A better way to hit Russian oligarchs where it hurts – New York Daily News

Right now, most western governments are seizing Russian oligarchs’ yachts and other assets in an effort to hinder Vladimir Putin and his cronies’ ability to wage war on Ukraine.

Congress, meanwhile, is working to ensure a steady supply of visas for those oligarchs — and thousands of other rich, often corrupt foreigners like them. In March, lawmakers made some small modifications to the notoriously fraud-ridden EB-5 visa program, which allows wealthy foreign elites to essentially purchase permanent residency in the United States. Those recent changes will make the program slightly less dysfunctional. But rather than tweak the program, lawmakers would have been better off scrapping it entirely.

The pathway, created in 1990, was supposed to stimulate U.S. job creation by harnessing foreign investors’ capital. Foreign nationals hoping to secure an EB-5 visa, and ultimately a green card, must invest a minimum amount of money in a commercial enterprise that creates new full-time jobs for at least ten employees in the United States. Alternatively, they can invest in ”regional centers” — effectively corporate middlemen that manage and funnel foreign cash into supposedly job-creating projects.

At the program’s outset, the minimum investment required was $500,000. That number has since fluctuated, as both Presidents Obama and Trump sought to raise it to $900,000. Their reforms were eventually struck down by a federal judge in 2021, bringing the number back to a mere half a million dollars.

The controversial program has been plagued with lawsuits and abuse.

Consider the case of California attorney Victoria Chan, who in 2017 pled guilty to running a fraudulent investment scheme alongside her father, a foreign national. Together, they helped obtain visas for dozens of Chinese citizens, some of whom were on China’s “100 Most Wanted List.” Much of the $50 million they received from Chinese investors was stolen, and no public developments or American jobs resulted.

In 2009, Chinese national Jianjun Qiao was granted an EB-5 visa, along with his “wife,” Shilan Zhao, and son. Only years later did the U.S. government determine Qiao and Zhao had used forged marriage documents. And they had embezzled up to $11 million by laundering it through properties they purchased in the U.S. By the time the U.S. government got wise to their schemes, Qiao was gone — and wasn’t arrested until 2020.

Analysts at Transparency International Russia found that effectively buying American residency with dirty money isn’t all that hard. The watchdog group “contacted 10 Russian agencies and seven U.S. layers. We posed as a potential investor wishing to apply for an EB-5 visa and asked for advice. We said that we had the money but hinted at its illegitimate origin. All 10 Russian intermediaries assured us that this would not be a problem. Consultants were quick to suggest ways to falsify documents regarding the origin of funds.”

From 2018 to 2019, some 150 Russian nationals obtained EB-5 visas. Their identities remain unknown to the public.

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And even when the program isn’t brazenly defrauded and actually results in job creation, that job growth often doesn’t occur in the downtrodden neighborhoods that actually need help.

Consider New York’s Hudson Yards. The largest private development in American history, Hudson Yards received around $1.2 billion in EB-5 investment.

Real estate developers masterfully gerrymandered the project site to qualify as a “targeted employment area,” or TEA, and receive funding reserved for poverty-stricken neighborhoods. Though the Manhattan location did not originally meet the TEA unemployment rate, developers were able to rope Harlem public housing projects into their districts to qualify. And this was all sanctioned under EB-5.

In short, EB-5 is a fantastic deal for foreign elites, but a lousy one for Americans. Wealthy backers of the Chinese Communist Party and Putin’s regime are happy to dish out a fraction of their cash in exchange for a visa that enables them to send their kids to American schools and hide away in New York or Los Angeles penthouses.

Thankfully, the atrocities in Ukraine have caused many nations to re-think their own versions of EB-5. In March, the European Union voted to phase out cash-for-passport schemes. The United Kingdom shut down its tier 1 investor visas in February.

While American lawmakers recently made some improvements to EB-5, including increased efforts to mitigate corruption and a higher minimum investment of $800,000, minor reforms will never be enough. Congress would have been better suited to scrap the scheme entirely.

Clark is a retired small business co-owner in Sheridan, Wyoming.

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