Wealthy Special Interests Kill Program to Boost Investment in Rural, Economically Challenged Communities


WASHINGTON – Sen. Chuck Grassley, Ranking Member of the
Senate Judiciary Committee, and Sen. Patrick Leahy, Chairman of the Senate Appropriations
Committee, today condemned a blockade of their bipartisan
bill to reform and extend the EB-5 investor visa program, which expires on
June 30. The blockade was led by a small group of wealthy and unscrupulous real
estate developers who blindly oppose any efforts to improve accountability and
transparency in the EB-5 visa program.

 

“A narrow subset of big moneyed and corrupt
interests has now shown that they would rather kill the program altogether than
have to accept integrity reforms designed to clamp down on their bad behavior,”
Grassley said on the Senate
floor
.

 

“It’s really unfortunate that a bipartisan bill
supported by the overwhelming majority of EB-5 stakeholders was blocked at the
behest of a small minority that blindly opposes much-needed accountability and
transparency in the program.  Senator Grassley and I have worked together
for years to develop a thoughtful, careful compromise that would both keep the
program alive and curtail the worst abuses of it.  Now that our bill has
been blocked, the EB-5 visa program is unfortunately going to lapse in the days
ahead and have untold economic consequences throughout the communities that
rely on the program for development projects.  I remain committed to
reforming the EB-5 program should there be another opportunity to do so,” Leahy said.

 

The EB-5 program was designed to encourage job
creation and investment in rural and economically distressed areas of the
United States. However, the program has long been riddled with fraud and
national security vulnerabilities. It’s also been exploited by some wealthy
urban developers who syphon investment money away from rural and economically
distressed areas to fund ritzy
projects in some of the nation’s most well-to-do neighborhoods.  The blockade of the Grassley/Leahy reform
bill effectively slams the door on all EB-5 projects, including those in rural
America.

 

A History of
Fraud and Abuse

The EB-5 program, established in 1990, provides
visas to foreign nationals who invest $1 million in new U.S. private
enterprises that create additional jobs. The investment threshold is reduced to
$500,000 for projects in rural or economically-distressed areas known as
Targeted Employment Areas (TEAs). The program later allowed for the
establishment of EB-5 regional centers, which pooled multiple investments into
a single project.

 

Grassley first
voiced concern
 about national security vulnerabilities in the
investor visa program in 2013 following whistleblower claims that visa
applications were being expedited without proper evaluations of criminal or
security issues. Around the same time, an internal
Homeland Security memo
 outlined potential security and financial
vulnerabilities of the EB-5 regional centers model, including exploitations by
Iranian operatives with possible ties to terrorism.

 

In 2015, Grassley and Leahy, then chairman and
ranking member of the Senate Judiciary Committee, introduced
legislation
 to improve integrity in the program and restore
congressional intent in creating the program. As they were today, the
bipartisan reforms have been repeatedly blocked
by big-money interests that benefited from the status quo and their supporters
in Congress. Today’s blockade not only killed the reforms, but also eliminated
a program extension, leaving it to expire at the end of June.

 

Related:

 

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