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S. HRG. 112–939 

REAUTHORIZING THE EB–5 REGIONAL CENTER 

PROGRAM: PROMOTING JOB CREATION AND 

ECONOMIC DEVELOPMENT IN AMERICAN 

COMMUNITIES 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

DECEMBER 7, 2011 

Serial No. J–112–56 

Printed for the use of the Committee on the Judiciary 

( 
(II) 

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

CHUCK SCHUMER, New York 

DICK DURBIN, Illinois 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

AL FRANKEN, Minnesota 

CHRISTOPHER A. COONS, Delaware 

RICHARD BLUMENTHAL, Connecticut 

CHUCK GRASSLEY, Iowa, Ranking Member 

ORRIN G. HATCH, Utah 

JON KYL, Arizona 

JEFF SESSIONS, Alabama 

LINDSEY GRAHAM, South Carolina 

JOHN CORNYN, Texas 

MICHAEL S. LEE, Utah 

TOM COBURN, Oklahoma 

BRUCE A. COHEN, Chief Counsel and Staff Director 

KOLAN DAVIS, Republican Chief Counsel and Staff Director 
(III) 

C O N T E N T S 

DECEMBER 7, 2011, 10:01 A.M. 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Grassley, Hon. Chuck, a U.S. Senator from the State of Iowa ............................ 3 

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 1 

prepared statement .......................................................................................... 50 

Schumer, Hon. Chuck, a U.S. Senator from the State of New York, 

prepared statement .......................................................................................... 52 

WITNESSES 

Witness List ............................................................................................................. 25 

Divine, Robert C., Attorney, Baker, Donelson, Bearman, Caldwell, and 

Berkowitz, P.C., and Vice President, Invest In the USA (IIUSA), 

Chattanooga, Tennessee ...................................................................................... 8 

prepared statement .......................................................................................... 41 

North, David, Fellow, Center for Immigration Studies, Washington, DC .......... 7 

prepared statement .......................................................................................... 32 

Stenger, William J., President and Chief Executive Officer, Jay Peak Resort, 

Jay, Vermont ........................................................................................................ 5 

prepared statement .......................................................................................... 26 

QUESTIONS 

Questions submitted to Robert C. Divine by Senator Grassley ........................... 56 

Questions submitted to Robert C. Divine by Senator Klobuchar ........................ 59 

Questions submitted to David North by Senator Grassley .................................. 55 

Questions submitted to David North by Senator Klobuchar ............................... 58 

Questions submitted to William J. Stenger by Senator Grassley ....................... 53 

ANSWERS 

Responses of Robert C. Divine to questions submitted by Senators Grassley 

and Klobuchar ...................................................................................................... 67 

Responses of David North to questions submitted by Senators Grassley and 

Klobuchar .............................................................................................................. 60 

[Note: At the time of printing, the Committee had not received responses 

from William J. Stenger.] 

MISCELLANEOUS SUBMISSIONS FOR THE RECORD 

Atteberry, Kimberly, President, Vermilion Consulting LLC, statement ............. 116 

Berthel Fisher and Company, Thomas J. Berthel, Chief Executive Officer, 

December 5, 2011, letter to Senator Grassley ................................................... 101 

City of Amarillo, Hon. Paul Harpole, Mayor, Amarillo, Texas, December 5, 

2011, letter to Senator Hutchison ....................................................................... 87 

City of Dallas, Hon. Michael S. Rawlings, Mayor, Dallas, Texas, November 

28, 2011, letter to Senator Hutchison ................................................................ 79 

City of Houston, Hon. Annise D. Parker, Mayor, Houston, Texas, December 

6, 2011, letter to Senator Cornyn ....................................................................... 92 

City of Houston, Hon. Annise D. Parker, Mayor, Houston, Texas, December 

6, 2011, letter to Senator Leahy ......................................................................... 140 
Page

IV 

City of New York, Hon. Michael Bloomberg, Mayor, New York, New York, 

statement .............................................................................................................. 138 

Civitas Capital Group, Daniel J. Healy, Chief Executive Officer, statement ..... 93 

Civitas Capital Management, LLC, Daniel J. Healy, Managing Partner, 

November 28, 2011, letter to Senator Cornyn ................................................... 76 

Cornyn, Hon. John, a U.S. Senator from the State of Texas, submission 

of eight letters and one statement ...................................................................... 120 

EB5 Capital, Angelique G. Brunner, President, Owner, DC Regional Center, 

and Principal, EB5 Sugarbush, statement ......................................................... 102 

Greater Des Moines Partnership, The, Jay R. Byers, Senior Vice President, 

Government Relations and Public Policy, December 5, 2011, letter to 

Senator Grassley .................................................................................................. 86 

Greater New York Chamber of Commerce, Mark Jaffe, President and Chief 

Executive Officer, December 5, 2011, letter to Senator Leahy ........................ 84 

Harry’s Cafe and Harry’s Steak, New York, New York, November 30, 2011, 

letter ...................................................................................................................... 110 

Hilton Worldwide, William B. Fortier, Senior Vice President, Development— 

Americas, December 12, 2011, letter .................................................................. 113 

Hyatt Hotels Corporation, Stephen G. Haggerty, Global Head Real Estate 

and Development, December 14, 2011, letter to Senator Leahy ...................... 109 

Iowa Economic Development Authority, Deborah V. Durham, Director, 

December 8, 2011, letter to Senator Grassley ................................................... 114 

LinkAmerica, Inc., Andres Ruzo, Chief Executive Officer, November 29, 2011, 

letter to Senator Cornyn ...................................................................................... 80 

Marriott International, Inc., Anthony G. Capuano, Executive Vice President, 

Global Development, December 6, 2011, letter to Senators Leahy and 

Grassley ................................................................................................................ 90 

Matthews Southwest, Jack Matthews, President, November 28, 2011, letter 

to Senator Cornyn ................................................................................................ 78 

New York City Regional Center, Paul Levinsohn, Esq., Managing Principal, 

and George Olsen, Esq., Managing Principal, statement ................................. 141 

Real Estate Roundtable, The, Jeffrey D. DeBoer, President and Chief Executive Officer, December 5, 2011, letter ................................................................. 88 

Spencer Crain, Elise A. Healy, Attorney at Law, December 2, 2011, letter 

to Senator Leahy .................................................................................................. 83 

StoneGate Senior Living, LLC, John F. Taylor, Chief Executive Officer, 

December 1, 2011, letter to Senator Cornyn ...................................................... 81 

Texas Association of Business, Bill Hammond, President, December 13, 2011, 

letter ...................................................................................................................... 144 
(1) 

REAUTHORIZING THE EB–5 REGIONAL CENTER PROGRAM: PROMOTING JOB CREATION 

AND ECONOMIC DEVELOPMENT IN AMERICAN COMMUNITIES 

WEDNESDAY, DECEMBER 7, 2011 

UNITED STATES SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:01 a.m., in Room 

SD–226, Dirksen Senate Office Building, Hon. Patrick J. Leahy, 

Chairman of the Committee, presiding. 

Present: Senators Leahy, Grassley, Sessions, and Cornyn. 

OPENING STATEMENT OF HON. PATRICK J. LEAHY, 

A U.S. SENATOR FROM THE STATE OF VERMONT 

Chairman LEAHY. Good morning. Thank you for being here on a 

rainy, sloppy morning. I am hoping that in Vermont the temperature is 10 or 15 degrees lower because that would mean about 10 

inches of snow, which we describe as something between a dusting 

and a snowfall back there. 

I thank our witnesses for joining us today to discuss the EB–5 

Regional Center Program and its proven record of creating jobs in 

America. In 2011 alone, this program is on track to create an estimated 25,000 jobs and provide direct investments in American 

communities of $1.25 billion. And, of course, there is great potential to increase the program’s annual benefits. If the full number 

of visas allocated to the program are utilized, based upon investment and job creation requirements, the program has the potential 

to create or preserve 100,000 jobs per year, with contributions of 

$5 billion in foreign capital investment. That is as much of a winwin program as one could think of. The benefits come at no cost 

to American taxpayers. The program is and should continue to be 

an important component of our overall immigration system. 

