Department of Homeland Security
 

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United States Citizenship and Immigration Services’ 


Employment͈Based Fifth Preference (EB͈5) 


Regional Center Program 


OIG-14-19 December 2013
 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Washington, DC 20528 I www.oig.dhs.gov 

December 12, 2013

MEMORANDUM FOR: The Honorable Alejandro Mayorkas 

Director 

United States Citizenship and Immigration Services 

FROM: 

SUBJECT: United States Citizenship and Immigration Services' 

Employment-Based Fifth Preference (EB-5) Regional Center 

Program 

Attached for your action is our final report, United States Citizenship and Immigration 

Services' Employment-Based Fifth Preference {EB-5} Regional Center Program. We 

incorporated the formal comments from the United States Citizenship and Immigration 

Services in the final report. 

The report contains four recommendations aimed at improving the EB-5 Regional Center 

Program. Your office concurred with three of the recommendations. The OIG considers 

recommendations 1, 2, and 3 open and unresolved. As prescribed by the Department of 

Homeland Security Directive 077-01, Follow-Up and Resolutions for Office of Inspector 

General Report Recommendations, within 90 days of the date of this memorandum, please 

provide our office with a written response that includes your (1) agreement or 

disagreement, (2) corrective action plan, and (3) target completion date for each 

recommendation. Also, please include responsible parties and any other supporting 

documentation necessary to inform us about the current status ofthe recommendation. 

Based on information provided in your response to the draft report, we consider 

recommendation 4 open and resolved. Once your office has fully implemented the 

recommendations, please submit a formal closeout letter to us within 30 days so that we 

may close the recommendation(s). The memorandum should be accompanied by evidence 

of completion of agreed-upon corrective actions. 

Please email a signed PDF copy of all responses and closeout requests to 

OIGAuditsFollowup@oig.dhs.gov. 
 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Consistent with our responsibility under the Inspector General Act, we will provide copies of 

our report to appropriate congressional committees with oversight and appropriation 

responsibility over the Department of Homeland Security. We will post the report on our 

website for public dissemination. 

Please call me with any questions, or your staff may contact Anne L. Richards, Assistant 

Inspector General for Audits at (202) 254-4100. 

Attachment 

 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Table�of�Contents�

Executive Summary ............................................................................................................. 1
 

Background ........................................................................................................................ 2
 

Results of Audit ................................................................................................................... 5
 

The Laws and Regulations ....................................................................................... 5
 

USCIS’ Mission Limitations...................................................................................... 6
 

Foreign Investments and Job Creation ................................................................... 7
 

Program Integrity.................................................................................................... 9
 

Conclusion............................................................................................................. 13 

Recommendations ............................................................................................... 14 

Management Comments and OIG Analysis ......................................................... 15 

Appendixes

Appendix A: Objectives, Scope, and Methodology............................................ 19 

Appendix B: Management Comments to the Draft Report............................... 21 

Appendix C: Major Contributors to This Report ................................................ 34 

Appendix D: Report Distribution ........................................................................ 35 

Abbreviations

CFR Code of Federal Regulations 

DHS Department of Homeland Security 

EB-5 Employment-Based Fifth Preference 

GAO Government Accountability Office 

iCLAIMS Interim Linked Application Information Management System 

INA Immigration and Nationality Act

OIG Office of Inspector General

U.S. United States 

USCIS U.S. Citizenship and Immigration Services

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Executive�Summary

In 1990, Congress created the United States Citizenship and Immigration Services’ 

(USCIS) Immigrant Investor Program, also known as the Employment-Based Fifth 

Preference Program. The program’s intent was to stimulate the United States (U.S.) 

economy through job creation and capital investment by foreign investors. Three years 

later, the Departments of Commerce, Justice and State, the Judiciary, and Related 

Agencies Appropriations Act, 1993 created the regional center pilot program for pooling 

investor money in a defined industry and geographic area. Our audit objective was to 

determine whether the USCIS’ Employment-Based Fifth Preference regional center 

program is administered and managed effectively.

Several conditions prevent USCIS from administering and managing the EmploymentBased Fifth Preference regional center program effectively. Specifically— 

•	 The laws and regulations governing the program do not give USCIS the authority 

to deny or terminate a regional center’s participation in the Employment-Based 

Fifth Preference program based on fraud or national security concerns; 

•	 The program extends beyond current USCIS mission to secure America’s promise 

as a nation of immigrants; and 

•	 USCIS is unable to demonstrate the benefits of foreign investment into the U.S. 

economy. 

Additionally, USCIS has difficulty ensuring the integrity of the Employment-Based Fifth 

Preference regional center program. USCIS does not always ensure that regional centers 

meet all program eligibility requirements, and USCIS officials differently interpret and

apply Code of Federal Regulations and policies. Furthermore, when external parties

inquired about program activities USCIS did not always document their decisions and 

responses to these inquiries, making the Employment-Based Fifth Preference regional 

center program appear vulnerable to perceptions of internal and external influences. 

As a result, USCIS is limited in its ability to prevent fraud or national security threats that 

could harm the U.S.; and it cannot demonstrate that the program is improving the U.S. 

economy and creating jobs for U.S. citizens as intended by Congress. 

Your office concurred with three of the four recommendations made to assist USCIS’

management and administration of the Employment-Based Fifth Preference regional 

center program. Our recommendations focused on strengthening regulations for 

oversight authority and consistent program application; better coordination with other 

Federal entities; comprehensive reviews of the program; and quality assurance 

procedures for program integrity. 

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Department of Homeland Security 

Background��

USCIS’ mission is to secure America’s promise as a nation of immigrants by providing 

accurate and useful information to its customers, granting immigration and citizenship 

benefits, promoting an awareness and understanding of citizenship, and ensuring the 

integrity of the immigration system. In 1990, Congress created the USCIS Immigrant 

Investor Program, also known as the Employment-Based Fifth Preference (EB-5) 

Program. The EB-5 Program was created under 203(b)(5) of the Immigration and 

Nationality Act (INA) in 1990, Public Law 101-649, Section 121(a), to stimulate the U.S. 

economy through job creation and capital investment by foreign investors. 

Through the EB-5 Program, foreign investors have the opportunity to obtain lawful, 

permanent residency in the U.S. for themselves, their spouses, and their minor 

unmarried children by making a certain level of capital investment and associated job 

creation or preservation. Three years later, the Departments of Commerce, Justice and 

State, the Judiciary, and Related Agencies Appropriations Act, 1993 (The Appropriations 

Act) created the concept of the regional center pilot program for pooling investor 

money in a defined industry and geographic area to promote economic growth.1

 U.S. 

citizens or foreign nationals can operate regional centers, which can be any economic 

unit, public or private, engaged in the promotion of economic growth, improved 

regional productivity, job creation, or increased domestic capital investment. As of 

October 1, 2013, USCIS reports that there are 325 approved regional centers. 

EB-5�Program�Requirements�

The EB-5 program requires that the foreign investor make a capital investment of either 

$500,000 or $1 million, depending on whether or not the investment is in a highunemployment area. The foreign investors must invest the proper amount of capital in a 

business, called a new commercial enterprise, which will create or preserve at least 

10 full-time jobs, for qualifying U.S. workers, within 2 years of receiving conditional 

permanent residency. Two distinct EB-5 pathways exist for a foreign investor to gain 

lawful permanent residency; each pathway differs in job creation requirements: 

1) The Basic Immigrant Investor Program requires the new commercial enterprise to 

create or preserve only direct jobs that provide employment opportunities for 

qualifying U.S. workers by the commercial enterprise in which capital has been 

directly invested. 

1

 On August 3, 2012, Congress removed the word “pilot” from the regional center program’s name; 

however, the program expiration date is currently September 30, 2015. 

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Department of Homeland Security 

2) The Regional Center Program, formerly known as the Regional Center Pilot 

Program, allows the foreign investor to fulfill the job creation requirement through 

direct jobs or projections of jobs created indirectly. Jobs created indirectly are the

job opportunities that are predicted to occur because of investments associated 

with the regional center.

Application�Process�

Individuals or entities must file a Form I-924 with USCIS to become an approved regional 

center or amend a previous approval.2

 Once the application is approved, USCIS requires 

the regional center to report operational and financial data annually on Form I-924A. 

The regional center can only operate within a self-defined geographic area and within a 

self-designated industry. USCIS documents show that regional centers generally collect 

unregulated management and administrative fees between $25,000 and $50,000 from 

each foreign investor. These fees include travel and marketing expenses, legal fees, and 

sales commissions.

Each foreign investor must file an individual Form I-526 petition to apply to the EB-5 

program. If the Form I-526 petition is approved, the investor obtains conditional 

permanent residency and has 2 years to fulfill the program requirements of job creation 

and capital investment. At the end of the 2-year period, the investor must file a Form I829 petition to demonstrate that the investor has met all of the terms and conditions of 

the program. When approved, the foreign investor becomes a legal permanent resident 

of the U.S. and is no longer under the jurisdiction of the EB-5 program. Table 1 describes 

the forms required for participating in the EB-5 program. 

Table�1:��EB-5�Forms�

Forms User Purpose

I-924 An individual or entity To request designation of the entity to be a regional 

center under the Regional Center Program.

I-924A Approved regional center To demonstrate continued eligibility for the regional 

center designation. 

I-526 A foreign investor To petition for status as an immigrant to the U.S. 

under section INA 203(b)(5) as amended.

I-829

A conditional permanent resident 

who obtained such status through 

entrepreneurship 

To request U.S. residency.

Source: DHS OIG generated based on USCIS documents.

2

 Prior to 2010, narrative proposals were accepted as requests to be a regional center under the regional 

center program. 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Figure 1 describes the general adjudications process for EB-5 petitions and 

applications. 

Figure�1:�EB-5�Adjudications�Process

Source: DHS OIG generated based on USCIS documents. 

The EB-5 program has been the focus of several reviews and media reports highlighting 

program concerns: 

•	 The Government Accountability Office (GAO) reported that there was a 

significant lack of information maintained by USCIS about the EB-5 program, 

including information on where immigrant investors established their business, 

the extent to which the businesses remained in the original location, the types of 

businesses established, the number of jobs created, or the number of immigrant 

investors who applied for U.S. citizenship.3

•	 The USCIS Ombudsman reported the need to streamline USCIS policy and 

strengthen the adjudication process for stabilizing the program and making it 

more attractive to investors.4

•	 The media have reported concerns with the EB-5 program’s operations. 

