A Look at What’s Left of the EB-5 (Immigrant Investor) Program

By David North on November 2, 2021

Four months have now passed since the Senate refused to extend the most controversial part of the EB-5 (immigrant investor) program, and it is time to look at what’s left of it. We have some State Department data for three of those four months, and they show a fast-shrinking program, as we will spell out later.

The part that Congress refused to re-authorize (at least for now) was the key element, the pooling of alien investors’ funds through U.S.-based and Homeland-Security-licensed regional centers. This had produced something like 95 percent of the visas. They, in turn, had been granted to aliens who invested a minimum sum of $500,000 — then $900,00 — then $500,000 again through the regional centers, with the minimum amount varying with changes in regulations and court decisions. The investor, his or her spouse, and their children under 21 all got visas, and there were about 2.5 visas issued for every investment. These visas all led to green cards after the passage of two years.

All too many of the regional centers (and their allies) misused the aliens’ funds and there have been a series of scandals in that connection, many of which are still playing out in the courts. (See here, here, and here.)

What’s left of the program is the part that did not need repeated re-authorization by Congress. This called for direct investments (of the same size) by aliens. I had thought that these investments must be in alien-managed enterprises, like a restaurant or a store, but it turns out that the direct investment, in addition to alien-managed enterprises, can be very much like the old regional center arrangements, without a regional center. In other words, the alien can buy a $500,000 stake in a real estate venture, for example, and have little or nothing to do with its management. Both of these actions are called “direct investments”, and thus can and do continue to operate under EB-5.

There are several such offerings displayed in the most recent issue of EB Investors Magazine. One of these is in a “120 key” resort hotel on the southern shore of St. Croix in the U.S. Virgin Islands and will carry the Best Western brand. There is an offer, which has been on the web for at least a month, of five EB-5 investment opportunities at $500,000 each.

The website description is interesting in what it reports, and what it does not.

It says “return 2.0%”. This is about twice what EB-5 investors have been getting in the past, which suggests a buyer’s market. What it does not say is that the project is by a major garbage dump, or in the gentle terms of a one-time employer of mine, the Virgin Island Source website: “Because it is near the St. Croix Anguilla Landfill, it has not been considered prime real estate for the past 50 years. With the closure of the landfill within the next two years, the space is open for future development.”

I was a very part-time Washington correspondent for the Source, an alternative news organization, for several years more than a decade ago.

The EB-5 announcement, for understandable reasons, also did not mention St. Croix’s murder rate, which was at 91.2 per 100,000, well above any nation on earth earlier this year. It has since dropped to about 65 per 100,000 which is still 10 times as high as America’s rate, which was 6.5 per 100,000 in 2020.

The online version of the EB-5 Affiliate Network, which also features the St. Croix hotel, has listings for three other EB-5 investment opportunities, all in more likely locations, some with a “three percent preferred return”; they are restaurants in Boston, Las Vegas, and New York City.

The direct investment program requires that 10 new, full-time jobs be created for each investment and this part of the program, unlike the old regional center part, allows for only direct jobs, not the combination of direct and indirect ones covered by the older program.

How can you produce 10 full-time jobs with the investment of $500,000? I asked the salesman for the St. Croix hotel this question and he breezily responded “Oh, you don’t figure the new jobs on the basis of the $500,000 alone, you add in the jobs created by other investors as well.”

That’s an odd interpretation of the law in my eyes.

Statistics. So how is the new version of EB-5 doing now that the regional centers are out of the picture? Homeland Security is neither generous with its statistics nor very up to date, but the State Department is both more transparent and more current in its data. Every month, State publishes the number of various kinds of immigrant visas issued in each of the nations of the world. It is a huge batch of numbers with no totals provided for individual visas, or for individual nations. This online publication is called ”Monthly Immigrant Visa Issuance Statistics”.

Given the nature of the data available, we calculated the number of EB-5 visas issued in July, August, and September of this year for China (the source of most EB-5 aliens) and four other nations known to have produced substantial EB-5 applications in the past. This is what we found:

EB-5 Visas Issued, in Selected Nations,
Summer 2021, to Regional Center & Non-RC Aliens

Country July,
China 1 127 0 42 0 20
Great Britain 2 0 0 0 0 0
India 4 0 0 0 0 0
Pakistan 5 0 0 0 0 0
Vietnam 17 0 0 0 0 0
Totals 29 127 0 42 0 20

Source: Calculated by CIS from Monthly Immigrant Visa Issuance Statistics, U.S. State

In July, 29 of the old applications for regional center visas somehow got themselves approved, with our consulates in Vietnam apparently operating differently than the ones in China.

More significantly, in July there was a small burst of activity in the non-regional center applications in China, with 127 direct investment visas issued. That number dropped to 42 in August and further to 20 in September. Meanwhile, zero direct-investment visas were issued in either August or September in the other four nations. India and Vietnam, until recently, had backlogs of visas, because of the country of origin limitation system; now, no visas are issued at all.

Let’s look at the 20 visas issued in September; were the issuances to continue at that rate, there would be 240 a year; contrast that to the numerical ceiling of just under 10,000 visas a year, and you see a 98 percent drop in the numbers.

In other words, the main part of the EB-5 program is four months dead and the remnants of it have just about disappeared. All of this reduces whatever political pressures there are to revive the regional center part of the program.