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68–299 PDF 2011

INVESTOR VISA PROGRAM: 

KEY TO CREATING AMERICAN JOBS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

IMMIGRATION POLICY AND ENFORCEMENT 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

SEPTEMBER 14, 2011 

Serial No. 112–54 

Printed for the use of the Committee on the Judiciary 

( 

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

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

[Vacant] 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON IMMIGRATION POLICY AND ENFORCEMENT

ELTON GALLEGLY, California, Chairman 

STEVE KING, Iowa, Vice-Chairman 

DANIEL E. LUNGREN, California 

LOUIE GOHMERT, Texas 

TED POE, Texas 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

PEDRO R. PIERLUISI, Puerto Rico 

GEORGE FISHMAN, Chief Counsel 

DAVID SHAHOULIAN, Minority Counsel 

(III) 

C O N T E N T S 

SEPTEMBER 14, 2011 

Page 

OPENING STATEMENTS 

The Honorable Elton Gallegly, a Representative in Congress from the State 

of California, and Chairman, Subcommittee on Immigration Policy and 

Enforcement .......................................................................................................... 1 

The Honorable Zoe Lofgren, a Representative in Congress from the State 

of California, and Ranking Member, Subcommittee on Immigration Policy 

and Enforcement .................................................................................................. 2 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Chairman, Committee on the Judiciary ..................................... 4 

WITNESSES 

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

Jay, VT 

Oral Testimony ..................................................................................................... 6 

Prepared Statement ............................................................................................. 9 

Daniel J. Healy, Chief Executive Officer, Civitas Capital Group, Dallas, TX 

Oral Testimony ..................................................................................................... 15 

Prepared Statement ............................................................................................. 18 

Jason Mendelson, Managing Director, Foundry Group, Boulder, CO 

Oral Testimony ..................................................................................................... 25 

Prepared Statement ............................................................................................. 27 

Shervin Pishevar, Managing Director, Menlo Ventures, Menlo Park, CA 

Oral Testimony ..................................................................................................... 36 

Prepared Statement ............................................................................................. 40 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee 

on the Judiciary ................................................................................................... 5 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of Patrick F. Hogan, President CMB Export, LLC, and 

CMB Summit, LLC .............................................................................................. 57 

Letter from K. David Anderson, President, Invest In the USA (IIUSA) ............ 69 

Letter from Randel K. Johnson, Senior Vice President, Labor, Immigration, 

& Employee Benefits, U.S. Chamber of Commerce ........................................... 75 

(1) 

INVESTOR VISA PROGRAM: 

KEY TO CREATING AMERICAN JOBS 

WEDNESDAY, SEPTEMBER 14, 2011 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON IMMIGRATION

POLICY AND ENFORCEMENT, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Subcommittee met, pursuant to call, at 1:35 p.m., in room 

2141, Rayburn Office Building, the Honorable Elton Gallegly 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Gallegly, Smith, Gohmert, Lofgren, and 

Conyers. 

Staff present: (Majority) George Fishman, Subcommittee Chief 

Counsel; Marian White, Clerk; and (Minority) Hunter Hammill, 

USCIS Detailee. 

Mr. GALLEGLY. I call to order the Subcommittee on Immigration 

Policy and Enforcement. 

Good afternoon, everyone. Almost 10,000 green cards a year are 

available through the Investor Visa Program for foreign businessmen who invest in American businesses and create jobs for American workers. 

If investors and their families utilize all these visas, and each investor created the 10 jobs called for in the program, tens of thousands of jobs a year would be created. That is something I am sure 

all of us could rally around. 

And yet the Investor Visa Program is presently underutilized. 

DHS issued only 749 investor visas in 2006, rising to 2,480 in 2010. 

The program has the potential to be a far larger job creator. 

The recent growth we have seen in the Investor Visa Program 

has come from the Regional Center Pilot Program. A regional center pools investments in defined economic zones. The establishment 

of a regional center may be based on general predictions concerning 

the kinds of commercial enterprises that will receive capital, the 

jobs that will be created directly or indirectly as a result of such 

capital investments, and the other positive economic effects such 

investments will have. 

Numerous regional centers exist in my State of California. The 

Regional Center Program expires in a year. We will examine today 

its level of success in generating jobs, the merits of the reauthorization, and the appropriate length of reauthorization. 

We will also examine another proposal that has been made to 

utilize unused investor visas. What if we were to make green cards 

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available, not just to foreign investors willing to invest in American 

businesses, but to foreign entrepreneurs with visions of new ways 

of doing business and whole new industries. 

