Many EB-5 Middlemen – Pledged to Create Jobs for Americans – Hire Aliens

By David North on June 13, 2014

The immigrant investor (EB-5) program is supposed to use aliens' money to create jobs for Americans, but many government-licensed middlemen in the program are on public record as preferring to hire temporary foreign workers in their own shops rather than citizens or green card holders.

This is, strictly speaking, legal, but it certainly runs counter to both public policy and the administration's cheerful characterization of the program.

David North Explains
the EB-5 Visa Program:

View the Full Interview

The program grants a family-sized set of green cards to aliens who invest half a million dollars in projects approved by USCIS-licensed Regional Centers. Each investment is supposed to create 10 full-time jobs for legal, permanent U.S. residents, none of which are to be held by members of the investor's family.

The regional centers which handle these investments work under a different set of rules. These centers are almost always private, for-profit entities and employ small staffs to work with government officials and the funded projects (usually modest real estate developments). Typically, investments in the actual centers, as opposed to the projects they promote, are made outside the EB-5 program, and the money is U.S.-based.

What we at the Center for Immigration Studies have just discovered is that a substantial minority of the regional centers have sought to hire temporary foreign workers rather than U.S. citizens or green card holders. We did this by simply cross-checking two public data sets – something that no one had done before, but anyone with a computer can do.

We decided to survey a large sample of the regional centers and checked on 93 of the Centers (representing 25 percent of the names on a list of centers provided by EB-5Info, an EB-5 service organization). We then used another list to see if these regional centers had sought foreign workers via the H-1B program.

About 10 percent of the centers – nine in the studied group of 93 – indicated on 35 occasions over a three-year period that they preferred to hire an alien professional through the H-1B program rather than a U.S. citizen or green card holder. Each of the nine filed between two and nine documents with the U.S. Department of Labor seeking foreign workers for this U.S.-based work.

If one projects from the sample, that would suggest that the 372 regional centers on the list probably sought something like 140 foreign professionals during the three years covered by our survey (2011-2013). Since the study was confined to those three years, and since some of the regional centers have been around for a decade or more, it is likely that, over time, many more than 140 H-1B workers were sought by these centers.

Further, our study did not involve all of the temporary nonimmigrant hires of the regional centers, only those sought through the H-1B program for certain classes of alien professionals. The centers could have used a variety of other programs to hire aliens and some of them probably did so.

I find this odd behavior. It is as if the regional centers did not understand that what they were supposed to do was to seek foreign capital to create jobs for legal U.S. residents. Instead, since the regional centers themselves are largely funded from sources within the United States, we see that when it comes to their own staffing, some of these centers are doing just the reverse of what they are supposed to do: they are using American funds to create jobs for aliens.

There are firm rules that projects funded by EB-5 investment funds are supposed to hire U.S. workers, but, to my knowledge, the middleman organizations, the regional centers, are under no legal obligation to confine their own staff hires to citizens or green card holders. Perhaps they should be.

Our Findings. We used two data sets that are open to the public. The list of regional centers, provided by EB5Info, had an unduplicated group of 372 regional centers that are known to be active and to have been licensed by USCIS. That DHS agency has a somewhat longer list of centers, 532, but some on that list are inactive and others are too new to have done much hiring.

Similarly we used a non-governmental list of H-1B employers provided by My Visa Jobs to see which of the 93 had used that program. That listing is easier to handle than the exhaustive DOL H-1B database; both lists carry the same information in different formats.

We found that the nine centers, on 35 different occasions, filed applications with DoL indicating that they wanted to hire alien workers. Completing an H-1B application is a complicated business, so the companies really must have wanted those alien workers.

The 35 applications, however, do not equate with the hiring of 35 people through the program, as seven of the applications were denied by DoL, five were withdrawn, and some of the remaining 23 presumably did not make it through the rest of the H-1B process. There were 35 times, however, in which these centers indicated a preference for a foreign worker.

The jobs the workers would fill were what one might expect: financial analyst, legal assistant, marketing specialist, web developer, as well as creative director, editor, and the like. The salaries to be paid range from $30,000 a year to $65,000. It is not hard to imagine finding U.S. workers for those jobs.

While I cannot say much about these particular linkages of jobs and salaries, I would assume that they were at the lower edge of the pertinent labor markets, as is the case with most H-1B salaries. The attraction of the program to employers, after all, is that they can secure near-indentured foreign workers at wages lower than the prevailing ones in the industry.

The multiple use of immigration-related programs by these EB-5 centers is not unique on the American scene; think of the multiple uses of various migration programs by the nation's universities – they can hire professors, secure ill-paid grad student help, and get full-tuition-paid foreign students, all by manipulating different parts of the immigration law.

I am grateful to Malcolm Richards, a CIS summer intern, for his research assistance.