Appendix A contains the objective, scope, and methodology of our audit. 

3

 Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors, 

April 2005, GAO-05-256.
 4

 Employment Creation Immigrant Visa (EB-5) Program Recommendations, March 18, 2009.
 

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Department of Homeland Security 

Results�of�Audit�

Several conditions prevent USCIS from administering and managing the EB-5 regional 

center program effectively. Specifically: 

•	 The laws and regulations governing the program do not give USCIS the authority 

to deny or terminate a regional center’s participation in the EB-5 program based 

on fraud or national security concerns; 

•	 The program extends beyond current USCIS mission to secure America’s promise 

as a nation of immigrants; and 

•	 USCIS is unable to demonstrate the benefits of foreign investment into the U.S. 

economy. 

Additionally, USCIS has difficulty ensuring the integrity of the EB-5 regional center 

program. Specifically, USCIS does not always ensure that regional centers meet all 

program eligibility requirements, and USCIS officials interpret and apply the Code of 

Federal Regulations (CFR) and policies differently. USCIS did not always document 

decisions and responses to external parties who inquired about program activities 

causing the EB-5 regional center program to appear vulnerable to perceptions of 

internal and external influences.

As a result, USCIS is limited in its ability to prevent fraud or national security threats that 

could harm the U.S., and it cannot demonstrate that the EB-5 program is improving the 

U.S. economy and creating jobs for U.S. citizens as intended by Congress. 

The�Laws�and�Regulations�

The laws that govern the EB-5 regional center program do not specifically allow 

USCIS to deny or terminate regional centers based on fraud or national security 

concerns identified during the adjudication process. The Appropriations Act, as 

amended, only describes the requirements to approve a regional center that 

submits a general proposal for the promotion of economic growth. The INA gives 

USCIS the authority to deny immigrants seeking a benefit or visa who are a 

national security concern. 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

However, USCIS has interpreted that because regional centers are pooling funds 

from investors and not seeking an immigrant benefit or visa, these sections of

the INA are not applicable. 5 USCIS has not developed regulations that apply to 

the regional centers in respect to denying participation in the program when 

regional center principals are connected with questionable activities that may 

harm national security. 

With stronger legal authority, USCIS would be in a better position to protect 

national security and U.S. citizens from harmful types of economic activities. 

USCIS’�Mission�Limitations�

The EB-5 program extends beyond USCIS’ mission to provide immigration and 

citizenship services. When the EB-5 program was created, lawmakers 

acknowledged that USCIS did not have all of the expertise needed to implement 

the program and noted that USCIS should seek assistance from other agencies. 

Three years later, the Appropriations Act gave USCIS the oversight of the 

regional center concept, which further extended the EB-5 program from USCIS’ 

mission. For instance, adjudications of regional centers involve different 

complexities and expertise that align to missions of other departments and

agencies, such as the Securities and Exchange Commission and the Departments 

of Commerce and Labor. Those adjudications involve responsibilities such as 

reviewing investments, business and economic plans, job creation 

methodologies, financial statements, funding, and legal agreements. 

According to the USCIS Director, the component has coordinated with other 

government agencies to assist with EB-5 program activities in the past, but 

acknowledged that more collaboration would help. 

Table 2 presents a comparison of the purpose of the EB-5 program to the 

mission of four government departments or agencies. The underlined text shows 

language that is applicable to the purpose of the EB-5 program. Because 

agencies other than USCIS have missions that USCIS could leverage to its 

advantage for the EB-5 program, USCIS needs to improve coordination and rely 

on the expertise at these agencies during the adjudication process. 

5

 Senate bill S.744, section 4804 has provisions intended to prevent individuals with national security 

concerns from participating in the EB-5 regional center program, as part of a substantial overhaul of the 

EB-5 program. S.744 would give the Secretary of Homeland Security the option to deny or terminate

participation in the regional center program based on national security concerns. The bill was proposed 

on April, 2013, and passed by the Senate on June 27, 2013. 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Table�2:�Comparison�of�EB-5�Program�Purpose�and�

Departmental�Mission�Statements�

Department�

and/or�Agency�

Mission�Statement�

United States 

Citizenship and 

Immigration 

Services 

To secure America’s promise as a nation of immigrants by 

providing accurate and useful information to our customers, 

granting immigration and citizenship benefits, promoting an 

awareness and understanding of citizenship, and ensuring the 

integrity of our immigration system. 

Department of

Commerce

To promote job creation, economic growth, sustainable 

development, and improved standards of living for all Americans 

by working in partnership with business, universities, communities 

and our nation’s workers. 

Securities and 

Exchange 

Commission

To protect investors, maintain fair, orderly, and efficient markets, 

and facilitate capital formation. 

Department of

Labor, Bureau of 

Labor Statistics

To measure labor market activity, working conditions, and price 

changes in the economy. Its mission is to collect, analyze, and 

disseminate essential economic information to support public and 

private decision-making.

Source: DHS OIG created from information published on USCIS and U.S. 

government websites.

In their application package, regional centers are supposed to provide USCIS with 

predictions of economic growth. To evaluate economic growth predictions, 

USCIS hired economists to participate in the adjudication process. However, 

according to the economists, they do not have access to data and systems 

needed to validate the support for these predictions. 

Foreign�Investments�and�Job�Creation�

USCIS is unable to demonstrate the benefits of foreign investment into the U.S. 

economy. Although USCIS requires documentation that the foreign funds were 

invested in the investment pool by the foreign investor, the CFR does not 

provide USCIS the authority to verify that the foreign funds were invested in 

companies creating U.S. jobs. Additionally, the CFR allows foreign investors to 

take credit for jobs created by U.S. investors. As a result, USCIS has limited 

oversight of regional centers’ business structures and financial activities. 

USCIS cannot demonstrate that foreign funds were invested in companies 

creating U.S. jobs. Under the EB-5 Program, 8 CFR 204.6(j) requires a petition to 

verify that the foreign investor is investing lawfully obtained funds in a new 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

commercial enterprise to create U.S. jobs.6 Under the USCIS precedent decision,7

Matter of Izummi, USCIS also allows the creation of jobs by other entities, but as 

shown elsewhere, USCIS is not given the authority by the CFR to oversee these 

other entities.8

 Therefore, USCIS cannot verify that the foreign investments lead 

to the intended creation of jobs. 

For example, we identified 12 of 15 regional center files in which USCIS allowed 

the creation of new commercial enterprises that collected EB-5 capital to make 

loans to other job-creating entities. USCIS adjudicators confirmed that because 

the CFR does not give them the authority to oversee these additional jobcreating entities, they are unable to inquire or obtain detail that would verify 

foreign funds are invested in the U.S. economy via a job-creating entity. 

Additionally, 8 CFR 204.6(g) allows foreign investors to take credit for jobs 

created with U.S. funds, making it impossible for USCIS to determine whether 

the foreign funds actually created U.S. jobs. Consequently, the foreign investors 

are able to gain eligibility for permanent resident status without proof of U.S. job

creation. In one case we reviewed, an EB-5 project received 82 percent of its 

funding from U.S. investors through a regional center. The regional center was 

able to claim 100 percent of the projected job growth from the project to apply 

toward its foreign investors even though the foreign investment was limited to 

18 percent of the total investment in the project. Every foreign investor was able 

to fulfill the job creation requirement even though the project was primarily 

funded with U.S. capital. When we questioned USCIS about this practice, the 

officials explained that the EB-5 project would not exist if not for the foreign 

investment. 

We also identified two cases in which foreign investments were loans for 

completed EB-5 projects. For example, in June 2010 a foreign national invested 

$500,000 to pay off an existing loan for the construction and operation of a hotel 

that had opened in December 2009. Total project costs for the hotel were about 

$28 million, in which foreign investments totaled $4.5 million. Four million of the 

foreign investments were used to pay off existing loans, and $500,000 was used 

6

 A new commercial enterprise is any public or private entity established for the purpose of promoting 

economic growth through the investment of foreign funds established after November 29, 1990.

7

 Precedent decisions are administrative decisions of the Administrative Appeals Office, the Board of

Immigration Appeals, and the Attorney General, which are selected and designated as precedent by the 

Secretary of the Department of Homeland Security (DHS), the Board of Immigration Appeals, and the 

Attorney General, respectively. 

8 Matter of Izummi, 22 I&N Dec. 169 (Assoc. Comm’r 1998). 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

to purchase existing equity. Although 84 percent of the funds were contributed 

by U.S. investors, the foreign investor was subsequently granted permanent U.S. 

residency based upon an investment in a project that had already been 

completed. 

The flow of EB-5 foreign investments is a complex process. It starts with the 

foreign investor sending funds to the investment pool (i.e., the new commercial 

enterprise). The foreign investor may be required to send administrative fees to 

either the regional center or the new commercial enterprise for expenses related 

to managing the investment. The new commercial enterprise then transfers the 

funds to the job-creating entity for management of the project. At the jobcreating entity, the foreign investments are combined with investments from 

other sources, such as U.S. domestic funds. The numbers of estimated jobs 

created from that job-creating entity are not allocated among all investors based 

upon investment percentage, but are only attributed to the foreign investor. 

Additionally, current regulations do not require USCIS to track and verify that the 

foreign investment was invested into the job-creating entity. 

Recently, USCIS reported that since 1990, more than $6.8 billion has been 

invested in the U.S. economy through the EB-5 program, and a minimum of 

49,000 jobs have been created. We attempted to validate these statistics and 

requested the supporting information. USCIS was not able to provide support for 

the statistics reported. USCIS officials said that they had to estimate these 

figures and assumed the minimum requirements of the program had been met. 

As a result, USCIS was only able to speculate about how foreign investments are 

affecting the U.S. economy and whether the program is creating U.S. jobs as 

intended. 

Program�Integrity�

USCIS has difficulty ensuring the integrity of the EB-5 regional center program. 

Specifically, USCIS does not always ensure that regional centers meet all 

eligibility requirements for the program. USCIS officials interpret the CFR and 

USCIS policies differently. USCIS does not apply the regulations effectively to the 

regional center program. Additionally, the EB-5 regional center program appears 

to be vulnerable to perceptions of internal and external influences when there is 

not adequate documentation that supports decisions made by USCIS. 

