EB-5 memo by Homeland Security Investigations, va. Sen. Grassley, Dec. 2013

8/13/2019 EB-5 memo by Homeland Security Investigations, va. Sen. Grassley, Dec. 2013

http://slidepdf.com/reader/full/eb-5-memo-by-homeland-security-investigations-va-sen-grassley-dec-2013 1/10

December 12, 2013

VIA ELECTRONIC TRANSMISSION

John Sandweg Acting DirectorU.S. Immigration and Customs EnforcementU.S. Department of Homeland Security500 12th Street, SW Washington, D.C. 20536

Dear Acting Director Sandweg:

I write to inquire about an internal U.S. Immigration and Customs Enforcement(ICE) memo that raises significant questions about U.S. Citizenship and ImmigrationServices’ (USCIS’s) EB-5 Regional Center program. The memo is from HomelandSecurity Investigations (HSI), an investigative arm of ICE. It appears to have been written in response to a request from then-Secretary Janet Napolitano.

One section of the memo outlines “concerns that this particular visa program[EB-5] may be abused by Iranian operatives to infiltrate the United States . . . .”1 Two ofthe operatives allegedly “facilitate terrorism and are involved in an illegal procurement

network that exports items to Iran for use by ‘secret’ Iranian government agencies.”2 According to the memo, one of the operatives acted as a representative in the U.S. for anIranian front company allegedly run by an individual associated with Iran’s IslamicRevolutionary Guard Corps.3

This is not the first time that Iranian operatives have been discovered operatingin the United States. In the spring of this year, Manssor Arbabsiar, who had bothIranian and U.S. passports, was sentenced for plotting with Iranian military officials tokill the Saudi Arabian ambassador by bombing a Washington, D.C. restaurant.4 Earlierthis fall, news outlets reported that the U.S. had intercepted an order from Iran to attack

1 Undated memo, “EB-5 Program Questions from DHS Secretary,” Homeland Security Investigations, U.S.Immigration and Customs Enforcement [Attachment].2 Id. at 2.3 Id.4 Press release, “Manssor Arbabsiar Sentenced in New York City Federal Court to 25 Years in Prison forConspiring with Iranian Military Officials to Assassinate the Saudi Arabian Ambassador to the UnitedStates,” Department of Justice, May 30, 2013, available at http://www.justice.gov/opa/pr/2013/May/13-nsd-621.html.



Acting Director SandwegDecember 12, 2013

of 4

U.S. interests in the event of a strike on Syria.5 In light of these facts, it is alarming tosee documentation that appears to indicate Iranian operatives used the EB-5 program totry to obtain visas for their associates.

According to the HSI memo, ICE identified seven main areas of program vulnerability with the EB-5 visa:

1) Export of sensitive technology/economic espionage;2) Use by foreign government agents/espionage;3) Use by terrorists;4) Investment fraud by regional center;5) Investment fraud by investors;6) Fraud conspiracies by investors and regional center; and7) Illicit finance/money laundering.6

The memo states: “The aforementioned vulnerabilities are directly affected by

information gaps on the alien beneficiaries of the EB-5 program. Unlike most otherpermanent resident visa classifications, EB-5 beneficiaries do not need to establish asignificant and verifiable background for program eligibility.”7

According to the memo, HSI made several suggestions for both informationcollection fixes and legislative fixes to close loopholes in the EB-5 program. Of theinformation collection fixes, the memo states: “HSI proposed making changes to theUSCIS forms (I-526, I-829, I-924, and I-924A) that are used by RC’s [regional centers]and alien investors. HSI felt that the forms did not collect enough information todetermine the validity of either the RC’s, the alien investors or the source of theinvestor’s funds.”8

The legislative changes proposed by HSI were: (1) doubling the minimuminvestment amount, (2) limiting the program to allow only active investors involved inmanaging and directing a business enterprise, and (3) eliminating the consideration ofinduced jobs for meeting the requirements of the program. These suggestions were notincluded in the technical assistance provided by USCIS in June 2012 when the EB-5program was being reauthorized. The only HSI recommendation which appeared in anyform in the technical assistance was a proposal for providing inflationary adjustments tothe minimum investment amount, which is very different from doubling it.

