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Vermont newspaper takes close look at EB-5 program, finds some reason for concern

A long and interesting article from Seven Days Vermont about EB-5 investment, headlined Seeing Green: Vermont's EB-5 program trades cash for visas — fair deal or shady business?, analyzes the program in the state where it probably has the largest impact.

While the article probably leaves an overall positive impression of the program, it breaks some news, describing one apparent scam and explaining how those benefiting from EB-5 reward those who support it.

And it doesn't quite grapple with the question of opportunity cost: if we are going to "sell" visas, are we really getting our money's worth?

Reasons for skepticism

The article notes articles from Bloomberg BusinessWeek and the New York Times that have questioned the EB-5 hype and gerrymandering, and also quotes me on the big picture:
According to freelance journalist Norman Oder, who writes a watchdog blog about the Atlantic Yards EB-5 project in Brooklyn, “There’s almost no one looking out for the public interest, to ensure that not only the letter but the spirit of the law is being met in terms of creating jobs.”

Though USCIS reviews job-creation figures provided by investors, critics say the industry is protected by a coterie of lawyers, brokers and economists who go to bat for a program that generates seemingly limitless foreign cash for anyone involved in the business.

“This is completely unregulated. USCIS is doing very little in the way of monitoring,” charges [Michael] Gibson, the financial adviser. “So far as we know, there is no concerted effort by any federal agencies to monitor the securities activity of the practitioners in the EB-5 field.”
Also see a very spirited back and forth regarding in the comments on Gibson's EB5info blog regarding the largest--and recently controversial--Vermont project, Jay Peak.

Apparent scam uncovered

The article states:
Contrary to the EB-5 program’s mission, one firm “certified” by Vermont and featured on the state’s website appears to be a front company for a Canadian immigration firm in the business of selling visas.
On job creation

The article states:
Despite the government’s role in securing investors by providing them visas, neither those analyses nor any other reports about the projects are available to the public. That means “job creation can be claimed via an economist’s report, not a head count,” says Oder, the Atlantic Yards watchdog.

But Jeff Carr, a state economist who has established one of the nation’s leading EB-5 economic consultancies, says USCIS is plenty rigorous.

“A lot of projects nowadays trying to get approved have to be much better prepared and much more thoroughly thought through than five or 10 years ago,” he says. “My belief is the USCIS is trying hard to improve the standards of the program.”
Well, until we see more transparency, his "belief" shouldn't be definitive.

The politics

The article states that several beneficiaries of EB-5 funding "have all given handsomely to the campaigns of Vermont politicians who support EB-5." Not a surprise, especially in such a small state.