Citizenship for Sale
A visa program that lets foreigners invest their way into permanent residency is getting a new lease on life, thanks to the recession and tight credit.
Samuel Sutton’s Lake Buena Vista Regional Center developed Buena Vista Resort in Orlando. The federal government favors investors who work through regional centers in approving permanent residency. [Photo: Brook Pifer]
Only one of the Florida centers has an actual development project under way, but the centers will be important magnets for foreign capital, says Steven Parnell, a Boca Raton-based relocation and immigration consultant who helps steer foreigners through the EB-5 process and connects them with investment opportunities. Foreigners can invest in any legitimate U.S. commercial enterprise to satisfy EB-5 requirements, he explains, but most prefer to channel their money through a regional center because the federal government, in approving permanent residency, seems to favor investors who work through regional centers.
|Top 10 EB-5 States (1992-2004)|
|State||Estimated Projects||% of Total|
|Source: Government Accountability Office; August 2005 report “Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors”|
Among the four Florida groups with regional center designations is Palm Beach Investments and Finance, a company headed by Al Zucaro, an immigration attorney in Palm Beach County, and Louis Haddad, a former employee of West Palm Beach and the current president of the World Trade Center Palm Beach. The two are spearheading an effort to raise money for a number of projects in southeast Florida via the EB-5 program, including the creation of an inland port and cargo warehousing and distribution center in southwest Palm Beach County [“EB-5 Regional Centers in Florida”].
For that project, Zucaro and Haddad plan to create a partnership of foreign investors — while cutting themselves in as general partners. That pool of money could help leverage additional money raised domestically: With $10 million from foreign investors, theoretically, Palm Beach Investment and Finance could raise another $10 million in domestic matching funds. By working through a bank, partners can leverage that combined $20 million as much as five times, creating an overall investment pool of $100 million.
“Money is tight and now, all of a sudden, there is this path to money that was available but not really commonly recognized throughout the United States,” says Zucaro.
Historically, around 83% of EB-5 immigrant investors have come from Asian countries such as Taiwan, South Korea and China. Zucaro and Haddad are focused on attracting investors from Latin America, Europe, Southeast Asia and to some extent, the Middle East. Says Haddad: “There’s a lot of keen interest in those investors who desire green card status who are living in countries where it’s difficult for them to acquire entry into the U.S. This route makes it easier.”
Whether the four Florida groups succeed may depend on whether the EB-5 program overcomes some of the obstacles that have plagued it since its inception.
Some politicians and bureaucrats have never liked the program, believing it amounts to selling the national birthright. Larry Behar, a Fort Lauderdale-based immigration attorney who is working as an adviser on one Florida-based EB-5 project, the Lake Buena Vista Regional Center, says the program fell “flat on its face” after it was introduced in 1991 because the “attitude of government reviewers and officials is that they were not prepared to allow foreign investors to buy their way into the United States.”
The program also has been marked by scandal. In 2000, a Baltimore Sun series chronicled how former Immigration and Naturalization Service officials and their associates cashed in as EB-5 visa brokers, using insider access to get preferential treatment of their clients’ EB-5 applications and generating hefty fees for themselves. In 2001, two Virginia men were convicted of a raft of crimes in connection with their operation of an EB-5 investment business called Interbank. James A. Geisler and James F. O’Connor collected approximately $21 million from some 300 investors who were told they would receive legal green cards. Instead, the money was shuffled through offshore bank accounts and siphoned off by Geisler and O’Connor for their personal use.