EB-5 Press Release (Unwittingly) Reveals the Truth

By David North on August 9, 2019

Sometimes press releases tell more than they intend to do. Take, for instance, this headline from an EB-5 middleman organization: "CanAm Announces its 36th EB-5 Partnership Loan Repayment".

It is good that CanAm Enterprises has paid back, in full, some EB-5 investors; many of its competitors cannot always make that claim. I have no doubt about the accuracy of the release.

But what is interesting about this document is the use of the word "loan".

You see, the EB-5 (immigrant investor program) is supposed to involve investments made "at risk". The name of the part of USCIS that runs the program is an obvious reflection of this; it calls itself the Immigrant Investor Program Office (IPO), a not-so-subtle play on the concept of the genuinely at-risk business activity called an initial public offering.

But alien investors neither make much of a profit from their EB-5 investments, if any, nor is their money at risk when they deal with a legitimate EB-5 operation, as CanAm appears to be.

What usually happens is that the aliens provide – as the press release says – a de facto loan at a very low interest rate. This is routinely packaged as an investment in a one-purpose corporation, that is a nominal for-profit-entity; it, in turn, lends its money to a real estate developer at a low interest rate, and, if all goes well, the alien gets his money back plus some slight interest, often in the neighborhood of 1 percent. I cannot see how this arrangement can be called an "at risk" situation.

So if a "loan" is repaid in the EB-5 business, as the press release states, that means that the investor is lucky and the government is allowing the program to be twisted out of shape.

Those of us who are critical of the EB-5 program can thank CanAm for this presumably unplanned burst of honesty.