For those businesses that pay off, we could be talking not about 

10 jobs, but thousands of jobs. This idea, called the Start Up Visa, 

has gained a lot of support in recent years in venture capital circles. A number of Members have introduced legislation proposing 

such a visa program, including my good friend, the Ranking Member, Ms. Lofgren. While I’m not prepared at this time to declare my 

full support, this innovative proposal deserves a lot of support and 

consideration from Congress. We will be giving that consideration 

today. 

And with that, I would yield to the gentlelady from California, 

Ranking Member Ms. Lofgren? 

Ms. LOFGREN. Thank you, Mr. Chairman. We often disagree in 

this Committee on the role that immigration plays in America, but 

every once in a while we seem to find something we can agree on. 

And today’s hearing on the EB-5 Regional Center Program and the 

Start Up Visa concept, I think will highlight some of the ways that 

immigrants create jobs and will show immigration can be used as 

a powerful tool for innovation and job creation. 

First, the existing EB-5 Regional Center Program provides conditional green cards to immigrant investors who pool their monies in 

projects that will create jobs in America. If a sufficient number of 

jobs are created, the conditions are removed and the investors earn 

permanent residency. The program smartly incentivizes investing 

in areas of high unemployment, focusing job creation in the areas 

where it is needed most. 

This program seems like a no-brainer, but it is severely underutilized, largely, I think, because of two problems that make the program risky for potential investors. 

First, the Regional Center Pilot Program is supposed to, as the 

Chairman has said, to expire at the end of the next fiscal year, 

which creates a pretty big uncertainty for investors. Second, there 

has been a lack of consistency by the government in adjudicating 

EB-5 petitions, and this, I think, in some cases led to a lack of confidence among investors who question whether they’ll actually receive a green card when they put their money at risk through the 

programs. 

Now, I understand that USCIS is trying to address the adjudication issues and will begin implementing new procedures this very 

month to streamline the process, including premium processing for 

the program and letting applicants directly contact the agency giving them an opportunity to appear before a panel to resolve issues. 

And those are positive steps. I think they will fix most of the problems in the application process. But until we get the Regional Center reauthorized for hopefully a long period of time, if not permanently, that uncertainty about the investment will remain and really undercut our goals in the program. 

There’s another similar job creating immigration proposal that 

we have enacted that the Chairman mentioned, and that is the 

startup visa. You know, I thought a couple of years ago how are 

companies really formed. And I thought about Google as an example. Larry and Sergey did not come in with a million bucks; they 

3 

came in with a tremendous idea, and they got venture capital funding. And now, they employ thousands of my constituents in Silicon 

Valley, and they are hiring. That is how companies get formed usually, not just with your own money that you are investing. 

And so, the startup visa really relies on that. If a talented individual has an idea that attracts U.S. venture capital financing, an 

idea that might lead to the next Google or Intel or Facebook or 

whatever, the startup visa will allow that entrepreneur to start the 

company here in the United States rather than abroad. And alternatively, if an individual starts a new commercial enterprise in the 

U.S. using his or her own sweat equity, that new company creates 

jobs for U.S. workers, and the promise of creating more of that 

would allow also for a green card for job creation. 

Now, the tremendous success of immigrants in the tech world is 

something I know pretty well because my district is in Silicon Valley. The National Venture Capital Association, NVCA, found that 

40 percent of U.S. publicly traded venture backed companies operating in the high tech field were started by immigrants. And if you 

take a look at those companies, they employ 220,000 people in the 

U.S., 400,000 people globally. That is a huge success. 

But our immigration system today really does not allow that virtuous activity to continue. And that is why we are here today. As 

the Chairman said, I introduced the Immigration Driving Entrepreneurship in America Act, the IDEA Act of 2011, which includes 

a startup visa of the two types that I just mentioned. It provides 

conditional residency to immigrant entrepreneurs who secure at 

least $500,000 in venture capital financing, and I am interested to 

hear if that is the right number from all of you today at the hearing. And if we get that funding from angel investors or the venture 

world and we create jobs, then the visa would vest. 

We also have self-sponsored entrepreneurs. And I think about 

Marvell in my district, that was founded by a wonderful engineer 

who was born in Shanghai, her husband a brilliant engineer born 

in Singapore. They met while getting their Ph.D.s at the University 

of California at Berkeley. They did not get big VC funding; they 

struggled. I mean, they borrowed money from their family, and 

they maxed out their credit cards. They now have 3,500 engineers 

employed in my district, and they just got the contract for the new 

cell phone design for the country of China. They are a massive success. This sweat equity self-sponsored plan would be perfect for 

them. 

I do not want to go on. I want to hear this, but I did mention 

we have someone sitting at the dais who is an important person 

in developing this concept and that is our colleague, Jared Polis, 

who is not a Member of the Committee, but had he been able to 

participate, he would have introduced Jason Mendelson, who is his 

constituent from Colorado. And I wanted to mention how grateful 

we are to Jared’s leadership in this whole area, and how glad I am 

that he can sit in at this hearing today. 