Now, the current authorization for the program is set to expire 

at the end of September 2012, and I have talked with a number 

of Senators, both Republicans and Democrats, who believe along 

with me that it is critical that Congress support U.S. Citizenship 

and Immigration Services, which administers the program, along 

with the many men and women who are working hard to bring jobs 

to their communities, by enacting the permanent authorization legislation that I introduced in March of this year. I thank the Chairman of the Subcommittee on Immigration, Refugees, and Border 

Security, Senator Schumer, for joining me as a cosponsor of the leg-
2 

islation. I know that like many parts of the United States, from 

Alabama to Vermont, entrepreneurs in New York City have turned 

to financing through the EB–5 Regional Center Program. 

Like any program, there is always room for improvement, and I 

commend Director Mayorkas at USCIS and Homeland Security 

Secretary Janet Napolitano for making the program a central part 

of the Department’s contribution to the President’s broader job creation efforts. The history of our Nation has been written in part 

through the contributions of immigrants. My maternal grandparents came to Vermont from Italy and started a small stone-carving business in South Ryegate, Vermont, as Mr. Stenger knows. 

That is up near his part of the State. The place does not have 

many jobs. It had a lot more jobs once they started their business. 

That is replicated in so many other areas, not only in our State but 

all 49 other States. And the EB–5 visa and other employmentbased visa categories within our immigration system can play a 

meaningful role in writing our future economic resurgence. 

I have been working for many months with interested parties 

and USCIS to put together a legislative framework to make significant improvements to the overall program to provide them with additional authorities to ensure that the program maintains the highest level of integrity and efficiency. I have shared this framework 

with the Judiciary Committee’s Ranking Member, Senator Grassley, and I hope we can work together to make the program an even 

more secure and effective job creator. 

But I think we should move forward with a permanent authorization without further delay. I think Congress has to show potential investors from around the world that America welcomes immigrant investors and values their contributions. If not, then we are 

going to lose those potential investors to our neighboring country 

of Canada or to the United Kingdom or to Australia or other nations that recognize immigration through investment and seek it 

out. We are already hearing that the uncertainty about the program’s future is a drag on investment and on our economic recovery. 

We are going to hear from Bill Stenger of Jay Peak, Vermont. 

His work, financed in part through the EB–5 Regional Center Program, has revitalized a very rural part of Vermont. It has turned 

a beloved and iconic Vermont ski resort into a world-class, four-season resort. I know that when I go up there and I hear carpenters 

and plumbers and electricians from that area who live in that area 

tell me they are making more money than they have ever made before, and they have been able to do more for their kids, they can 

invest in the community, they are seeing the training they had as 

Vermonters pay off, and now they are actually making money in 

an area where there was not much money to be made, it really 

makes this Vermonter happy. 

In Texas, the city of Dallas has recently entered a partnership 

with a capital management firm to create the City of Dallas Regional Center to create jobs for the people of Dallas. Companies 

like Marriott Hotels and Lennar Homes have turned to the EB–5 

program to finance job-creating projects around the country. So this 

is happening all over, and, again, I think that is why we have support for this from both Republicans and Democrats. But I would 
3 

like to see—I will put my full statement in the record, but I would 

like to see this become permanent so that investors can plan. 

[The prepared statement of Chairman Leahy appears as a submission for the record.] 

Chairman LEAHY. Senator Grassley. 

OPENING STATEMENT OF HON. CHUCK GRASSLEY, 

A U.S. SENATOR FROM THE STATE OF IOWA 

Senator GRASSLEY. Thank you, Mr. Chairman. 

This program and its regional centers, now 21 years old, was created to benefit American communities through investment and job 

creation. Certainly at a time of economic uncertainty, high national 

unemployment, and stagnant growth, we must consider all tools at 

our disposal to increase economic activity. 

While I supported the EB–5 Regional Center Program in the 

past, I hope to hear how this program can better serve our Nation’s 

needs in the future. Today’s hearing is a way for us to conduct our 

constitutional duty of oversight. It is important for us to review the 

EB–5 program to determine how many jobs are created and hear 

whether the program is increasing economic activity in the areas 

most needed. 

I hope to work with the Chairman on reauthorizing a reformed 

and cost-effective program in addition to several other immigration 

programs that will expire at the same time. We need to enact reforms that will make the EB–5 Regional Center program worthy of 

its goals. 

Some may argue that the EB–5 Regional Center Program is 

doing very little to stimulate the economy. I appreciate the administration’s recent attempts to focus energy and attention on reforming the program and increase participation in regional centers. The 

changes they institute will help, but at the end of the day, one fact 

remains. The program is simply a way for wealthy investors to buy 

a green card, not only for themselves but for their families. No 

skills or management experience are needed. One only needs to 

write a check to gain entry into the United States. While taking 

a financial risk in projects or businesses in the United States is admirable, evidence suggests that it is not doing enough to spur job 

creation. 

Since Congress kept the number of employment-based immigrants that are allowed to enter the United States each year, it is 

important that we utilize those visas to the best extent possible. 

We must have an immigration system that is based on merit. We 

should be taking the best and the brightest. We can afford to be 

choosy, so we must elect to provide immigrant visas to those with 

tremendous skills that will benefit our country in the long term. 

So, in that vein, we must figure out where the EB–5 Regional 

Center Programs fit into this equation. I have the question of 

whether or not the EB–5 program attracts the individuals we need 

or are we simply selling visas to the highest bidders. 

I want to take a moment to express serious concern about reports 

that the EB–5 Regional Center Program is creating jobs for people 

in this country illegally. The U.S. Citizenship and Immigration 

Services Administrative Appeal Office reviewed the applications for 

one investor in the South Dakota Regional Center. The AAO said 
4 

that the agency was correct in denying his request for green card 

status because the employees were in the country illegally. If we 

are going to allow wealthy foreigners to enter the United States to 

create jobs, I would sure hope that U.S. citizens are the benefactors. I would like to hear today about how the centers create 

jobs, how they report this information to the Federal Government, 

and whether the USCIS is doing substantial auditing of centers to 

verify the information received from the regional centers. 

We must also do a better job of rooting out abuse in EB–5 promoters abroad. Reuters recently reported on how cash-hungry 

American businesses are working abroad to promote EB–5 Regional Center Programs. Many of these EB–5 promoters are 

mischaracterizing the program, luring investors here and robbing 

them of the American dream. In fact, China has reportedly put restrictions on these promoters. When asked by Reuters, both the 

USCIS and the Securities and Exchange Commission were unaware of any marketing abuses. Maybe it is time that these agencies figure out what is truly going on. 

I would like to work with Chairman Leahy on ways to strengthen 

the oversight over the program. I think he may have some good 

ideas on doing that, including requiring more reporting by the centers and ending centers that are not producing as they promised. 

In addition to restoring program integrity, I think it is important 

to consider whether the dollar amount should be raised. They have 

remained $500,000 and $1 million since the early 1990s. 

Finally, we must close any loopholes that allow a foreign investor 

to bring capital to the table, receive a green card, and then withdraw his financial support and walk away from the regional center. 

I realize that we have testimony from every single regional center 

program citing the benefit foreign investment has provided their 

community. I appreciate Mr. Stenger appearing before us again 

today and sharing with us how the program has benefited 

Vermont. 

Conversely, I look forward to hearing from Mr. North, a Fellow 

at the Center for Immigration Studies. Mr. North will provide a 

different perspective. 

I also look forward to hearing from Mr. Divine, who had experience in overseeing the operation of the program when he worked 

as Chief Counsel and Acting Director of the U.S. Citizenship and 

Immigration Service. 

Thank you, Mr. Chairman. 

Chairman LEAHY. Well, thank you, and I can assure you I will 

work with you on what we can do to make this permanent. I know 

Senator Sessions and Senator Cornyn on this Committee and Senator Schumer and others have expressed an interest in going forward with the program, and I am happy to work with them. I just 

want to bring enough stability into it so that people can plan. 

