In a pre-holiday rush, Congress ditched reforms that would have reined in the controversial EB-5 investor visa program.
The omnibus spending bill to keep the government operating extends the visa program that has been plagued by fraud and abuse while posing “significant national security risks.”
“No reforms. No plugs to national security. No safeguards against fraud and abuse,” Sen. Charles Grassley, R-Iowa, said Thursday on the eve of expected House approval.
Bowing to big New York developers who have increasingly dominated the EB-5 visa allotment, congressional leaders jettisoned a bipartisan reform bill sponsored by Grassley and Sen. Patrick Leahy, D-Vt. House sponsors included Rep. Bob Goodlatte, R-Va.; John Conyers, D-Mich.; Darrell Issa, R-Calif.; and Zoe Lofgren, D-Calif.
“Senator Grassley’s bill would have long-term economic benefits for Texas if ever enacted,” said Shae Armstrong, a Dallas attorney representing the More American Jobs Alliance.
“The Texas opponents to Sen. Grassley’s reform efforts have been drinking the juice for way too long,” Armstrong added. “They are ignorant to the fact that if you take a close look at the EB-5 capital raise trends, Manhattan will essentially monopolize the EB-5 industry within the next nine months.”
“If Texas EB-5 developers think they can compete with Manhattan projects such as the World Trade Center II (which raised $500 million in EB-5 cash via Chinese investors), they should be committed to the nearest mental health facility,” Armstrong told Watchdog.org.
Sen. Chuck Schumer, D-N.Y., prevailed in pushing for business as usual.
Last June, a government whistleblower testified he was harassed for speaking out about the program that grants U.S. green cards to foreign investors.
The whistleblower told a Senate committee hearing that the EB-5 program, operated through loosely monitored “regional centers,” presented “serious security challenges.”
“EB-5 applicants from China, Russia, Pakistan and Malaysia had been approved in as little as 16 days and in less than a month in most. The files lacked the basic and necessary law enforcement queries,” he said.
The whistleblower said he was unable to verify how applicants were tracked once they entered the country.
Though Congress enacted EB-5 for the purpose of creating jobs in areas of high unemployment, an investigation by Forbes found that millions of dollars of investor money has been siphoned off for other purposes — even returning overseas.
Two years ago, Watchdog reported how EB-5 was vulnerable to the “export of sensitive technology and economic espionage.” A Homeland Security investigation recommended the abandonment of regional centers.
In a last-minute reform bid, Sens. John Cornyn, R-Texas, and Jeff Flake, R-Ariz., introduced the “EB-5 Integrity Act of 2015.” Their bill would require all EB-5 regional centers to follow strict rules regarding national security, fraud prevention, securities law compliance, transparency/disclosure and auditing.
The Cornyn-Flake requirements are nearly identical to those in the Grassley-Leahy-Goodlatte bill, but do not address the gerrymandering of Targeted Employment Areas.
Grassley said the “failure to heed calls for reform proves that some in Congress would rather side with special interest groups, land developers and those with deep pockets.”
Read more by Kenric Ward at Watchdog.com.