The HSI memo makes clear that overall, HSI believes the Regional Center model

has significant flaws and should be abandoned: “The principal change proposed by HSI was that the Regional Center Model be allowed to sunset, as HSI maintainsthere are

5 Julian E. Barnes and Adam Entous, “Iran Plots Revenge, U.S. Says,” Wall Street Journal (Sep. 6, 2013),available at http://online.wsj.com/article/SB10001424127887323893004579057271019210230.html.6 Undated memo, “EB-5 Program Questions from DHS Secretary,” Homeland Security Investigations, U.S.

Immigration and Customs Enforcement, at 4. 7 Id.8 Id., at 5.




of 4

no safeguards that can be put in place that will ensure the integrity of theRC model.”9

Given these concerns with the EB-5 Regional Center program and informationgaps on recipients of EB-5 visas, it is important that Congress have statistics on whathappens after individuals enter the U.S. on an EB-5 visa. Foreign investors whoparticipate in the EB-5 program may receive conditional permanent residence for a two- year period. However, it seems unlikely that they are ever removed from the countryeven if the conditions of their conditional status are not met because the required jobs weren’t created within the required period.

Therefore, please respond to the following:

1. Please produce all legislative and information collection recommendations made by ICE or any of its divisions for the EB-5 program. Please provide in detail anyspecific changes recommended for USCIS forms I-526, I-829, I-924, and I-924A.

2. For each of the above recommendations, please identify the date ICE proposedthe recommendation and to what entities it was proposed.

3. What is the current total number of EB-5 conditional residents whose request toremove conditional status was denied?

4. Does ICE know how many EB-5 investors who were denied permanent residentstatus remain in the country? Does ICE know the location of these foreigninvestors? If so, please provide a status report, including how many are detained,how many are in removal proceedings, and how many have been removed fromthe country by ICE.

5. Do you or your agency have any information as to why USCIS did not provideCongress with the legislative recommendations made by HSI, as indicated in theattached memo?

6. What is ICE doing to help ensure that USCIS does not provide EB-5 visas toindividuals and entities that are involved in international terrorism orproliferation operations, as was the case with Iranian operatives whose goal wasto infiltrate the U.S. and export items back to their country?

7. What is the current status of the Iranian case mentioned in the memo?

8. What type of visas did the two Iranian operatives mentioned in the memo enterthe U.S. on?

9 Id., at 4 (emphasis added).




of 4

9. Is the principal of the regional center referenced in the memo in the UnitedStates? If so, what type of visa did the principal enter the U.S. on?

10. For each individual associated with the principal of the regional center through

TECS subrecord hits, please indicate whether or not the individual has enteredthe U.S. in the past or is currently in the U.S., as well as what type of visa eachindividual entered the U.S. on.

11. What is the current immigration status of each of the individuals referenced inquestions 8, 9, and 10?

Thank you in advance for your cooperation in this matter. Please respond tothese questions by January 1, 2014. Should you have any questions regarding this letter,please contact Tristan Leavitt of my staff at (202) 224-5225. I look forward to yourprompt response.

Sincerely,

Charles E. GrassleyRanking Member

ATTACHMENT



Attachment



U.S-.mmigrationand CustomsEnforcement

Hotvtu-aNo tcunrrv lNvssrtcerloNsI nt' t gat t'e P ograms

EB-5 Program Ouestions rom DHS Secretarv

The following information s provided n responseo a U.S. Immigrationand CustomsEnforcement(ICE) HomelandSecurity nvestigations HSI) Taskingbasedon request rom DHS, number 66820,

titled Request or Information mplicationsof ICE CaseAgainst Procurement gent. The

answers o thesequestions re eachmarked U/FOUO):

1. (U//FOUO) Pleasegive a brief overview of theEB-5 visaprogram, including the ability and

processof petitioningfor additional workers usingother visa codes.

ICE defers o U.S. Citizenshipand mmigration Services USCIS) or a full overview of the EB-5

visaprogram;however, CE provides he following information.The EB-5 visa was created y

Congressn 1990as a means o stimulate he U.S. economy hroughcapital nvestmentby foreign

investors. A maximum of 10,000 mmigrantvisasper yearareset aside or qualifying foreign

investors andtheir immediate families (spouses nd unmarried children under age2l). The basic

requirements f the program are hat he alien must nvesta minimum of $1,000,000.00n a new or

existingU.S.business, r a minimum of $500,000.00f the businesss located n a Targeted

Employment Area (arcaat the time of investmentexperiencingan unemploymentrate of at least

150% of the national average)or a rural area,and the investmentmust either createor preservea

minimum of ten full time obs for qualifying U.S. workerswithin two years. The invested unds

must be wholly owned by the alien investorandmust comefrom a legitimate source,and the

investmentmust be at risk . After the qualifying investment s made, he alien andhis or her

immediate amily membersmay file a form I-526,Immigrant Petitionby Alien Entrepreneur. f the

form I-526 is approved,he alien andhis or her family members an be grantedan EB-5 visa and

becomeConditionalResidents f the U.S. Within 90 daysof the two yearanniversary f being

admitted o the U.S. asConditionalResidents,he alien andhis or her family membersmay file a

form I-829, Petition by Entrepreneur o RemoveConditions,andbecomePermanentResidentsof

the U.S.

Under a pilot program first establishedn 1992,and enewedseveral imes since, he alien investor

can nvest n a RegionalCenter RC) that hasbeenapproved y USCIS. When investing n a RC,

the alien investor doesnot have o take an activerole in the day to day managementof a company,

but simply becomesa passive nvestor n a limited partnership. Another advantage o the alien is

that when investing in a RC, the alien doesnot have o showthat ten direct obs were createdor

preserved.The businessor EB-5 visa holder may petition for foreign workers in the samemanneras any otherbusiness s ong as he minimum of 10 full-time U.S. workers s maintained n order o

continue n the EB-5 status. Rather, he createdor preservedobs can be any combinationof ten or

more direct, ndirector inducedobs, using anyreasonable alculation he RC chooseso use.

Unofficial estimates rom USCIS indicatethat over 90o/o f the applicants or EB-5 visasnow invest

in theseRCs, and a majority of all investments reat the lower $500,000.00 mount. As of June

2012, herewere 205 approvedRCs n the U.S., 193pendingnew RC requests, nd 59 amendment

requestso previouslyapprovedRCs.

LAW ENFORCEMENT ENSITIVE



Hovnr.qNnSscunr-ryNvsslctrloNsI nv stigativP ograms

2. (UIFOUO) Explain the relevanceof the EB-S visa in this specific case,especially theapplicationprocessand vetting of applicants,such as checksor derogatory information.

The EB-5 programandthe RC model in particular,became he focus of an interagency eview inearlyFY 2012. In reviewing heprogram, CE HomelandSecurity nvestigations HSI)

representativesearned hat USCIS was not conductingbackground ecord checksof RC operators,managers, ndprincipals. Basedon this reviewUSCIS changed usiness ractices o includecheckingEB-5 sponsor ompanynames,associated ddresses,nd ndividualsagainst he TECSsubject ecorddatabase.USCIS has since ounda numberof links betweenEB-5 sponsors,businesses,rincipals,and associated ddresses, ith the subjects f HSI and otheragencyinvestigations.

The HSI Visa Security Program (VSP) currently screens ll counter-proliferation and export controlsecurityadvisoryopinion (SAO) referrals. VSP is currently n theprocess f expanding o screen

100% of non-immigrant visa applicantsbefore visa adjudication hrough the PATRIOT program.PATRIOT is scheduled o begin full screeningand vetting of all non-immigrant visa applicantsfrom the l9 overseas isa SecurityUnits. Expansiono cover all otherpostswill occur as resourcesbecomeavailable. VSP efforts ncludescreening ot ust the applicant,but alsoU.S.sponsors/pointsf contact,addresses,honenumbersandemail addresses ssociated ith the visaapplication againstDHS-held information. Any derogatory nformation identified during thescreening s analyzedby a VSP intelligence analyst and referred o an HSI specialagent or finalvetting anddetermination. Futureplans nclude expanding he screeningprocess o immigrant,refugee,asylumand other mmigrationapplicants.VSP works closelywith partneragenciesoconductposGadjudicatednd ecurrentvettingofvisa applicantsor any terroristconnections. nthe investigation,he three dentihedsubjects ave TECS records, hereforea relatedapplicationwould be found by VSP screeningefforts.

3. (U//LES)Provide an operational update on the actions taken against and theindividuals involved in this case.

In January2010, he HSI Counter-ProliferationnvestigationsCenter CPIC) receivedinformation that and facilitate terrorismand are nvolved in an illicit procurementnetwork that exports tems to Iran for use by secretIraniangovernmentagencies. The investigation revealed nvolvement by andin procuringa variety of goods or Iranian entities and they appear o be associatedwith a network

involved n a seriesofinternationalassassinationnd errorismoperations.

In 2012, was indicted for his role in exporting electronics o Iran and was

subsequently rrested n 2013. In addition, he HSI CPIC investigation

revealed hat placeof employmen

is a participant n the EB-5 investorvisaprogram. Basedon concerns hat this particularvisaprogrammay be abusedby Iranian operatives o infiltrate the United States, he HSI

CPIC initiateda oint investigationwith the HSI DocumentandBenefit Fraud Group.

U.S_.mmigrationand CustomsEnforcement

LAW ENFORCEME,NTSENSITIVE



Horr4pr-cNuscuntrv NvrsrtcerloNsInv stigativP ograms

The investigationrevealed actedas a U.S. representativeor an Iranian front company

suspected f involvement in facilitating terrorism andproliferation activities. The company,

appears o be run by an individual associatedwith Iran's Islamic

RevolutionaryGuard Corps (IRGC). is named n a UnitedNations report as an entity thatsmuggledarms o militia groups. The CPIC discovered vidence ndicating

the network received diamondsaspayment or thesearmsshipments.

Recentdevelopmentsn the investigation nclude the discovery of a -basedprocurement

agent nvolved in this network, who appears o represent he

procurement rm of is likely involved n procuringsensitiveelectronics rom

U.S. electronicsirms with a suspected ltimate destination f Iran. also appearso be

involved with an Iranian electronics irm that, according o open-sourcenformation, services ran's

IRGC and the Ministry of Intelligence and Security. A review of electroniccorrespondencerom

email account ndicatesan association ith an Iranian

citizento whom he passednformation regarding explosivecomponents. an

employeeof and a network associate,was recently arrested n for

allegedly eading assassination ndterrorist operations n , and the country of

a. email accountalso ndicates e procuredhe samesize and ype of ball

bearingsound n improvisedexplosivedevices ocated n

apadment.

4. (U//FOUO) Identifu theprocedural or information gaps in the EB-5 visaprogram and other

similar programs and any recommendedmitigating steps o address hese isks.

ICE recommendsUSCIS also be consultedor this information. ICE provides he following

suggestions.Through its participationon the inter-agencyworking group, HSI Identity and Benefit

Fraud Unit (IBFU) and other affectedagenciesdentified sevenmain areasof programvulnerability

with the EB-5 visa. Theseprogramvulnerabilitiesareas ollows:

U.S. mmigrationand CustoirsEnforcement




HousreNo SrcuRtry NvsstrcRTroNSInvestgativP ogr m

1. Export of SensitiveTechnology EconomicEspionage2. Use by ForeignGovernmentAgents Espionage3. Use by Terrorists

4. InvestmentFraudby RegionalCenter

5. InvestmentFraudby Investors6. Fraud Conspiracies y InvestorsandRegionalCenter7. Illicit Finance Money Laundering

VSP only screenedEB-5 immigrant visa applicantswho were referred or an SAO relating tocounter-proliferation r export control. n2012, VSP providedguidanceo all HSI Visa SecurityUnits to include the EB-5 immigrant visa category n their targetingprofiles (beyondonly counter-proliferationor export controls).