Now, William Stenger, our first witness, comes to us today from 

my home State of Vermont, as I have said. He is currently the 

president and chief executive officer and co-owner of the Jay Peak 

Resort in Jay, Vermont. He has served as the chairman of the 

Vermont Ski Areas Association and was chairman of the Vermont 

Travel Council from 1998 to 2007. The Vermont Chamber of Commerce in a statewide vote selected him as the 2011 Citizen of the 
5 

Year for his work in transforming Jay Peak into a four-season resort, and also not just for what he has done for Jay Peak, but the 

huge amount of economic development it has created in the Northeast Kingdom of Vermont. Mr. Stenger was instrumental in creating the Vermont Regional Center in 1997. 

I would note also for the record that both he and his wife are 

personal friends of me and my wife. We value their friendship, and 

I especially value all the jobs you created up there. 

Mr. Stenger, please go ahead. 

STATEMENT OF WILLIAM J. STENGER, PRESIDENT, 

JAY PEAK RESORT, JAY, VERMONT 

Mr. STENGER. Mr. Chairman and Senator Grassley, thank you 

for this opportunity to be before you today. My name is Bill 

Stenger, and I am president and co-owner of Jay Peak Resort located in Jay, Vermont. 

I am very appreciative of this opportunity to meet with you today 

and share with you my perspective on the significant value the 

EB–5 foreign investor Regional Center Program represents to my 

employees, my community, and the State of Vermont and why I 

urge Congress to make this program permanent. 

My company, Jay Peak Resort, was founded in 1955 as a winter 

ski resort. It is located in Orleans County, 3 miles from the Canadian Border. George Aiken, one of Vermont’s most revered U.S. 

Senators, called the northern region of Vermont the ‘‘Northeast 

Kingdom’’ because of its beauty and authentic, hardworking people. 

Orleans County is a place of great rural agricultural character, 

with beautiful mountains, streams, and lakes, but it also has the 

most significant unemployment and economic challenge of any region in Vermont. 

However, despite these facts, I am very optimistic about the economic future of our community and its citizens. We are seeing at 

our facilities the significant creation of the biggest positive life 

changer a person needs—a job. A job that will sustain them and 

their families with benefits, and a future that inspires and rewards 

their economic and human spirit. We are seeing this employment 

creation at Jay Peak and our surrounding rural communities in 

this terribly troubled economic time solely because of the EB–5 foreign investor program. 

In 1997, I had the opportunity to work with you, Mr. Chairman, 

and at the time Governor Howard Dean to create the Vermont Regional Center and its first EB–5 Pilot Project in Vermont. In 2004, 

because of improved CIS efforts and the renewed commitment of 

our State officials led by Governor Jim Douglas, the EB–5 program 

became truly functional from our perspective in Vermont. 

Since 2005, Jay Peak has developed several EB–5 projects at the 

resort creating over 2,000 jobs in our region and over the next 2 

years will create that number of jobs again in this northern rural 

community. 

The EB–5 program has provided us the most important tool we 

need to build our business and create economic energy: affordable 

equity capital. 

Affordable capital is almost non-existent in this marketplace. 

However, through the EB–5 Regional Center Pilot Program, Jay 
6 

Peak has raised over $250 million of equity capital by welcoming 

over 500 investors from 56 countries. This capital has helped us 

build year-round facilities that we desperately need in order to be 

competitive, but also helps us create full-time job opportunities for 

so many citizens throughout northern Vermont’s highest unemployment communities. 

The EB–5 program is a win-win-win program for all involved. 

Jay Peak is gaining access to equity capital to create facilities it 

needs, and by doing so scores of quality year-round jobs are created 

in a rural, high unemployment area where our Government wants 

to see job creation. 

In exchange for the job-creating equity capital investment, the 

foreign investor benefits from a green card for themselves and immediate family members. I have met personally almost every investor participating in the Jay Peak program. They are a group of 

wonderful people, so appreciative of the opportunity to live in and 

contribute to our society. I can tell you that their equity investment 

is changing our region in a profound and positive way. Once in the 

United States, they have continued to contribute as every one of 

them are well-educated, successful people who have brought their 

family values and capital with them. They are now living throughout the United States and contributing to the communities they 

live in. 

The success of Jay Peak’s EB–5 program has now led to other 

important job-creating projects in our community. Ariel Quiros, my 

partner in Jay Peak, and I have created AnC Bio Vermont, a 

biotech research company that will employ 200 people in Newport, 

Vermont, and will open in 2012–13. EB–5 investment has made 

this possible. We are also working on additional Orleans County 

commercial facilities, affordable housing and infrastructure programs, all scheduled for 2012 and 2013, resulting in several thousand more job opportunities—all EB–5 funded, all with overwhelming community support and significant economic impact. 

However, unless this program is extended, none of these job expansions will take place. 

I would like to close by mentioning a few things that will make 

the EB–5 program better for all concerned. 

Congress must make this program permanent so regional centers 

can concentrate on developing quality programs and long-term jobcreating programs. The short-term extensions that have taken 

place in the past cripple the effectiveness because the projects cannot plan correctly and potential investors will not have the confidence to stick with the program because of its uncertainty. 

USCIS should make every effort to be as efficient as possible 

with swift EB–5 case processing so that predictability can become 

a program asset and not a program concern. 

Mr. Chairman, Senator Grassley, thank you again for this opportunity. I look forward to answering questions you might have in a 

few minutes. 

[The prepared statement of William J. Stenger appears as a submission for the record.] 

Chairman LEAHY. Thank you very much, Mr. Stenger. 

Our next witness is David North, a Fellow at the Center for Immigration Studies, which is a Washington, DC, think tank. He 
7 

joined in 2008. In addition to posts in Federal and State government, he is a former Assistant Secretary of Labor, and he has conducted immigration policy research for several decades. 

Mr. North, welcome. Please go ahead. 

STATEMENT OF DAVID NORTH, FELLOW, CENTER FOR 

IMMIGRATION STUDIES, WASHINGTON, DC 

Mr. NORTH. Thank you, Mr. Chairman, Senator Grassley. We are 

gathered here to discuss what I think is, contrary to what my 

friend to the right just said, a dysfunctional portion of a silly program which should be allowed to wither and die. 

As background, the INA and its employment-based section permits aliens to secure green cards by investing various sums in the 

Nation. This is the program for the fifth and lowest priority of 

aliens coming through the employment-based section, therefore it 

is called EB–5. The most troublesome part of the EB–5 program relates to the regional centers, largely private, for-profit entities—not 

true in Vermont—that identify investments that can provide green 

cards to aliens making half-million-dollar short-term investments. 

That sum allows the alien and his family after 2 years to secure 

a full set of green cards. 

The other part of the program permits the issuance of green 

cards for a full-million-dollar investment without reference to the 

regional centers. It is the regional center part of the program which 

is up for reauthorization, not the larger program, which has some 

of its own problems. My conclusions about these programs come 

after examining the American program from the outside fairly carefully and after having been retained by the Government of Australia some years ago to evaluate its somewhat comparable program from the inside. There are seven reasons for my views. 

First, the program is placed in a very odd and non-helpful bureaucratic location for the stimulation of international investment 

in the United States. 

Second, its scale is all wrong. We are giving away too much for 

too small of an investment. Further, raising venture capital half a 

million dollars a tranche is, to say the least, inefficient. The big 

guys do not do it that way. The regional centers, with their halfmillion schemes, essentially undercut the more sensible million-dollar part of the EB–5 program. 

Third, such programs, if we have them at all, as they do in Australia, should be about creating business entities, not passive investments. It should be about creating real jobs, not elaborate calculations about the indirect creation of jobs, which is now part of 

the legislation. 

Fourth, the EB–5 program by its nature attracts sub-par investments and often scandals. Perhaps that is one of the reasons why 

it has failed year after year to reach the legislative goal of 10,000 

investment visas. 

Fifth, the Regional Center Program is inherently clumsy, and the 

program is too filled with middlemen, both public and private. The 

program has more than its share of scandals, which I will get into 

later if anybody is interested. 

Sixth, it should not be streamlined, which is what USCIS is currently suggesting. This is an agency that loves to say yes to appli-
8 

cants, but as the table in my testimony shows, USCIS officers have 

much more trouble with EB–5 applications than others. I think 

that is something that nobody has really talked about much. There 

are high rates of internal denials in this program and for good reason. Some of the paper they see must be pretty dreadful. 

