EB-5 Middleman Firm Acts as Fourth Branch of Government in the Immigrant Investor Biz

By David North on August 26, 2022

In most federal matters, there are three branches of government: the executive, the legislative, and the judicial, but in the EB-5 (immigrant investor) field there is now a virtual fourth branch, Behring Regional Center, a California middleman outfit that routinely beats the government in the courts, beats it like a drum.

In its most recent victory, Behring reversed a Homeland Security decision that, given new legislation, all the regional centers must re-apply for the right to pool immigrant investors’ funds into (usually) urban real estate projects. This came in the form of a settlement of a federal court case brought by Behring; the settlement was accepted by DHS, by Behring’s lawyers, and by the judge in the case.

The settlement permits the 600 or so regional centers to keep going, as they did before, but requires them to file a form I-956 in order to continue operating after December 29 of this year. The form is a comprehensive 12-page document and carries with it a fee of $17,795.

I will be surprised if more than 300 centers apply, as the basic program has become less popular as the years have passed; we will see.

The EB-5 program has been hit by a long series of scandals, mostly related to U.S. middlemen (often DHS-licensed regional centers or their shady allies) cheating mostly Chinese investors out of vast sums of money. As a result, the Trump administration adopted a new and stronger set of rules for the program, with those rules shaped very closely to an earlier Obama proposal, but Behring secured a court ruling last year voiding the reforms, as we noted earlier.

The main part of the EB-5 program, that which involves regional centers and pooled investments, has never had more than temporary congressional approval; Congress allowed it to lapse in the summer of 2021. When it was finally reinstated, this spring, it carried with it new and tougher rules that were also attacked by Behring.

The settlement agreed to by a less-than-feisty DHS also carries a provision that DHS will check in with Behring every three months to make sure (in my words) that the regional center is happy with how the department handles the program, an unfortunate arrangement. This gives Behring a virtual fourth-branch power.

Oh, yes, and the magistrate judge who chucked the Obama-Trump regulations, on the grounds that the then-acting DHS secretary had been appointed inappropriately, Jacqueline Scott Corley, has since that decision been promoted by the Biden administration to be a full-fledged federal judge. Magistrate judges in the federal system are civil servants, not presidential appointees. The White House may have been unaware of her anti-EB-5-reform decision when it made the appointment, or perhaps it knew and did not care.

The EB-5 program, so-named because it is the fifth of the five employment-based immigration programs, currently provides a family-sized set of green cards to alien families making an investment of at least $800,000 in DHS-approved but not guaranteed projects. It was originally supposed to support rural and low-income parts of the U.S., but the regional centers have managed over the years to place most of the investments into high-end downtown real estate developments.

Historically, but not currently, the program raised most of its funds from nervous Chinese multi-millionaires, who viewed it as an escape hatch should things worsen for them in the homeland.