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24–970 2017

THE DEPARTMENT OF HOMELAND SECURITY’S 

PROPOSED REGULATIONS REFORMING THE 

INVESTOR VISA PROGRAM 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

MARCH 8, 2017 

Serial No. 115–4 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

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(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAUL LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DESANTIS, Florida 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

MARTHA ROBY, Alabama 

MATT GAETZ, Florida 

MIKE JOHNSON, Louisiana 

ANDY BIGGS, Arizona 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia 

THEODORE E. DEUTCH, Florida 

LUIS V. GUTIE ́ RREZ, Illinois 

KAREN BASS, California 

CEDRIC L. RICHMOND, Louisiana 

HAKEEM S. JEFFRIES, New York 

DAVID CICILLINE, Rhode Island 

ERIC SWALWELL, California 

TED LIEU, California 

JAMIE RASKIN, Maryland 

PRAMILA JAYAPAL, Washington 

BRAD SCHNEIDER, Illinois 

SHELLEY HUSBAND, Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

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C O N T E N T S 

MARCH 8, 2017 

OPENING STATEMENTS 

Page 

The Honorable Bob Goodlatte, Virginia, Chairman, Committee on the Judiciary ......................................................................................................................... 5 

The Honorable John Conyers, Jr., Michigan, Ranking Member, Committee 

on the Judiciary ................................................................................................... 7 

The Honorable F. James Sensenbrenner, Wisconsin, Chairman, Subcommittee 

on Immigration and Border Security, Committee on the Judiciary ................ 8 

The Honorable Zoe Lofgren, California, Ranking Member, Subcommittee on 

Immigration and Border Security, Committee on the Judiciary ...................... 9 

WITNESSES 

The Honorable Chuck Grassley, Iowa, United States Senate 

Oral Statement ..................................................................................................... 2 

The Honorable Patrick J. Leahy, Vermont, United States Senate 

Oral Statement ..................................................................................................... 3 

Rebecca Gambler, Director, Homeland Security and Justice Team, U.S. Government Accountability Office 

Oral Statement ..................................................................................................... 13 

Sam Walls III, Managing Director, Pine State Regional Center 

Oral Statement ..................................................................................................... 14 

Angelique Brunner, Founder and President, EB5 Capital 

Oral Statement ..................................................................................................... 16 

Dekonti Mends-Cole, Director of Policy, Center for Community Progress 

Oral Statement ..................................................................................................... 18 

David North, Fellow, Center for Immigration Studies 

Oral Statement ..................................................................................................... 20 

OFFICIAL HEARING RECORD 

MATERIAL SUBMITTED FOR THE RECORD

Statement submitted by the Honorable Sheila Jackson Lee, Texas, Committee on 

the Judiciary. This material is available at the Committee and can be accessed 

on the committee repository at: 

http://docs.house.gov/meetings/JU/JU00/20170308/105660/HHRG-115- 

JU00-20170308-SD002.pdf. 

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THE DEPARTMENT OF HOMELAND SECURITY’S PROPOSED REGULATIONS REFORMING 

THE INVESTOR VISA PROGRAM 

WEDNESDAY, MARCH 8, 2017 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The committee met, pursuant to call, at 10:10 a.m., in Room 

2141, Rayburn House Office Building, Hon. Bob Goodlatte (chairman of the committee) presiding. 

Present: Representatives Goodlatte, Sensenbrenner, Chabot, Issa, 

King, Gohmert, Jordan, Poe, Marino, Gowdy, Labrador, Buck, 

Gaetz, Johnson of Louisiana, Biggs, Conyers, Nadler, Lofgren, 

Jackson Lee, Deutch, Cicilline, Lieu, Jayapal, and Schneider. 

Staff Present: Shelley Husband, Staff Director; Branden Ritchie, 

Deputy Staff Director; Zach Somers, Parliamentarian and General 

Counsel; George Fishman, Counsel, Subcommittee on Immigration 

and Border Security; Danielle Brown, Minority Parliamentarian 

and Chief Legislative Counsel; David Shahoulian, Minority Chief 

Counsel, Subcommittee on Immigration and Border Security; 

Veronica Eligan, Minority Professional Staff Member; and Joseph 

Ehrenkrantz, Minority Legislative Aide. 

Chairman GOODLATTE. We welcome everyone to this morning’s 

hearing on ‘‘The Department of Homeland Security’s Proposed Regulations Reforming the Investor Visa Program.’’ 

We will begin today by recognizing our first panel of witnesses 

for their statements. After they have concluded, I will recognize 

myself and the ranking member for our opening statements. 

The Honorable Chuck Grassley is a United States Senator from 

Iowa, where he has been a leader in shaping legislation to expand 

the economic opportunities for individuals, families, and communities. Senator Grassley serves as chairman of the Senate Committee on the Judiciary. He also serves as a senior member of the 

Senate Committee on the Budget and on the Senate Committee on 

Agriculture. Senator Grassley was previously chairman of the Committee on Finance. 

The Honorable Patrick Leahy is ranked first in seniority in the 

United States Senate. Senator Leahy is the vice chair of the Senate 

Appropriations Committee. He is the senior-most member of the 

Senate Judiciary Committee and of the Senate Agriculture Committee. Senator Leahy is the ranking member of the Appropriations 

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Subcommittee on State Department, Foreign Operations, and Related Programs. 

I would ask each witness to summarize his or her testimony in 

5 minutes or less. To help you stay within that time, there is timing light on your table. When the light switches from green to yellow—well, you guys know how this works, even though you are in 

the Senate. 

We welcome both of you. We welcome both of you, and we will 

begin by recognizing Chairman Grassley. Welcome. 

STATEMENT OF THE HON. CHUCK GRASSLEY, A UNITED 

STATES SENATOR FROM THE STATE OF IOWA 

Senator GRASSLEY. Chairman Goodlatte, Ranking Member Conyers, and all the members of this very good committee, thank you 

very much for inviting me to testify about the EB–5 investor visa 

program. Senator Leahy and I have longstanding concerns with the 

regional center program. We have worked together for years to address this program’s rampant waste, fraud, and abuse. 

In 1990, Congress created the EB–5 program. The goal was to 

create new employment opportunities for American workers. A 

mere 2 years later, Congress established a pilot program which allowed investors to pool their investments in regional centers. The 

theory was simple: by allocating investors to pool their funds, 

greater investment would occur, and jobs for American workers 

would flourish. 

Twenty-five years later, this pilot program still exists, but it is 

deeply flawed and has strayed very much from its original intent. 

There are many problems with the regional center program, but let 

me mention just a few of the worst. 

Jobs created are not direct and verifiable jobs. They, instead, are 

indirect and based on vague estimates and economic modeling. A 

foreign national is allowed to count all jobs created by a project 

when obtaining their green card. This is even if EB–5 money is 

only a mere fraction of total investment. Investment funds are not 

adequately vetted, and there are no prohibitions against foreign 

governments owning or operating regional centers. Even more concerning, background checks aren’t required for anyone associated 

with regional centers. This raises serious questions about whether 

foreign governments are selling U.S. green cards to their citizens. 

Regional centers gerrymander targeted employment areas and the 

boundaries therein to encompass economically distressed areas in 

order to come in at a lower investment level. 

This is an issue because the jobs created aren’t actually created 

in those areas, and the projects aren’t actually in those areas. The 

problem is made worse by the fact that every targeted employment 

area designation is just simply rubber stamped. 

Finally, and perhaps the most frustrating, the minimum investment level hasn’t been raised in 25 years. I could keep going on 

about many abuses. With this in mind, I believe that either the regional center program should be completely overhauled and reformed, or it should expire. The American people deserve better 

than what we are getting out of this program. 

Senator Leahy and I have tried to work in a bicameral and bipartisan way to enact real EB reforms. Last year, the Senate Judimstockstill on DSK30JT082PROD with HEARING

3 

ciary Committee held two hearings alone on this subject, and this 

committee we are before now held another. We heard from local 

leaders and associations representing workers in regional centers. 

We listened to the academics and government officials. We received 

feedback from many industries as well as immigration and security 

attorneys. After painstaking negotiations and concessions by almost every stakeholder, some of us more than others, we reached 

consensus and would reauthorize that program for 6 years. Unfortunately, this wasn’t acceptable to all parties. Instead of addressing 

the program’s waste, fraud, and abuse, Congress merely reauthorized, as you know. 

Nothing better supports the need for serious reform than the 

work that Chairman Chaffetz and I have done to draw attention 

to the program’s very real national concerns. We have sent several 

letters and conducted transcribed interviews with key players of an 

interagency working group to assess just how rampant fraud and 

abuse are in the program. 

This working group made several recommendations, the most 

compelling of which was to sunset the regional center model due 

to crippling fraud, national security vulnerabilities. 

I also want to take a moment to address the reforms proposed 

by the Obama administration. Earlier this year, former Homeland 

Security Secretary Johnson published proposed rule changes to the 

regional center, the program, that would stop gerrymandering and 

increase investment levels. I strongly support these changes. They 

are a vital first step—but just a first step—to returning the program to its original intent, creating new employment for American 

workers and infusing capital into the distressed rural areas. 

When I met Secretary Kelly before his confirmation, I emphasized the importance of those rules, and he seemed favorable to 

them. I want to continue working with my colleagues of both 

Chambers and both parties to reform the program. I look forward 

especially to working with you, Chairman Goodlatte and Ranking 

Member Conyers, and hopefully the Trump administration in the 

coming months on legislation that is serious and substantial. 

Thank you for receiving my testimony. 

[Senator Grassley’s written statement is available at the Committee or on the committee repository at: http://docs.house.gov/ 

meetings/JU/JU00/20170308/105660/HHRG-115-JU00-WstateGrassleyC-20170308.pdf] 

Chairman GOODLATTE. Thank you, Senator Grassley. Senator 

Leahy, welcome. 

STATEMENT OF THE HON. PATRICK J. LEAHY, A UNITED 

STATES SENATOR FROM THE STATE OF VERMONT 

Senator LEAHY. Thank you, Mr. Chairman and Ranking Member 

Conyers. I appreciate being here with my good friend Chairman 

Grassley. 

You know, the last several years, as Senator Grassley said, we 

worked together across the aisle. We got to work across the Capitol, as you know, to try to bring overdue reforms to the EB–5 regional center program. The EB–5 program that I once championed 

seems like a distant memory. That program was designed to bring 

jobs to underserved rural and urban communities. And for some 

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time, it did just that, but the program has strayed from these 

goals, and it is a magnet for fraud. Security violations are common, 

and the incentives that Congress created to promote investment in 

distressed areas have become obsolete due to economic gerrymandering. Only 3 percent of EB–5 investors now invest in rural 

areas, 3 percent. I am representing a State that has a lot of rural 

areas. I note that number. 

Less than 10 percent invest in true high-unemployment areas. 

Almost every EB–5 project uses gerrymandering to qualify as distressed. I will give you an example: a luxury hotel in Beverly Hills 

uses gerrymandering to claim it is located in a distressed community, one of the wealthiest communities in America. But the fact 

that this type of abuse represents almost 90 percent of the entire 

EB–5 program is appalling. I am told a number of these luxury developments would be pursued whether they had EB–5 financing or 

not. So it casts real doubt on whether this is creating any jobs at 

all. 

In my home State of Vermont, EB–5 has been used in areas it 

would not otherwise have been able to attract significant investment. But even in Vermont, experience has clearly shown the need 

for the reforms and the transparency—transparency, which is so 

important—that we are trying to achieve. 

In our State, the news organization Vermont Digger has dug 

deeply, if you will excuse the pun, to reveal the need for broad reforms. Yet, for some developers, any change to the status quo is a 

threat to their bottom line. And, unfortunately, some in our leadership have allowed a couple of powerful developers who exploit this 

program’s flaws to derail critical reform. That is unacceptable. The 

worst abusers of a government program should not be given veto 

power over its reform. 

Now, the Department of Homeland Security’s proposed rules represent a significant step forward. I agree with Senator Grassley. 

When we asked then Secretary Jeh Johnson over a year ago to do 

all he could do to improve the EB–5 program, he worked at that, 

and I commend him for that. By increasing investment amounts, 

reining in abusive gerrymandering practices, these changes will 

end some of the most egregious abuses. Investors will be afforded 

greater flexibility when circumstances changed through no fault of 

their own, which is going to bring additional fairness to the program. But the Trump administration is going to have to make sure 

these are implemented and improved. 

And, Chairman Goodlatte and my friend Chairman Grassley, I 

thank you for shining a spotlight on this issue. You can’t let these 

proposed rules be diluted or discarded, because this thing will just 

spin out of control. I still believe, as did Secretary Johnson, the 

EB–5’s many problems ultimately demand a legislative solution. I 

think we need that. I remain committed to doing more to protect 

investors to root out fraud within the program, increasing fraud investigations, requiring additional oversight. 

Chairman Grassley and I will soon reintroduce our legislation 

that would do just that. It is my hope that serious reforms proposed in new rules would lead to these broader improvements. But 

I look forward to working with all of you on this committee as well 

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as on ours to make sure the EB–5 program, again, serves the rural 

and poor urban communities that Congress intended. 

Thank you very much. 

[Senator Leahy’s written statement is available at the Committee 

or on the committee repository at: http://docs.house.gov/meetings/ 

JU/JU00/20170308/105660/HHRG-115-JU00-Wstate-LeahyP20170308.pdf] 

Chairman GOODLATTE. Thank you, Senator Leahy. 