Seventh, in this program visas go to people who could not get 

them any other way and to people whose planned investment is actually less, according to the Federal Reserve, than the average 

mean net worth of all American families in 2007. 

Let me expand on one of my observations. In 2009, total foreign 

investment in the United States increased by $1.9 trillion, according to the Department of Commerce. My estimate based on the investors’ green card applications filed 2 years after the first investment—these are the solid ones that remain and are approved. This 

is 2009—was that they had about $191 million confirmed—that is 

my estimate. USCIS does not provide the kind of data that we 

could use on this. And that was a good year for the program. So 

for every $100 of increased foreign investment that year, the EB 

program contributed one penny. 

Under a much more wobbly statistical base, the initial applications of would-be immigrant investors, USCIS is telling journalists 

that the level of investment in the just-concluded year was about 

$1.2 billion. Let us accept that. But even that number makes that 

ratio only 6 cents for every $100 of additional foreign investment 

in a typical year. 

Thank you for listening to me. I look forward to your comments 

and questions. 

[The prepared statement of David North appears as a submission 

for the record.] 

Chairman LEAHY. Thank you. 

Our next witness is Robert Divine. He is a shareholder of Baker, 

Donelson, Bearman, Caldwell, and Berkowitz. He is the head of the 

firm’s immigration practice group. Mr. Divine served as Chief 

Counsel of the United States Citizenship and Immigration Services 

from July 2004 until November 2006, the year in which he was 

Acting Director, and then Acting Deputy Director. He has worked 

extensively with the EB–5 program in private practice. He was 

elected, as I understand, vice president of the Association to Invest 

in USA, the national industry association of regional centers. 

Mr. Divine, we are delighted to have you here. Please go ahead, 

sir. 

STATEMENT OF ROBERT C. DIVINE, ATTORNEY, BAKER, 

DONELSON, BEARMAN, CALDWELL, AND BERKOWITZ, P.C., 

CHATTANOOGA, TENNESSEE, AND VICE PRESIDENT, INVEST 

IN THE USA (IIUSA) 

Mr. DIVINE. Thank you, Mr. Chairman, Senator Grassley, and 

others. Thank you for having me. 

I have submitted written testimony, and I am not going to read 

from it. It is there and I hope it provides useful background. 

Chairman LEAHY. It will be part of the record. 

Mr. DIVINE. And it will be part of the record, so I thank you for 

that. I will try to just give a brief bit of information that might put 
9 

things in perspective and respond to a few questions that Senator 

Grassley embedded in his comments. 

Yes, the investor visa, this EB–5 program, is one of many ways 

that we allow immigrants to come to the United States. At most, 

if all 10,000 slots were used, it would be 1 percent of the immigration annually to the United States. It is not near that yet, but it 

is growing and getting toward that. 

Particularly as USCIS, the agency that oversees the program, 

has been making the rules clearer and the processes more rational 

and clear for the people who are organizing investments and for 

the investors who are investing, more people have been willing and 

able to put effort and money into the process to find good projects 

and develop them, and then more investors have been willing to invest their money and take the risk and use the money to create the 

jobs that is the point of the program. 

If the agency can continue to speed their adjudication, which 

they are trying to do—they are staffing up—that will really help 

to improve the number of projects, the quality of projects, and help 

the program meet its potential, because people need to be able to 

get the approvals quickly in order to take advantage of the opportunity for whatever project is there. These projects do not wait 

around forever, and USCIS understands that and are trying to 

speed the program, speed the process. 

That does not mean that they are relaxing their scrutiny, and, 

in fact, they are ready to deny applications that are not qualifying. 

And they do so, as was mentioned. 

The EB–5 program or category is permanent in the code. The regional center part of the program is not. It is part of an appropriations bill that was enacted in 1992, and since then that program 

has been extended five times for 19 years. It is time for it to be 

permanent, and it needs to be done now and not nearer to the date 

of expiration in September. People need to plan. The process takes 

a good while to work up a project and then to get the investors approved. And they do not want their money flowing through until 

they have been approved. And the specter of the expiration of this 

Regional Center Program in September is already discouraging the 

development of projects. So it really matters to do it now and not 

later. 

I would like to clarify that the Regional Center Program is not 

the same as the half-million-dollar thing. The idea of half a million 

or a million is a function of the regular EB–5 law that is part of 

the code. It just is a reality that most of the regional centers that 

are pooling investments have set those in places of high unemployment or in rural areas where half-million-dollar investments are allowed, and that makes sense. But it is not—those two are not necessarily tied together. 

I think at this point I would emphasize in terms of the dollar 

number, half a million dollars versus a million, it is a good question. You know, is half a million dollars enough? The idea of that 

level that is set in the code was that that amount could be used 

if it is in a certain targeted area of high unemployment or in rural 

areas. I guess the program has worked in that almost all of the investment has been spurred in those kinds of areas. 
10 

But half a million dollars is a lot of money. It is a lot of money 

for one person to put in one risky project, and if you put together 

a bunch of half million dollars in a pool in a project, that can be 

a big project, and it can create a lot of jobs. 

I think I will stop there and be happy to answer questions. 

[The prepared statement of Robert C. Divine appears as a submission for the record.] 

Chairman LEAHY. Well, I appreciate that very much, and let me 

ask a few questions. 

Mr. Stenger, you have been involved with this program for many 

years. Obviously, in the kind of business you are in, you have to 

look for investment and financing opportunities wherever you can. 

Tell me about what opportunities you have been able to pursue because of financing through EB–5. 

Mr. STENGER. Senator, we have been able to expand our resort 

that, as I said earlier, was founded in 1955, a very popular ski resort. Our goal from a business standpoint is to convert it to a yearround facility. We are currently employing—this coming winter we 

will employ over 1,200 people at the resort itself. A year from now, 

that will exceed 2,000. 

Because of the success of our EB–5 program and the job creation 

that we are seeing at Jay Peak, we are also seeing opportunities 

to develop investment in our region in areas like technology, manufacturing, infrastructure development, and it has been because of 

the EB–5 funding that we have been able to develop that these 

other opportunities are taking place. 

Now, you are very familiar with our region of Vermont. It is all 

small businesses. Mr. North was mentioning that the big guys do 

not raise money this way. Well, we are a small company in a rural 

part of Vermont, and raising capital this way has been effective for 

us. We are changing the lives of many hundreds of people in our 

region. The $500,000 investment is a marketable thing for us. We 

have worked hard at it, and we are changing the landscape of the 

economy in an otherwise incredible difficult time. 

So I would tell you that the EB–5 program has helped us build 

our company, but we are also making an impact on other businesses and other opportunities in our region at a time when development is just not taking place elsewhere. 

Chairman LEAHY. Well, you mentioned Mr. North. He has also 

said that this money is more likely to show up in decaying ski resorts in Vermont. I realize if you work at a think tank inside the 

Beltway the idea that somebody would actually believe in a ski resort—I mean, this is a town that will close down in 3 inches of 

snow. We stay open with 2 feet of snow overnight. But let me ask 

you this: You have traveled extensively. You have talked to many 

potential investors around the world. We have these current shortterm authorizations. What kind of reaction do you get from these 

investors around the world when they see us going from short-term 

to short-term to short-term reauthorizations? 

Mr. STENGER. Senator, in a word, it is uncertainty, and with uncertainty goes the question of whether or not an investor should 

participate in a program. Having a permanent authorization will 

give projects the opportunity to plan and develop good programs 

and good projects, but it also gives the investor the sense of con-
11 

fidence that what they become involved in will have an opportunity 

to be developed to its completion. 

Chairman LEAHY. Well, let me ask a little bit more about that. 

You talk about having, when this is finished, up to 2,000 people 

working there. I know this area very, very well, as you have mentioned, and an awful lot of the jobs there are minimum wage jobs 

when they are available at all. It had the highest unemployment 

rate before you started doing this in the State. 

I get the impression, talking to carpenters and plumbers and 

electricians there, that they are doing a lot better than they did before. Is that correct? 