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Department of Homeland Security 

Regional�Center�Accountability�

Although USCIS adopted 8 CFR 204.6(m) in 1994 to assist its efforts in 

implementing the Appropriations Act, as amended, it has not always held 

regional centers accountable to the CFR requirements. Specifically, 204.6(m) 

requires regional centers to submit business plans with verifiable detail on how 

jobs will be created, yet regional centers continue to provide general concepts 

with some applications. After 8 CFR 204.6(m) was created, Congress amended 

the Appropriations Act in 2002 to allow regional centers to submit a general 

proposal. In 2013, 20 years after the creation of the regional center concept, 

USCIS officials have indicated that there is obvious tension evident in the 

regulatory language requiring “verifiable detail” and the statutory language 

which allows for the proposal to be based on “general predictions.” Because of 

this language difference, it appears that USCIS may not always apply its CFR 

requirements to the regional centers. 

For example, the USCIS California Service Center asked regional center officials 

to provide additional information related to one proposed business plan. Center 

officials responded that they did not need to submit a detailed business plan 

according to the Appropriations Act. Subsequently, the USCIS California Service 

Center approved the regional center’s application without obtaining verifiable 

detail that complies with the CFR. As a result, there is no assurance that regional 

centers meet the qualifications to participate in the program. 

USCIS�Regulations�and�Policy�

USCIS officials interpret the CFR and USCIS policies differently, which prevents 

adjudicators from evaluating regional center applications and related petitions 

effectively. For example, an adjudicator requested additional evidence from a 

regional center applicant. According to 8 CFR 103.2(b)(8), the regional center 

application should have been denied for not responding in the mandated 

12 weeks. However, the denial letter was refused by the USCIS legal department, 

stating that there is no language that provides the ability to go straight to denial. 

In another example, to generate a favorable decision, USCIS requested a regional 

center applicant to omit information from its application because the language 

was not in compliance with a USCIS precedent decision. By advising applicants to 

remove information because it may delay or prevent approval, USCIS may be 

circumventing measures in place to ensure applicant eligibility. An adjudicator 

must deny an application if the evidence establishes ineligibility. 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Another example is the designation of high-unemployment areas by state 

governments. The regulations provide for state governments to designate highunemployment areas for determining whether the EB-5 regional center project 

qualifies for the lower foreign investment of $500,000. However, the regulations 

do not instruct the states on how to make the designation. Because of how the 

regulations are written, USCIS adjudicators said that they must accept what the 

state designates as a high-unemployment area without validation even when it 

appears as if these designations are areas of low unemployment. For example, a 

regional center provided USCIS a letter from its state agency designating that 

one EB-5 project being built in a prosperous area qualified as being in a highunemployment area. The letter explained that employment data for the 

requested combination of areas did not qualify for the designation but provided 

an alternative combination of areas for the project to qualify. The area where 

the project was being built is included in both combinations. This places doubts 

on whether program requirements are met, and it allows the foreign investors to 

invest only $500,000 instead of $1 million to qualify for permanent residency.

As a result of USCIS’ unclear regulations and policy, USCIS is unable to hold 

regional centers and foreign investors to a consistent standard, and adjudicators 

may approve applicants and petitioners that do not meet eligibility 

requirements. 

Internal�and�External�Influence�

USCIS did not always document decision making and responses to external 

parties who inquired about EB-5 activities. Outside influence may require USCIS 

senior leadership to become involved in the EB-5 adjudication process, thereby 

creating the perception of special treatment and internal influence by senior 

managers. While the files we reviewed were not well organized and 

comprehensive, they appeared to contain sufficient evidence to support the final 

adjudication decision. However, USCIS employees provided supplemental emails 

that suggest internal and external parties may have influenced the adjudication 

of EB-5 regional center applications and petitions. Some parties may have 

compelling reasons for influencing decisions made regarding EB-5 participation. 

For example— 

•	 The estimated job creation and economic improvements to local economies 

are convincing and important reasons for lawmakers and citizens to have an 

interest in advocating the EB-5 program. 

•	 USCIS documents show that regional centers generally obtain between

$25,000 and $50,000 in unregulated fees from foreign investors, and as such, 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

we believe that may contribute to them losing sight of the integrity of the EB5 program in the interest of making money. 

USCIS did not have protocols to document all inquiries and decisions made 

during the adjudication process. During the course of the audit, we obtained 

records showing email communications from external parties who were 

contacting USCIS senior leaders with inquiries pertaining to specific EB-5 

adjudications. The emails requested private discussions about regional center 

applications or expressed dissatisfaction with the time USCIS was taking for 

adjudication decisions. Based solely on the correspondence, we were unable to 

determine whether USCIS honored the requests. These emails referenced 3 of 

the 15 regional centers in our case file review along with other regional centers 

not covered in the scope of our review. The case files we reviewed did not 

contain evidence of the external or internal inquiries, whether the inquiries were 

addressed, or if anyone from USCIS ever met with or responded to the external 

parties. 

One set of emails contained inquiries about unwarranted delays and denials in 

processing applications. The regional center was amending its application to 

increase its area of operations. This amendment was denied by the USCIS 

California Service Center. The emails also discuss I-526 petitions that had been 

held awaiting the outcome of the Administrative Appeals Office. The emails 

discuss scheduling a meeting with a senior official and others at USCIS to discuss 

the inquiries and the decision of the Administrative Appeals Office. The emails 

do not discuss the outcome of this issue. 

In another email, a Congressman attached a letter asking a USCIS senior official 

to withdraw a request for evidence that USCIS sent to a regional center. In the 

same letter, the Congressman thanked the senior USCIS official for discussing the 

request for evidence with him. In the draft letter, the senior official responded to 

the Congressman saying that some items in the request for evidence were 

appropriate and some were not, and promises to clarify some of the issues in 

forthcoming EB-5 policy guidance. The emails do not discuss the outcome of this 

issue. 

One set of documents showed a president of a regional center emailed a senior 

USCIS official threatening a Federal lawsuit because a previously approved 

regional center project was in the process of being terminated by USCIS. The 

president of the regional center then asked to speak to the senior USCIS official 

personally. The emails do not discuss the outcome of this issue. 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

In another example, there is indication of USCIS senior leadership with no direct 

involvement overturning an adjudicator’s decision to deny a foreign investor’s 

petition associated with a regional center. Senior management stated that the 

adjudicator did not give proper consideration to previous decisions made on 

other investor petitions associated with the same regional center. Consequently, 

the petition was approved even though the adjudicator had concerns that the 

proposed project would not meet the requirements of the EB-5 regional center 

program. USCIS senior managers reported that they were not making an 

adjudicative decision legally; however, they noted that functionally, the 

adjudicator must make decisions based on senior management’s guidance. 

Other examples of regional center advocates that may attempt to influence the

adjudication process to benefit their own interest included a newspaper article, 

which reported that a lawmaker pushed for an adjudicative approval to be made 

within 15 days, while the regional center was approaching bankruptcy. We 

provided that information to our Office of Investigations for further review. 

As a result, USCIS decisions regarding the EB-5 regional center program may be 

questioned due to the perception of internal and external influences. USCIS 

needs to establish protocols to ensure all correspondence and discussions 

between external interested parties and USCIS leadership are documented and 

shared for transparency and accountability. 

Conclusion

Currently, USCIS cannot administer and manage the EB-5 regional center 

program effectively. The legislation establishing the regional center program did 

not give USCIS the necessary authority to prevent fraud and national security 

threats that could harm the U.S., and it assigned responsibility to USCIS for a 

program with mission areas outside USCIS’ immigration mission. Also,

regulations were not always enforced, and USCIS did not always enforce its own 

regulations and procedures established to assist with managing the regional 

center program. To improve upon the administration and management of the 

program, USCIS needs to revise the regulations governing the EB-5 regional 

center program. USCIS also needs to execute memoranda of understanding with 

other agencies. 

www.oig.dhs.gov 13 OIG-14-19
 
 

 

��

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Until improvements are made, USCIS is unable to prevent fraud and national 

security threats, and it cannot report the results of the program accurately or 

ensure the EB-5 program is benefiting the U.S. economy and creating jobs for 

U.S. citizens as intended by Congress. 

Recommendations��

We recommend that the Director of the U.S. Citizenship and Immigration 

Services: 

Recommendation�#1:�

Update and clarify the Federal regulations to — 

•	 provide the U.S. Citizenship and Immigration Services with the authority 

to deny or terminate EB-5 regional center participants at any phase of the 

process when identifying known connections to national security and/or 

fraud risks without compromising any ongoing or potential investigation; 

•	 make explicit that fraud and national security concerns can constitute 

cause for revocation of regional center status under 8 CFR § 205.2;

•	 give the U.S. Citizenship and Immigration Services the authority to verify 

that the foreign funds were invested in companies creating U.S. jobs; and 

•	 ensure requirements for the EB-5 regional center program are applied 

consistently to all participants.

Recommendation�#2:�

Develop memoranda of understanding with the Departments of Commerce and 

Labor and the Securities and Exchange Commission to provide expertise and 

involvement in the adjudication of applications and petitions for the EB-5 

regional center program. 

Recommendation�#3:�

Conduct comprehensive reviews to determine how EB-5 funds have actually 

stimulated growth in the U.S. economy in accordance with the intent of the 

program. If necessary, employ other specialists or work with other Federal 

agencies to assist and confirm the results. 

www.oig.dhs.gov 14 	 OIG-14-19
 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Recommendation�#4:�

Establish quality assurance steps to promote program integrity and ensure that 

regional centers comply with the Code of Federal Regulations requirements. 

Management�Comments�and�OIG�Analysis�

USCIS agreed with three of the four recommendations. USCIS acknowledged that 

additional statutory authorities would strengthen the program. USCIS also 

acknowledged concerns with the consistency in EB-5 adjudications, the lack of 

clarity regarding program rules and serious fraud and national security issues 

within the program. In USCIS’ management response, the Component indicated 

that it recently completed a transformation of how they administer the EB-5 

Program. Our audit focus was limited to regional center applications as of 

November 29, 2012, which was before details of the transformation were 

announced. We will evaluate management’s reported changes as part of the 

audit recommendation follow-up process. 