I will just say that in these perilous economic times, our singular 

focus should be on creating jobs and more jobs. The startup visa 

program has the potential to create that, and I am looking forward 

to hearing from our witnesses today. And I thank you, Mr. Chairman, for allowing me to go over my time just by a bit. 

4 

Mr. GALLEGLY. I thank the gentlelady. And at this time I would 

yield to our good friend from Texas, the Chairman of the full Committee, Mr. Smith? 

Mr. SMITH. Thank you, Mr. Chairman. 

The number one job of Congress is to create jobs. We must ensure that our policies help private enterprise, strengthen our economy, create jobs for American workers and maintain our global 

competitiveness. 

The Investor Visa Program plays a part in achieving this goal. 

Under the program, almost 10,000 immigrants can receive permanent residence each year if they engage in a new commercial enterprise, invest between $500,000 and $1 million in the business, and 

see that it creates 10 full time jobs for American workers. 

The Regional Center Pilot Project, which is almost two decades 

old, has become the most used part of the Investor Visa Program. 

Investment through a regional center is attractive to potential investors because they are relieved of the responsibility of running a 

new business, and they can count indirect job creation toward the 

job creation requirement. 

Investors may feel more confident about a regional center that is 

operated through a State or city government. In these difficult economic times, many State and local governments have turned to regional centers as a method of generating economic growth. 

The Association to Invest in the USA has estimated that the Regional Center Program has created or saved over 65,000 jobs in the 

U.S., and had led to the investment to over $3 billion in the U.S. 

economy. 

The program is set to expire at the end of Fiscal Year 2012. 

Just as in any visa program, there is the potential for fraud in 

the Investor Visa Program. We have to ensure, both for the sake 

of the American people and potential foreign investors, that regional centers operate at the highest levels of professionalism and 

integrity. The business plans and promotional materials that regional centers produce should meet the same standards as if they 

were to be submitted to the Securities and Exchange Commission. 

Another proposal is the ‘‘start-up’’ visa. Foreign entrepreneurs 

would be granted conditional permanent residence to come to 

America to launch their businesses. If the businesses succeed and 

create a certain number of American jobs, the immigrants would 

become unconditional permanent residents. 

While we can benefit by bringing entrepreneurs to America with 

their bold ideas, and we need to do so, such a program could be 

susceptible to fraud and abuse. How is the government to determine which economic vision is feasible and which is pie in the sky? 

And how will it root out schemes proposed simply to procure a 

visa? 

I look forward to today’s hearing to help us answer some of these 

questions. 

Thank you, Mr. Chairman. Yield back. 

Mr. GALLEGLY. I thank the gentleman. And at this time, I will 

recognize my good friend from Michigan, the Ranking Member of 

the Committee, Mr. Conyers? 

Mr. CONYERS. Thank you, Chairman Gallegly. I have asked that 

my statement be submitted. And I would like to join in with the 

5 

Chairman of the Committee and, you, Mr. Chairman, in working 

out the concerns of fraud that you have so that we can move forward with a very important part of the jobs initiative that we are 

all committed to. 

I thank and I yield back. 

[The prepared statement of Mr. Conyers follows:] 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee on the Judiciary 

The single biggest issue facing the American economy is the current lack of jobs 

available for U.S. workers. The majority has talked a great deal about job creation, 

so I’m glad we’re finally having a hearing on how immigration can create jobs for 

Americans. The hearing today is about two investor visa ideas that can create 

American jobs—one that is current law, one that is not. 

The first of these job creating programs is the EB–5 program. It gives green cards 

to immigrant investors who invest at least half a million dollars towards projects 

that create jobs for Americans. And the program wisely focuses on creating jobs 

where they are needed most—areas of high unemployment. 

The EB–5 regional center program is working for my home of Detroit. For example, the Green Detroit Regional Center is working to advance sustainable energy solutions by using immigrant investor funds in the company ‘‘Alt-E,’’ which was founded by former employees of Tesla Motors to retrofit fleet-based trucks with electrichybrid powertrains that greatly increase their fuel efficiency. An article in Crain’s 

Detroit Business noted that the EB–5 investment will let the company ‘‘speed up 

hiring and create more than 300 jobs by the end of 2011.’’ 

The program as a whole is working to attract significant capital to the United 

States. In 2005, the GAO found that the EB–5 program had attracted $1 billion to 

the country since it began. 