Mr. STENGER. I would tell you that the workforce that is involved 

in our programs, there are two kinds of workers. There is the developmental group, and then there is the operational group. The 

developmental group are the construction workers. I happen to 

bring a photo with me—and I will share it with you afterwards— 

of just a fraction of the construction workers that were involved in 

this past winter, last winter. We had 550 construction workers on 

our project in northern rural Vermont. It was the largest construction project in the State. A profound economic impact. Now that 

the construction is nearing completion and we are going on to other 

construction programs, the operational aspect of the facility kicks 

in. And we are increasing our full-time employment this year by 

over 500 people alone just this year. So it is a remarkable transformation, and it is taking place in a rural community that, without this program, none of this would be going on. 

So I have to just restate what an important win this is for our 

community, what an important win it is for the State of Vermont 

in terms of job creation. And, of course, it is a win for the investor 

because they get access to coming to this country. But I would restate again what—in our particular case, we have doctors, lawyers, 

engineers, accountants, entrepreneurial people, all part of our investment group bringing their skills, their education. They are living around the country. They are making contributions to their 

communities, and they have certainly made a contribution to the 

success of our community, and I am very grateful for that. 

Chairman LEAHY. It is not what you would call a decaying ski 

resort. 

Mr. STENGER. No. I would just share that we are about to really 

kick the ski seasons off in Vermont. We will welcome 4 million skiers to the State. We have 16 wonderful ski areas. It is 25 percent 

of our economy. We have 12,000 employees in our industry, and we 

are not decaying. We are thriving, and we are a wonderful place 

to visit, and I invite you all to come. 

Chairman LEAHY. The number of millions you are talking about, 

I should just note for the record, Senator Grassley, we are a State 

of 650,000 people, so that has a multiplier effect. 

But you have heard that these EB–5 programs that immigrants 

who come here have nothing to offer our Nation other than their 

initial investment. But you said in the past that you make it a 

point to get to know your investors. Would you agree they have 

nothing to offer us other than their money? 

Mr. STENGER. No, I could not disagree more. One of the great 

benefits for me personally in this program has been the oppor-
12 

tunity to meet and welcome almost every investor to our facility. 

We have 500 investors from 56 countries. I have met personally 95 

percent of them, welcomed them to the area, shown them what we 

are doing. They have seen firsthand the impact that their investment is making. They have walked the property. They have seen 

the hundreds of construction workers. They take great pride in 

what we are doing. They take great pride in the fact that they are 

a partner in that effort. They see the job creation. They see the 

gleam in the eyes of the employees that know they have got a future. And they are proud of it. 

They are skilled, educated people. As I said, they are living in 

various States around the country, professional people, well educated, many of them engineers, scientists. They are a wonderful 

group, and they are all family people. And I have been proud to 

meet them and proud to welcome them. 

Chairman LEAHY. Also, as my last question, in some of the testimony this morning there has been a suggestion that, of course, just 

with all the hundreds of billions, trillions of dollars ready to invest, 

you should just go somewhere else. Have you found that in this 

current economic environment it is that easy to go somewhere just 

to raise money? 

Mr. STENGER. I would tell you that in this climate the ability to 

raise capital for the things we are doing would have—it is impossible to do so in a manner that would allow us as effectively and 

as quickly create the things we have done. You can borrow money 

if you have got 50 percent down. And if we have—we are just opening a $25 million indoor water park facility. I could have borrowed 

half of that if I had the $12 million in cash to put up. Everyone 

knows that, yes, banks have money to loan as long as you have got 

half of it in your pocket before you ask for the other half. That is 

not how business works these days. 

Chairman LEAHY. You are speaking from a real-world experience, not from a think tank experience. I will leave that simply as 

a gratuitous comment from the Chairman. 

Senator Grassley. 

Senator GRASSLEY. Thank you. 

I want to be responsible in this issue of undocumented workers. 

I want to admit that we only have anecdotal information, but I 

would like to ask you to what extent you have to go or do go to 

make sure that the centers make sure that the investments do not 

create jobs for people here illegally. And I might also add to that 

whether or not it is the center’s responsibility, it is the investor’s 

responsibility, or the business that is involved. 

Mr. STENGER. Senator, I am a hands-on owner of a business, and 

I am on-property every single day. We have hired—as I said, at the 

Peak we had 550 construction workers on our project. The marching orders that I gave to my team is that we are to hire local companies in almost every instance to do all of the construction. We 

know these companies. They are made up of 10, 15, 20, 30 employees. They are from our local counties. They are Vermonters. They 

are benefiting directly from the investment. 

So we are a hands-on facility. I know the workers, I know their 

families, and we have been able to employ—through these last 3 

years of terrible economic turmoil, we have been able to employ al-
13 

most every construction worker in our county and the surrounding 

counties. They are U.S. residents. They live in the area. Their families are there. They are invested in the communities, and they are 

all U.S. workers. 

Senator GRASSLEY. You do not have to use e-verify, but I would 

like to know whether or not you do. 

Mr. STENGER. We do. 

Senator GRASSLEY. You do. Okay. Thank you. 

Mr. North, along the same lines of the question I asked him, has 

your research shown examples other—and I only gave one example, 

so I want to admit that and be responsible about it—of centers hiring undocumented individuals? 

Mr. NORTH. That kind of data is very hard to obtain from USCIS, 

and I must say that what we do know about many of the internal 

things about that agency as far as this program is concerned relates to cases in which the staff has said no to an application of 

some kind and then the regional center or the individual entrepreneur has gone to the Administrative Appeals Office—which is 

part of the agency—and there we get documents, we get a hearing 

officer telling us what is going on in that particular case. There 

were 28 cases that were appealed in the year, I think, 2009, and 

in every single case the AAO hearing officers, administrative law 

judges, said, ‘‘Yes, the staff was right. This is a bad application.’’ 

So there is a quantity of bad applications out there, but only once 

that process gets before an administrative law judge do we see 

much in the way of detail. 

Now, there was one case that you mentioned, and let me just 

elaborate on that a little bit. This is a bankrupt—and there is a 

lot of this going on—dairy farm in South Dakota that was funded 

by—— 

Senator GRASSLEY. Do not take too long because I want to ask 

another couple questions. But go ahead and quickly finish. 

Mr. NORTH. The dairy farm had claimed 17 workers, and they 

got into it, and the judge found that 16 of them were illegals. Now, 

that is the one example I have, and it is a good example. 

Senator GRASSLEY. Okay. I am going to ask separate questions 

of each of the three of you, but it deals with this one issue. As I 

said in my opening statement, I am concerned about the potential 

loophole that allows investors to withdraw their investment in regional centers after receiving their green card. So, Mr. Divine, are 

you aware of any instances in which an investor withdrew the investment and walked away immediately after receiving a green 

card? And if you are, or if you think it is a problem, do you think 

that it is a loophole that should be closed? 

Mr. DIVINE. I would say that most of the investors, if you asked 

them what are their goals, they would say, ‘‘I want to get a green 

card, and I want to keep it. In order to keep it, I will need to see 

the jobs created in the time frame that they need to be created.’’ 

Two, ‘‘One of these days I want to get my principal money back. 

I do not want to lose my money.’’ 

And, three, ‘‘I would like to make some money if I can.’’ Those 

are their priorities. 

Sure, would they like to get their money out of a particular investment quicker after the conditions are removed from their per-
14 

manent residence? I would say most people probably would say, 

‘‘Yes, I would like to realize some gain from that investment and 

then diversify.’’ Ask anybody who has made a bunch of money in 

any investment, they will tell you that. But, in reality, very few of 

these investors have been able to take their money out. If I put my 

money in a hotel development—— 

Senator GRASSLEY. Can I assume then that you are saying that 

there does not need to be any changes made in that regard? 

Mr. DIVINE. I do not think so. 

Senator GRASSLEY. Okay. Let me ask Mr. Stenger, is it common 

for an investor in your experience to withdraw his or her investment immediately after receiving a green card? 

Mr. STENGER. Senator, no. Our programs require that the investor be invested for a minimum of 5 years and be paid back only 

if the business is in a position to do so at the end of that time. So 

we have the benefit of the capital to create the business, get it running, make it successful, assure that the jobs will be created and 

maintained, and then only if the business is successful will there 

be an exit strategy for the investor. 

Senator GRASSLEY. And, Mr. North, do you have any comment in 

regard to my question or what the other two witnesses have suggested? 

Mr. NORTH. Yes, I do. Very quickly, the law says you can take 

the money out after 2 years. In some cases you will find that that 

is maybe not a good idea. Or maybe the investee will not let you. 

But the law says you have got to invest for 2 years and that is all. 

Second, at one of the stakeholders meetings put on by USCIS, I 

asked a question: Have you done any research on how much money 

stays beyond the 2 years? And the answer was no. There is sort 

of a lack of curiosity in that agency about some of these things. 

Senator GRASSLEY. Thank you, Mr. Chairman. I would like to 

have a second round. 

Chairman LEAHY. Certainly. 

Let me just ask, Mr. Divine, you hear this criticism that the 

money only has to remain invested for 2 years. Has that been your 

experience? 

Mr. DIVINE. If money gets put into a hotel, as I was beginning 

to explain earlier, the developer of that project would have to be 

able to find somebody to buy the hotel or would have to be able to 

find somebody to refinance it with other money. That is not easy. 

It is not any easier necessarily than when it was in the conditions 

that led to the foreign investors being the best option for financing 

the thing in the first place. 

But, hey, if it is a successful project, it makes money, and it can 

be sold, I do not see any reason why the project should not be able 

to be sold and for the investor to be able to realize the return of 

his investment, maybe gain on his investment, just like every other 

investor. 

Chairman LEAHY. If you have a project that is funded directly 

through the Immigrant Investor Program and it is believed to be 

employing undocumented workers, Immigration and Customs Enforcement could investigate the employer, could they not? 

Mr. DIVINE. They could. I mean, I think what we need to realize 

also is that the case that is being cited as evidence that sometimes 
15 

these projects have hired an unauthorized worker is one in which 

USCIS did some kind of checking and determined that the worker 

was not authorized and stopped it. I mean, the process worked. 

Chairman LEAHY. But that would be the same with any company. 

Mr. DIVINE. Every one of these employers is required to complete 

the I–9 form, but USCIS goes a step further and does a check of 

some kind that led to the case that has been mentioned. 

Chairman LEAHY. I am not a witness here, but I am so struck 

by Mr. North speaking of these decaying ski resorts in Vermont 

and the suggestion that this is not creating jobs. I mean, I recommend that all of you actually—Mr. North, in your case, get out 

from inside the Beltway and go up there and talk with some of 

these people. For one thing, you do not have too many illegal immigrants who quite have the Vermont accent you hear around there, 

especially when they talk about their grandparents who live there, 

and parents and so on. In fact, you almost need a simultaneous 

translation. They will say, ‘‘We have got about nine of us here, and 

we have been here since 5 o’clock this morning, Mister.’’ 

[Laughter.] 

Chairman LEAHY. Not quite what an illegal immigrant might be 

saying. In fact, I think Mr. Stenger would say that one of his British investors was thinking, ‘‘Are we all speaking the same language 

here?’’ 

Mr. Divine, let me ask one more serious question about the 

short-term authorizations we have had in the program. I asked Mr. 

Stenger this. Let me ask you what your experience is as a former 

agency official. What does it do if Congress keeps running up 

against a last-minute reauthorization? In this case it would be, I 

think, September of next year, September of 2012. What does that 

do to an agency trying to administer a program if Congress waits 

until the last few days to reauthorize it? What is the practical effect? 

Mr. DIVINE. I mean, the agency in effect is—USCIS is a fee-funded agency, so it is essentially kind of running a business and has 

to cover its expenses with the income that is generated. To run this 

program correctly, USCIS needs to staff up in a big way, dealing 

with the volume that is already there and anticipating the increased volume of more investment as we get even close to half of 

the 10,000 visas that are available in this category. 

But, you know, imagine running an agency where you are running up against the possible sudden end of the program, essentially, but you are trying to staff up in a big way to handle the volume that you hope will come. I mean, that has got to feel like a 

conflicting situation, and you would imagine that it is going to hold 

somebody back. 

Now, I am not saying that they are holding back, and I know 

that they are trying to staff up because I am sure they believe and 

hope that the program will be reauthorized for the benefit of the 

Nation. But I think, you know, the concern is there. And is that 

really where they are going to be able to invest their time and resources in trying to clear up the rules of this program so that everybody knows whether they can qualify or not and which kinds of 
16 

projects are going to qualify and so forth? We need that continually. 

Chairman LEAHY. And, Mr. Stenger, we in Vermont—again, a 

small State, but we have the State government involved with the 

Vermont Regional Center. Does that add benefits to Vermont’s program? 

Mr. STENGER. The fact that the State of Vermont is the regional 

center administrator, and actually I guess you would call it the 

owner of the regional center, has been a tremendous benefit. As 

you know, in Vermont we have local, regional, and State regulations both at the planning stage as well as permitting. We have 

worked hand in hand with the State. Our Governor has been very 

supportive. It is a win for us to be in partnership with the State 

of Vermont as the regional center. Our investors recognize the stability and the continuity of the State’s involvement. They appreciate our continuity and our stability. 

So for us, the Vermont Regional Center has been a wonderful 

partnership, and we look forward to that continuing. 

Chairman LEAHY. And we are small enough that people could be 

reached easily. I think everybody finds that surprising when they 

find that certainly past governors, and I believe the current Governor, myself, and others have listed home phone numbers. 

Mr. STENGER. We are a small State, a small community, and we 

know how to get things done. 

Chairman LEAHY. Yes. Mr. North, I made a few comments about 

your comments. Is there anything you would like to add, out of 

fairness to you? 

Mr. NORTH. Thank you, sir. I would like to make simply one 

point. We have apparently a tremendous success story. We have 

not heard about the profits that the investors received on this thing 

yet, but we apparently have a successful operation. 

I do not think that the United States Senate should operate on 

anecdotes, and I think that looking at this thing from a greater distance, perhaps without knowledge of ski resorts—I am a little old 

to ski—I do not think that we should rely too much on one glorious 

anecdote, and I will leave it at that. 

Chairman LEAHY. Well, I appreciate that, and I appreciate your 

implication of that, that we Senators only rely on anecdotes. We 

study a great deal more than that. I mean, I realize I may live on 

a dirt road in a small town, I am just a small-town lawyer, but I 

actually read other things and I actually have even traveled outside of Washington to other parts of the country, and I actually 

have the ability to learn. I do not work for a think tank, but I actually do have a fair amount of information that comes through to 

me every day. 

Senator Grassley. 

Senator GRASSLEY. Mr. Chairman, I live on a dirt road, too. 

[Laughter.] 

Senator GRASSLEY. And I have traveled some with you. 

I have just two questions, and if I could have the Chairman’s attention on the first one, I think that this—this is going to go to Mr. 

Divine mostly, but I think that this is something that you see as 

maybe an issue that ought to be dealt with because I think you got 
17 

something on this in your draft legislation. You do not have to listen to everything. I just wanted to make—— 

Chairman LEAHY. I will listen to it. 

Senator GRASSLEY. Okay. Reuters recently reported on how cashhungry American businesses are working abroad to promote the 

EB–5 Regional Center Program. Many of these EB–5 promoters are 

mischaracterizing the program, luring investors here and robbing 

them of the American dream. And, admittedly, if you get something 

out of Reuters, I suppose it has got to be considered somewhat anecdotal, too. But China has reportedly put restrictions on these promoters. And when asked by Reuters, both the USCIS and the Securities and Exchange Commission were unaware of any marketing 

abuses. So, rhetorically, I want to ask but do not expect an answer 

from any of you on this point: Is it possible that everyone outside 

the Beltway is aware of these promoters and yet our Government 

sits idly by? 

So, Mr. Divine, since you worked at USCIS, can you tell us if 

these promoters were on the radar screen at the agency? 

Mr. DIVINE. Well, I will confess that when I was there, I was not 

really much aware of, you know, what was going on in promoting 

these projects in China or in any other place back in 2006, when 

I left. But since then, I have become very aware of how the whole 

thing works, and I want to make clear, first of all, that these 

projects for pooled investments where people are investing passively, they are an offering of a security, and they are covered by 

the U.S. securities laws. And the parties who put these offerings 

together take great pains to describe—and, you know, people like 

me help them articulate for the investor, hey, these are the risks 

associated with investing in this thing. 

There is a whole section of the placement memorandum that is 

given to each one of these people that describes all the risks: You 

could lose all your money from this; you could lose all your money 

from that. And it goes on pages and pages. Those things are given 

to each investor. They have to sign off that they have seen all those 

things, and it is very carefully managed. 

Now, what gets said on the ground in another country about 

what those documents are, is it possible that there are some promoters in China or elsewhere who are mischaracterizing in Chinese 

what these documents say? It is possible. If that did happen, then 

that would be a violation of the U.S. securities laws, and it also 

would be a violation of Chinese securities laws, by the way. And 

to my understanding, China has a fairly significant regulatory 

scheme for these immigration brokers. They are kind of a combination of immigration agent and securities broker. And they have to, 

in fact, each put up a million dollars to get a license from China 

for each city in which they are operating. This is my understanding. 

They are heavily regulated, and the Chinese Government does 

not suffer misrepresentation to Chinese investors well, and my understanding is they actually implemented the death penalty for 

somebody in China who was promoting fraudulent investments to 

people. So it is pretty serious there. 

Is it possible that there could be fraud in the offering of securities? Sure. This is human behavior, and it is the same as it always 
18 

ever has been. But there are securities laws and the SEC who are 

there to address these issues, and USCIS, as I understand it, is 

working more closely with the SEC and coordinating with them on 

these issues. 

Senator GRASSLEY. I would just ask, following on in the same 

question, your experience on whether anything more needs to be 

done or if you even see it as a problem. Mr. Stenger first and then 

Mr. North, and then I will go on to my last question. 

Mr. STENGER. Senator, there are different markets in the world 

that are involved in this program. As I mentioned, we have welcomed investors from 56 countries. China has an enormous population with an enormous interest in this program. 

As a policy, with our particular program, we meet every investor 

that we can, and by doing so we get any middleman, if you call it, 

out of the way. I want them to see the project. I want them to come 

and see what we are doing, understand it themselves on the 

ground. And when we have done that, it has been incredibly successful for us and for them. And any regional center that is in the 

marketplace—and there are some 200 around the country. If they 

take that approach, they will avoid problems such as being mentioned. 

Senator GRASSLEY. Okay. Mr. North, if you see it as a problem, 

give me your answer. 

Mr. NORTH. I do see it as a problem, and it is aggravated by the 

fact that the agency, the USCIS, is currently trying to streamline 

its review of these proposals. They have set up a new command 

structure. They are bringing in new staff hopefully that will say 

yes a little more often than the staff that is there now. 

There is a tremendous flow of questionable documentation. 

USCIS picks up some of it, as you see in the table in my report. 

And a lot of it does not get picked up until later, and it shows up 

in the Administrative Appeals Office decisions. 

There have been difficulties—and I would just tick these off very 

quickly—with a plan to use Iranian funds to revive the old Watergate Hotel here in town; a scheme so lacking in integrity in the 

Mojave Desert that the EB–5 Center itself was terminated; similarly, one in El Monte, California, where it turns out that some of 

the developers had some pretty questionable backgrounds. There is 

an attempt—— 

Senator GRASSLEY. You can go on, but I want to—— 

Mr. NORTH. I will not. 

Senator GRASSLEY. I think you are talking about my last question. 

Mr. NORTH. All right. 

Senator GRASSLEY. No, go ahead. I just kind of want you at that 

point, as long as you are using it to answer the other question. 

Mostly explain what went wrong at these centers, Mojave and the 

real estate development in El Monte. 

Mr. NORTH. Generally, it turned out that not necessarily the regional center people but the developers—and these are two different sets of people. The developers in those two places were 

snake oil salesmen, and USCIS sort of found out in this case, but 

there are other snake oil salesmen out there that have not been de-
19 

tected, and I just think there ought to be more, not fewer, checks 

and balances. 

Senator GRASSLEY. Thank you, Mr. Chairman. 

Chairman LEAHY. Thank you. Fortunately, that is the only Government program where people come in like that. We certainly 

have nothing of that sort from anyone involved with our contractors in Iraq. 

I notice that Senator Sessions and Senator Cornyn are here. Before I yield to you, I ask unanimous consent to place a statement 

from Senator Schumer in the record. Without objection, that will 

be done. 

[The prepared statement of Senator Schumer appears as a submission for the record.] 

Chairman LEAHY. I will also submit for the record a number of 

letters from the EB–5 Immigrant Investor Program, including letters from Marriott International and the Real Estate Roundtable. 

[The letters appear as submissions for the record.] 

Chairman LEAHY. I might just read a couple sentences from 

Thomas Berthel from Marion, Iowa, from Berthel Fisher and Company. He says, ‘‘Rarely do we find a program that does not rely on 

taxpayer funding or bank funding that is available at reasonable 

rates of return. It is our opinion it may be poor fiscal policy to cut 

off such a funding stream at this critical time.’’ And that I will also 

place in the record. 

Senator GRASSLEY. And I will say for those people, they are reputable people as far as I know. 

Chairman LEAHY. Thank you very much. 

[The letter appears as a submission for the record.] 

Chairman LEAHY. And I will put letters from the regional centers 

from 17 States who have written to their Senators and Representatives and asked them to go forward. 

[The letters appear as submissions for the record.] 

Chairman LEAHY. We will go to Senator Sessions, who has 

worked with me on this subject for years, and then Senator 

Cornyn. 

Senator SESSIONS. Thank you, Mr. Chairman. You and I talked 

about this before, and I think we share a common understanding 

that the EB–5 program can be good for America. It can strengthen 

our country and direct a number of immigrants to our country that 

have a real chance of creating jobs and growth in the economy. So 

I think it has potential. 

My fundamental view of the immigration situation of our country 

is that more people want to come here than we can accept. In fact, 

we have billions of people in the world who, economically and 

health-wise, would be better if they could live in the United States. 

Canada has gone through a series of debates over many years, 

and they concluded that a good immigration policy would serve the 

interest of the people of Canada. It is Canada’s policy and it is 

Canada’s interest that they are seeking to advance, and they have 

utilized investment from foreigners as part of their immigration 

policy. And, Mr. North, I think maybe Australia has, and I will ask 

you in a second about how they do it. 

But I guess I just would say that this has got real potential, Mr. 

Chairman. Thank you for your personal leadership on it. I do think 
20 

we are at a point where we probably are ready to make it permanent, and if so, we ought to take the opportunity to review it very 

carefully because, if not properly drafted, it can be an abused program. I do not think there is any doubt of that. So that is just what 

I would say. 

I am sincere in saying EB–5, I believe, should be a significant 

part of our immigration system. Of the hundreds of thousands that 

come to our country legally every year, this program should represent a part of that because in most instances, they will be investors with wealth to bring, will be job creators, will not drain the 

treasury but actually making money and increasing the U.S. treasury. And that is what a country with common sense should seek 

in its immigration policy. 

Mr. North, would you share about Australia or Canada, if you 

would, and how they feel about it and how you evaluate its success 

or failure in those countries? 

Mr. NORTH. I will comment on Australia because I know something about that, and less in Canada. Australia is interested in entrepreneurs and people who are going to put together businesses as 

opposed to passive investment. Our program is largely one of passive investment. Australia also is more demanding about age. They 

want you to be under 45 under one set of circumstances, under 55 

in another. They have a strong preference for managers, and they 

also ask for more money than we do. This is American dollars, not 

Australian dollars. They want $778,000 for one class and $1.5 million for another class. So they are getting more money from their 

people, and since theirs is a smaller economy than ours, the same 

amount of money goes a lot further. And so they are getting a lot— 

they got more bang for their buck than we do, and I think that 

what Australia is doing is typical of a bunch of other countries, 

that they require more money than the United States does, and if 

we are going to be doing this, I think we should be doing it at least 

at the $1 million level. 

Senator SESSIONS. I think that is something we should consider. 

And I believe the age factor is very real. Canada emphasizes age, 

that it is healthier for Canada, they have concluded—rightly, I believe—that younger people are able to contribute more to society 

normally than an elderly person would. As I reach my Federal 

health care Medicare age, that is something that has become personally real to me. 