USCIS noted that they previously had no meaningful economic expertise to 

conduct independent and thorough reviews of economic models, but had hired 

economists and corporate attorneys to support the EB-5 program. Our report 

recognizes that USCIS hired economists to participate in the adjudication 

process. At the beginning of our fieldwork, USCIS provided an organizational 

chart that showed the EB-5 program had seven economists. During our audit, we 

validated that two additional economists were hired. We did not audit program 

changes completed after our audit fieldwork. During fieldwork, five USCIS 

economists expressed concern that their expertise was not being used in the 

adjudication process because they did not perform any substantive analysis of 

economic plans or predictions. Instead they prepared checklist summaries of 

answers to a series of canned questions. 

USCIS’ response indicated that it reviewed each of the 22 regional center cases 

mentioned in our report and believed that all were adjudicated properly. Our 

conclusions are based on our analysis of documentary and physical evidence 

supported by corroborating testimonial evidence that showed limitations of the 

legislation for denying applications and consistency in EB-5 adjudications, which 

USCIS has also acknowledged. We did not make recommendations specific to the 

regional center cases identified. Our report does not make conclusions on 

whether cases had been decided properly or whether we concur with the 

statute, regulations, or policy. 

www.oig.dhs.gov 15 OIG-14-19
 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

In its response, USCIS stated that the report suggests Component officials 

improperly urged an applicant to omit information from an application in 

contravention of the regulations and is incorrect. We provided the facts based 

on our review of documentation which showed that USCIS specifically requested 

removal of language to ensure that the regional center would meet eligibility 

requirements. 

USCIS responded that they are not in a position to quantify the impact of the EB5 Program on the U.S. economy. They also believe they are not charged with 

conducting a broader assessment of the program’s impact, something which has 

been the subject of both congressional hearings and private studies over the 

years. We disagree with USCIS’ position that it should not attempt to monitor or 

measure the performance of the EB-5 program. One of USCIS’ strategic 

objectives is to ensure the integrity, effectiveness, and responsiveness of its 

programs. The USCIS Strategic Plan provides integrated planning context for 

other USCIS initiatives, such as the business transformation plan, human capital 

strategy, management improvement plans, and the development of new 

immigration programs. 

USCIS defended its policy of deferring to prior agency decisions involving the 

same investment project, and believed our criticism was misplaced. USCIS 

indicated that an important element of consistency is that the agency must not 

upend settled and responsible business expectations by issuing contradictory 

decisions relating to the same investment projects. It disserves the public, 

undermines program integrity, and is fundamentally unfair to USCIS to approve a 

project, have developers and investors act in reliance on the approval, and then 

subsequently reverse course by determining that the agency’s initial approval 

was in error. 

USCIS provided technical comments to the draft report. When appropriate, we 

incorporated those changes into the report. A summary and analysis of the 

Component’s response to each recommendation follows. 

USCIS’�Response�to�Recommendation�#1: USCIS concurred with the 

recommendation. USCIS will update regulations to provide greater clarity

regarding the requirements for establishing eligibility under the program. In 

particular, revised regulations will more clearly delineate the evidentiary 

requirements applicable to stand-alone EB-5 petitions versus regional centerbased applications and petitions. A revised rule will be drafted for interagency 

clearance within 9 months of the report. 

www.oig.dhs.gov 16 OIG-14-19
 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

OIG�Analysis: Although USCIS concurred with the recommendation, the planned 

corrective action does not fully address the recommendation. This 

recommendation will remain open and unresolved until USCIS provides specific 

corrective actions and milestones to address the recommendation in its entirety. 

We need to review and analyze the corrective actions plans and evidence of 

their implementation. We need USCIS to provide actions taken to proactively 

address fraud or national security concerns by participants; verify funding and 

job-creation results; and ensure consistent application of the program. 

USCIS’�Response�to�Recommendation�#2: USCIS concurred with the 

recommendation. Within 6 months of the report, USCIS will develop and 

implement an interagency collaboration plan outlining liaison and collaboration 

roles and responsibilities among key Federal partners. This will include 

collaboration with the Department of Commerce and the Securities and 

Exchange Commission. 

OIG�Analysis: USCIS’ corrective action plan should resolve this recommendation. 

However, more details of the memoranda of understanding are necessary. This 

recommendation will remain open and unresolved until we have more 

information on the memoranda of understanding and have reviewed 

documentation of the interagency collaboration plan. 

USCIS’�Response�to�Recommendation�#3: USCIS did not concur with the 

recommendation. USCIS stated that its mandate is to adjudicate EB-5 cases 

according to the eligibility criteria, including the statutory job creation 

requirements. USCIS responded that the Component is not charged with 

conducting a broader assessment of the program’s impact. While the 

Component agreed that an assessment may be beneficial, it did not believe 

USCIS, as the administering benefits agency, is best positioned to conduct a 

study. 

OIG�Analysis: This recommendation will remain open and unresolved until 

USCIS provides an action plan and evidence of comprehensive reviews scheduled 

to validate how EB-5 funds have actually stimulated growth in the U.S. economy.

Because program results and integrity assurance may be compromised and we 

identified concerns within the program, our recommendation included the 

option for USCIS to employ specialists or other Federal agencies to confirm the 

results of the EB-5 Program. We realize USCIS is facing challenges to ensure the 

program is meeting its goals and needs assistance and an assessment by internal 

groups or external specialists. 

www.oig.dhs.gov 17 OIG-14-19
 
 

 

� �

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

USCIS’�Response�to�Recommendation�#4: USCIS concurred with the 

recommendation. Within 6 months, USCIS will establish quality assurance steps 

to promote program integrity and ensure regulatory compliance. 

OIG�Analysis: USCIS’ corrective action plan should resolve this recommendation. 

This recommendation is resolved, but will remain open until we have reviewed 

documentation of the implemented quality assurance steps. 

www.oig.dhs.gov 18 OIG-14-19
 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix�A�

Objectives,�Scope,�and�Methodology�

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was 

established by the Homeland Security Act of 2002 (Public Law 107-296) by amendment 

to the Inspector General Act of 1978. This is one of a series of audit, inspection, and 

special reports prepared as part of our oversight responsibilities to promote economy, 

efficiency, and effectiveness within the Department. 

This report provides the results of our work to determine whether USCIS administered 

and managed the EB-5 Regional Center Program (regional center program) effectively.

We reviewed the INA; the Departments of Commerce, Justice and State, the Judiciary, 

and Related Agencies Appropriations Act, 1993; and other legislation to renew the pilot 

program. We also reviewed USCIS regulations, management policies, procedures, and 

other memoranda related to the EB-5 program and Fraud Detection and Nationality 

Security. 

We interviewed USCIS management and staff responsible for the administration of the 

EB-5 program at both USCIS Headquarters and the California Service Center. Our 

interviews included representatives from the Branches of Service Center Operations; 

Fraud Detection and National Security; Policy and Strategy; and the Office of Chief 

Counsel. 

We identified 336 I-924 regional centers with applications or amendments submitted 

during fiscal years 2010, 2011, and 2012. Our selection of regional center application 

files to review was based on the most foreign investor petitions filed as reported in the 

Interim Linked Application Information Management System (iCLAIMS) as of November 

29, 2012. USCIS began using iCLAIMS in fiscal year 2010 as a database to store 

information related to EB-5 Regional Centers. The iCLAIMS database is updated 

manually when regional center applications, amendments, or annual updates are 

received on forms I-924 or I-924A by the California Service Center. The immigrant 

investor applications and petitions for permanent residency, forms I-526 and I-829, are 

maintained in other USCIS systems and transferred to iCLAIMS. We did not verify the 

reliability of the iCLAIMS system and do not draw any conclusions from its data. We 

used the National File Transfer System to identify the location of immigrant investor 

files related to the regional centers. 

We visited the California Service Center and reviewed 15 Regional Center application 

files and 6 immigrant files, either form I-526 or I-829, associated with the regional 

centers. Our selection was based on the location of the files and the timeframes needed 

www.oig.dhs.gov 19 OIG-14-19
 
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

for review. We evaluated internal controls to the extent necessary to address the audit 

objective. 

We conducted this performance audit between September 2012 and June 2013 

pursuant to the Inspector General Act of 1978, as amended, and according to generally 

accepted government auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based upon our audit objective. We believe that 

the evidence obtained provides a reasonable basis for our findings and conclusions 

based upon our audit objective. 

www.oig.dhs.gov 20 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix�B

Management�Comments�to�the�Draft�Report��

U.S. DeJlartment of Homeland Security 

L.S. Citi:r.ensh..ip and Immigralion Services 

Office of the Din>ctnr (MS 2000) 

Wasllmgton, DC 20529-20<XJ 

U.S. Citizenship 

and Immigration 

Services 

NOV 4 2013 

Memorandum 

TO: Charles K. Edwards 

Deputy Inspector Genera Y:!J

J:: 

FROM: Alejandro N. Mayorkas 

Director, U.S. Citizcnshi an Immigrati n Services 

SUBJECT: Official Comments to the Draft Report Recommendations on U.S. Citizenship and 

Immigration Services ' Employment-Based Fifth Preference (EB-5) Regional Center 

Program - For Official Use Only (010-12-166) 

U.S. Citizenship and Immigration Services (USCIS) thanks the Office of the Inspector General 

(OIG) for the opportunity to review and comment on its draft report on the EB-5 program. 

The draft report cites con~.;ems regarding USCIS 's administration of the program, and other 

concerns best directed at Congress given its sole authority over the program's statutory 

framework_ \Vhether the EB-5 statutes vest CSCIS with sufficient authority to ensure the 

program's integrity is an important queslilln, and one which we have worked closely with 

Congress in recent years to address. We agree with the 010 that additional statutory authorities 

would strengthen the program. 

The EB-5 caseload is, by far, the most complex that USCIS oversees, and involves decisions on 

issues- such as the evaluation of business plans and econometric employment modeling - more 

typically associated with other U.S. government agencies than with USCIS. We appreciate that 

the OTG shares our concerns regarding consistency in EB-5 adjudications, the lack of clarity 

regarding program rules, and serious fraud and national security issues in the program. It is 

precisely these concerns that have driven users over the past several years tu undertake a 

complete transformation of how we administer the EB-5 program. 

This work is progressing rapidly; indeed, JUSt as the OIG was wrapping up its work on this audit 

in June 2013, USCIS was implementing several fundamental, long-planned steps to improve the 

EB-5 process. We have strong confidence that our overhaul of the program, already well 

underway, will translate to improved consistency, integrity, timeliness, and adherence to law_ 

We arc, in other words, already in the pro~,;ess of addressing the issues raised in the OIG's audit 

that are within the agency 's power to resolve. 

www.oig.dhs.gov 21 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1.fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page 2 

In particular, we have taken the following cm1crete steps to improve ow· administration of this 

progrmn: 

• lJSCJS announced its plans to reali!!n the FR-5 p•-o~~:•-am into a new office in 

Decem her of 2012, to he stafted \~ith the expertise needed to efth.-tively mana~~:e the 

progn1m in-houst·. In .\'lay 2013, LISCIS stood up tht' m·w progmm otlk.t·-tht' 

Immignmt Innstor Program Office- in Headquarters. Previously, and essentially 

through the end of the OIG's audit work. the EB-5 program was based at the CSCIS 

Califomia Service Ccntcr, in the same facility as more traditional immigration casework 

involving, for ex<mlple, family-based immigration petitions, and handled by generalists 

who did not necessarily have the needed national security, economic, business, and legal 

expertise. The needs of the EB-5 program arc unique. from an eligibility perspective as 

well as a security perspective, and the program warrants dedicated inrra~trudure and 

leadership. 'l11e new program ollice opened in May 2013 just before the OlG audit 

work was completed in June 2013. 

The new program office is led by a sit1gularly-focused SF.S-Ievel Chief atld consists of 

prolessional economists with prior lederal and commercial experience, COflJOrate and 

immigration attorneys, and experienced adjudicators. For the firsttimc in the agency's 

history, the office is also staffed full time by :fi·aud and national security specialists :fi·om 

the headquarters staff of the Fraud Detection and National Security (FDNS) directorate. 

By locating the otllce in \'>.i ashington, DC, we have ensured that FDNS will be better 

situated to coordinate directly with critical enforcement and intelligence partners at other 

agcncics in the adjudication of EB-5 applications. 

Within the nell:t six months, all ED-5 work will transition away from the Califomia 

Service Center structure reviewed by the OIG and to the new structure at Headquarters. 

• On May 30, 2013, USC IS issued a comprehensi\'e EB-5 polic~' memorandum thr the 

first. tirm· in the progmm's history. Previously, there were several separate policy 

documents that applied to EB-5 adjudications and these doclmlents failed to address a 

wide range of critical issues that typically arise in EB-5 cases, leaving adjudicators 

without rom1al guidance on an array or complex questim1s. 'lltis was una..:ceptahle and, 

predid.ably, it undennined ..:onsisl.ency, timeliness or adjudications, and adllerence to law. 

The comprehensive policy memorandum was subject to several rmmds of public 

comment before it \Vas finalized, and it now gives agency officials as well as the public 

the prediclahiliLy and gLtidam;e they need. 

• LISCIS has fortified the program with adYanccd expertise. EU-5 cases involve 

evaluation of business plans, econometric job creation models, and international financial 

nows. For too long, users failed its adjudicators by not Sllpporting them with the 

expertise needed to contend properly with these issues. 'l11at h~s now changed. In 2011, 

users began hiring full time federal economists and transactional attomeys to work the 

www.oig.dhs.gov 22 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1.fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page 3 

F.R-5 case load. Tn the new program office, we \vill for the first time have economists 

who actually serve as adjudicators (as opposed to simply consulting with adjudicators). 

• lJSCJS. in close consultation with other· enforcement and intelli::ence a::encies. has 

bolstered fraud and national secmity safeguards in the pl'Ogram. Historically, 

lJSCTS treated ER-5 like its other immigration programs when it came to fraud and 

national security. Tite consequence was a security infrastructure that was not properly 

tailored tor the unique needs of this program. In recent years. US CIS has implemented 

i.mpottant and substantial EB-5 integtity enhancements. For the fn·st time, the agency 

now conduo.:t~ secutity o.:hecks on regional center businesses :md certain exe<.:utives 

(instead of only potential investors). collaborates closely with partner agencies on 

program-level issues. conducts enhanced security checks leveraging a range of holdings 

rrom across Lhe l J.S. govemmenl lellllinates regional centers where rrand is detected, and 

refers wbslantialmmtbers or EU-5 o.:a~es lo OLLr interagency enlor~ement partners. Also 

tor the tlrst time, beginning in 2010. the agency began requiring use of a standard tonn 

by all regional center applicants, and in 2011 began requiring all regional centers to file 

an annual disclosme npdate to USCTS detailing regional center activities on a contitming 

basis. All or these are new developments. We are rnlly leveraging the range or statutory 

authorities we have at our disposal. TI1c progress on the fraud and security front has been 

substantial. The program is, unquestionably, more secure now than it has ever been. 

As we have before, we invite the OIG to review our new operations. We believe our new model 

addresses the deficiencies in the legacy program that the OIG reviewed, and would welcome an 

audit ofthc new structure. Unfmtunatcly, because of the ongoing changes, the present audit docs 

not ao.:o.:uratdy describe the current stale or the program. 

W c remain disappointed that the OIG did not interact more tl!lly with the senior career leaders 

who manage the ER-5 program and are responsible ror its integrity. Over the course or its ten 

month audit period, the OIU interviewed the Chief of Ute EU-5 Program lor jttst one honr, and 

only upon our express request that it do so after the OIG had already conveyed to us its initial 

audit findings. TI1e OIG interviewed the Associate Director for Fraud Detection and ~ational 

Secnrity jusl once, and only at the heginnittg or the audit process. We do not believe the andit or 

such a ~omplex program should o.:ondude on these knns. 

We respond to the draft repott's findings and recommendations bdow. While we believe the 

draft rep01t ha~ a number of ittaccuracies and mischaractetizations as to how the program 

operates, we have focused our response on the high-level points that we believe are most critical 

from the perspectives of progran1 integrity, efficiency, and effectiveness. 

Th<' Laws and Rcgulrltions 

\Ve agree in significant part with the OTG's con cent that the "laws and regulations goveming the 

program do noL give LSCIS the authority to deny or temtinate a regional cenler's participaLimt itt 

the EB-5 program based on fraud or national security conccms," which is why last year, CSCIS 

www.oig.dhs.gov 23 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1_fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page 4 

offered e:>.'tensive legislative proposals to Congress to close these gaps, and to equip CSCIS with 

important authorities to enhance ED-5 program integrity. CSCIS already ha~ authority to deny 

or terminate a regional center based on fraud or misrepresentation, 1 but the statutory framework 

leaves other significant gaps in users authorities. especially with regard to national security. 

In anticipation of the regional center program's reauthorization, in June of2012 USCIS proposed 

to the Chairman and Ranking Member of the Senate Judiciary Committee specific statutory 

language that would, for example: ( 1) grant USCTS authority to deny or tenninate F.R-5 cm;es on 

a discretionary ha.~is: (2) require regional centers to certily their compliance with lhe lJ.S. 

securities laws; (3) penuit USClS to run security checks on a broader range of regional center 

patiicipants thatl is eunently authorized tmdcr existing statutes; ( 4) pcnnit USC IS to exclude 

from regional center participation individuals with prior record~ of crime or· fraud; and, 

(5) broaden lJSCIS authorities to condud oversight over job-creating bLL~inesses associated with 

regional centers. 2 

The draft r·eport r·ecommends that CSCIS pnmmlgate regulations that would allow the agency 

"to deny or tenninate ED-5 regional center participru1ts at ru1y phase ofthe process when 

idcntif)'ing known connections to national security and/or tfaud risks without compromising any 

ongoing or potential investigation." and to "[m]akc explicit that fraud and national security 

concems can constitute cause for revocation of regional center status tmder 8 CFR ~ 205.2.''3 1n 

principle users agrees that explicit authority to tenninate a regional center based upon fraud 

and national security concerns is needed, but USCIS lacks authority to promulgate such 

regulations uttder current law. Statutory change is required, which is why l JSCIS over a year 

ago proactively proposed legislative language to Congress t.o secure these authorities and oU1er.;. 

CSCIS appreciates OIG's support tor this etlort. 

However, USC IS has taken substantial administr-ative measures to ensure ER-5 program security 

to the fullest extent permitted tmder existing law. The drart report roc uses on legal attthorities, 

and docs not address many of the operational steps- some transfonnativc -that USCIS has 

taken in recent years to counter fraud and national security risks in the EB-5 program with the 

limited authority that USC IS already possesses. \Ve are concerned that this omission may leave 

readers with the misimpression that users has done little to leverage the tools it already has. 

when in tact quite the opposite is true: 

• users has expanded its background vetting to include regional center entities and key 

executives, for the first time itt the program's history. 

1 Soi!e Matter ofCTTAIY471TF:, 2'i 1 &N Dec. 169, .176 (AAO 201 0). 

., USCJS notes, as Joes the Jrart repurt, that the Senate earlier tills year passed kg~slation (S. 744) that woulJ 

significHntly improve ER-'i Huthorities in line with the recommendations that users offered 3 S C-.. F .R § 205.2 0st.1.blishcs proccd11n~s for cx~~rc.i.smg the ~cr0tary' s authority pursuant to s-.,ction 205 of th0 

Immigration and )Jationahty Act (1:\fA) to revoke approval of any petition approved under INA§ 204. Speciftcally, 

~ C'.F K ~ 205 2(a) states "ra lny Service offrcer m1thorized t.o approve a petition under section 21.14 oftli< Ad. may 

revoke the approval of that petit1on .. " CSCJS designates rogronal centers pl~SlJ:mtto the Appropnatroru; Act, as 

HJ11 ended. and 11 Dt under section 204 of the TNA. 

www.oig.dhs.gov 24 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1.fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page 5 

• users has required all regional centers to file annual disclosures on their business 

ac--tivities and m>~lership and management changes, for the first time in the program's 

histor:v. 

• USClS has dramatiL:ally enh;mL:ed collaboration with key government partners, induding 

ICE, CDP, the fDI, the Securities and Exchange Commission (SEC), the Treasury 

Department, and the intelligence community, on specific EB-5 cas.:s as well as 

pr-ogrammatic issues. 

• users has created a new EB-5 progrmn office at lwadquartcrs with embedded FD:-JS 

officers, who have the authority to liaise directly with other l .S. govennnent agencies, 

tor the tlrst time in the program's history. 

• Where lJSCIS develops <Xllll:ems in Fll-5 ca.~es , it leverages its regulatory authority to 

withhold adjudication of those cases until it has ti.llly coordinated its approach with 

enforcement and intelligence pmincrs. See 8 C.F.R. § 103.2(b)(l8). 

A titHer stunmary of steps US CIS ha~ taken to ensure ED-5 program integrity is attached as 

Exhibit A, which is marked For Official Use Only-Law Enforcement Sensitive. 

Finally, we note the drail report's reference to a. specific Ll3-5 c~~e involving national se..:urity 

concems. TI1e OIG's conclusion is premature and inaccurate. TI1e OIG's conclusion that the 

referenced regional center poses a national security threat, m1d that the primary reason the 

regional center has not been terminated is a legal belief held by USC IS, is simply not supported 

by the record. 'l11e mallerremains under law enforcement investigation and USClS continues to 

closely coordinate with the lead law enforcement agency, m1d will coordinate any adjudicative 

action, as appropriate. TI1e OIG bases its case assessment on input tfom "one CSCIS otlicial'' 

despite PSCIS's detailed comments to the OIG delineating where OIG's case recor·d wa~ 

lacking. 'llte OICJ has not smtght to discuss the matter wilh key LSCIS national security oiTicers 

responsible for handling the matter, despite USC IS's notice to the OIG that these ofilcials have 

relevant information. Further. to the best of US CIS's knowledge, the OIG did not seck input 

from the law enforcement agency involved in investigating the matte.-. Our detailed summary of 

C(mcems on this issue is heing tnmsmitted llltder separate cover given the law enf'or<.:emenl 

sensitivities. 

Tht> J.l:ll-5 Progr:tm :tntl thl' LSCIS .Vlission 

We note the draft rep01t's conclusion that the EB-5 program "ell.1cnds beyond CSCIS's mission 

to provide immigration and citizenship services," at1d its observation that other agencies hav e 

mission statemenl~ closely aligned will1 ll1e program's goals. LSCIS (and its predecessor, the 

Immigration and Naturalization Service (Il\S) 1mdcr the Department of Justice,) has been 

charged by Congress with administering the EB-5 program since the program's inception in 

1990. l:SCIS operates and will cm1tinue to operate the program as it is required to do by law 

unless Congress changes this mandate. 

www.oig.dhs.gov 25 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1.fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page 6 

We agree with the draft repmt that USCIS can benefit from collaboration with other CS. 

government agencies in administering the ED-5 program. A tew years ago, the CSCIS Director 

proposed to the Department of Commerce that the agencies explore possibilities for Commerce 

to take on a significant role in EB-5 adjudications. Since that time, US CIS and Commerce have 

partnered successfttlly on a munber of discrete issues in the EU-5 program, and we continue to 

disclL~s the optimal level of collaboration in the program. 

In support of its goal to reduce fraud, CSCIS has also forged a highly successful partnership with 

the SEC in recent years. The agencies have cm1ducted a joint public engagernent,jointly issued 

an Fll-5 investor alert to the investing public, and collaborated on investigation and enl(lrcement 

action in particular EU-5 cases. USClS has also collaborated with SLC staff in the development 

ofteclmical assistance to Congress that would enhance securities law compliance and investor 

protection within the ER-5 prog.-am. 

W c believe the OIG should have assessed the wide range of initiatives on which we arc currently 

engaged with the Department of Commerce and the SEC. We appreciate the OIG's general 

recommendatim1 that PSCTS execute memoranda of understanding with these agencies, but a 

memorandum is simply a procedural vehicle and not a substantive strategy for how to enhance 

collaboration. We welcome specific suggcstioll.S, as we arc focused on this goal. 

We ultin1ately defer to Congress as to wheti1er the program is properly housed aJ LSCIS or 

another agency. \Ve have tal,en tremendous strides to develop in-house expertise and to ensure 

that the program has all necessary resources to properly and effectively handle EB-5 cases. 

Historically, CSCIS had 110 significant economic or corporate tra11sadional expertise 011 hand to 

manage this complex casework. Culminating in U1e creal ion and ongoing sta111ng of the new 

progrmn otlice, we now have 22 economists4 on stntr as well as business analysts and corporate 

artomeys to review the business and economic questions that EB-5 cases typically present. We 

continue to build up these resources i11 the new ER-5 pmgram office and are committed to 

providing our team wilh all the resources and expertise they need lo administer lhe program. 

Measurement of Overall Progr·am Impact 

\Ve note the draft report's finding that USClS is not in a position to quantity the impact of the 

EB-5 program on the U.S. economy. We agree. CSCIS administers a number of business visa 

programs that were designed by Congress to foster economic pmsperity, hut we do not attempt to 

measLtre the broader economic impact of' any of' those programs, inciLtding EH-5. LSCIS"s 

mandate is to adjudicate EB-5 cases according to the eligibility criteria, including the statutory 

job creation requirements. USC IS is not charged with conducting a broader assessment of the 

program's impact, something which has been the subject of both congressional hemings and 

private studies over the years. 

4 The draft report criticizes CSCIS for not providing its economists with access to needed systems and data. We 

h ave \Vorkc>d dosdy with our economists to ensure they ru-e equipped to hruKJle the workload and we-re stlrprised by 

this Imding. Our economists have received access tu the IMPLA'.' econumelnc phmnmg tool •nd other resources. 

Tfthe om helieves ~dditi0.nal tooh are needed, it would he helpful to specify which ones. 

www.oig.dhs.gov 26 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1.fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page 7 

CSCIS therefore agrees with the OIG's recommendation to the ex-tent that fmther study of the 

EI3-5 program's impact may be warranted, but we do not believe users, as the administering 

b~ndits agency, is b~st position~d to conduct those studies. W c stand ready to provide any 

appropriate assistance to Congress and to U.S. govemment agencies that specialize in 

measurement of economic impacts in this regard. 

Velification of Job Creation 

'11te draft report observes, correctly, that it is often impossible for US CIS to conclusively verity 

job creation in EB-5 cases. Titis is a direct result of the statutory design of the EB-5 program, 

which pcm1its in1migrant investors to usc economic modeling to predict "indirect" job creation 

that will likely result rrom lhe regional center's economi<: adivily. The legislation creating lhe 

regional center program provides that L SCIS shall penuit immigrant investors to rely upon 

"reasonable methodologies tor determining the number ofjobs created ... including such jobs 

which are estimated to have been created indirectly."~ Ry definition, these indirect jobs cam10t 

each he verified, a.~ they are producL~ or an economic model. l·~conomist~ hroadly accept the use 

oflhe~e model~ (some of which are developed by U1e Department of Commerce), <md Congress 

has mandated that cscrs accept them as evidence. !d. Jvlorcovcr, because the statute pennits 

regional centel' applications (Form T-924) and initial investor petitions (Fol'm T-526) to be filed 

hef(Jre the economic adivity ha-; heetl underlaketl and the jobs have been created, these 

processes n~ccssarily involve estinzatesoflikdy job creation. and not a backward-looking 

counting of jobs already in existence. 

We emphasize that cscrs is rigorous in its review of each case before it, applying economic 

expertise to determine whether each economic model presented to the agency is a reasonable 

approxin1ation of how many jobs arc likely to be created. cscrs conducts independent and 

thorough reviews or the suhmitted economi<: models bel(>re concluding they are rea~onahle in 

their assumptions and predictions. Where the agency previously had no meaningt1tl economic 

<)Xpertise on hand to conduct this work, we have in recent years hired and continu<) to hire 

economists a11d corpol'ate attomeys to ensure the work is done properly and consistent with 

widely accepted standaJ'ds in the fidd. \.ISCIS regLtlal'ly denies cases rm lailul'e to meelthejoh 

creation requirements. ln FY 2012, for example, USClS denied 63 regional center applications 

for failure to satisfy the job creation or other eligibility requirements and approved 35 regional 

center applications. 

CSCrS agrees with the draft report's finding that users would bcndit hom additional 

authorities to oversee job creation in cntctpriscs associated with a regional center. USC IS has 

provided legislative proposals to Congress to expand those authorities. 

' ScctJOn 610 of th<' Dq:>.'Utmonts of Commorco, Jtistlcc, and State, the JudJcJary, and Rotated Agcnc1os 

,\ppropriations Act, 1993, Pub. L :-Jo. 102-395, 106 Stat. 1828 (1992), as amended by section 116 of Pub. L. No. 

liJ5-ll D, Ill Stat 244•.1 (l'i'!'l); ""ction 402 of Pub L No lll(>-3%, 114 Stat. 1(>3 7 (2000), section 11037 of Pub 

L. 1\o. I 07-273, 116 Slat. 1758 (20:)2); sect10n 4 of Pub. L. Nu I 08-156, 117 Slat. 1944 (2003): and seclton 1 uf 

Puh. !.. \·o. I 12-176, 126 Stat l.l2.~ (2012). 

www.oig.dhs.gov 27 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1_fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

PageS 

The draft r·eport r·eferences instarrces in which CSCIS has granted ER-5 benefits to investors 

whose capital was used to pay off construction loans or other bridge financing t:rom projects that 

had already begun. W c note that EB-5 !rogram rules do allow EB-5 capital to replace bridge 

fmancing under certain circumstances. For example. a bank may approve a temporary 

construdion loan on the condition thallhe loaned funds will be replaced once a developer is able 

to secure EI3-5 timding. TI1ese types oftinancing arrangements pemtit shovel-ready projects to 

begin (and jobs to be created) right away. Of course, users has denied and will continue to 

deny ca<;es where a project is alr·eady completed and circumstarrces do not wan·ant attribution of 

jobs to a proposed late-stage investment. 

