraordinary ability in the
sciences, arts, education, business, or athletics. EB-5 refers to the
fifth employment-based preference category. Nonimmigrant visas are for
those aliens (such as students or those traveling for business or
pleasure) who wish to enter the United States on a temporary basis.
[19] GAO, Homeland Security: Risks Facing Key Border and Transportation
Security Program Need to Be Addressed, GAO-03-1083 (Washington, D.C.:
Sept. 19, 2003); Homeland Security: INS Cannot Locate Many Aliens
because It Lacks Reliable Address Information, GAO-03-188 (Washington,
D.C.: Nov. 21, 2002); and Immigration Benefits: Several Factors Impede
Timeliness of Application Processing, GAO-01-488 (Washington, D.C.: May
4, 2001).
[20] According to USCIS officials, the Marriage Fraud Amendment System
is used to process EB-5 applications because, like those immigrating
upon marriage, EB-5 participants must undergo a conditional period
prior to being granted permanent residence status.
[21] Aliens are allowed to enter the United States under immigrant and
nonimmigrant visas. Immigrant visas are for those who wish to obtain
permanent resident status in the United States and are categorized as
either family or employment visas. Within each category, USCIS
established a preference whereby certain visas are processed before
others. For example, the first priority of employment-based visas (EB-
1) refers to those deemed by USCIS to be priority workers--that is, a
person who has a well-documented and extraordinary ability in the
sciences, arts, education, business, or athletics. EB-5 refers to the
fifth employment-based preference category. Nonimmigrant visas are for
those aliens (such as students or those traveling for business or
pleasure) who wish to enter the United States on a temporary basis.
[22] Section 8 C.F.R. § 204.6(e) defines a targeted employment area as
an area that, at the time of the investment, is either a rural area or
an area that has experienced unemployment of at least 150 percent of
the national average rate.
GAO's Mission:
The Government Accountability Office, the investigative arm of
Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order
GAO Products" heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office
441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm
E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director,
NelliganJ@gao.gov
(202) 512-4800
U.S. Government Accountability Office,
441 G Street NW, Room 7149
Washington, D.C. 20548:
