eb-5 ice memo & grassley letter

8/17/2019 EB-5 ICE Memo & Grassley Letter

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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.


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Acting Director SandwegDecember 12, 2013

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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.


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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).


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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


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Attachment


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U.S-.

mmigration

and Customs

Enforcement

Hotvtu-aNo tcunrrv

lNvssrtcerloNs

I 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 these

questions

re each

marked

U/FOUO):

1.

(U//FOUO)

Please

give

a brief

overview of the

EB-5

visa

program,

including

the ability and

process

of

petitioningfor

additional workers

using

other

visa codes.

ICE defers o U.S.

Citizenshipand

mmigration Services

USCIS)

or a

full overview of the

EB-5

visa

program;

however,

CE

provides

he

following information.

The EB-5

visa was created y

Congress

n 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 and

their immediate

families

(spouses

nd

unmarried children

under age

2l). 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

$500,000.00

f the business

s located

n

a

Targeted

Employment Area

(arca

at the time of

investmentexperiencing

an unemployment

rate of at

least

150% of the

national average)or a

rural area,and the

investment

must either createor

preserve

a

minimum of ten

full time

obs

for

qualifying

U.S. workerswithin

two

years.

The

invested unds

must be wholly owned by the alien

investor

and

must come

from a legitimate

source,and the

investment

must

be

at risk . After

the

qualifying

investment

s made,

he alien and

his or her

immediate amily members

may file a form

I-526,Immigrant

Petitionby Alien

Entrepreneur.

f the

form I-526 is approved,

he alien and

his or her family

members an be

granted

an

EB-5 visa and

becomeConditional

Residents f

the U.S. Within 90

daysof the two

year

anniversary

f being

admitted

o the U.S. as

Conditional

Residents,he alien and

his or

her family members

may file a

form I-829, Petition by Entrepreneur

o

Remove

Conditions,

and

become

Permanent

Residentsof

the U.S.

Under

a

pilot program

first

established

n 1992,

and

enewed

several imes

since, he alien

investor

can

nvest n a Regional

Center

RC)

that hasbeenapproved

y USCIS.

When

investing

n a RC,

the

alien investor does

not have o take an active

role in the day

to day

managementof

a company,

but simply becomes

a

passive

nvestor n a limited

partnership. Another advantage

o the

alien

is

that when

investing in a

RC, the alien does

not have o show

that ten direct

obs

were createdor

preserved.The businessor EB-5 visa holder may petition for foreign workers in the samemanner

as 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

preserved

obs

can be any

combination

of ten or

more direct, ndirect

or induced

obs,

using any

reasonable alculation

he RC chooses

o use.

Unofficial estimates

rom

USCIS

indicate

that over 90o/o f

the applicants

or EB-5 visas

now

invest

in theseRCs, and a

majority of all

investments re

at the lower

$500,000.00

mount.

As of

June

2012, here

were 205 approved

RCs

n the U.S., 193

pending

new

RC requests,

nd 59

amendment

requestso

previously

approved

RCs.

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ENFORCEMENT ENSITIVE


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Hovnr.qNnSscunr-ryNvsslctrloNs

I nv stigativP o

grams

2.

(UIFOUO)

Explain the relevance

of the EB-S visa

in this specific case,especially the

application

process

and vetting of applicants,

such as checks

or

derogatory

information.

The EB-5 programandthe RC model in particular,became he focus of an interagency eview in

early

FY

2012. In reviewing he

program,

CE

Homeland

Security

nvestigations

HSI)

representativesearned

hat USCIS was not conducting

background ecord checksof RC

operators,

managers,

nd

principals.

Based

on

this review

USCIS changed usiness

ractices

o

include

checkingEB-5

sponsor ompany

names,

associated ddresses,

nd

ndividuals

against he TECS

subject ecord

database.USCIS has since ound

a

number

of

links

betweenEB-5 sponsors,

businesses,

rincipals,

and associated

ddresses, ith the subjects f HSI and other

agency

investigations.

The HSI Visa

Security

Program

(VSP)

currently screens

ll counter-proliferation and export control

securityadvisoryopinion

(SAO)

referrals. VSP is

currently

n

the

process

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 applicants

from

the l9 overseas isa SecurityUnits. Expansion

o cover all other

posts

will occur as resources

becomeavailable. VSP

efforts

nclude

screening ot

ust

the applicant,but also

U.S.

sponsors/pointsf contact,addresses,

hone

numbersand

email addresses ssociated ith the visa

application againstDHS-held information.

Any derogatory nformation identified during the

screening s

analyzedby a VSP intelligence analyst and referred o an HSI special

agent

or final

vetting and

determination. Future

plans

nclude

expanding he screening

process

o

immigrant,

refugee,

asylumand other mmigration

applicants.VSP works closelywith

partner

agencieso

conduct

posGadjudicated

nd ecurrentvetting

ofvisa applicants

or

any

terrorist

connections.

n

the

investigation,

he three

dentihed

subjects ave TECS records, hereforea related

application

would be

found

by VSP screening

efforts.

3.

(U//LES)

Provide

an operational update on the actions taken against

and the

individuals involved in this case.

In January2010,

he HSI Counter-ProliferationnvestigationsCenter

CPIC)

received

information that

and

facilitate

terrorism

and are

nvolved

in an illicit

procurement

network that exports tems to Iran for use by secret

Iranian

government

agencies. The investigation revealed nvolvement by and

in

procuring

a variety of

goods

or

Iranian

entities and they appear o be associatedwith a

network

involved n a

series

ofinternational

assassinationnd

errorism

operations.

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

place

of employmen

is a

participant

n the EB-5 investorvisa

program.

Based

on

concerns hat this

particular

visa

program

may be abusedby Iranian operatives o infiltrate the United States,

he HSI

CPIC initiated

a

oint

investigationwith the HSI Documentand

Benefit

Fraud Group.

U.S_.mmigration

and Customs

Enforcement

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Horr4pr-cNuscuntrv

NvrsrtcerloNs

Inv stigativP ograms

The investigation

revealed acted

as a U.S. representative

or an

Iranian front company

suspected f

involvement

in facilitating terrorism and

proliferation

activities.

The company,

appears o be

run by

an

individual

associated

with

Iran's Islamic

RevolutionaryGuard Corps (IRGC). is named n a UnitedNations report as an entity that

smuggledarms o

militia

groups.

The

CPIC discovered

vidence ndicating

the

network

received diamondsas

payment

or thesearms

shipments.

Recentdevelopments

n the investigation

nclude the discovery of

a -based

procurement

agent

nvolved in this network,

who appears o

represent he

procurement

rm of

is likely involved n

procuring

sensitive

electronics

rom

U.S. electronics

irms with a suspected

ltimate destination f

Iran.

also appears

o be

involved with an

Iranian electronics

irm that, according o open-source

nformation, services

ran's

IRGC and the

Ministry of

Intelligence and Security.

A review of electronic

correspondence

rom

email account

ndicatesan association

ith

an

Iranian

citizento whom

he

passed

nformation regarding explosive

components.

an

employee

of

and a

network associate,was

recently arrested

n

for

allegedly

eading assassination nd

terrorist operations

n

, and the

country of

a.

email accountalso

ndicates e

procured

he same

size and ype of ball

bearings

ound n improvisedexplosive

devices ocated

n

apadment.

4.

(U//FOUO)

Identifu the

procedural

or information

gaps

in

the EB-5

visa

program

and other

similar

programs

and any

recommended

mitigating steps

o address

hese

isks.

ICE recommends

USCIS also be

consulted

or this information.

ICE

provides

he following

suggestions.

Through

its

participation

on

the inter-agency

working

group,

HSI Identity

and Benefit

Fraud Unit

(IBFU)

and other affected

agencies

dentified seven

main areas

of

program

vulnerability

with

the EB-5 visa.

These

program

vulnerabilities

are

as ollows:

U.S.

mmigration

and Custoirs

Enforcement

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HousreNo

SrcuRtry NvsstrcRTroNS

I

nvestgativP ogr m

1.

Export of SensitiveTechnology Economic

Espionage

2.

Use by

Foreign

GovernmentAgents Espionage

3. Use by

Terrorists

4. InvestmentFraudby Regional

Center

5. InvestmentFraudby Investors

6. Fraud Conspiracies

y

Investors

and

Regional

Center

7.

Illicit Finance

Money

Laundering

VSP only screenedEB-5 immigrant

visa applicantswho were referred or an SAO relating

to

counter-proliferation

r export control. n2012, VSP

provided

guidance

o all

HSI

Visa Security

Units to include the EB-5 immigrant

visa category n their targeting

profiles (beyond

only

counter-

proliferation

or export controls).

The aforementionedvulnerabilities

are directly affected by information

gaps

on the alien

beneficiaries f the EB-5

program.

Unlike most

other

permanent

esident

isa classifications, B-5

beneficiariesdo not need o establisha significantand verifiable background or program eligibility.

For

example,

permanent

esident classifications or employment require

proof

of

education

andlor

experience, hile family-based

isas

equire

positively

demonstrating ona-fide elationships.

Theseclassifications

provide

greater

nformation

that can be researched, etted, or cross-checked

than

that required

of an

EB-5

applicant. Conversely, he

primary

requirement or EB-5

eligibility

is

a

lawful

sourceof investment ncome. However,

verifying the legitimacyof

investment

ncome

sourcess difficult. Therefore,

he

primary qualiffing

criteria or EB-5 beneficiariess both imited

in scope

and hard to confirm.

In

addition o the information

gap

on EB-5 beneficiaries,

hereare

procedural

ssues

associated

ith

the approval and

operation of

RCs

that

lead

to vulnerability.

The

HSI

review has

uncoveredserious

concerns

about he credibility of the RC

platform.

The nature of indirect

ob

growth

is

problematic,

and basedalmost solely on a RC's

ob

creationmethodology

as described

n applications o USCIS.

HSI conducted esearch

sing

ob

creationstatistics sedby large corporations nd he U.S.

government

stimulus

package,

and has reason

o believe that

the RCs are

greatly

exaggerating heir

indirect

and

nduced

ob

creation

igures.

By not having o

provide

evidenceofjobs directly

created, he RC inherently createsan opportunity for fraud, where the business

goal

can be initiating

projects

hat

give

the

appearance f creating

ob

growth,

with the sole

ntent to meet

USCIS criteria

rather

han

produce

obs.

Basedon the concerns utlined above,HSI madeseveral uggestionsor both

legislative ixes

and

informationcollection ixes to close oopholes n theEB-5

program.

The

principal

change

proposed

by HSI was hat the RegionalCenterModel be allowed o sunset, s

HSI maintains here

are

no

safeguardshat

can

be

put

in

place

that 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

$1,000,000

or TargetedEmploymentAreas,as he

minimum investmentamounts

had not

changedsince he

inception

of the

RC

Model

in 1992. Raising the required nvestment

amount would make fraud more inconvenient and

provide

a

more legitimate basis o meet the

ob

creation

goals

of the

program.

U.S-

mmigration

and Customs

Enforcement

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ENSITIVE,


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Hovru-aNo

StcuRrry

xvrsrrcRTroNs

Inv

stigat

veP

o

grams

U.S.

mmigration

and

Custoirs

Enforcement

Additionally,

the EB-5 program

should

be

open

only

to

active

nvestors

nvolved

n

managing

and

directing

a

business

nterprise,

nd

not

to

passive

artners,

which

would provide

a heighteneJ

degree

of

certainty

regarding

he intentions

of

the

ilien

applicant.

Passive

nvestors

are

too

far

removed

rom

these

projects

o

have

any verifiable

connections

r

ties.

Finally,

induced

obs

should

not

be used

as

a measurement

fjob

creation;

only

direct

obs,

and

indirectjobs

created

rom

suppliers,

artner

entities,

and

direct

support

could

be

considered.

Further,

ndirect

obs

must

be

verifiable

n

the

targeted

geographic

rea.

Induced

obs

based

on

increase

n

economic

activity

should

not

be

used

owardt

G requirement

f

creating

0

jobs.

Jobs

created

irectly

are

easier

o verify

and

substantiate,

oth

by the

RC

and

USCIS.

On

September

28,

2012,

President

Obama

signed

a three year

reauth

orizationof

the

EB-5

RC

Program.

The

RC

Model

was

renewed

without

any

changes.

In

addition

o

the

proposed

egislative

edits,

HSI

proposed

makingchangeso theUSCIS forms (I-526,I-829,1-924

andl-924A)

that

are

used

by RC,sind

alien

nvestors.

HSI

felt

that

he forms

did

not

collect

enough

nformation

o

determine

he

validity

of

either

he

RC's,

the

alien nvestors

or the

source

of

the

investor's

unds.

HSI

submitted

o USCIS

a

series

of recommended

uestions

o

be

included

on

the

aforementioned

orms,

as

well

as

additional

recommended

security

checks,

o help

address

he

sevenprogram

vulnerabilities

that

were

identified.

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ENFORCEMENT

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eb-5 ice memo & grassley letter

Documents