Everything Is Absolutely Perfect in One Aspect of the EB-5 Program

By David North on July 16, 2015

There is little perfection in most people's lives — there may be a few weeds in the lawn, noisy neighbors, a damp basement, a child or grandchild who is not doing very well in school, or some combination of these or other blemishes.

But there is one perfect segment of the controversial EB-5 (immigrant investor) program that is so beloved by the Obama administration. This is the program that essentially sells a family-sized set of immigration visas to aliens who put $500,000 into a DHS-approved, if not guaranteed, project, usually in real estate.

During the months of October-December 2014, USCIS received 810 EB-5-related green card applications and denied none of them — zero, zip, nada. That's a score of 810 to 0.

In the next three months there were 693 receipts, of which two were denied or perhaps withdrawn (that is not clear in the statistics). So there were 1,503 receipts and just two negative decisions in that six-month period.

That might suggest that the flow of these applications was 99.87 percent spotless (even better than Ivory Soap's old claim of 99.44 percent pure) and that USCIS is, to paraphrase the young lady in the musical "Oklahoma!", just an agency that can't say no.

There's a lot of pressure from the top in USCIS to "get to yes" on EB-5 applications, as the acting inspector general of DHS declared a couple of years ago, but that's only part of the story.

The rest of the tale is that while the agency rarely says "no", it frequently says "later".

During the six-month period, 1,503 applications for green cards were received. USCIS denied two, approved 338, and left the balance of 1,163 up in the air, augmenting the 2,075 pending cases that they had at the start of the fiscal year. And bear in mind that this is a program favored by the administration because it adds some well-to-do immigrants to the million a year influx of largely low-income people.

What's going on here?

My sense is that here are several factors at work: This is an expanding program — thanks to the administration's cheerleaders — and though much additional staff has been added to the program, and the decision-makers have been moved from California to D.C., the flow of these fairly complicated applications has overwhelmed the staff. Further, there may very well be a practice of not really deciding on questionable applications, shoving them off into the pending bin instead. And finally, while the EB-5 program is a small pet of the administration, the agency's resources have been diverted to the DACA amnesty, a much more favored and a much larger activity.

Before Obama arrived, the EB-5 program was smaller and there was a much higher rate of denials. In FY 2008, for example, there were 391 receipts, 161 approvals, 69 denials, and 151 applications added to the pending pile. If you compare denials to receipts, that is a 17.6 percent denial rate rather than a 0.13 percent rate for the last six months.

Which denial rate sounds more plausible for an immigration program mixed with money and deeply scarred by repeated scandals? Is it 17.6 percent or is it 0.13 percent? That is a more than 100 to 1 disparity.

The data shown above is for the second stage of the two-part EB-5 program. In the first phase, which involves form I-526, the alien and his or her family get conditional, two-year residence cards and permission to work; in the second phase, the alien and family seek to convert those temporary cards to permanent resident alien status using the I-829 form. In this second phase, the alien has to prove to the agency that the money has in fact been invested, that it came from legitimate sources, and that the alien has done nothing in those two years to make himself inadmissable to the United States. The full set of statistics, dealing with both phases of the program, can be seen here and here.