I want to thank both of you for your insights into this program 

and these important regulatory reforms. And as is our custom, we 

will not have a round of questioning for you. And I know you have 

other matters to attend to. So thank you very much, and we will 

at this time excuse both of you. 

Senator LEAHY. Thank you. Good to see you. 

Chairman GOODLATTE. I will now recognize myself for an opening statement. 

In 1990, Congress created the investment visa program in order 

to bring entrepreneurial talent to the United States, create new 

jobs, and infuse new capital into our economy, especially in hardhit rural and depressed areas. Unfortunately, over the years, the 

program has strayed further and further from Congress’ intent and 

has seen its reputation repeatedly tarnished by scandal. 

For the past year and a half, I have worked collaboratively with 

Ranking Member Conyers, Representative Issa, and Senators 

Grassley and Leahy to reform the program and set it on a solid 

foundation. 

Currently, aliens must invest $1 million unless they invest in 

projects in rural or high-unemployment areas, in which case they 

can invest half of this amount. These levels have remained untouched since 1990, a quarter century ago, never adjusted for inflation or any other factor. As a result, the real value of each investment has fallen by half. Almost all visas now go to aliens investing 

at the lower level, meant for rural and poor areas, even when the 

resulting projects are built in prosperous areas. Regional centers 

have discovered that they can duct tape together ritzy, high-rent 

districts with distant depressed zones in order that the combined 

area magically meets the high-unemployment test. The Government Accountability Office found that 12 percent of projects qualifying as high-unemployment TEAs, in fact, taped together over 100 

disparate census tracts. The GAO also found that more than threequarters of projects in supposedly high-unemployment areas are actually physically located in places with unemployment rates from 

zero to 6 percent. 

This gerrymandering takes place to access cheap capital. Aliens 

don’t care about their rate of return as much as they do procuring 

green cards. Real estate experts at New York University have concluded that, quote: ‘‘Projects in even the most affluent areas are 

able to routinely qualify for the discounted investment. This gerrymandering renders the two-level investment threshold meaningless, and foreign investors flock to invest in luxury projects,’’ end 

quote. 

For example, here is Hudson Yards, a Manhattan mega development that purchased a 4-page spread in the 800-page September 

issue of Vogue. Based on Vogue’s rack rate, the ad cost Hudson 

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Yards about $800,000. It boasts that Hudson Yards will include 

some of the tallest and grandest towers in the city. Inside, soaring 

ceilings, walls of glass, and ingenious details reflect the highest 

standards in the residential market. Boasting a collection of restaurants curated by world-renowned chef Thomas Keller, Hudson 

Yards is poised to become the city’s most unique and exciting dining destination. A unique combination of luxury retailers and independent boutiques is being curated. You can rejuvenate in the innovative luxury spa, and on and on. 

At the Yard’s first condominium project, condos will start at around $1.9 million for 843 square feet and rise to $32 million for 

the two penthouses. Perhaps in recognition of the huge success of 

HGTV’s show, Tiny Houses, the real deal, a New York real estate 

journal states that 200 of the total 285 market-rate condos are 

priced at 7 million—at below $7 million. The move is reflective of 

a general drift in the market toward smaller homes at less ostentatious prices. Things must be tough all over. 

Of course, Hudson Yards is marketing investor visas for $500,000. 

Projects in affluent areas will always be able to compete for foreign investors. Even if aliens have to invest more, they prefer the 

lower risk of the investments and their prestigious ZIP Codes. 

However, if Congress is going to be granting a path to citizenship, 

we have every right to ensure that a healthy percentage of investments be in rural and depressed areas, as Congress originally intended. 

I have been one of the most vocal opponents of the Obama administration’s executive overreach. However, for the past quarter 

century, both Democratic and Republican administrations have engaged in executive underreach when it comes to the investor visa 

program. Congress gave the administration explicit statutory authority to raise the minimum investment amounts. Congress gave 

the administration the power to determine for itself which areas 

qualify as depressed rather than simply delegating away this authority. And, yet, no administration acted until January. 

In one of his last acts, Secretary of Homeland Security Jeh Johnson commendably issued proposed regulations that deliver long 

overdue reform. The regulations proposed to raise the minimum investment amount to $1.8 million. While this is higher than what 

I was willing to accept last year, in the spirit of compromise, it is 

eminently justifiable, merely accounting for inflation over the past 

quarter century and far lower than the investment amount required by our international competitors. The regulations would also 

raise the minimum investment amount for rural and high-unemployment areas to $1.35 million and effectively end gerrymandering 

by defining a high-unemployment area as the census tract or tracts 

in which a project is principally doing business and, at the discretion of the regional center, any or all census tracts directly adjacent 

to the project tract, a concept I proposed 2 years ago. These regulations deserve to be issued in final form, and I urge the Trump administration to do so. They will enable the investor visa program 

to become a turbo-charged engine for economic growth. If, however, 

the regulations are not finalized and the program remains in disrepair, I am not sure that it deserves to continue. 

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I look forward to hearing from today’s further witnesses. And I 

am now pleased to recognize the ranking member, the gentleman 

from Michigan, Mr. Conyers, for his opening statement. 

Mr. CONYERS. Thank you, Chairman Goodlatte, for what I agree 

is a very comprehensive statement. 

Members of the committee, last Congress, I had the honor of 

working with Chairman Grassley and Senator Leahy in an effort 

to reform the EB–5 investor visa program. While the proposed Department of Homeland Security regulations would go a long way toward addressing many of our longstanding and serious concerns 

with the program, there is no substitute to a meaningful legislative 

solution. 

I remain confident that we can accomplish these important legislative reforms this Congress, and I look forward to working with 

you on this, Chairman Goodlatte. 

I have taken a particular interest in the EB–5 investor visa program because I believe it has drifted far from the program initially 

envisioned by Congress. As a result, the communities that need investment the most, specifically rural and distressed urban areas, 

struggle to benefit from the program and are unfairly placed in direct competition with the developed, affluent areas. We have already heard some examples of that. 

When Congress established the EB–5 investor visa program in 

1990, the intention was to create jobs for American citizens and to 

bring new investment capital to the United States. To help encourage investment in job creation in rural or high-unemployment 

areas, the EB–5 program offered a reduced investment level of 

$500,000 for projects in designated target employment areas. 

However, as reported by the GAO, academics, Wall Street Journal, and other news sources, the vast majority of the EB–5 investment funds are going to projects in some of America’s wealthiest 

corridors. They qualify as TEAs, or economically distressed, only by 

aggregating census tracts across many miles, sometimes across 

State lines, and often across natural boundaries, such as rivers. 

I call it economic gerrymandering. This practice has been criticized by the Leadership Conference on Civil Rights, noting that the 

EB–5 regional center program has dramatically deviated from its 

original purpose to spur job creation and development in rural and 

high-unemployment areas. 

Steering investments to projects in our cities’ well-to-do neighborhoods comes at the expense of EB–5 funds for urban and rural 

communities. According to the Center for American Progress, the 

congressional district that I represent, for instance, I am sorry to 

say, is the second most impoverished district in the United States. 

I am pleased to say that, under the Obama administration, our economic environment began to improve. It is slow, and we have a 

long way to go, but for those Americans living in my city of Detroit 

and in many other cities across the country, manipulation of targeted employment areas has diverted a potential source of jobs and 

neighborhood improvement away from those that it was originally 

intended to help. 

The Department of Homeland Security’s proposed rules make a 

number of important reforms. First, the rules would raise the higher investment level to adjust for inflation from $1 million to $1.8 

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million and would raise the lower investment amount from 

$500,000 to $1.35 million. 

Secondly, the rules would reduce the difference between the statutory and targeted employment area investment levels and would 

allow for conforming adjustments based on inflation beginning 5 

years from the effective date. 

And, lastly, the rules would significantly rein in manipulation of 

targeted employment areas. I am encouraged by this development 

from the Department of Homeland Security and consider the proposed rulemakings as movement in the right direction. But I must 

reiterate: to achieve the necessary reforms to the EB–5 program, 

there is no substitute to a meaningful legislative solution. And absent significant reform, either regulatory or legislative, I will not 

be able to support continued authorization of this program. 

And so, in closing, I want to thank the witnesses for their willingness to appear before our committee. I look forward to an open 

debate about the proposed regulations and the future of this valuable program, the EB–5 program. 

Thank you, Mr. Chairman. I yield back. 

Chairman GOODLATTE. Thank you, Mr. Conyers. 

It is now my pleasure to recognize the chairman of the Immigration and Border Security Subcommittee, the gentleman from Wisconsin, Mr. Sensenbrenner, for his opening statement. 

Mr. SENSENBRENNER. Thank you very much, Mr. Chairman. 

For anyone looking for CliffsNotes on today’s hearings, I can 

summarize it at the onset into two major points that you will hear 

over and over again. 

First, the EB–5 investor visa program brings sustained foreign 

investment and quality jobs to the U.S. And, second, the program 

is out of date and has been subject to waste, fraud and abuse. Any 

time you have a valuable government program that isn’t working 

as well as it should, it is time for reform. 

The days of last-minute extensions and continuing resolutions 

are over. Let me repeat that: no more extensions and CRs. It is 

time for all parties to come together to the table so that Congress 

can do the often dirty job of legislating. 

The immigrant investor program has made great contributions to 

our economy. We should not look at its problems today and dismiss 

it as a failure. Its value was recognized as far back as 1981 by the 

Select Commission on Immigration and Refugee Policy. The committee concluded that admitting investors into the United States is 

in the national interest and recommended the creation of a small 

numerically limited visa program for immigrants who would contribute a substantial amount of investment. 

Congress listened and created the EB–5 investor program. Customs and immigration service has reported that since—from its inception in 1990 through 2014, the EB–5 program has created at 

least 73,730 jobs and generated more than $11.2 billion in investment. We want that capital, and we need those jobs. 

But even if I don’t like to admit it, the world has changed since 

we created the program in 1990. The price of a stamp has doubled; 

so has the price of milk. The number of millionaires in the United 

States has more than tripled. And the minimum investment in the 

EB–5 program has not increased by even a nickel. 

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Other nations with investor visa programs require much larger 

investments. Australia’s investor program requires up to 11 million 

U.S. dollars. Canada’s program requires at least 1.5 million U.S. 

dollars, in addition to a required personal net worth of over 7 million or more U.S. dollars. And the United Kingdom’s investor program requires at least 2.5 million U.S. dollars and millions more 

for expedited citizenship. There are, of course, some countries that 

offer cut-rate prices for investment visas, but I for one believe that 

the value of U.S. citizenship is that higher than any other country 

in the world, and I think the cost of becoming a U.S. citizen should 

be fairly valued at way over $500,000. 

Demand supports my patriotism because we currently have a 7- 

to 8-year backlog for the roughly 10,000 investor green cards available each year. I am not an economist, but when demand is that 

high, it means that the price is too low. An increase in investment 

amounts would cause considerably more capital to flow into the 

United States. 

Making matters worse, not only are the required investment levels 25 years out of date, but the system has been abused to require 

even less capital than Congress intended. Congress intended the 

minimum investment for an EB–5 visa to be $1 million. We then 

specifically sought to incentivize investments in rural and depressed areas by carving out an exception. In so-called targeted 

employment areas, Congress lowered the minimum investment 

amount to $500,000. 

These incentives completely failed, however. The targeted boundaries were gerrymandered, and the million-dollar investment level 

was almost completely ignored. The exception swallowed the rule, 

and all EB–5 visas are now set at the $500,000 level, even though 

the majority of capital flows to affluent areas. 

Last year, the Department of Homeland Security attempted to 

address these and other concerns through its rulemaking process. 

I agree with the intent of DHS’ proposed regulations, but Congress, 

not the administration, is suited to weigh the policy considerations 

necessary to properly reform the investor visa program. 

I thank the chairman for holding this hearing, and I thank Senators Grassley and Leahy for crossing over to the wrong side of the 

tracks to testify here today. 

The four of us, along with Ranking Member Conyers and many 

other members of this committee, have worked to solve a lot of intractable problems over the years, and I look forward to working 

with you all to reform the EB–5 program. Thank you. 

Chairman GOODLATTE. Thank you, Mr. Sensenbrenner. 

The chair is now pleased to recognize the ranking member of the 

Immigration and Border Security Subcommittee, the gentlewoman 

from California, Ms. Lofgren, for her opening statement. 

Ms. LOFGREN. Thank you, Mr. Chairman. 

Created 27 years ago, this EB–5 program is an important investment and job-creation program. It got a slow start, but after the 

Great Recession in 2008, the program really picked up. When traditional bank lending dried up during the economic crisis, developers 

turned to the EB–5 program to keep funding projects, and the use 

of the program has really skyrocketed since then. 

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Now, I saw a 2017 report from the U.S. Department of Commerce that says in fiscal years 2012 and 2013 alone, the EB–5 program brought in $5.8 billion in capital financing to the United 

States and was expected to create more than 174,000 jobs. The 

benefits of this program are on display in the bay area, where I am 

from. The program has funded a new hotel in the revitalizing San 

Jose Airport corridor in the 19th Congressional District I represent 

as well as development in revitalizing Treasure Island. According 

to investors, these projects would not have happened without EB– 

5 financing. For example, the hotel in my district was the first one 

built near the airport in 20 years. And the Treasure Island project 

includes the island’s World’s Fair site, which is a California historical landmark and a former military base, which has required significant remediation and redevelopment. 