Progr·am Integrity 

'11troughout the draft report, the OIU has included references to casework that may leave the 

reader with the impression that these cases were adjudicated in error, even though the draft report 

states, with respect to at lea<;t a number of these cases, that there is evidence to support the 

adj udicalive decisions reached. ;\sa result ol'the ()[(f's willingness to provid~ a list ol'the 

actual o.:ase~ reH:reno.:ed, USC IS ha~ been able to look. inlo each of these ca~es further to 

detennine whether a case had been adjudicated properly. A total of twenty-two (22) regional 

center applications were identified by the OKr. CSCIS ha~ detennined that in each of the 

applio.:alions o.:ited in Lhe reporl in whidr a lirral deo.:ision has been made, that deo.;ision wa.~ irr 

accordance with the law, regulations, and policy. users thanks the OrG tor the opportunity to 

clarify this issue. 

Inasmuch as the ca~e review fomtd that each case cited by the OIG had been decided properly, 

cscrs must conclude that the orG's concern is not that cases arc being adjudicated improperly, 

but rather the OIG docs not concur with the statute, regulations or policy, as written. In the 

section below, LSCIS will directly address ea(;h ar~a ol'conc~m Lo provide clarirication orthe 

relevant law, regulation or policy. 

A, Re::ional CenteJ' Accountability 

We disagree with the draft report's finding that users does not require regional centers to meet 

all regulatory requirements, and in particular the requirement on which the draft report focuses: 

6 See ED-5 Policy MomordndLun Cv!ay 30, 2013) at 15-16 ("Since tt is tho commercial cnterpmo that creates the 

johs, the developer m the principn1 of the nevt' commercial enterprise, either directly or through a. ~epa.mte johcroatmg entity. m"y utiltze mtenm, tempomry or bmlge financing- m the form ui etthor debt or equity- pnor to 

receipt ofF.R-5 capital. Tfthe project commences hased on the interim or bridge financing prior to the receipt of the 

RR-5 cflpiml m'd ;rul"equently replAces it wit], FR-5 capital, the new commercial emerpri'e may 'till receive credit 

for the JOb creation LLJJ.Llcr the rcgulalivn>. Generally, the replacement of bndgc iinancing with EB-5 investor ""pital 

should hnve 11een contemplated r1rim !.t..l acqulrlng the original non·ER-5 financing_ HC'J\\'ever, even if the F.R-5 

flllancing was not cont~mplatcd prior to acqujrjng the temporary fm .. wcmg.. as long as th .. --; fin .. 'lliC.ing to be r0placcd 

was contemplated as short-term tempomry financing which would be subsequently replaced, the infusion of ED-5 

financing could still result in the creatjon of, and credit for, tk'W _jobs_ For example, the> non HB-5 financing 

ongin"lly contemplated lu replace the temporary tinancmg may nu longer be av"tlablc tu the commerctal enterprise 

as fl result of changes in availability oftmd1ti0.nal financing.") 

www.oig.dhs.gov 28 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1.fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page 9 

that an application for a ne\V r·egional center must pm'>ide "in verifiable detail how jobs will he 

created indirectly." 8 C.F.R. ~ 204.6(mX3)(ii). The draft report suggests that US CIS should 

interpr~t its regulation to require that all n~w regional center applications includ~ a fully 

developed business plan. but that view is contrary to the statute, which permits creation of a 

regional center b;t~ed on "general proposals'' 'l11e regioruil center legislation sfl{t.es !hat the 

progrmn "shall involve a regional center in the Cnited States, designated by the Secretary of 

Homeland Security on the basis of a general proposal, tor the promotion of economic grow1h, 

including increa~ed export sales, improved regional productivity, job creation, or increa.~ed 

domestic capihtl im:estmenl" and that "l tjhe establishment or a regi(mal center may be based on 

general predictions. "

7 ln light of the controlling statute, US CIS has interpreted the regulation's 

reference to "verifiable detail" as requiring substantial evidence of how jobs will likely be 

cr·eated, but not necessarily a ii.tlly developed business plan, which is not a r·equir·ement 

authorized by the statLtte. 

It is i.mpottant to note that no alien is properly admitted as an immigrant to the C.S. under the 

ER-5 program if he or she cannot show a fully developed husiness plan and finn commitment of 

the required investment amomtt. At the stage at which an individual investor seeks approval to 

invest in an already-approved regional center, a fully developed business plan must be presented. 

Afatter ofHo, 22 !&1\ Dec. 206, 213 (Assoc. Comm'r 1998). The statute, however, docs clearly 

permit regional<.:ent.ers lobe approved at the oulsel, before any individual investors have been 

approved, on a lesser showing. Again, if Congress modified the statute to require a more 

detailed showing by the regional center, CSCIS would adhere to that new standard. 

In another example cited in the dra1l report, !he OIG suggests !hal USCIS improperly urged an 

applicant to omit intonnation from an application in contravention of the regulations. TI1e OIG 

is inconcct; in the case discussed, users followed ordinary evidentiary procedures in a manner 

consistent with law. users adjudicates ever·y regional center application to ensure thatthe 

docLtments submitted establish eligibility l'or the designation as a regional center as ol'the date of 

tiling. In addition to establishing eligibility tor designation as a regional center, Fonn I-924 

applications arc sometimes accompanied by a Form I-526 Exemplar along with draft documents 

describing the proposed investment oppmnmity. The I-526 Exemplar is an avenue available to 

the regional center applicant to obtain a determination from users. in advmtce of the tiling of 

actual investor petitions, that the draft documents do not contain provisions that violate program 

requirements. Ifthe draft investment documents contain impennissiblc provisions. USCIS 

provides the applicant t.he opporhmit y to ;unend !he dra.fi in vestment. dm:ument~ through a 

Request for Evidence (RfE). This process is pennissible tmder both the statutes and the 

regulations. Moreover, the exemplar process is an intportant tool to ensure predictability and 

eiTiciem:y in the processing ol'investorpetitions under the regional center proje..:t. We therel'ore 

believe the OIG 's criticism of this established and well-designed process is Lmwarrant.ed. 

7 ScctJOn 610 of th<' Dq:>.'lrtmonts of Commorco, Jtistlcc, and State, the JudJcJary, and Rotated Agcnc1os 

,\ppropriatiollS Act, 1993, Pub. L :-Jo. 102-395, 106 Stat. 1828 (1992), as amended by section 116 of Pub. L. No. 

liJ5-ll D, Ill Stat 244•.1 (1 1i'!7); ""ction 402 of Pub L No lll(>-3%, 114 Stat. 1(>3 7 (2000), section llll37 of Ptrb 

L. 1\o. 107-273, 116 Slat. 1758 (20:)2); sect10n 4 of Pub. L. Nu 108-156, 117 Slat. 1944 (2003): and soclton 1 uf 

Puh. T.. \-o. I 12-176, 126 Stat l.l2.~ (2012). 

www.oig.dhs.gov 29 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1_fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page 10 

The OTG also concludes that USCTS's regulations and policies pertaining to the designation of 

Targeted Employment Areas (TEA) are tmclear. Specifically, the OIG appears to take issue with 

an adjudicator's ability to challenge the designated boundaries of a TEA. CSCrS believes the 

recent policy memorandum removes any ambiguity. As noted in the May 30, 2013 EB-5 Policy 

l'vlemorandtun, "US CiS defers to stale detenninations ofthe appropriate boundaries of a 

geographic or political subdivision that constitutes the targeted employment area. However, tor 

all TEA designations, USCrS must still ensure compliance with the statutory requirement that the 

proposed area designated by the state in fact ha-; arr unemployment r-ate of at lea-;t 1 50 per·cent of 

the national average rate.·· This policy pronouncement adheres lo lhe legal framework !'or TF.:\ 

designation. 

R. lJSCJS Re~latiom and Policy 

We agree with the OrG's concern that users has historically applied laws and policies 

inconsistently in the ER-5 pr·ogram. This ha-; been arr ongoing source of criticism for the agency, 

and one lhat has been warranted. The program's eligibility ~riteria, involving complex issues or 

job creation proje<.:Lion, economic modeling, business plan evaluation, <md review of 

transactional documents, complicate eff01ts to devise simple rules that arc readily applied to 

actual ca~es. The problem was long exacerbated by thr·ee key deficiencies that users ha~ now 

made sigrril1canl headway in resolving: (1) lJSCIS had no fomral policies addressing many of 

the critical issues that frequently arise in EB-5 cases; (2) users did not inject meaningful 

economic or corporate legal expcttise into the program: and, (3) users did not require regional 

center applicants to suhmit standardized and ba~ic information to gain approval, or to update 

csers regularly· on their status once approved. 

On ~lay 30, 2013, cscrs issued a 27-pagc EB-5 policy memorandum that. for the first time in 

the program's history, addresses comprehensively the range or eligibility issues in a single 

doctmtent. '11te issuance of the new policy memorandmn was a seminal event for the program, 

and though it was finalized only toward the end of the orG's audit period, we are confident that 

it will result in more consistent decision-making that faithfully applies the statutory and 

regulatory requirements. \Ve regret that the OICI ha~ not addressed the policy memorandum. 

Fmthennorc, users has made great strides in resourci.ng the EB-5 program with the types of 

expertise necessary to conduct these complex adjudications. In 2009, USeTS had just nine 

employees a~signed to the program, none or whom were economists or corporate attorney~. 

With the creation and ongoing stafiing of the new program otlice, there arc currently more than 

80 employees assigned to the EB-5 program. including economists and corporate attomcys 

whose expertise will pay enonnous dividends in ternrs of improving the agency's consistency 

and adherence to law in its adjudications. The pro grant chief is also now designated. tor the first 

time in program history, as an SES-Icvd position. 

LSCIS has also sought to bring order and consistency to the regional center approval illld 

monitoring process, which until recently was extraordinarily under-developed and ad hoc. 

Historically, and as recently as 2009, a regional center applicant could apply to csers through 

www.oig.dhs.gov 30 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1_fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page 11 

an infomral letter-writing process. There was no regular· security vetting and no standardized 

collection of basic information. users in 2010 introduced a new fonn, fonn r-924, that collects 

this intonnation and that all new regional center applicants (or regional centers tiling to amend 

their designation) arc required to usc. CSCIS also began. for the first time, charging a fcc for 

regional center applications. Previously, regional center applicants paid no fee at all, me:ming 

that the work lmdertaken to adjudicate cases filed by sophisticated business interests was 

dfcctivdy subsidized by the rest ofCSCrS's customers. That inequity no longer persists. 

