An interesting mix of EB-5 news: A conventional scandal, in which Americans steal $26 million from dozens of Chinese; a success story (for one Chinese National) in a legal, three-nation investment ploy; and a seasonal jump in EB-5 visas during October.
EB-5 is the program in which an alien family, with no credentials other than wealth, gets to buy a family-size set of green cards if it successfully invests at least $800,000 in an American business venture that is approved (but not guaranteed) by the Department of Homeland Security. It is an obstacle course in which the alien family has to avoid predatory Americans, as well as satisfying different sets of regulators in the departments of Homeland Security and State. A total of a little fewer than 10,000 visas are set aside for this purpose each year.
EB stands for “employment-based” as each investment is supposed to create ten new jobs for other than family members. A formula used by DHS softens this requirement.
Texas. The scandal has a whole series of elements that are all too familiar. There were 52 or so investors from China; they were conned over the years by a set of fast-talking Americans; the Chinese thought they were investing in Texas real estate through a well-connected operator, in which they, the Chinese were told that they were putting up 80 percent of the front money while the Americans supplied the other 20 percent. They were told that they would get their money back at the end of the second year and that no commissions would be charged.
None of the promises were upheld and the Justice Department said that $26 million was lost in the scheme, as the Americans (mis)used the money in various other ways, all according to the U.S. attorney’s office in North Texas. We had not previously reported on this case, though two defendants had previously pleaded guilty; it broke into the news again a few days ago when two more defendants also entered pleas.
A three-cushion billiard shot. We did report earlier that the clever folks in the tiny Caribbean island of Grenada had devised a scheme, assisted by American lawyers, by which rich people (notably rich Chinese) who had been stuck in long waiting queues by the country-of-origin elements in the EB-5 program could come to America quickly.
All the rich families have to do is to fork over $150,000 to the local government, or invest $230,000 in Grenada, and then – voila – they became Grenadian citizens. Once that happens they became eligible for the tax treaty between that nation and the U.S. and they could become nonimmigrant treaty investors in the U.S. through yet a third investment, this time in the U.S. China has no such treaty arrangement with the U.S.
So with this new Grenada-based investment the thwarted EB-5 investors could use the resulting E-2 nonimmigrant visas to stay in America while waiting for the permanent immigrant visas.
I had wondered whether this scheme would work, but learned in a newsletter from an American law firm entitled Visa Franchise that one of its clients had successfully applied for the E-2 visa. I am assuming that the three-time investor was on the waiting list for an EB-5 visa, although the law firm did not say so, nor did it report that three investments would be needed in the process, two in the U.S. and one in Grenada.
In the six months ending in October, 22 E-2 (treaty investor) visas were issued for Grenada residents; some of these, maybe many of them, went to those with EB-5 investments.
October’s EB-5 visas. October1 began a new fiscal year which opened up a new set of visa availabilities for the then existing EB-5 backlogs (notably in Vietnam and China); the total issued, which is unlikely to be equaled in November, was 1,431, including 832 from Vietnam and 380 from China. India came in a distant third with 21.