At the same time, there is growing recognition that the program 

is in need of modernization and reform. As has been mentioned by 

others, the minimum investment level of 1 million or 500,000 

hasn’t been updated since the program was created in 1990. And 

considering the high demand for the program demonstrated by the 

long and growing backlog of EB–5 petitions, it shows that the U.S. 

is leaving investment capital on the table by not increasing the investment level. 

The program has also come under consideration—criticism with 

respect to the provisions designed to ensure that EB–5 investments 

are shared among rural areas and distressed areas. As has been 

mentioned, my colleagues, the gerrymandering issue is of concern 

to many. Others worry, however, that excessive tightening of the 

current conditions would prevent funding of many projects that, although situated in relatively prosperous areas, nonetheless create 

jobs for workers in nearby distressed areas. 

And in the midst of the program’s exploding popularity, there is 

increasing concern about fraud within the program. We have seen 

reports concerning alleged investment scams, SEC civil violations, 

and even criminal indictments related to EB–5 projects. 

And I will say this, although there has been not yet full consensus on the investment amount and the so-called gerrymandering issue, I do think there is broad consensus on the antifraud provisions no matter what the opinion is on the investment 

amount. 

We do need to reform this program. And as we know, the Department of Homeland Security proposed some changes to reform the 

program, increasing the threshold amounts and reforming the targeted areas. Whether these proposed changes should be adopted in 

the final rule—of course, is what we are here to discuss today—or 

whether the rule should be replaced by legislation, I support increasing the investment threshold to ensure that we are maximizing foreign investments and creating the maximum number of 

U.S. jobs for workers. But we must also be careful to avoid changes 

that would reduce the overall investment and, thus, the number of 

jobs created by the program. 

I think we need to look at how we can incent additional development in depressed and rural areas. I do think that we have fallen 

short there although our intent was clear. But we need to be careful, as we move in that direction, not to impose restrictions that 

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11 

would effectively close off the EB–5 program in large swaths of the 

country. 

These are difficult issues that require careful balancing, and I 

look forward to hearing from the witnesses today on the right balance. 

I would note that, along with this hearing, EB–5 stakeholders 

are currently submitting comments on the proposed rule for consideration by DHS, which is exactly the way this system should work. 

By airing proposals and gathering feedback and other data, both 

the Congress and the Department can weigh competing priorities 

and hopefully reach the right balance for the good of the country. 

I would be remiss if I did not mention that, while this EB–5 

hearing is important and a subject deserving of review, I would 

hope that the committee might also find time to work on the topic 

of comprehensive immigration reform, something that our country 

desperately needs. 

And, with that, Mr. Chairman, I would yield back the balance of 

my time. 

Chairman GOODLATTE. The chair thanks the gentlewoman. 

And I would now invite our second panel members to come forward and take their seats at the witness table. 

Thank you. You might want to remain standing since the first 

thing I am going to do is swear you in. 

Welcome to all of you. If you would, please raise your right hand. 

Do you each of you solemnly swear that the testimony that you 

are about to give shall be the truth, the whole truth, and nothing 

but the truth so help you God? 

Thank you. 

Let the record reflect that all five witnesses answered in the affirmative. 

And you may be seated. Thank you. 

Ms. Rebecca Gambler is a Director in the U.S. Government Accountability Office’s Homeland Security and Justice Team, where 

she leads GAO’s work on border security, immigration, and elections issues. Ms. Gambler joined GAO in 2002 and has worked on 

a wide range of issues related to Homeland Security and Justice. 

Prior to joining the GAO, Ms. Gambler worked at the National Endowment for Democracy’s International Forum for Democratic 

Studies. Ms. Gambler has an M.A. in national security and strategic studies from the United States Naval War College, an M.A. 

in international relations from Syracuse University, and an M.A. in 

political science from the University of Toronto. She is a Fulbright 

fellow to Canada. Ms. Gambler has a B.A. in political science from 

Messiah College. 

Mr. Sam Walls is the president and chief operating officer of Arkansas Capital Corporation, having joined the company in 2003. 

ACC is a private, nonprofit, economic development company that 

provides capital to businesses starting or expanding in Arkansas. 

In 2012, State leaders approached ACC and asked ACC to consider creating an EB–5 regional center that would serve Arkansas. 

Consequently, Pine State Regional Center was born. PSRC was approved in 2014, and Mr. Walls serves as its managing director. He 

has a B.A. from Southern Methodist University in Dallas, Texas, 

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12 

and a J.D. from the William H. Bowen School of Law in Little 

Rock, Arkansas. 

Ms. Angelique Brunner established EB5 Capital in 2007. She 

splits her time between the company’s Washington, D.C., and San 

Francisco offices providing strategic direction and oversight to EB5 

Capital’s real estate, marketing, and legal team. 

Ms. Brunner serves on the board of directors for Invest In The 

USA, the national EB–5 industry trade association, and was the inaugural chair of the II USA Policy Committee, which guides the industry’s communications with the USCIS and other governmental 

agencies. Ms. Brunner received her bachelor’s degree in public policy from Brown University. She also holds a master’s degree in 

public affairs and a certificate in urban planning from Princeton 

University’s Woodrow Wilson School. 

Ms. Dekonti Mends-Cole serves as a director of policy for the 

Center for Community Progress, which is a nonprofit solely dedicated to transforming blighted and vacant properties into assetsupporting neighborhood vitality. Prior to joining Center for Community Progress in September 2015, Ms. Mends-Cole worked as the 

deputy director of dispositions for the Detroit Land Bank Authority 

overseeing disposition, property management, and compliance program. 

In addition, she served as a fellow with the White House Strong 

Cities, Strong Communities initiative embedded in the city of Detroit’s law department. Ms. Mends-Cole holds an M.S. from the 

London School of Economics in urban regeneration and affordable 

housing, a juris doctor from Georgetown Law Center, and a B.A. 

from the University of Miami in international studies and economics. 

Mr. David North, a fellow of the Center for Immigration Studies, 

is an authority on immigration policy, specializing on the interaction between immigration and domestic systems, such as education and labor markets. He served in the United States Labor 

Department as the Assistant for Farm Labor to the U.S. Secretary 

of Labor and as the Executive Director of President Lyndon Johnson’s Cabinet Committee on Mexican-American Affairs. Mr. North 

received a Fulbright scholarship to attend Victoria University in 

Wellington, New Zealand, where he earned an M.A. He is also a 

magna cum laude graduate from Princeton University. 

Welcome to all of you. Your timing device is right there in front 

of you. You have 5 minutes. When it reaches 1 minute remaining, 

it will turn to yellow. We ask that you summarize and conclude before the red light comes on. Your entire statement will be made a 

part of the record. 

And we will begin with Ms. Gambler. 

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TESTIMONY OF REBECCA GAMBLER, DIRECTOR, HOMELAND 

SECURITY AND JUSTICE TEAM, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; SAM WALLS III, MANAGING DIRECTOR, PINE STATE REGIONAL CENTER; ANGELIQUE BRUNNER, FOUNDER AND PRESIDENT, EB5 CAPITAL; DEKONTI 

MENDS-COLE, DIRECTOR OF POLICY, CENTER FOR COMMUNITY PROGRESS; AND DAVID NORTH, FELLOW, CENTER FOR 

IMMIGRATION STUDIES 

TESTIMONY OF REBECCA GAMBLER 

Ms. GAMBLER. Good morning, Chairman Goodlatte, Ranking 

Member Conyers, and members of the committee. I appreciate the 

opportunity to testify at today’s hearing to discuss GAO’s work reviewing the immigrant investor or EB–5 program. 

The EB–5 program was established to promote job creation and 

encourage capital investment in the United States by foreign investors in exchange for a lawful permanent residency and a path to 

citizenship. 

Currently, under the program, immigrant investors are to invest $1 million in a commercial enterprise, or $500,000 if the business 

is in a targeted employment area, or TEA. A TEA is defined as an 

area that at the time of investment is either rural or has experienced unemployment of at least 150 percent of the national average 

rate. 

Investments are to result in the creation of at least 10 full-time 

jobs. Immigrant investors and their eligible dependents receive 2- 

year conditional green cards. If they meet program requirements, 

including their investments resulting in at least 10 full-time jobs, 

they can apply to remove the conditional basis of their green cards. 

About 10,000 EB–5 visas are made available to qualified applicants 

each fiscal year. 

My remarks today summarize a report GAO issued last fall to 

this committee providing information on proposed EB–5 investments in TEAs. For that report, we selected and reviewed a random sample of 200 of the approximately 6,600 investor petitions 

submitted during the fourth quarter of fiscal year 2015. 

Based on our review of those petitions, we provided information 

on the proportion of petitioners that did or did not elect to invest 

in TEA, the proportion of petitioners basing a high-employment 

TEA on various types of geographic areas, and EB–5 investment as 

a proportion of the total investment in projects. 

With regard to the first area, we estimated that 99 percent of the 

EB–5 petitioners who filed a petition in the fourth quarter of fiscal 

year 2015 elected to invest in a project located in a TEA, most 

within a high-unemployment TEA that is qualifying for a reduced 

investment threshold of $500,000. 

In particular, just under 97 percent elected to invest in a highunemployment TEA and just under 3 percent in a rural TEA. The 

remaining petitioners elected to invest at least $1 million in a 

project that was not located in a TEA. 

Second, we estimated that 90 percent of petitioners electing to invest in a high-unemployment TEA based that on the average unemployment rate for a combination of census areas while the remaining 10 percent based the TEA on the employment rate of a 

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14 

single census tract, block group, or a county. Most of these petitioners combined from 2 to 10 census areas, but others combined 

more than 100 census areas, as allowed under the program as currently structured. 

With regard to the third area, we estimated that EB–5 investment by one or more immigrant investors who invested in projects 

located in a TEA was generally less than the nonEB–5 investment 

by other U.S. or foreign investors relative to the total estimated 

project cost. We also estimated that nearly three-fourths of petitioners who elected to invest in a TEA invested or plan to invest 

in various types of real estate projects, such as hotels and resorts, 

commercial and residential developments. 

In closing, in addition to our September 2016 report regarding 

proposed investments in TEAs, we have also issued reports related 

to USCIS’ efforts to assess and address fraud within the EB–5 program and to report the economic benefits of the program. We have 

made recommendations in these areas, which USCIS is working to 

address, and we will continue to monitor USCIS’ efforts and 

progress. 

This concludes my oral statement, and I would be pleased to answer questions members may have. 

[Ms. Gambler’s written statement is available at the Committee 

or on the committee repository at: http://docs.house.gov/meetings/ 

JU/JU00/20170308/105660/HHRG-11-JU00-Wstate-GambLerR20170308.pdf] 

Chairman GOODLATTE. Thank you, Ms. Gambler. 

Mr. Walls, welcome. 

TESTIMONY OF SAM WALLS III 

Mr. WALLS. Thank you, Chairman. 

Chairman Goodlatte, Ranking Member Conyers, and members of 

the committee, thank you for the opportunity today to appear today 

to discuss the EB–5 foreign investor program. 

My name is Sam Walls, and I am the president and chief operating officer of Arkansas Capital Corporation. Arkansas Capital 

Corporation is a private, nonprofit, economic development company 

that was formed in 1957 by State business leaders that included 

the late Governor Winthrop Rockefeller. We partner with banks 

and other sources to provide capital to businesses starting or expanding in our State. 

In 2012, State leadership requested Arkansas Capital to create 

an EB–5 regional center that would serve Arkansas. This request 

was made of Arkansas Capital because of our impeccable reputation and history of partnering with the State to promote economic 

development. Pine State Regional Center was approved in 2014. 

In September of 2015, Pine State filed its first EB–5 exemplar 

petition to raise up to $200 million for a $1.67 billion steel manufacturer in Osceola, Arkansas, a rural community with high unemployment, persistent high poverty levels, and a low level of college 

degrees. State and local leaders have described this steel production facility as a game changer and a godsend. This facility is the 

largest industrial project in the history of the State of Arkansas. 

The project creates 9,600 construction direct and indirect jobs. The 

employees of this facility will earn wages with benefits that far exmstockstill on DSK30JT082PROD with HEARING

15 

ceed the average salary in that community and what most would 

ever have dreamt possible. 

But to be clear, although we are proud of our involvement in this 

project, our support for the reforms in the USCIS proposed regulations and in past legislative efforts are not merely because they 

may provide some benefit to our current project. As a now 60-yearold economic development entity serving Arkansas, we see these reforms as an opportunity for rural and distressed urban communities to realistically use this program to assist in economic development. Our current project is an example of how rural communities will utilize this program if given the opportunity. 

Before I make some remarks about the USCIS proposed EB–5 

regulations, I wanted to express my thanks to you, Mr. Chairman, 

Ranking Member Conyers, Senator Grassley, and Senator Leahy, 

for your efforts to enact EB–5 reform legislation. We strongly support your legislation introduced in the last Congress and encourage 

you to continue to push your EB–5 reforms that will help rural and 

underserved communities. 

I applaud USCIS for its proposed regulations on EB–5. Today, 

the adjective ‘‘controversial’’ almost invariably seems to be used 

when this program is discussed in public forums. The USCIS is 

clearly attempting to take whatever steps it can within its authority to reform the program and address these concerns. While we 

share the view of many in the industry about the rates of increase 

to the current investment levels, we still welcome the proposed 

rules for several reasons. 

