Dozens of Fraud Investigations Target US Immigration Program for Rich Foreigners

Government audit finds $500K Green Card program could be magnet for fraudsters.

ByABC News
August 12, 2015, 3:35 PM

— -- Federal agents have opened dozens of investigations into fraud allegations involving the controversial immigration program that promises the chance at a U.S. Green Card to foreigners who invest $500,000 in selected U.S. ventures, according to an audit published today.

The U.S. immigration service “faces significant challenges in its efforts to detect and mitigate fraud risks,” the audit by the Government Accountability Office concluded in a report that catalogs the struggle by the Department of Homeland Security to combat abuse in the immigration program known as EB-5.

The report discloses for the first time that between January 2013 and 2015, the SEC received more than 100 “tips, complaints and referrals of possible securities fraud” connected to the EB-5 program, and there are currently 59 open investigations by various agencies into alleged EB-5 scams. In one recently announced case in California, the SEC went so far as to describe an EB-5 visa center that tried to sell investors on an oil drilling business as “a Ponzi-like scheme.”

The little-known, but immensely popular immigration program was the focus of a two part ABC News investigation earlier this year that looked into claims the program had created an avenue for criminals and spies to enter the country, and had become a magnet for fraud.

Under the program, foreigners who invest $500,000 or $1 million in a selected American business venture can qualify for an entry visa. If the venture creates 10 or more American jobs after two years, the foreign investor can receive a Green Card. Since the program has grown in popularity, hundreds of firms have opened to facilitate EB-5 investments.

PHOTO: ABC News Brian Ross Investigation: The $500,000 Green Card
ABC News Brian Ross Investigation: The $500,000 Green Card

The risk of fraud is especially high, the GAO report said, because some foreign visa applicants may care less about the prospects for their $500,000 investment than they do about the U.S. Green Card the money can procure.

In a statement emailed to ABC News late Wednesday, a Department of Homeland Security spokesman said the department “remains committed to preventing fraud and ensuring the integrity of the EB-5 Program.”

The immigration agency “concurs with GAO’s four recommendations to strengthen fraud prevention, detection, and mitigation capabilities within the program and to more accurately assess and report on program outcomes and the overall economic benefits of the program,” the statement says. “To address these recommendations, [officials are] revising EB-5 forms to improve program integrity and data collection and taking significant additional measures to ensure the integrity of the program.”

After the ABC News report, two leading U.S. Senators introduced legislation to try and clean up the boutique U.S. immigration program for wealthy foreigners. Senate Judiciary Chairman Charles Grassley, R-Iowa, and Vermont Democrat Sen. Patrick Leahy credited the program for creating thousands of jobs. But they also acknowledged that the program had attracted foreigners seeking to sidestep the scrutiny of the traditional immigration process.

“We’ve seen too many occasions where national security has been put at risk and job creation has taken a back seat,” Grassley said. “Our bill strengthens oversight, ensures greater accountability and transparency, discourages fraud, and provides a higher priority for national security.”

Leahy said he pushed forward on the legislation, separate from other immigration measures, because he believes it is important to repair the program before it is set to expire later this year.

Supporters of the program have noted that it is now so popular that the 10,000 visas allotted in 2014 for EB-5 investors were claimed in a matter of months. The money has paid for popular projects -- a Brooklyn basketball arena, a California winery, a Vermont ski lodge, even a Hollywood movie studio -- and it has supported an estimated 42,000 jobs.

"I have seen over the last two decades how the EB-5 program creates jobs and provides access to capital in communities in Vermont and throughout the country, all at no cost to American taxpayers,” Leahy said.

The GAO report credits the Department of Homeland Security with initiating efforts to address the fraud issue with the EB-5 program, saying the agency enhanced “its fraud risk management efforts, including establishing a dedicated entity to oversee these efforts.”

In their formal response to the audit, DHS officials said they considered the report to be confirmation that the agency is taking steps to improve the program. “The report affirms that [the agency] has improved the administration and integrity of the program.”

Grassley had a different takeaway.

"The GAO has confirmed that there are fraud risks associated with the EB-5 program, and it shows the need for reform legislation if this program is to be effective for legitimate job creation,” Grassley said in a statement. “The program needs an overhaul so that national security isn't at risk, fraud is minimized, and economic benefits are realized for Main Street.”

This report was updated Aug. 13, 2015.