So, Mr. Chairman, thank you for your leadership. I will not take 

any more time. I do think that we ought to think it through, look 

toward the implementation of a permanent policy that serves the 

interests of the United States, and the age, the amount of money, 

the quality and nature of the investment, maybe we should look at 

it. We are in a situation where a lot of people would like to come, 

so we can try to make the legislation work in a way that it serves 

our interest. 

Thank you. 

Chairman LEAHY. I have worked with the Senator, as he knows, 

on a lot of different issues in the past, but when we join hands, we 

usually get things passed. So I will work with him on that. 
21 

Senator Cornyn, we were talking about Texas in here earlier— 

in a very positive way, I assure you. I am delighted to have you 

here. Go ahead. 

Senator CORNYN. Well, Mr. Chairman, like so many of us, we 

have dueling obligations. I was over at the Senate Finance Committee, so I am glad I was able to come over here and say a few 

words. 

The first thing I would like to do is to ask unanimous consent 

to have some letters made part of the record. I have letters from 

the cities of Houston, Dallas, and Amarillo and from business leaders around the State all urging the reauthorization of the EB–5 Regional Center Program. 

Chairman LEAHY. They will be made part of the record. 

[The letters appear as submissions for the record.] 

Senator CORNYN. And we also have with us Dan Healy today 

from Civitas Capital Management of Dallas. He has offered some 

written remarks that I would like to be made part of the record. 

He has been working closely with the city of Dallas to develop their 

regional center. 

Chairman LEAHY. Without objection, it will be part of the record. 

[The information appears as a submission for the record.] 

Senator CORNYN. I will not detain the witnesses much longer. I 

did see, Mr. Divine, after Mr. North commented, you apparently 

had something you wanted to add. I will give you a chance to do 

that. 

Mr. DIVINE. Well, I wanted to add a perspective on the other 

countries’ program. In particular, it is my understanding—and I do 

not claim to be an expert on the immigration law of every other 

country. But it is my understanding that Australia has two programs that are sort of relevant to this. One is an entrepreneur program that specifically requires the person to create two jobs over 

a period of a year, and then they can keep the visa longer if they 

keep the jobs in place. But they also have a raw investor visa 

which only requires, just as is the case in Canada and in the U.K., 

a money investment that is essentially equivalent to buying treasury bills, keeping the money in place for 3, 5 years. You get a green 

card. There is no risk of the money. There is no job creation component whatsoever. And the Canadian amount has been $800,000 

and still is operative in Montreal in that regard. And they have 

filled their program with this. Canada has beaten the United 

States in attracting foreign investors with their program because 

of the lack of risk and job creation requirements. 

But, okay, that is the program here that is requiring job creation. 

That is part of the deal. You cannot keep your green card if you 

cannot show that you created ten American jobs for your money. 

No other country does that. 

Senator CORNYN. Well, thank you Mr. Divine. 

Mr. Chairman, I would just say that I look forward to working 

with you on this, and I agree with Senator Sessions, we ought to— 

we naturalize 1 million people as new American citizens each year 

in America. We are a very welcoming country when it comes to 

legal immigration. That is not to say our system is perfect, because 

it is far from it. We need to do a lot to make it better. But I do 

agree with Senator Sessions’ orientation that says that we ought 
22 

to look at what is in the best interests of our country and our economy, because we have seen countries like Japan, Russia, and others lose population because people are having fewer children and 

in some instances dying much younger—in Russia, for example— 

and it has a dramatically negative impact on the economy and one 

that immigration, sensible immigration, can help improve. 

But the two areas that I really think we need to look at closely, 

too—and I realize this is a multifaceted issue, as the Chairman 

knows—is obviously making sure that we stop the problem when 

it comes to unauthorized entry into the country as much as we possibly can by providing more security at the borders. The combination of increased enforcement at the borders and our slower economic, and higher growth rate, for example, of the economy in 

Mexico have meant that we have had fewer people coming across 

our southern border. But we need to deal with that as a confidencebuilding measure for the American people because they frankly do 

not trust the Federal Government right now in this area. We need 

to show that we deserve their trust. 

The other areas I mentioned were just on the e-verify program 

that I know Chairman Smith on the House Judiciary Committee is 

working on, working to try to get input from a broad array of 

stakeholders to make sure it is done the right way, but to make 

sure that we actually are able to permit employers to verify who 

can legally work here in the United States while permitting, in my 

view guest worker programs and others to provide for temporary 

needs or less than naturalization. 

Finally, I would just say the one area that I am really most concerned about that we talk very little about is the US–VISIT program, people who come into the country on a visa and simply overstay, and they melt into the American landscape, and it is 40 percent, by some accounts, of our illegal immigration, much higher 

than the number of people who come across the southwestern border, and it is something we have to get a handle on. 

But I applaud your concentration on this particular aspect of the 

program and look forward to working with you on this and other 

aspects of our broken immigration system. 

Thank you. 

Chairman LEAHY. I appreciate that. And as the Senator knows, 

I was one who supported former President George W. Bush’s call 

for a comprehensive immigration bill, which would still be my preference. But if we are not going to get to a comprehensive one, there 

are a number of these areas. Chairman Smith and I have talked 

about e-verify and others. Certainly EB–5 is one that we ought to 

be able to work closely together on. While we will not rely just on 

anecdotes, I look at how well it has worked in my State. But I see 

letters from Dallas and other areas how well it has worked there. 

If you have people who want to come into the country and create 

jobs, especially when most of the jobs go to Americans who are already here who could use the jobs, then we ought to be supportive. 

I also think that we cannot lurch from a year-by-year reauthorization. We have got to fish or cut bait on this thing and say if we 

are going to do it, let us do it permanently. Let us find out if there 

are problems, let us correct the problems, and let us make a piece 
23 

of legislation that can have bipartisan support, bicameral support, 

and that will allow investments to continue. 

Senator CORNYN. Mr. Chairman, if you will permit me, I would 

just say, just to make sure we keep at the top of our list, too, or 

toward the top the H–1B visa issue, highly skilled people who come 

to our colleges and universities and get degrees, subsidized in part 

by the American taxpayer, and who then we do not permit to stay 

here even though we need some of those skills. 

Chairman LEAHY. I was speaking on that just the other day, and 

it just makes no sense, especially in these universities and colleges, 

whether private or public, we are subsidizing one way or the other. 

Even the private ones, they still get tax benefits elsewhere. And it 

makes no sense to say, ‘‘Come on over here, get these advanced degrees, and, oh, by the way, you cannot stay, go back to your own 

country and create jobs there and compete with us.’’ I would kind 

of like to keep them here. 

Thank you. We stand in recess. 

[Whereupon, at 11:23 a.m., the Committee was adjourned.] 

[Additional material submitted for the record follows.] 

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A P P E N D I X 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
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PREPARED STATEMENT OF WILLIAM J. STENGER
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PREPARED STATEMENT OF DAVID NORTH
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PREPARED STATEMENT OF ROBERT C. DIVINE
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PREPARED STATEMENT OF CHAIRMAN PATRICK J. LEAHY
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PREPARED STATEMENT OF SENATOR CHUCK SCHUMER
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QUESTIONS SUBMITTED TO WILLIAM J. STENGER BY SENATOR GRASSLEY

[Note: At the time of printing, the Committee had not received responses from William J. Stenger.] 
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QUESTIONS SUBMITTED TO DAVID NORTH BY SENATOR GRASSLEY
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QUESTIONS SUBMITTED TO ROBERT C. DIVINE BY SENATOR GRASSLEY
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QUESTIONS SUBMITTED TO DAVID NORTH BY SENATOR KLOBUCHAR
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QUESTIONS SUBMITTED TO ROBERT C. DIVINE BY SENATOR KLOBUCHAR
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BY SENATOR GRASSLEY
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RESPONSES OF ROBERT C. DIVINE TO QUESTIONS SUBMITTED

BY SENATOR GRASSLEY
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RESPONSES OF ROBERT C. DIVINE TO QUESTIONS SUBMITTED

BY SENATOR KLOBUCHAR
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SUBMISSION FOR THE RECORD FROM HON. MICHAEL BLOOMBERG
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