The rules’ reform of the targeted employment area destination 

would return the use of this designation to the original intent of 

Congress. Currently, some of the most affluent areas of the country 

have been able to attain the TEA designation by creatively streaming together dozens of disparate census tracts. The TEA designation was intended for rural and highly distressed urban areas and 

was anticipated to be exception, not the rule. According to the Government Accountability Office, we know that, today, more than 90 

percent of investors have gone into projects that are in urban TEAs 

comprised of many, sometimes dozens, of census tracts, and only 3 

percent of EB–5 investments have gone into rural areas. 

We agree with the chairman in his observation that this practice 

has made a mockery of what Congress intended. 

The proposed regulations essentially maintain the current statutory differential between the TEA and non-TEA investment levels 

of 500,000. From our perspective, this is a key component to the 

TEA reform because a more restrictive process to qualify for TEA 

status is only half of the equation. There must be a meaningful difference in the investment amounts. Past suggestions of a $50,000 

difference, for example, will amount to a continuation of the status 

quo. The program’s legislative history is clear on this point: the discounted investment rate was intended to drive investment to areas 

of the country that are traditionally undercapitalized. A meaningful investment differential is essential to achieve that goal. 

The proposed rule is important for another reason. Over the past 

2 years, we have seen a small segment of the EB–5 industry essentially veto proposed reforms. Most recently, this past December, 

these stakeholders rejected a very fair reform compromise. Like 

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16 

any compromise, they were asked to accept things that we didn’t 

like, but taken as a whole, it was fair, and we support it with an 

eye toward the long-term health and viability of the program. 

If finalized, these proposed regulations will finally make this ongoing strategy of delay untenable for these parties and force them 

to participate in good faith in the legislative process. 

All of you have heard arguments against making changes to the 

EB–5 program. Some have claimed that proposed legislative reforms are picking winners and losers. We believe that efforts to restore congressional intent to the EB–5 TEA incentive is not picking 

winners and losers. It is an effort to fix a broken program. 

Some claim that the EB–5 program is just a job creation program, and so it should not matter where investments are going as 

long as jobs are being created somewhere. Some argue that the 

TEA policy is being honored if people commute from poor areas to 

prospering areas where an EB–5 project is. This argument completely ignores the fact that Congress enacted the TEA incentive 

for a very specific purpose: to boost economic activity in communities that are traditionally undercapitalized. Congress would not 

have debated and enacted the TEA provision on the assumption it 

would apply everywhere. Congress has every right to insist that 

public policy work as it was intended. 

If the recent Presidential election showed us anything, it demonstrated that there are numerous rural and distressed urban communities that feel the government has forgotten about them. The 

clear intent of the TEA designation was an effort by Congress to 

help induce more job-creating economic investment in those areas, 

a result that has not been realized yet. 

The reforms contained in the USCIS proposed regulations and 

recent legislative efforts is a reaffirmation to the people in those 

areas of the country that Congress has not forgotten about them 

and is working to help those communities restore vital sources of 

employment. 

Thank you, and I look forward to your questions. 

[Mr. Walls’ written statement is available at the Committee or 

on the committee repository at: http://docs.house.gov/meetings/ 

JU/JU00/20170308/105660/HHRG-115-JU00-Wstate-WallsS20170308.pdf] 

Chairman GOODLATTE. Thank you, Mr. Walls. 

Ms. Brunner, welcome. 

TESTIMONY OF ANGELIQUE BRUNNER 

Ms. BRUNNER. Chairman Goodlatte, Ranking Member Conyers, 

and distinguished members of the committee, thank you for the opportunity to testify today. 

My name is Angelique Brunner, and I am founder and president 

of EB5 Capital, a regional center operator based in Maryland. I 

founded the company in 2007 in the District of Columbia to utilize 

foreign capital in disadvantaged communities and support livingwage job creation. Founding the company during the economic 

downturn gave me a unique perspective on capital markets, their 

lack of resilience, and the importance of a flexible, independent 

source of capital. 

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17 

Today, EB5 Capital is a leading regional center operator. We 

manage more than $400 million of investment capital that represents more than 20 projects in five States and the District of Columbia on behalf of clients from 50 countries. 

Our investments have anchored more than $2.4 billion of total 

development that has created thousands of jobs. The company’s initial focus was Washington, D.C., where we have committed over 

$250 million of investment in transitioning communities in the 

Convention Center corridor, the ballpark and Capitol Riverfront 

area, and most recently in NOMA, where Uline Arena is reshaping 

the entire neighborhood with REI’s flagship store and the District’s 

first creative class A offices. 

Our expansion outside of the District includes projects throughout California and the entire State of Michigan, where we believe 

that we can bring $100 million a year for qualified EB–5 projects 

under the current TEA definitions. 

I am here today to comment on proposed regulations that, if enacted, will jeopardize the ability of the program to continue to draw 

foreign direct investment to the United States. I urge Congress to 

complete the legislative reform of the EB–5 program that your committee has been working on with stakeholders for the past 2 years. 

Regulatory changes in support of new legislation could then be revisited after congressional action. 

The most problematic proposed changes that I will focus on are 

the changes to the targeted employment area definition and the increases in investment amounts. On their face, both may seem 

grounded in principled arguments, but with further examination, 

the economic basis of both are subjective and far from a best-practices approach to the reform each is meant to foster. 

My first area of concern is that the proposed TEA definition does 

not incorporate preexisting government criteria. DHS is proposing 

to continue the single variable criteria of a targeted employment 

area. I was hopeful that DHS would propose new criteria practiced 

elsewhere in Federal Government, like those used to define the 

new market tax credit qualifying geography, or eliminate the TEA 

entirely. 

Additionally, proposed limitations based on number of census 

tracts are biased against densely populated urban areas that have 

significantly more census tracts per square mile than suburban and 

rural areas. The suggested doughnut approach that measures economic development as a circle of adjacent census tracts rather than 

commuting distance does not reflect the reality of economic development in cities which follow a block-by-block path and/or occur 

along public transit lines. To illustrate this bias, I offer an anecdote 

from my commute to the hearing from my office this morning, an 

8.3-mile drive. If I take a suburban route, I travel only 10 census 

tracts. But if I travel through the District of Columbia, I cover 21 

census tracts. 

My second area of concern is that the market will not support 

the proposed increase in investment levels. At this time, the EB– 

5 program is effectively operated as a one-tier level of investment, 

with 95 percent of investments occurring at the $500,000 level, 

which DHS proposes raising to $1.35 million. Such an increase will 

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18 

shock the marketplace and, in my opinion, decimate the EB–5 program. 

U.S. competes for investors with about 40 countries. Our ability 

to attract investors is already compromised because of our complex 

immigration requirements, visa capacity issues, and processing 

backlogs. An increase in investment amount at the magnitude proposed. While the investment tiers of $501 million date back to the beginning of the program, the higher investment amount has never 

been competitive. 

Success and reform can be aligned. Incentives for rural and distressed urban areas through visa set-asides will achieve the investments expressed by many stakeholders. Reform efforts should shift 

away from the arbitrary single variable TEA to a single investment 

amount. Given the program’s backlog, investors want their visas 

quicker. A single investment amount, eliminating the TEA, coupled 

with set-asides will incent increased investment in needed areas. 

In conclusion, Mr. Chairman, Ranking Member Conyers, and distinguished members of the committee, I strongly urge you to advise 

the current administration to cancel the regulations proposed by 

the previous administration. I ask that you instead support Congress to complete its work on legislative reform of the EB–5 program. Regulatory changes in support of new legislation could then 

be revisited after congressional action. 

Thank you. This concludes my statement, and I would be pleased 

to answer questions. 

[Ms. Brunner’s written statement is available at the Committee 

or on the committee repository at: http://docs.house.gov/meetings/ 

JU/JU00/20170308/105660/HHRG-115-JU00-Wstate-BrunnerA20170308.pdf] 

Chairman GOODLATTE. Thank you, Ms. Brunner. 

Ms. Mends-Cole, welcome. 

TESTIMONY OF DEKONTI MENDS-COLE 

Ms. MENDS-COLE. Thank you, Chairman Goodlatte, Ranking 

Member Conyers, and distinguished members of the committee. 

Thank you for inviting me to testify today. As stated, my name is 

Dekonti Mends-Cole and I serve as the director of policy for Center 

for Community Progress based in Washington, D.C. 

The Center for Community Progress is a national nonprofit focused on addressing vacancy and abandonment to revitalize distressed communities in urban, suburban, and rural areas. 

Headquartered in Flint, Michigan, with staff in Detroit, upstate 

New York, New Orleans, Chicago, and Atlanta, our organization 

supports the revitalization of America’s older industrial regions and 

places, as well as communities that for decades have experienced 

an exodus of population and industry. We believe that a reformed 

EB–5 program that presents an opportunity to revitalize places experiencing economic distress and in the greatest need of at-risk 

capital to spur growth, such as Detroit, Michigan; Cincinnati, Ohio; 

and Scranton, Pennsylvania, would provide the greatest benefit. 

The EB–5 program introduced in 1990 was intended to be an innovative financing tool that encouraged job growth, incentivized investment, and recruited at-risk capital to disinvested communities. 

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19 

The program was largely dormant until the 2010s when increased 

immigrant interests, largely from China, coupled with increased 

demand for low cost mezzanine finance drove take-up. 

At the same time EB–5’s use began to increase exponentially, a 

widening disparity began to emerge between recovering markets 

and those that are currently on a downward trajectory. From 2010 

to 2013, the most prosperous 10 percent of ZIP Codes saw unemployment climb by 22 percent, and the number of businesses rise 

by 11 percent, while the most distressed 10 percent of ZIP Codes 

lost 13 percent of their jobs and saw a business closure rate of 1 

in 10. Fifty million Americans live in the country’s most distressed 

communities, characterized by low job growth, high vacancy, and 

out of work adults as high as 55 percent. 

The program has become disconnected from its original purpose. 

Immigrant investor capital, rather than serving as a catalyst for 

growth in communities serving job and industry loss, has sought 

the safe havens of high-return and low-risk projects in the country’s most prosperous census tracts. This has been made possible 

by the gerrymandering of EB–5 investment areas. It is not a coincidence that EB–5 capital is heavily concentrated in the States and 

ZIP Codes with the highest populations living in prosperous census 

tracts: California, New York, Texas, New Jersey, and Illinois. I 

hope to shift the EB–5 conversation beyond high density, high 

growth, largely coastal cities, and support the Department of 

Homeland Security’s efforts to better target EB–5 capital and stimulate economic growth in America’s distressed communities. 

I would like to specifically talk about the narrowing definition of 

TEAs that was focused on in the proposed regulations. A February 

2017 article by EB–5 experts and scholars, Professor Friedland and 

Calderon at Stern’s business school, applied the following proposed 

regulation TEA definitions to a sample of 52 projects that were 

largely from what is known as gateway cities. Based on this application, 52 of the sample qualified projects, only two would apply 

under a single census tract and only four would qualify under the 

contiguous census tract definition. This demonstrates that a narrower TEA definition would prohibit projects from continuing to include high unemployment areas that are in close proximity but are 

not receiving any direct investment from the project. It also would 

better align with similarly targeted programs such as new market 

tax credits. 

The proposed regulations would more effectively target credits to 

hard to recruit capital areas than also two other models that have 

been proposed: The California 12-tract model or the commuting 

pattern model. Both of these models will continue to permit investors to enter at a lowered investment level and high growth census 

tracts. It’s applied nationally and are less likely to recruit capital 

for distressed communities than what is outlined in the proposed 

regulation. 

Lastly, I’d like to briefly comment on the deferential between 

TEAs and non-TEAs. The current legislation has proven to be a 

valuable incentive for both investors and regional centers. EB–5 investment is completely at risk and investors seeking to minimize 

their risk have favored lower cost of entry projects in TEA designated areas. A sizable differential is necessary to attract capital 

mstockstill on DSK30JT082PROD with HEARING

20 

to the most economically distressed areas. Ensuring that the 

spread is continued and adequately incentivizes immigrant investors to support difficult-to-finance projects is necessary. 

Thank you for the opportunity to present, and I would be happy 

to take any questions. 

[Ms. Mends-Cole’s written statement is available at the Committee or on the committee repository at: http://docs.house.gov/ 

meetings/JU/JU00/20170308/105660/HHRG-115-JU00-WstateMends-ColeD-20170308.pdf] 

Chairman GOODLATTE. Thank you, Ms. Mends-Cole. 

Mr. North, welcome. 

TESTIMONY OF DAVID NORTH 

Mr. NORTH. Good morning, Mr. Chairman, Mr. Ranking Member, 

members. I’m grateful for a chance to discuss the proposed changes 

in the regs of the EB–5 program. I speak for the Center for Immigration Studies. It is a downtown agency, nonpartisan research organization here in Washington, D.C. 

Frankly, we have no need for an immigrant investor program. 

EB–5 brings in only 1 or 2 percent of the flood of new foreign 

money that is invested in the United States every year, and it 

brings it in through a convoluted way that almost invites corruption and theft. It is lodged in an agency that does not deal in high 

finance, involves the sale of visas to aliens who could not become 

U.S. immigrants in any other way. The Center has moral objections 

to selling green cards. 