The aforementionedvulnerabilitiesare directly affected by information gapson the alienbeneficiaries f the EB-5 program. Unlike mostotherpermanentesident isa classifications, B-5

beneficiariesdo not need o establisha significantand verifiable background or program eligibility.For example,permanent esident classifications or employment requireproof of educationandlorexperience, hile family-based isas equirepositivelydemonstrating ona-fide elationships.Theseclassificationsprovide greater nformation that can be researched, etted, or cross-checkedthanthat requiredof an EB-5 applicant. Conversely, he primary requirement or EB-5 eligibility isa lawful sourceof investment ncome. However,verifying the legitimacyof investment ncomesourcess difficult. Therefore,he primary qualiffing criteria or EB-5 beneficiariess both imitedin scopeand hard to confirm.

In addition o the informationgapon EB-5 beneficiaries,hereareproceduralssuesassociated iththe approval andoperation of RCs that leadto vulnerability. The HSI review hasuncoveredseriousconcernsabout he credibility of the RC platform. The nature of indirect ob growth is problematic,

and basedalmost solely on a RC's ob creationmethodologyas describedn applications o USCIS.HSI conducted esearch sing ob creationstatistics sedby large corporations nd he U.S.governmentstimulus package,and has reason o believe that the RCs aregreatly exaggerating heirindirectand nducedob creation igures. By not having o provideevidenceofjobs directlycreated, he RC inherently createsan opportunity for fraud, where the businessgoal can be initiatingprojects hat give the appearance f creating ob growth, with the sole ntent to meetUSCIS criteriarather hanproduceobs.

Basedon the concerns utlined above,HSI madeseveral uggestionsor both legislative ixes and

informationcollection ixes to close oopholes n theEB-5program.

Theprincipal

changeproposed

by HSI was hat the RegionalCenterModel be allowed o sunset, sHSI maintains hereareno

safeguardshat canbe put in placethat will ensure he integrity of the RC Model. In the absenceof

the elimination of the RC Model, HSI proposed aising the minimum investment amount to

$2,000,000 r $1,000,000or TargetedEmploymentAreas,as heminimum investmentamounts

had not changedsince he inceptionof the RC Model in 1992. Raising the required nvestment

amount would make fraud more inconvenient andprovide a more legitimate basis o meet the ob

creationgoalsof theprogram.

U.S- mmigrationand CustomsEnforcement

LAW ENFORCEMENT ENSITIVE,



Hovru-aNoStcuRrry xvrsrrcRTroNsInv stigatveP ograms

U.S. mmigrationand CustoirsEnforcement

Additionally,the EB-5 programshouldbe openonly to active nvestorsnvolved n managinganddirectinga business nterprise, ndnot to passive artners,which would providea heighteneJdegreeof certainty regarding he intentionsof the ilien applicant. Passive nvestorsaretoo farremoved rom theseprojects o haveany verifiableconnections r ties.

Finally, inducedobs shouldnot be usedasa measurement fjob creation;only direct obs, andindirectjobscreated rom suppliers, artnerentities,anddirectsupportcouldbe considered.Further, ndirect obs mustbe verifiable n thetargetedgeographic rea. Inducedobs basedonincreasen economicactivity shouldnot be used owardt G requirement f creating 0 jobs. Jobscreated irectly areeasier o verify andsubstantiate,othby theRC andUSCIS.

On September28, 2012,PresidentObamasigneda three year reauthorizationof the EB-5 RCProgram. The RC Model was renewedwithout any changes.

In addition o theproposedegislativeedits,HSI proposedmakingchangeso theUSCIS forms (I-526,I-829,1-924andl-924A) thatareusedby RC,sind alien nvestors.HSI felt that he formsdid

not collectenough nformation o determinehe validity of either he RC's, the alien nvestorsor thesourceof the investor's unds. HSI submittedo USCISa seriesof recommended uestionso beincludedon the aforementioned orms, aswell asadditional recommendedsecuritychecks, o helpaddresshe sevenprogram vulnerabilitiesthat were identified.


EB-5 memo by Homeland Security Investigations, va. Sen. Grassley, Dec. 2013

Documents

Transcript of EB-5 memo by Homeland Security Investigations, va. Sen. Grassley, Dec. 2013