Grassley On Critical Regulatory Reforms to the EB-5 Investor Visa Program
Jul 16, 2019
Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa
Senior Member and Former Chairman, Senate Judiciary Committee
On Critical Regulatory Reforms to the EB-5 Investor Visa Program
Tuesday, July 16, 2019
I want to talk today about the deeply flawed EB-5 green card program. Several weeks ago, we learned that the Office of Management and Budget at the White House had completed its review of new rules to update and reform the EB-5 program.
For the rule to come into effect, it must now be published in the Federal Register. The rule was first proposed in January 2017. We’ve been waiting for it to be finalized for two and a half years. I hope President Trump now makes that happen as soon as possible.
The proposed rule would raise the minimum investment amounts required under the program. It also makes sure that investments are directed to rural areas and truly high unemployment areas as Congress intended when EB-5 was created in 1990.
Since that time, rampant and abusive gerrymandering of the EB-5 program’s targeted employment areas has undermined congressional intent. Instead of channeling investment to rural and high unemployment areas, EB-5 has become a source of cheap foreign capital for big city, big moneyed interests. The targeted employment area reforms in the proposed rule would take a first step towards refocusing EB-5 investment in the way that Congress originally intended.
In addition to channeling investment away from the areas of our country that need it the most, the EB-5 program has been plagued with other forms of fraud and abuse for years. There are examples of EB-5 fraud from all over the country.
In Chicago, a businessman defrauded 290 investors of $150 million in funds that were supposed to be used for the construction of a hotel and conference center hear O’Hare Airport. In Palm Beach, Florida, a real estate developer and real estate attorney teamed up to defraud 60 Chinese and Iranian EB-5 investors of $50 million. Instead of being used to fund the construction of a proposed hotel, it was instead used to pay personal taxes and purchase a 151-foot yacht.
In Wisconsin, a businessman used over half of the $7.6 million in funds he had solicited from investors to pay for personal expenses including Green Bay Packers tickets and the purchase of a Cadillac Escalade.
I could go on all day.
In May 2017, U.S. Citizenship and Immigration Services conducted an internal fraud assessment and found 19 cases of national security concern within the EB-5 program. These cases related to terrorism, espionage, and information and technology transfer.
Unfortunately, multiple bipartisan efforts in Congress to reform the EB-5 program have been consistently stymied by powerful special interest groups and big moneyed interests. That makes the publication of these EB-5 reform rules even more important.
I applaud President Trump and the Administration for getting the proposed rule to this point. But now it’s time for the President and his team to finish this process and make sure the final rule goes into effect as soon as possible.
Iowans and all Americans who live in rural and high unemployment areas deserve to have the investment that Congress intended when the EB-5 program was created almost 30 years ago. President Trump and his Administration now have a chance to finally address some of the serious flaws in this program that have hurt rural America.
We’ve been waiting for these reforms for over two years. It’s time for this final rule to be published, and it needs to happen now.