That said, realistically, the chances are that the big urban 

monied interests that profit from the EB–5 program, heavily in 

Manhattan I might add, it never places—the program never places 

investments in the Appalachias—will prevail. The big money people will as they usually do. But if the termination battle is lost, 

perhaps we can make some modest and sensible changes in the 

program. I have four specific suggestions, two echoing what the Department suggests, and two that don’t appear to be in the Department’s proposals. 

As far as the basic investment is concerned, moving it up to $1.35 million makes a lot of sense to me. Bring in more money 

without spending more visas in the process. I also disagree with 

one of my colleagues here at this table about the prospective market. There is a whole lot of fear among a whole lot of very rich people, primarily in China, and I think that the market for visas at 

$1.35 million will be quite brisk. Besides, we have a backlog to take 

care of anyway. 

The question of the location of the investments is interesting. 

This is a TEA. Currently, the half million dollar investments must 

be used in what the agency calls targeted employment areas. I 

would like to illustrate how this definition can be manipulated in 

terms of this place. We are in Rayburn House Office Building and 

the Rayburn House Office Building, as you can see on the screen, 

is in that kind of upside down U shape form, the red form there. 

That is a TEA that could be created—I am not saying it has been— 

it could be created under the current rules, and includes the White 

House, which is one of the more expensive residences in the country, and this wonderful building. And it is a depressed area as far 

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21 

as DHS is concerned. If you can put the White House in a TEA, 

you can put a TEA anywhere in the country. 

I want to stress something that I am not sure is in the regulation 

package, and that is the question of integrity. There are numerous, 

multimillion dollar scandals in this program, in South Dakota, in 

Vermont, in Chicago, in Florida, in the State of Washington, and 

lots and lots of them in California. There needs to be a different 

focus in the administration on these things. And let me give you 

one example of a particular fraud. 

I decided to see—this is regarding one of the California frauds— 

what I could find out about the proposers of what turns out to be 

fraudulent activity by using the internet. I am not skilled with the 

internet. I had no particular law enforcement connections. I just 

went on the internet and I looked. And what did I find? Well, the 

first thing I found, that the main broker was a lawyer who had 

been to a for-profit law school, which is worrisome to me. He had 

a debt counseling firm attached to his law firm. That sounds worrying. He had been twice sanctioned by the California bar, and 

when once was suspended from the practice of law for 7 months. 

Now, do you want to invest in a program that is led by somebody 

like that? I would think not. But none of the 100 or so investors 

did what I had just done in a few minutes, nor had the managers 

of the EB–5 program. There needs to be a rather more careful approach to who gets to run these programs and who the middlemen 

are. 

There is one other thing that I didn’t see in the regs, which I 

think should be there, and that should be a provision that there 

be jobs for residents only. There was a failed project in South Dakota where Korean workers were brought in, I think H–2Bs, to 

build a beef slaughterhouse, and there were Germans working on 

tourist visas on a German-connected EB–5 lumber mill in Florida. 

Now, these matters are deplorable, and I think that if any jobs 

were to be created by this program, they should go to full-time 

legal residents of this country, including green card holders. 

In closing, I would like to point out an irony. This is a program 

which has been defended stoutly by the leadership, the Republican 

leadership of the House and the Senate through the continuing resolution that Mr. Sensenbrenner talked about. They have done so 

despite the fact that two-thirds of the money in this program goes 

into States that supported Ms. Clinton in the last election. So it 

may be an act of generosity on the part of the Republican Party 

to continue a program that is so nice to the blue States. 

And on that note, I end. 

[Mr. North’s written statement is available at the Committee or 

on the committee repository at: http://docs.house.gov/meetings/ 

JU/JU00/20170308/105660/HHRG-115-JU00-Wstate-NorthD20170308.pdf] 

Chairman GOODLATTE. Thank you, Mr. North. 

We will now begin questioning by the members of the committee. 

And I will recognize myself for 5 minutes. 

Ms. Gambler, let me start with you. I find it interesting that the 

General Accounting Office found that three-quarters of all alien investors in TEAs invest in real estate projects, and yet real estate 

construction accounts for about 6 percent of the U.S. economy. So 

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22 

why does 75 percent of these investments go into what is only 6 

percent of the economy? 

Ms. GAMBLER. Congressman, that is not something we looked at 

specifically as part of our review. It may be due to the universe of 

projects that are available for investors to seek to invest in. So it 

could be a product of just the types of projects that are available 

to investors and that that is more predominantly in certain industries than others. 

Chairman GOODLATTE. Is it possible that under the current law 

and regulation, where gerrymandering can allow you to figure development in highly attractive areas like the Hudson Yards example that we used earlier, that the money would gravitate toward 

what would be considered to be easier investments than it would 

be to invest the money in a rural area or in a high unemployment 

area? 

Ms. GAMBLER. I think it is reasonable that the types of projects 

that are available for investors to invest in are probably driven by 

a number of factors, including what is currently allowed under law 

and regulation in terms of how projects and regional centers can 

designate TEAs or can have—use TEAs that have been designated. 

Chairman GOODLATTE. Thank you. 

Mr. Walls, I read your testimony. It is easy to imagine that 

projects such as the Big River Steel in Osceola, Arkansas, are the 

exact type of projects that Congress wanted to facilitate in creating 

the investor visa program and the regional center program. Isn’t it 

disappointing that so few such projects get funded through this 

program? 

Mr. WALLS. It is. I think, you know, when we were asked to do 

this and you got into the program without any previous experience, 

you look at the regs and you say, well, there is TEAs and there is 

non-TEAs. Clearly, a project like that would fall onto a TEA. And 

intuitively you would say, well, this clearly looks like a good job 

creator. And so when you get more immersed into it and you discover that you are competing with very impressive projects in very 

affluent areas of the country, it is—it is disappointing, it is frustrating, it has been. 

Chairman GOODLATTE. And it is highlighted by the fact that, 

well, this would be considered a less attractive area for the most 

part for investments, Big River Steel is going to pay its mostly noncollege educated workers in rural Arkansas $75,000 a year or more. 

How do you think this compares with the wages that noncollege 

educated workers will make at the high end hotels and condos that 

are being built with EB–5 funds? 

Mr. WALLS. I would hesitate to speculate to an exact number, but 

I would assume that it would be much higher. 

Chairman GOODLATTE. Ms. Brunner, you state in your testimony 

that the administration should cancel the proposed regulations and 

allow Congress to complete the legislative reform of the EB–5 program that your committee has been working on with stakeholders 

for the past 2 years. Now you mention your involvement with a 

number of industry groups who, in my experience, have been incredibly resistant to any real reforms and who have, in fact, stymied reform over the past 2 years. These groups like the investor 

visa program the way it is. They want the investment level to remstockstill on DSK30JT082PROD with HEARING

23 

main low and they want to be able to qualify luxury condo projects 

as being in depressed areas. If the regulations are canceled, why 

would they have any more incentive to engage in substantive negotiations than they have over the last 2 years? 

Ms. BRUNNER. Mr. Chair, one thing that has happened in the 

past year is I have become the membership chair and spokesperson 

for the EB–5 Investment Coalition. Since that time, the statements 

in my testimony actually reflect the alignment of those groups and 

that we are prepared to eliminate the TEA, go to a single investment model. And my understanding is that we are very excited to 

cooperate with your committee and the Senate committee and 

achieve reform this calendar year. 

Chairman GOODLATTE. Well, good. I am definitely glad to hear 

that. 

One of your statements caught my ear, and did Mr. North as 

well, and that is that current markets will not support the investment amounts that are provided for in these regulations. And yet 

for a program that for most of its existence never hit the 10,000 

green card cap until just 3 years ago when it suddenly mushroomed into not just hitting the cap, but now having a 7- or 8-year 

waiting list, meaning that there is a backlog of 70,000 to 80,000 

green cards that are committed for and in demand right now, this 

disturbs me for a couple of reasons. 

First of all, I think, like Mr. Sensenbrenner, it makes it very 

clear that this program can justify much higher payments for green 

cards than investments for green cards, if you will, than is currently provided for. But secondly, it bothers me that this program 

has been sold like that to people primarily in China, who I don’t 

think have a clue that this program isn’t even authorized beyond 

April of this year. There is no authorization whatsoever for any 

green card beyond the expiration of the current continuing resolution in April. And yet this industry, if you will, is busy selling 

green cards in China to people who, you know, I don’t think even 

have any idea that if the program were allowed to expire in April, 

would have nothing except for a 70,000 to 80,000 green card backlog. 

What would happen if that were to occur? And how—what can 

you tell me about how the people who promote this program in 

places like China make full disclosure to these people who are 

making these investments? 

Ms. BRUNNER. I can tell you how my company makes full disclosure. We make sure that all of our investors are aware of the pending expiration or the pending reform of the program, is what we 

are hopeful for. 

Chairman GOODLATTE. But you still think it is appropriate to 

have them go ahead and make investments without the knowledge 

that the program is even going to continue? 

Ms. BRUNNER. No, they do not make investments without that 

knowledge. That is not a true statement for our investors. They are 

all aware of the April 28 deadline for Congress and for the industry. And the market has slowed significantly. It slowed because of 

the expiration and it slowed because of the significant backlog. 

I would like to address one of your earlier comments in your 

statement about the increase demand that we have seen recently. 

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So we are all well aware here that demand really started in 2008. 

I would argue that that is when the price matched the demand, 

which allowed the supply of the visas to be utilized. So it wasn’t 

until 2008 that $500,000 was actually the right price for the market demand. 

Now, it seems that $500,000 is a bit low for the market demand, 

and that it would be better served with an increase in the price. 

We support that. I support that as a company and as a stakeholder 

in the industry. What I support, though, is a single investment 

amount that would drive more investment to distressed areas in a 

set-aside program instead of forcing them into a reduced investment amount below what the higher qualified areas could receive. 

Chairman GOODLATTE. I am way over my time here. I just want 

to make one more point. I agree with your assessment that a lot 

of this got started following the financial crisis in 2008, because 

there was a severe shortage of capital at the time and this became 

attractive, but it didn’t shoot through the roof until you get to 

about 2013 or 2014. That is the first time we ever hit the cap. And 

now, in the 3 years since then, when capital has been far more 

abundant and it has been noted far more capital flows into the 

United States for other reasons than this reason that we have this 

huge backlog, and now as we are trying to reform this program, we 

see tremendous resistance from people who don’t want to see greater investments or who don’t want to see the reforms take place 

until this entire investment backlog now 7 or 8 years is worked 

down. I find that intolerable given the problems the program has. 

I am now happy to yield to the gentleman from Michigan, Mr. 

Conyers, and I will be generous with his time as well. 

Mr. CONYERS. Thank you, Mr. Chairman. 

Let me start with Ms. Mends-Cole. In your testimony, you mention that your organization works in areas experiencing economic 

distress. What kinds of EB–5 finance projects can be made in this 

area, in your view? 

Ms. MENDS-COLE. There is a lot of opportunity for EB–5. And examples of existing projects that are on the pipeline are the 

Hardesty Federal Complex in Kansas City. It is an 18-acre 

brownfield site in which a nonprofit regional center is looking to secure capital. It is working with Northwest Missouri State University. And the purpose of this project is both the educational facility 

as well as addressing the needs of a food desert. 

Another example is the George Washington bus station restoration which is in a distressed census tract in upper Manhattan. This 

is a 15,000 square feet development and it is projected to create 

250 jobs and has leveraged $5 million worth of tax credits. 

Mr. CONYERS. Now, let me follow up on the idea, what kind of 

revitalizing impact could these projects have on distressed urban 

areas? 

Ms. MENDS-COLE. Both examples in Hardesty Federal Complex 

and also in your home city of Detroit, Michigan, where Bedrock 

Ventures is looking at investing utilizing EB–5, specifically looks at 

vacant properties. Properties—for example, the Hardesty Federal 

Complex has been abandoned since 2002, and Bedrock’s looking at 

some of the most distressed census tracts in neighborhoods in 

terms of the abandonment and vacancy in the country. 

mstockstill on DSK30JT082PROD with HEARING

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Mr. CONYERS. Good. 

Let me ask Mr. Sam Walls. We have heard testimony today from 

others in the EB–5 industry that targeted employment areas 

should take into account commuter patterns, that is whether those 

working in projects from distressed areas. What are your thoughts 

about this kind of an approach? 

Mr. WALLS. I disagree. The problem with—I look at congressional 

intent. And if you look at congressional intent, clearly, it wasn’t a 

function of we want to just create jobs and then people that live 

in those poor areas can commute to those good jobs in better areas 

of their cities or from rural communities into larger areas around 

them. Clearly, the congressional intent was looking for investment 

within those census tracts. 

We are an economic development entity so we have a saying 

around our shop; it is activity begets activity. And so, clearly, what 

the intent was to see investments physically—actually end those 

census tracts and then the subsequent advantages that come with 

that investment. We do a lot with new market tax credits with one 

of our other entities. And it is the same thought process: Catalytic 

investment. 

And that is clearly what the TEA intent was. And so to modify 

that to say TEA now as if they can drive somewhere closely, I 

think is inconsistent with what the intent was to begin with. 

Mr. CONYERS. Thank you. 

Ms. Brunner, you raise in your testimony concerns that EB–5 

program has to compete with about 40 other countries that also 

have investor programs, and that raising the U.S. investment 

threshold to over $1 million could make EB–5 noncompetitive. But 

that doesn’t seem to be the case. For example, the United Kingdom 

offers temporary visas for investments of $2.5 million in effect. 