:Mor·eover, as of2011, appmved regional center-,.; are required to submit e>.~ensive infonnation to 

LSCIS on an annual basis through 1:omr 1-924.:\, updating the agency orr the status oftlreir 

investment projects and management or ownership changes, and pennitting LSClS to conduct 

heightened oversight and vetting of regional centers on a continuing basis. 

:\11 of these changes have contrihuted to enhanced consistency and integrity in \.ISCIS's 

administration of the program. 

J .astly, the dr-aft report implicitly criticizes CSCJS 's policy of defening to prior agency decisions 

involving the same investment project, but we believe the criticism is misplaced. A ..n important 

dement of consistency is that users must not up~nd settled and reasonable business 

expectations by issuing contradictory decisions relating to the same investment projects. It 

dis serves the public, Lmdem1ines progr:un integrity, am! is ftmdament.ally unfair for lJSClS to 

approve a project, have the developers and investors act in reliance on the approval, and tben 

subsequently reverse course by determining that the agency's initial approval was in error. To 

that end, CSCIS has long followed a policy that it will defer to its own prior det:isions unless 

there is evidence of fraud, material change in f:td.s, or legal deilt:iency in the prior decision. 

Some of the sharpest criticism cscrs has historically received from Congress and stakeholders 

relates to perceived failures to follow this deference policy, precisely because of the huge 

reliance U.S. project developers and investors justifiably place on CSCJS 's decisions. Where a 

prior approval wa.~ issued in ohjedive contravention of law, 1 !SCIS will not accord deference to 

that approval (and indeed has rdi.Jsed to deter in such cases in recent years). But where an 

adjudicator simply would have decided a close case differently, it lmdermines the program's 

effectiveness, predictability, and consistency for the agency to abmptly rever-,.;e course. 8 

C. Internal and External htfluence 

LSCIS agrees with the OIO's observation llrat EH-5 cases attract signil1cant interest from a 

range of stakeholders, including members of Congress, state and local otlicials, the busin~ss 

'The draft report cites an ~pplicmion of USGS deference policy in tenm thflt we believe mixh~rncteri ze our 

processes Before 1 ISCTS detennines that one of its prior decisions was incnrrect and that the agency should reverse 

a prior <1pprvval, a ''DdCri..:ncc Bmmr or users o(Ticiab: indw..ling Cl:onomists, conv~;m::s to ri..:vicv .. ' the t:asc and 

m~ke R determinntlon a::. to tl1e ~P1.1Topriate way forwArd The Defere11Ce Ronrd process includes ~m op].')t.:1rhmity to 

discuss and clanfy Js""" m tho case w1th the appliCant. ln the case cited at page 13 of the dra!lrq:>ort, the 

Deference Board determined that the agency's initial decision was not in error and should not be disrurbed, 

notwithstanding the contnuyview of a USCJS adjudJC'lltor We believe the process worked m this case, and that the 

010. S CTlli~ism lS liilWarmnlel\; mtkel~ we are concerned lhallhe draft report does not even acknowledge lhallhe 

ultimate decision in this cnse wHs mHde purnu~nr tn thi::. carefu1].1TV...:ess. 

www.oig.dhs.gov 31 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1_fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page 12 

community, and the applicants themselves. On average, USCTS r·eceives hundreds (and in recent 

years thousands) ofED-5 case inquiries from members of Congress per year. 

As a threshold matter. \Ye note the draft report's finding that the case files "appeared to contain 

sufficient evidence to support the 11n~l adjudicalim1 decision'' in ea.ch oflhe cases that the OIU 

reviewed involving ell.'temal inquiries. cscrs 's core fimction is, in a manner consistent with 

ensuring national security, to approve cases that arc eligible, and to deny cases that arc not. \\' e 

decide ca.~es based mr the facts and the law and nothing else. CSCTS management officials 

have in many instances received case inquiries lr-om memhers of Congress or applicants and 

declined to take action because they assessed that the agency had reached the right result. In 

other instances. CSCIS officials have become more involved where they believe the agency had 

eTTed. That is as it should be. 

\V c agree \vith the draft report that it is important to have processes in place to manage external 

inquiries about EB-5 cases, to pcnnit appropriate responsiveness to those inquiries, and to avoid 

perceptions that anything other· than the facts and the law drives agency decisimrs. ;\t the same 

time, we must be accountable and responsive to legitimate criticism. In the ED-5 program in 

particular, our agency has historically struggled with issuing timely decisions that arc consistent 

with the law given the enonnously complex economic and legal issues that these cases can raise. 

If our agency has decided a. case incorred.ly, in U1e EU-5 program or any other visa progrmn, we 

cannot allow that error to go uncorrected when it is brougl1t to our attention. Senior agency 

managers must be empowered to supervise and to correct course when they believe difficult 

issues are not heing handled coTTeclly in cases. Thal is the responsibility or the chain or 

cmnmand. 

We would welcome suggestions from the OIG for processes that Users could implement to 

accommodate all of these legitimate concems. \lie would particular-ly welcome suggestions from 

the 01(1 as to protocols it would recommend l(rr documenting the agency's response Lo Lhe 

thousands of inquiries received every year regarding EB-5 cases. It is important that the public, 

Congress. and USCIS staff all have confidence in the integrity of the EB-5 process and our 

adher·ence to the la\'li. \Ve ar·e committed to taking any steps that can help accomplish this. 

Conclusion and Recommendations 

We concur with three or the rour 010 recommendations, allhmtgh as noted a/rove we have 

refined some of the action items to comport with USCIS's authorities and structure. We 

respectfully request that the recommendations be amended to reflect these refinements: 

1. users will update regulations to provide greater clarity regarding the requirements tor 

establishing eligibility under the program, in particular by more clearly delineating the 

evidentiary requirements applicable to stand-alone EB-5 petitions versus Regional 

Center-based applications and petitions. A revised rule will be drafted for interagency 

clearance within nine months of this report. 

www.oig.dhs.gov 32 OIG-14-19
 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Oil! cia] Comments to the Drafi Report Recommendations on U.S. Cilizenship and Jmmzgralwn 

Services' Employment-Based F1_fth Preference (EB-5) Regional Center Program- For Otlicial 

Cse Only (OIG-12-166) 

Page B 

2. users will develop and implement an interagency collaboration plan outlinirrg liaison 

and collaboration roles and responsibilities among key federal partners, to include the 

Department of Commerce and the Securities and Exchange Commission. within six 

months of this rcpott. 

3. USCIS's mandate is to adjudicate ED-5 cases according to the eligibility criteria, 

including the statutory job creation requirements. US CIS is not charged with conducting 

a broader assessment of the pmgram's impact. And while we agree that an assessment 

may he hend'i(;iaL we do not believe lJSCIS, a.~ the administering henel'its agen<:y, is best 

positioned to conduct that study. LSCIS therefore disagrees with the OlU's 

recommendation that such a study be undctiaken by US CIS. 

4. \.ISCIS will establish within six months quality assuran<:e steps to promote program 

integrity and ensure regulatory compliance. 

We appreciate the OIG's review of the legacy F.R-5 progr·am and we cmrcur in the OIG's 

assessment that improvements to the legacy program will enhance CSCIS's ability to ensure the 

program is administered dlicicntly and consistently, with due focus on preventing fraud and 

threats to national security. Tite OIG's assessment echoes concems we developed independently 

~md which spurred us t.o transfonn the wa.y the EU-5 program is administered. Some of those 

steps have come online over the past several years, but other critical and transformative changes 

have become a reality only in the months since the OIG finished its audit \York. \Vc th.:rcfore 

renew our invitation for the OIG to t:ondnct andit work on the rrew F.R-5 program oiTi<:e that we 

latm<:hed in May orthis year, lhe new EU-5 poli<:y memorandtml that we published in 'lhy of 

this year, and the many anti-fraud and nntional security mea~ures we have recently implemented. 

We and the public would benefit from the OIG's independent analysis of these measures, which 

ar·e not cuTTently reflected in the dmft r·eport. 

www.oig.dhs.gov 33 OIG-14-19
 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix�C��

Major�Contributors�to�This�Report�

Patrick O’Malley, Director 

Cheryl Jones, Audit Manager

Keith Nackerud, Analyst-in-Charge 

Jeanette Hyatt, Auditor 

Rebecca Mogg, Program Analyst

Audrey Van, Auditor 

Katrina Bynes, Auditor 

Marisa Coccaro, Program Analyst 

Kevin Dolloson, Communications Analyst 

Patricia Benson, Referencer

www.oig.dhs.gov 34 OIG-14-19
 
 

 

����

���

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix�D�

Report�Distribution��

Department�of�Homeland�Security

Acting Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff

General Counsel 

Executive Secretary 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs

Assistant Secretary for Office of Legislative Affairs 

USCIS Audit Liaison

Acting Chief Privacy Officer 

Office�of�Management�and�Budget

Chief, Homeland Security Branch 

DHS OIG Budget Examiner

Congress

Congressional Oversight and Appropriations Committees, as appropriate 

www.oig.dhs.gov 35 OIG-14-19
 
 

ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this document, please call us at (202) 254-4100, fax your 

request to (202) 254-4305, or e-mail your request to our Office of Inspector General 

(OIG) Office of Public Affairs at: DHS-OIG.OfficePublicAffairs@oig.dhs.gov. 

For additional information, visit our website at: www.oig.dhs.gov, or follow us on Twitter 

at: @dhsoig. 

OIG HOTLINE 

To expedite the reporting of alleged fraud, waste, abuse or mismanagement, or any 

other kinds of criminal or noncriminal misconduct relative to Department of Homeland 

Security (DHS) programs and operations, please visit our website at www.oig.dhs.gov 

and click on the red tab titled "Hotline" to report. You will be directed to complete and 

submit an automated DHS OIG Investigative Referral Submission Form. Submission 

through our website ensures that your complaint will be promptly received and 

reviewed by DHS OIG. 

Should you be unable to access our website, you may submit your complaint in writing 

to: 

Department of Homeland Security 


Office of Inspector General, Mail Stop 0305 


Attention: Office of Investigations Hotline 


245 Murray Drive, SW 


Washington, DC 20528-0305 


You may also call 1(800) 323-8603 or fax the complaint directly to us at 

(202) 254-4297. 

The OIG seeks to protect the identity of each writer and caller.