Sen. Grassley Opposes Short-Term Extension of EB-5, but Big Money Prevails

By David North on March 21, 2018

It looks like there will be another short-term extension of the main part of the controversial EB-5 (immigrant investor) program, but this time over the vigorous objections of the chairman of the Senate committee in charge of such things, Sen. Chuck Grassley (R-Iowa).

That extension, if it occurs, will be part of the omnibus spending bill and will extend the life of the program, now due to end on March 23, until September 30. There have been about half a dozen of these short-term extensions in recent years.

Grassley, citing reforms he had sought over the years with his predecessor as Judiciary Committee chairman, Sen. Patrick Leahy (D-Vt.), called on his Senate colleagues to terminate the program, saying it is "simply too corrupted to be saved, and it needs to be ended."

He said that the program has been "hijacked by big moneyed New York City real estate interests." He continued, "These developers now take almost all the foreign investment from this program and for the last few years they've actively prevented this body from enacting any reforms."

Speaking of "big moneyed New York City real estate interests", neither the world's most prominent real estate developer nor his son-in-law, whose firm is a large-scale user of EB-5 investments, has said much, if anything, about the program. The two most active protectors of it have been Senate Minority Leader Sen. Chuck Schumer (D-N.Y.), and Senate Majority Whip Sen. John Cornyn (R-Texas).

An insignificant part of the EB-5 program, dealing with individual rather than pooled investments, is a continuing entity; the part of the program allowing pooled investments of $500,000, which lead to a batch of green cards for the investor and his or her children, is up for renewal. These pooled investments are handled by DHS-licensed regional centers, many of which have been involved in financial scandals.

The reforms sought by Grassley and Leahy, who was a big fan of the program until it exploded in his home state, include provisions calling for 30 percent of the funds to go to rural and underserved urban areas, a larger investment amount per visa, and "a host of integrity measures", to quote the senator.

Meanwhile, though Congress has been deadlocked on this issue, the Securities and Exchange Commission has been active filing civil suits against specific EB-5 abusers. Further, some of these civil suits have become criminal cases, as some U.S. attorneys have taken action against specific EB-5 crooks.

The most recent instance of this involved the U.S. attorney in Connecticut taking action against two Florida EB-5 promoters, Robert V. Matthews and Leslie R. Evans, causing their arrests in Florida and their appearances in a West Palm Beach federal courtroom. As we reported earlier, the scammers managed to get themselves photographed with both President Trump (and his second wife) and with President Clinton and his spouse, and used these two different photos in their promotions.

According to the U.S. attorney's press release on this case, some of the mishandled funds "were used to pay Robert Matthews' credit cards, to assist in Matthews' purchase of a 151-foot yacht, and to purchase two properties located in Washington Depot, Conn."

One of the encouraging elements in this particular instance is that the case was brought in Connecticut rather than in Florida. This means that an EB-5 promoter involved in a multi-state scandal has to worry about U.S. attorneys in all of the states involved, not just in the state where most of the activity took place.

So if one U.S. attorney decides not to pursue the specific EB-5 scandal or scandals — as was the case with the massive series of EB-5 frauds in South Dakota — maybe another U.S. attorney, in another state, will take up the challenge.

A cheerful thought in an otherwise non-cheerful setting.