Australia has three programs requiring $5 million, $15 million, and 

$1.5—these are in Australian dollars—and $1.5 million in Australian dollars. 

Is there reason to believe that a U.S. investor program cannot 

compete with these other programs if the investment threshold is 

raised beyond $565,000 as you propose in your testimony? 

Ms. BRUNNER. The demand for the U.K. program and the Australian program in the markets that the U.S. is competitive in, primarily China, is much less than the demand for the U.S. program. 

To adjust the amount up, I think the market can accommodate 

some adjustment, but to approach those levels, I think you have to 

ask yourself, is this an economic development program or is it 

something else? If it is going to be an economic development program, then we want to maximize the demand at the right price 

threshold. That is a delicate—that is a delicate task that I think 

warrants continued conversation, and it certainly is worthy of our 

effort. But we have to strike that balance if we want to continue 

funding. 

For example, I funded food deserts; I have put 70,000 square feet 

of retail back into commission in Washington, D.C. My pipeline includes the Greyhound bus station in Washington, D.C. I hope to 

put hundreds of millions of dollars into the State of Michigan, and 

I hope to start with the city of Detroit. All of these things are ecomstockstill on DSK30JT082PROD with HEARING

26 

nomic development for me. They won’t be possible if we raise the 

investment amount too high. 

Mr. CONYERS. Thank you so much. 

Mr. Chairman, I yield back. 

Mr. KING [presiding]. The gentleman from Michigan yields back 

the balance of his time. 

I now recognize myself for 5 minutes. And I would turn first to 

Ms. Brunner. I think I heard Mr. North mention that he expects 

that the Chinese would come up with 1.35 million in lieu of the 

half million that we are discussing here. What is your estimation 

of how that might affect their investment in this country should 

that number be increased to 1.35? 

Ms. BRUNNER. Sure. Well, it is one of the reasons why I advocate 

for the elimination of TEAs. I do not want the market to have an 

option of a lower investment amount. I want to eliminate that option. 

Mr. KING. And do you think if we raised it, then it would affect 

the flow of capital coming from China into the United States? 

Ms. BRUNNER. I think it will. In any supply and demand model 

you have three variables: You have the supply, you have the demand, and you have the price. The only thing that we can change 

is the supply of the visas. I understand that is not really—Congress 

really isn’t inclined to do that, so the thing that we can change is 

price. There seems to be some agreement on that. So we need to 

figure out the right price to maintain this as an economic development program. 

Mr. KING. In listening to Mr. Conyers, did you reflect that other 

countries are selling access to a path to citizenship at a much higher price than the United States is? 

Ms. BRUNNER. Well, no other country in the world uses it for economic development. We are the only country in the world with a 

job creation requirement. 

Mr. KING. You heard the quotes from Mr. Conyers that it was substantially higher than half a million dollars, I think up to $2.5 

million in one case. That is what I reflected. 

And so if we repeal EB–5, what does that do to the flow of capital into some of the investments that you are promoting? 

Ms. BRUNNER. It will stop it. 

Mr. KING. And what would be the next source of capital for those 

investments? 

Ms. BRUNNER. Well, I have been in economic development in 

Washington, D.C. since 1999, and when I came here, the city was 

selling houses for $1. And I asked why and they said because of 

the riots. And I said, what riots? And they said the Martin Luther 

King riots. So I imagined the development would stop. 

Mr. KING. I have a bit of a different estimate, but I appreciate 

your testimony. 

I turn to Ms. Gambler, and I just ask you this, when I think 

about some countries that are not emerging as our friends, China 

to a degree, Russia to an increasing degree, especially in the last 

couple of months, if you were Saudi investors and you wanted to 

infiltrate people who were sympathetic to the cause of some of the 

people who flew planes into the building, what method would you 

use to bring those folks into the United States? 

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Ms. GAMBLER. Well, sir, I think there are a couple of comments 

in response to that. We do have some ongoing work right now looking at the vetting and background check process for individuals 

who are coming to the U.S. on visas. And we would be happy to 

come up and talk with you about that as well, about what that 

work is. 

With regard to the EB–5 program, we have identified through 

our work some concerns with fraud in the program. We have talked 

about that a little bit this morning. And that is why it is important, as it relates this program, for USCIS to do the fraud risk assessments that we have been calling for them to do to include identifying what the inherent risks are in the program. 

Mr. KING. Let’s just say you are a drug cartel in Mexico and you 

want to get some of your people into the United States. They are 

the masters at laundering money. And so to be able to trace that 

back to them, but the dollars and identify whether or not those 

people are affiliated, it seems to be to be a very difficult task. Second thing would be, from a national security standpoint, although 

I always hear vetting, better vetting, extreme vetting. But I am not 

one who is convinced we can actually vet people when their children become radicalized. And so I will submit that if you are 

strategizing against the interest of the United States and you want 

your people into America and you had money and you wanted a return on that investment, you would look at the EB–5 program as 

the perfect tool for access into the American society and, by the 

way, to be able to maneuver and operate throughout the business 

circles in the United States. 

I was on a plane not that long ago, a man sat next to me and 

I ask him what he did. We had that little conversation. He was 

putting together an EB–5 hotel, a $30 million hotel that had 60 

Chinese investors. And I wonder, would that hotel be built if it 

weren’t for EB–5. But I am going to turn to Mr. North with that 

question, would that hotel be built if it weren’t for EB–5? 

Mr. NORTH. In many cases, the EB–5 program is an income 

transfer program from rich Chinese to rich Americans. What happens is there is something called mezzanine financing, which is the 

financing that goes into real estate developments where you do not 

have either ownership or a mortgage, and so it is kind of risky. 

And mezzanine financing typically produces—again I am not an 

economist, I don’t do this sort of thing—but produces a fairly substantial interest rate because there is no guarantees. 

However, if you bring in EB–5 money, not looking for guarantees 

particularly, they can get their mezzanine financing for about 1 

percent. So there is—I am sure there are hotels that would not 

have been—or projects that would not have happened without the 

EB–5. In most cases, it is just simply a question of making it easier 

and more profitable for the U.S. developers. 

Mr. KING. Does anybody on the panel know how much U.S. capital is stranded overseas because of our current tax policy? That 

number would be in the trillions. Does anybody have that number? 

Mr. NORTH. It is a big number, but it is—I think it is beyond my 

expertise. 

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Mr. KING. I would submit that repatriating U.S. capital would be 

a far better thing to do than to open our doors up for these kind 

of nefarious activities that appear to me to be taking place. 

I thank you, all the witnesses, and I yield back the balance of 

my time. 

I now recognize the gentlelady from California, Ms. Lofgren. 

Ms. LOFGREN. Thank you, Mr. Chairman. 

I don’t know if anyone can answer this question, but this is obviously something that is program of interest both to the Congress 

but also to the executive branch. In the newspapers it has been reported that a key adviser to President Trump, his son-in-law, Jared 

Kushner, has used the EB–5 program to build hotels and other investments in New York City. Is that true? And if that is true, I 

wonder whether we might ask the administration to take steps to 

guard against being influenced by the financial benefit to that key 

adviser. 

Mr. NORTH. If I may, I sense that the Kushner family has heavily invested with EB–5 money in Jersey City, which is right across 

the river from midtown Manhattan. I do not know if there are— 

and the enterprise is a Trump center—Trump Plaza, excuse me— 

I do not know whether there are any EB–5 projects in New York 

City that are funded for the Trump family from EB–5. I don’t know 

about that, but there is one right across the River. 

Ms. LOFGREN. Does anyone else know about this? Perhaps it is 

unfair, you wouldn’t necessarily know. But I think some research 

ought to be done on that, Mr. Chairman, to make sure that we are 

getting unbiased participation by the executive. 

Just a word on the investment level. I come from Silicon Valley 

where recently a double wide was put up—double-wide trailer was 

put up for sale for almost $400,000. So a $500,000 investment 

seems incredible. You know, this has got to be updated. In looking 

at the investments required by other countries, I think a substantial increase is required. I will just put that out there. 

One of the questions I have is whether, in addition to looking at 

the dollar amount, whether we ought to—and the gerrymandering, 

whether we ought to look at the nature of the investments themselves. You know, recently, somebody who is doing a project said 

that the funding through EB–5 was being used for the basic infrastructure. Well, you can’t get a bank loan to do the sewers and the 

infrastructure that then allows development on top of that. Would 

it make sense for us to direct these funds to something that then 

creates a platform for investment from other sources to be successful? Does anybody have a thought on that? 

Apparently not. But at a later date, I mean, I think that that 

is—we ought to take a look at what promotes development and 

growth and job structure best. And right now, this is primarily 

used as funding for hotel construction. I am certainly not against 

hotel construction if it makes sense, but that is certainly not the 

only economic need, and some might argue, not the most important 

economic need in the United States. 

You know, I was wondering, Mr. North, you mentioned the reform that was necessary. I am thinking about, if we do a reform 

package, when that reform should be put into place. There is a 

backlog I think of nearly—well, it is over 20,000 petitions, and 

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some have argued that the—whatever reform that we do, assuming 

we get there, should be instituted only after the backlog is cleared. 

Others have said if you do that, we might as well not do the reform, because there is such a backlog in hand. 

I am wondering if anybody has an observation on the timing of 

reform question. 

Mr. NORTH. I do. I think that to postpone it until all the backlog 

is used is kicking the can down the road squared, and I don’t think 

it should be done that way. There may be a problem about changing the dollar value. I don’t think you can change the dollar value 

of the minimum investment retroactively, but I think you certainly 

can immediately—— 

Ms. LOFGREN. Well, I think certainly you can. I don’t think the 

people have a vested actionable interest in a law that could be 

changed by the Congress. 

Mr. NORTH. But I think that the administrative reforms that I 

have been suggesting and also the TEA reform should be done 

right away. 

Ms. LOFGREN. I know my time is close to running out. Ms. Gambler, you had important testimony last year about the immigrant 

investors who were vulnerable to fraud schemes. And I am wondering, in addition to all of the investor alerts that were done, what 

further steps USCIS should take to protect innocent investors from 

being defrauded. 

Ms. GAMBLER. There are a couple of key issues there, Congresswoman. One, as I mentioned, they have made progress on doing 

fraud risk assessments identified the inherent risks in the program. They need to continue to do that. I think they also need to 

continue to look at the fraud prevention and assessment tools that 

they do have, including things like random site visits to some of 

these projects, doing interviews and proving the data and information they are collecting from investors and regional centers. So they 

have made some progress in these areas, but there is additional 

work they could do. 

Ms. LOFGREN. Just one final question. It is—some have suggested that the middlemen that are essentially charging very high 

fees to investors outside the United States for kind of act as the 

broker have not really been scrutinized adequately by our government. Do you have insight into that allegation? 

Ms. GAMBLER. That is part of some of the unique fraud risks that 

our report from 2015 identified. And we would say that is part of 

assessing the risk in the program. That could be one of the inherent risks that should be looked at. 

Ms. LOFGREN. Okay. My time has expired, Mr. Chairman. Thank 

you very much. 

Mr. KING [presiding]. The gentlelady’s time has expired. 

The chair now recognizes the gentleman from California, Mr. 

Issa. 

Mr. ISSA. Thank you, Mr. Chairman. 

Mr. NORTH. Senator Feinstein has called EB–5 selling citizenship. Some might say renting for citizenship. But is there any reason to say that if this is a good program, we should cap it at 

10,000? If we’re going to sell citizenship and earn $1.5 billion a 

year of loaned money for a total of about $7.5 billion in investment, 

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in this $18 trillion, $19 trillion economy, we have 1.2 million people 

who receive green cards, why not sell them all? Why not make it 

100,000 and be getting $15 billion a year if it is a good thing? So 

the question is are we selling citizenship? 

Mr. NORTH. Well, first of all, to be narrow, we are selling green 

cards rather than citizenship. 

Mr. ISSA. Yes. Green cards lead to the ability to have citizenship. 

Mr. NORTH. I understand that. 

Mr. ISSA. So we are selling the ability to permanently be here. 

Maybe I will phrase it to you another way. Why is it we see sell 

for a temporary loan, a temporary investment, a permanent right 

to be here? Why wouldn’t we have temporary visas for temporary 

investment? 

Mr. NORTH. I don’t think renting or selling visas is a good idea. 

I think it is amoral; if not immoral. I would be opposed to it, but— 

and that is our basic position. 

Mr. ISSA. Okay. Well, it is not my basic position, but I could get 

there if we can’t reform it. 

Mr. Walls, regional centers by definition, by testimony, essentially get—are part of giving us, whether gerrymandered or not, 

virtually 100 percent of the investments are made at 500,000 per 

investor. That is right. So if we assume for a moment under current rules—we will forget about whether they are gerrymandered 

or not—that all the investment is going to underserved areas, why 

wouldn’t we simply eliminate any investment except in underserved areas? In other words, since desirable areas shouldn’t have 

a problem getting money, and I would say that Beverly Hills is 

pretty desirable, but assuming that we are only talking undesirable, for such a small program that is so oversubscribed, why 

wouldn’t we go to 1.8 or 2 million per investment and have them 

only in underserved areas? Why would we have two tiers at all? 

Why wouldn’t we just mandate that the only way you get in and 

get what Mr. Walls, Mr. North and I might consider to be selling 

residency, why wouldn’t we require that you invest in underserved 

areas? 

