by A report released earlier this month by the Office of the Inspector General (OIG) analyzed the United States Citizenship and Immigration Services’ (USCIS) administration of the EB-5 Regional Center program. The report was largely negative, and criticized the integrity of the agency in its administration of the program, stating,
“USCIS does not always ensure that regional centers meet all program eligibility requirements…officials interpret and apply the Code of Federal Regulations (CFR) and policies differently… the EB-5 regional center program to appear[s] vulnerable to perceptions of internal and external influences…USCIS is limited in its ability to prevent fraud or national security threats that could harm the U.S.; and it cannot demonstrate that the program is improving the U.S. economy and creating jobs for U.S. citizens.”
In an effort to mitigate what it perceives as shortcomings in USCIS’s administration of the EB-5 Regional Center program, OIG offered four recommendations:
(1) Update and clarify the federal regulations to —
- Provide U.S. Citizenship and Immigration Services with the authority to deny or terminate EB-5 regional center participants at any phase of the process when identifying known connections to national security and/or fraud risks without compromising any ongoing or potential investigation;
- Make explicit that fraud and national security concerns can constitute cause for revocation of regional center status under 8 CFR § 205.2;
- Give U.S. Citizenship and Immigration Services the authority to verify that the foreign funds were invested in companies creating U.S. jobs; and
- Ensure requirements for the EB-5 regional center program are applied consistently to all participants
(2) Develop memoranda of understanding with the Departments of Commerce and Labor and the Securities and Exchange Commission to provide expertise and involvement in the adjudication of applications and petitions for the EB-5 Regional Center program.
(3) Conduct comprehensive reviews to determine how EB-5 funds have actually stimulated growth in the U.S. economy in accordance with the intent of the program. If necessary, employ other specialists or work with other federal agencies to assist and confirm the results.
(4) Establish quality assurance steps to promote program integrity and ensure that regional centers comply with the Code of Federal Regulations requirements.
USCIS agreed to implement three of the four recommendations put forth by OIG. Specifically:
- In response to (1): USCIS will update its regulations with respect to the clarity of eligibility requirements for regional centers specifically, they “will more clearly delineate the evidentiary requirements applicable to stand-alone EB-5 petitions versus regional center-based applications and petitions.”
- In response to (2): “Within six months of the report, USCIS will develop and implement an interagency collaboration plan outlining liaison and collaboration roles and responsibilities among key federal partners. This will include collaboration with the Department of Commerce and the Securities and Exchange Commission.”
- In response to (3): USCIS disagrees with this recommendation. They hold that an evaluation of the broader impact of the EB-5 Regional Center program on the U.S. economy does not fall within the scope of their responsibilities. Their responsibilities are limited to adjudicating EB-5 cases with respect to the statutory job creation requirements
- In response to (4): USCIS concurred with the recommendation. Within six months, USCIS will establish quality assurance steps to promote program integrity and ensure regulatory compliance.
In addition to these responses to OIG’s recommendations, in a letter to Deputy Inspector General Charles Edwards, USCIS outlined the report’s failure to recognize operational and policy changes it implemented towards the end of the period in which the report was conducted:
- USCIS announced its plans to realign the EB-5 program into a new office in December 2012, to be staffed with the expertise needed to effectively manage the program in-house. In May 2013, USCIS stood up the new program office – the Immigrant Investor Program Office – in Headquarters
- On May 30, 2013, USCIS issued a comprehensive policy memorandum for the first time in the program’s history
- USCIS has fortified the program with advanced expertise
- USCIS is in close consultation with other enforcement and intelligence agencies and has bolstered fraud and national security safeguards in the program
It seems clear that the some of the recommendations put forth by OIG, and the overall negative tone of its report are unfounded. Before the report was even concluded, USCIS made deliberate policy changes to uphold the integrity of its administration of the EB-5 Regional Center program, and it expanded the scope of its expertise by working in consultation with other agencies and staffing experts in-house. It should be said though, that USCIS’s response to OIG’s recommendations, however ill-informed, will have a positive effect on the agency’s administration of the EB-5 Regional Center program, and will help to increase the program’s integrity past what has been done already.
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