Mr. WALLS. Well, I think there are two questions there. One, you 

know, what is the dollar amount? And I actually agree with the industry and Ms. Brunner that, you know, I think there needs to be 

additional conversation as to what the true market for what we 

should charge, though. So setting that aside. 

Mr. Issa. But you know the true market is a lot higher than 

what we are currently charging? 

Mr. WALLS. Absolutely. 

Mr. ISSA. The oversubscription tells us that. 

Mr. WALLS. We agree to that. We agree. It is just what that 

number is. 

As far as—again, you go to congressional, what do you want this 

program to do? Clearly, it appears to me that the intent was to— 

you know, this two tiered of, hey, if it is a good project and creates 

jobs regardless where it is, we are prepared to accept that, but, you 

know, there is less risk there, real or perceived. And we as a country are prepared to put a certain amount, a dollar amount. But if 

you want to—we want to encourage economic development in these 

areas, we will give it a break and try to mitigate that risk. 

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Mr. ISSA. What is interesting is I have looked at the history of 

it, and, of course, two things that were assumed: One is that the 

investors and the entrepreneurs would come together, that somehow there would be a connection. But in fact, in almost every case, 

the investor—the green card holder goes one place and the money 

goes another, and there is no participation almost always. So we 

failed in that presumption. 

We also set aside about 3,000 of 10,000 slots for underserved. 

That was to assume that it would still be hard to get them into underserved. 

Mr. WALLS. Right. 

Mr. ISSA. So if eventually we live up to what Senator Grassley 

and the chairman had been working on so long and hard with 

members on the other side also, maybe what we need is a set-aside 

without a discount, because ultimately, then you would get that 

amount in underserved areas and you could be stringent about it, 

but you wouldn’t necessarily be selling anything for less, because 

right now, the incentive has been get to the lower price. But the 

incentive does not seem to be get to the true underserved area. 

Ms. Brunner, you are shaking your head in a way that I really 

want to know your answer. 

Ms. BRUNNER. Well, thank you, Congressman. I am extremely in 

favor of a single price because I don’t think that it is fair that if 

you are designated a set-aside area, distressed area, or rural area, 

that means then that you have to compromise and receive less capital. 

Mr. ISSA. The—— 

Mr. WALLS. If I may answer the question as well. 

Mr. Issa. Go ahead. 

Mr. WALLS. I just—respectfully, if you are going to drive—again, 

the intent behind it was those underserved areas have challenges. 

Congress deals with those challenges in a number—new market 

tax credits; USDA guarantees; in my area, Delta Regional Authority. Saying there is one tier, and the set---aside is a short-term answer to that, but involvement in the market, without a true meaningful difference in that, you are not going to ultimately accomplish 

what you say—— 

Mr. ISSA. Let me just ask a closing question for the entire panel, 

with your indulgence, Chairman. Is it fair to say that if we were 

doing an overall today, and if we set the price where we knew 

10,000 slots, and all 10,000 would be sold, whatever that price is, 

is if fair to say that we look at original intent and the best and 

the highest use for this investment, that really all of it should go 

to underserved areas? Whatever that definition is. We don’t think 

it is Manhattan or Beverly Hills, but just a general yes, would you 

say if we were starting over from scratch and assuming we are not 

killing the program, we are setting at a price at some level, and 

because so many agree to a single rate, isn’t the best part of what 

this program could do is get investment where it otherwise 

wouldn’t go, which is underserved areas? Please, if I could get a yes 

or no from each of you. 

Mr. NORTH. I would say yes. Yes. 

Ms. MENDS-COLE. I would also say yes. 

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Ms. BRUNNER. I would say yes, but the goal is to create the highest wage living—living wage jobs. 

Mr. ISSA. Good point. 

Mr. WALLS. Yes. 

Ms. GAMBLER. Yes. 

Mr. ISSA. Thank you. I will quit on yes. 

Mr. KING. The gentleman’s time has expired. 

And the chair now recognizes the gentlelady from Texas, Ms. 

Jackson Lee. 

Ms. JACKSON LEE. First, I would like to thank the witnesses for 

I think a very thoughtful discussion. And I believe that there is 

value to the EB–5, but let me be very clear. As we have listened 

to some of the reforms, I just wonder why we sell ourselves so 

cheap, putting aside present governmental challenges. This is a 

great country to come to, a great country to invest in. And from recent international trips, one that many people are eager to come 

to. 

So let me ask Ms. Brunner the first question. And let me thank 

you for your work and Ms. Mends-Cole’s work. What is the amount 

that you would think would be viable? And you are supporting the 

one tier as opposed to—and that would be how much? 

Ms. BRUNNER. I am going to have to lean heavily on my Princeton economics background on this. 

Mr. ISSA. Go Tigers. 

Ms. BRUNNER. Go Tigers. 

I would have to say that that can be modeled, and I would look 

to the GAO’s work and I would look to the committee’s work that 

we should be able to actually mathematically find that price. And 

that is the price that I would support. I agree that it is above 

$500,000. I believe, from my experience in the market, with almost 

a 1,000 investors, that that amount is less than $1 million. 

Ms. JACKSON LEE. So I would probably—and I appreciate both 

the cautiousness, but also the intellectual assessment which is that 

you look at the economic modeling. But I would immediately go to 

$1 million to $2 million. And I think we are, in essence, undermining the competition here in the United States. We are undermining the viability of projects, if we would be at that level. I don’t 

even know we can do it with $500,000. I guess it is used as a leverage, or $750,000. 

So I would argue against modeling—well, I wouldn’t argue against modeling, but I would argue against anything below $1 

million, and I would argue for $2 million. But I think the EB–5 

program has a great deal of merit, but let me ask—and so thank 

you. 

Let me ask Ms. Gambler, if I could, to indicate in your review, 

in your reform—or in your suggested reform or reforms, does the 

regional centers go away? 

Ms. GAMBLER. So it is not our proposed reform—— 

Ms. JACKSON LEE. DHS. 

Ms. GAMBLER. I am with GAO. I am so sorry. 

Ms. JACKSON LEE. I understand. Does DHS go away? Does the 

regional centers go away? 

Ms. GAMBLER. Under DHS’s current proposals and the regulation, no, there is no proposal to eliminate the regional centers. 

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Ms. JACKSON LEE. And what is your assessment of the regional 

centers? 

Ms. GAMBLER. Based on the work that we have done, I think 

there are some questions about them, particularly as it relates to 

EB–5 investors being able to take credit for all of the jobs created 

by the total investment in projects that are funded through regional centers and other projects as well. So I think there are some 

open questions that stakeholders and Congress has raised about 

the program. 

Ms. JACKSON LEE. And do see the reforms helping with the gerrymandering aspect so that you don’t draw in Beverly Hills along 

with maybe one or two blocks that are distressed? 

Ms. GAMBLER. The proposed rulemaking on the TEA seems to be 

a reasonable step forward to addressing some of the concerns that 

have been raised by the TEAs. And I think USCIS seeking comments from the public and from stakeholders and industry will be 

helpful to inform that rulemaking process as well, including asking 

for feedback and input on the potential effects of changes to the 

TEAs. 

Ms. JACKSON LEE. And let me give three questions and then you 

all can answer them. To you, Ms. Gambler, what about the ability 

of the Immigration Services to vet the whole project and economic 

aspect of it; in your review, what did you see in that? 

Let me ask questions to Mr. Walls. How do you respond to arguments that the current system operates as a one-tier level investment? 

And then to Ms. Mends-Cole, the cited projects that you had in 

distressed areas, if these projects are already happening, why do 

you think the program needs reform? 

So, Ms. Gambler, on the review by the Immigration Services, do 

they have the wherewithal to do so? Should we set up a certain— 

another entity to do that? 

Ms. GAMBLER. So I don’t know for certain that they would have 

the staff with the right skills and abilities. But what I would say 

is, in the past, both we and the DHS IG have reported in other 

areas related to the EB–5 program on the need for USCIS to increase staff in both numbers and skills. And USCIS has been taking steps to do that over the course of the past few years. 

Ms. JACKSON LEE. Mr. Walls. 

Mr. WALLS. I agree that it has been operating as a one-tier investment system, but it was contrary to the intent of congressional 

intent. It was intended to be a two tier. It just has operated a one 

tier because of misuse of the TEA designation. 

Ms. JACKSON LEE. And Ms. Mends-Cole. 

Ms. MENDS-COLE. These projects have largely been happening 

not because of but despite of the current status quo. I believe that 

a reform would allow for greater geographic distribution both at a 

national level, but also within a State level. So some of the projects 

that were discussed are largely heavily in New York, upstate New 

York. Places like Utica that desperately need these dollars have 

been overlooked because of the attraction for at-risk capital to very 

low risk investments. 

Ms. JACKSON LEE. Thank you. 

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Mr. Chairman, I would just like to conclude by saying I think it 

is very important that this committee looks to improving distressed 

areas and creating jobs in all areas, both urban and rural, and I 

hope we can do this together. With that, I yield back. 

Mr. KING. The chair thanks the gentlelady from Texas. 

And now recognizes the gentleman from Idaho, Mr. Labrador. 

Mr. LABRADOR. Thank you, Mr. Chairman. And thank you to all 

the witnesses for being here today. 

As you know, Senator Grassley testified that the original intent 

of the investor visa program was to create new employment for 

American workers and infuse capital into distressed or rural areas. 

Ms. Gambler, is the program accomplishing those goals? 

Ms. GAMBLER. Based on the sample of files that we looked at for 

the report we issued to this committee last year, we found that the 

majority of projects within our sample were going to areas or were 

located in census tracts, census areas that had unemployment rates 

of 6 percent or less. So the majority of projects in the sample we 

looked at, they were located in areas that had an unemployment 

rate of 6 percent or less. 

Mr. LABRADOR. Okay. Mr. Walls, in the past I have expressed 

concerns about how gerrymandered districts have led to so many 

urban projects in low unemployment areas, while the rural communities and the true high end unemployment urban centers have 

been largely forgotten. Do you think the proposed regulatory 

changes stopped the gerrymandering that has been occurring? 

Mr. WALLS. Yes. Sorry, the microphone comes in and out. 

Mr. LABRADOR. That is okay. 

Mr. WALLS. Yes. As proposed, it does address the gerrymandering issue. 

Mr. LABRADOR. Okay. Mr. North, same question. Are the proposed changes to the TEA definition sufficient to end the gerrymandering that has been occurring in the program? 

Mr. NORTH. I think it helps. I would rather do it the way the— 

some of you may recall in this room—the Appalachian regional development commission was done. You would have to put your investment in a previously defined depressed county, which was the 

minority of the United States, the minority of the geography of the 

United States. If you do it that way, then Congress has some control over it. Otherwise, various creative people do as they are currently doing, and I don’t like that. 

Mr. LABRADOR. Okay. Mr. Walls, my State Idaho like Arkansas 

is a rural State and I am concerned about the lack of investment 

going to those areas. Will the proposed changes lead to more investment in those areas? 

Mr. WALLS. Well, I think, again, our motivation is the changes 

are a step towards that. We agree with—ultimately, legislation is 

the best answer for this thing. This is a step towards it as an incentive to—in the markets that we are having to go to for these 

investors for them to, I think, more realistically or more honestly 

or openly want to look at investments in those areas outside the 

gateway cities in the major States. 

Mr. LABRADOR. So you mention it needs to be done through legislation, and we have been working on legislation to improve the promstockstill on DSK30JT082PROD with HEARING

35 

gram. What more can be done to ensure that these rural and true 

high unemployment areas are able to attract investors? 

Mr. WALLS. I think I mentioned in my statement, I think our 

concern has been there had a been a small group that—again, 

sorry, the microphone goes in and out—have a vested interest in 

the status quo. And, you know, when you talk about market, you 

are talking about—there is two markets you are talking about: 

There is the 10,000 visa market. And right now that is oversubscribed, that has been mentioned. And I think the issues that we 

are all concerned about is what pricing and how does that effect 

the overall market. 

But you also have, certain parties, they are looking at the market is defined as the market that they have enjoyed for the history 

of the program. We understand that to be over 90 percent of investors are going a very select market, or very affluent, nondistressed 

area. And so invariably, whatever reforms happen, it is going to affect that market, and they certainly are vested to keep that from 

happening. We as a rural State admittedly would like to see more 

of that dispersed in other areas of the country, like Arkansas and 

Idaho. 

Mr. LABRADOR. Okay. Thank you. 

Mr. North, if we are going—so let’s assume we are going to continue the investor program, and I understand you don’t want to 

continue it, but if we do, what other changes would you recommend 

to actually accomplish the goal of attracting capital to rural and 

high unemployment areas? 

Mr. NORTH. I would change the definition of where the money 

should be spent. And I am not happy with the thought that developers are going to figure this out and create, you know, their own 

maps as they have done. So I would make it a different definition, 

and I would make it—I would try to get something that would really push investment into rural and genuinely distressed areas, such 

as downtown Detroit. 

Mr. LABRADOR. Okay. Ms. Brunner, you stated that both the proposed increasing investment amounts and the proposed changes to 

the definitions will have a negative impact on your ability to attract investors. Is it the combination of both changes that will impact investment or is the one change more likely than the other to 

have the negative impact? 

Ms. BRUNNER. They will a work in concert, Congressman. The increased numbers don’t seem to—well, they are tied to a CPI calculation going back to 1990. They don’t seem to be tied to a supplyand-demand model where you would try and figure out at what 

price can you achieve the same demand, which is the question I 

would like this committee to ask and get answered. So that is a 

very serious concern. That will impact demand. 

The second thing that will impact demand is the ability of 

projects to qualify. The arbitrary and capricious nature of the 

TEA—of the existing TEA definition and the proposed TEA definition do a disservice to the program. At minimum, I would invite 

the committee to explore what other definitions are used within the 

Federal Government. And in the absence of that, our preference is 

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36 

tressed and rural areas and other areas, create set-aside programs 

that properly incent the investors. 

The only variable that investors seem to care about right now is 

time. And so what I would invite the committee to do is to explore 

what they can do to manipulate the time factor for investors. If you 

manipulate that factor, you can drive investment anywhere you 

want it to go. 

Mr. LABRADOR. Okay. Thank you, I yield back. 

Mr. KING. The gentleman from Idaho yields back his time. 

And the chair would now recognize the gentleman from New 

York, Mr. Nadler. 

Mr. NADLER. Thank you, Mr. Chairman. 

Mr. Chairman, in less than 2 months in office, President Trump 

has issued two unconstitutional and immoral executive orders attempting to enact the Muslim and refugee ban, is reportedly considering ordering women separated from their children, has threatened to punish so-called sanctuary cities even though doing so will 

likely make those communities less safe, and has embarked on 

building an unnecessary and fiscally irresponsible wall across the 

southern border. In short, he has fundamentally reoriented our immigration policy toward one of exclusion based on fear and ignorance rather than adhering to our historic commitment of being a 

place of refuge based on the belief we are stronger as a nation because of those who come to our shores. 

In light of this radical departure in Federal policy, it seems a bit 

incongruous for our first immigration hearing since the Trump administration began to be focused on the EB–5 investor visa program, a useful but relatively minor program that offers visas in exchange for significant economic investment in the United States. 

I hope we will soon conduct oversight into President Trump’s 

cruel and shortsighted immigration policies. In the meantime, since 

we have the opportunity to consider the EB–5 program today, I 

want to ask a few questions about that program. 

Now, Ms. Brunner, some critics of the EB–5 program argue that 

certain regional centers are in effect gerrymandering census tracts 

in order to create targeted employment areas and take advantage 

of the lower investment criteria for TEAs. Do you believe that the 

proposed regulations and other proposed reforms account for the 

unique circumstances of major urban centers where a census tract 

may only consist of a block or two? 

Ms. BRUNNER. No, I do not, Congressman. 

Mr. NADLER. Could you elaborate? 

Ms. BRUNNER. Sure. Urban areas—first of all, census tracts are 

designated by density of population. So, in a rural area, you may 

have a single census tract in Wyoming or another rural State that 

covers 20-plus miles, single census tract. In an urban area, you 

may have a census tract that covers maybe four, six blocks. 

Mr. NADLER. In my area, you have a census tract that covers half 

a block. 

Ms. BRUNNER. There you go. Exactly. Exactly to my point. So, 

when you use census tracts as a basis of designation, either it be 

12 in California or the doughnut approach that is used in the current proposed regulations, you completely ignore any principle of 

economic development. It is completely unrelated, actually, to the 

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purpose of the TEA designation, which is to determine unemployment. You really have to look at the area in a whole different light. 

Now, the Federal Government does an excellent job of that. 

There has been a lot of thought through a number of agencies, 

USDA, HUD, a number of agencies, not to mention the State-level 

work that is done on—that has been done on enterprise zones in 

the past or the current designations or the rural designations that 

exist. 

I would invite the committee to not reinvent the wheel and either 

lean on the work that has already been done so diligently by other 

agencies in the Federal Government or to eliminate the conversation. 

As much as the conversation of TEA designation and gerrymandering has hijacked this committee and the entire reform conversation, I think the most responsible thing we can do is to eliminate the conversation and eliminate TEAs. 

Mr. NADLER. What do you mean by ‘‘eliminate the conversation’’? 

Ms. BRUNNER. We need to go to a single investment tier, and we 

need to use set-asides. 

Mr. NADLER. And let me just elaborate for a moment. Also, if the 

purpose of this is to generate employment in under—in low-income 

areas, basically, in high-unemployment areas, not only do you have 

the distortion here where a census tract can be half a block or a 

block or two, but does it also ignore the fact that, in an area like 

an urban area, like in New York, you may have Hudson Yard, very 

upscale development, half a mile away from a very depressed 

neighborhood where the workers live? 

Ms. BRUNNER. Well, I am actually in favor of commuting patterns because I think that they demonstrate the actual reality of 

economic development in the United States, that people—the variable that Bureau of Labor Statistics and a number of other Federal 

agencies use is, what is the commute that people would endure to 

go to work? That is why high speed—— 

Mr. NADLER. What I am saying is that, if you are looking, you 

are saying, as the chairman implied when he was reading that 

ad—that ad from that development, Hudson Yards, he was implying that this is a very rich area; you are not going to help low-income people, unemployed people. But that area, that high-end development area, is half a mile from Harlem and less than a mile 

from the South Bronx, which are very depressed, low-income areas 

where workers live. 

Ms. BRUNNER. That is right. 

Mr. NADLER. In other words, by looking at this and not taking 

that into account, you are distorting the reality of the effect of the 

economic development here, which is to help, arguably, to help lowincome workers who live nearby, albeit in a different census tract 

and, therefore, to gerrymander the census tracts to—not to master 

reality but to show the reality that the low-income workers are living—who are being aided are living near the development, that is 

not wrong. 

Ms. BRUNNER. That is correct. 

Mr. NADLER. You agree with that? 

Ms. BRUNNER. I do. 

Mr. NADLER. Okay. I see that my time has expired. 

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I yield back, thank you. 

Mr. KING. I thank the gentleman from New York. 

Now I recognize the gentleman from Texas, Mr. Gohmert. 

Mr. GOHMERT. Thank you, Mr. Chair. 

I appreciate the witnesses being here today. 

Director Gambler, I understood you had commented about the 

vetting that occurs with those who want to invest in this EB–5 program. What kind of vetting goes on? 

Ms. GAMBLER. So, as part of our work, Congressman, we did not 

get into a lot of details on the background check process. However, 

sir, I would be happy to get some followup information and get 

back to you and your office with much more detail. 

Mr. GOHMERT. Well, obviously, from the comments here, the 

focus is in the EB–5 program, you know, getting financial investments in the United States. And that seems to be the focus of the 

State Department as well. Much more important that we get the 

price we have named for prostituting our own visas than it is to 

figure out whether these people are going to be good, moral, upstanding folks here in the United States. And although a colleague 

may call two executive orders unconstitutional and immoral, it 

doesn’t make them so any more than the Supreme Court saying the 

Dred Scott decision was constitutional. It was constitutional. Calling it so one way or another does not make it so. And there is nothing immoral about a President trying to protect people. 

It really is astounding. As I sit and listen—I was listening in the 

back as well. I mean, it really is like that story, you know, we are 

just haggling over price. We have established what you are. The 

United States is willing to sell its soul. How much are we going to 

get for the price of selling our souls? 

I wasn’t even aware of the EB–5 program until my sheriff let us 

know. 

But here is part of the story: A former Mexican Government official wanted for embezzling millions was arrested in Texas this 

month, then promptly ordered released by the State Department. 

A day after pulling rank on Smith County law enforcement officials, the State Department rescinded the order, but Hector Hernandez Javier Villarreal was gone by then. Villarreal, the former 

Secretary Executive of the Tax Administration Service of Coahuila, 

Mexico, was arrested on charges in Mexico relating to an alleged 

scheme involving embezzling millions of dollars from the Mexican 

Government. He posted a $1 million cash bond, then got himself a 

U.S. visa and skipped town. Villarreal surfaced in Tyler, Texas, 

when he, his wife, Maria Botello, and another man were pulled 

over for a routine stop. ‘‘All we did was make a traffic stop; they 

didn’t have a front license plate,’’ Smith County sheriff, J.B. Smith 

told FOX News. Police were given permission to search the vehicle. 

They found $67,000 in cash and a shotgun. Anyway, he said Homeland Security officials had told his department Villarreal was a 

high-profile and wanted fugitive. ‘‘We placed them in jail on moneylaundering charges, seized the vehicle and the money; ICE came, 

picked him up from our jail, took him to Dallas, and that is the 

last we have seen.’’ Villarreal and Botello posted bond on February 

6, were released in the custody of Homeland Security Immigration 

and Customs. They were taken to a Dallas detention center for demstockstill on DSK30JT082PROD with HEARING

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portation. That is when State Department intervened. Homeland 

Security officials called to tell him the Federal diplomatic agency 

had ordered Villarreal and his wife released. 

And so, anyway, I don’t know that they have ever been found, 

but it seemed pretty clear the focus was getting the money. And, 

once again, like has been talked about, this guy offered 500,000 to 

invest, and he got a visa very immediately. And what comes to 

mind is, how many people in the world have massive amount of 

money that was obtained from immoral or illegal purposes, and we 

in America seem to say, ‘‘we don’t care how you obtained your 

money; you could have swindled it from the Mexican people, but we 

want you in America if you will put some of that cash where we 

tell you to put it, and we won’t even be that particular about where 

we tell you to put it’’? 

So I am appalled at this program. You know, America has degenerated to the point that, you know, our soul is for sale, and now 

we have got to negotiate about how high of a price we want. Give 

us your tired, your energetic. We don’t care. Give us your immoral, 

your degenerate. As long as they have got money, the message is 

we want them in America, and we will give them a visa to get their 

money. I think it is an immoral message to send to the world. It 

feeds the hatred that some have for America that we don’t care 

about being moral and upright in America; we care about the all 

mighty dollar. I for one would like to see it stop. 

I yield back. 

Mr. KING. The gentleman from Texas has yielded back. 

The chair now recognizes the gentleman from Louisiana, Mr. 

Johnson. 

Mr. JOHNSON of Louisiana. Thank you, Mr. Chairman. 

Director Gambler, this is a couple for you. We are all committed 

to rooting out fraud, waste, and abuse, and I thank you for your 

commitment to that and your important work on it, all of you, for 

helping on that. 

Just three quick questions on that topic. When the GAO was conducting its review to the proposed project investments in the targeted employment areas, was the information you were seeking 

easily accessible when you were trying to understand how the EB– 

5 recipients were actually investing this money? 

Ms. GAMBLER. We specifically looked at files that were submitted 

in the fourth quarter of fiscal year 2015. That was a sample that 

was readily available for our review. It did require us to go through 

paper files for the 200 sample files that we looked at. 

Mr. JOHNSON of Louisiana. So, of the sample files, did you find 

that it was clear and concise? I mean, it was easily understood 

where the money went and how they created jobs? 

Ms. GAMBLER. We were able to get the data for our review out 

of the files. I would add, though, that some of the files can be thousands of pages long. And one of the key challenges with the program that we have pointed out in our work is the lack of data 

being readily available in an electronic format that allows for the 

agency to do things like identify fraud risks, look at trends in the 

program, that kind of thing. 

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Mr. JOHNSON of Louisiana. So is the need for additional information, or just is it a formatting issue to make it more readily accessible? 

Ms. GAMBLER. In part, it is having the information available in 

such a way that it can be searched and utilized more easily for the 

purposes of like risk assessment and other things. USCIS is working toward a case management system, and so they are making 

some progress there, and that is a good and important step. 

Mr. JOHNSON of Louisiana. So do we know when the case management system will be completed or released? Is there a target 

date for that? 

Ms. GAMBLER. USCIS, I believe, was hoping to get something underway this fiscal year. We would be happy to follow up with them 

and get back to your office if that time frame has changed. 

Mr. JOHNSON of Louisiana. I am just curious. I mean, we are all 

interested in increasing transparency, and the more that we can 

make it readily available and accessible, understandable for, you 

know, just taxpayers, the better, I think because we want to know, 

really, where all this money is going and how it is being spent, obviously. 

Is the completion of the case management system, is that a—do 

you think it is a funding issue, or is it just timing; it is on their 

things-to-do list? 

Ms. GAMBLER. At the point in time that we were doing our work 

last year, I think they were figuring out, kind of, what the parameters would be for that, what the requirements would be. So I 

think it is more just that they have to go through the process of 

determining what their requirements are and what type of system 

will meet their needs. 

Mr. JOHNSON of Louisiana. Have you given them feedback or 

ideas on what will make it easier for you when you went through 

this process? 

Ms. GAMBLER. Not specifically as it involves to a case management system related to the EB–5 program. But, more broadly, I 

think, as you are probably aware, USCIS relies on a paper-based 

process for adjudicating immigration benefit applications, and they 

are working through their transformation program to move to a 

more electronic system. And we have made a host of recommendations to the USCIS on that broader transformation effort designed 

to help them implement that program on a more effective basis. 

Mr. JOHNSON of Louisiana. All right. Thank you. 

I appreciate all of you being here. 

Thank you. 

Mr. KING. The gentleman from Louisiana returns his time. 

And this concludes today’s hearing. I want to thank all of our 

witnesses for your testimony here today and your response to all 

the questions of the panel. 

Without objection, all members will have 5 legislative days to 

submit additional written questions for the witnesses or additional 

materials for the record. 

This hearing is now adjourned. 

Æ 

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