Yet, while successful, the program remains underused because of two issues that 

we’ll hear about today. First, the regional center pilot program that targets areas 

of highest unemployment is not permanent and is set to expire at the end of FY 

2012. This creates uncertainty for immigrant investors. Second, the program has 

been administered in an inconsistent manner by USCIS, and INS before them. This 

creates even more uncertainty for investors. 

I understand that USCIS is working to streamline the EB–5 process and make 

it easier for immigrant investors to use. This is a welcome change. But we should 

work towards making the regional center pilot program permanent so that we can 

continue to attract money and jobs to areas that sorely need both. 

I’m also interested in hearing today about another immigrant investor visa concept that does not yet exist. I’m talking about the so-called start-up visa concept 

that my friend Zoe Lofgren has worked on. This concept would help immigrants stay 

in the United and start companies here if they have intellectual capital and backing 

from American venture capitalists. 

As you know, companies like Google and Intel were started by immigrants. We 

need to do everything we can to ensure that the next innovative company begins 

right here in the U.S. and the jobs created by it stay in the United States. So, I’m 

looking forward to hearing about how we can advance the start-up visa concept. 

I thank the witnesses for their participation today. 

Mr. GALLEGLY. I thank the gentleman. 

At this time, I would like to introduce our witnesses. We are very 

fortunate today to have the very distinguished panel of witnesses 

we have. And I would just like to make note that all the statements will be entered into the record in its entirety. 

And I would ask the witnesses if you would be kind enough to 

try to keep your comments summarized within the 5-minute period 

so we can get into the question and answer session. And we have 

provided the lights down there as kind of a convenient way to remind you, but to make sure that you do understand that your testiVerDate Aug 31 2005 12:40 Nov 02, 2011 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6601 H:\WORK\IMMIG\091411\68299.000 HJUD1 PsN: 68299
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mony will be made a part of the permanent record of the hearing 

in its entirety. 

With that, I would introduce our first witness, Mr. William 

Stenger. Mr. Stenger serves as president and chief executive officer 

of Jay Peak Resort in Jay, Vermont. He is the general partner of 

the largest regional center project in Vermont, and one of the most 

substantial EB-5 projects in America. 

He has been appointed by the governor of the State of Vermont 

to serve on the Governor’s Council of Economic Advisors, and 

serves as a member of the Agency of Commerce and Community 

Development Advisory Council. 

Mr. Stenger earned his associate in science degree from the Corning Community College, and a bachelor of science degree from 

Syracuse University. 

Our second witness is Mr. Daniel Healy. He is co-founder of the 

Civitas Capital Management, LLC. He is responsible for the general management of the firm. Mr. Healy leads a team that is responsible for identifying and evaluating investments that meet EB5 Program criteria. Prior to forming Civitas, Mr. Healy served as 

executive vice president and partner of Royalty Real Estate Capital. 

Mr. Healy earned his B.A. from the University of Texas at Dallas 

and his M.B.A. from Cox School of Business at Southern Methodist 

University. 

Our third witness, Mr. Jason Mendelson, is the co-founder and 

managing director of Foundry Group, a bolder based venture capital firm that invests in early stage formation of technology companies. He also serves as a board member at the National Venture 

Capital Association. 

Prior to this, Mr. Mendelson was attorney for Cooly LLP and a 

software engineer for Accenture. 

Mr. Mendelson earned his bachelor’s degree and J.D. from the 

University of Michigan. 

Mr. Shervin Pishevar—is that close enough? 

Mr. PISHEVAR. Pishevar. 

Mr. GALLEGLY. Pishevar. Is the managing director of Menlo Ventures at Venture Capital Firm in Silicon Valley. Before joining 

Menlo, Mr. Pishevar was chief application officer and general manager at Mazelli Corporation after spending most of his career as a 

serial entrepreneur and angel investor. 

He serves on the advisory board of comScore. Mr. Pishevar is one 

of the 10 members of the UN Foundation Global Entrepreneurs 

Council. 

He earned his B.A. from the University of California at Berkeley. 

So, with that, we will start with Mr. Stenger. Welcome, and we 

look forward to your testimony. 

TESTIMONY OF WILLIAM J. STENGER, PRESIDENT & 

CHIEF EXECUTIVE OFFICER, JAY PEAK RESORT, JAY, VT 

Mr. STENGER. Mr. Chairman, thanks very much. Distinguished 

Members of the Committee, I appreciate the opportunity—— 

Mr. GALLEGLY. Why do you not pull the mic up a little bit, 

maybe turn on the button. I am not sure. 

Mr. STENGER. Is that better? 

7 

Mr. GALLEGLY. I am not sure. 

Mr. STENGER. Is that better? 

Mr. GALLEGLY. Yes, sir. 

Mr. STENGER. Okay. Can we start my clock again? [Laughter.] 

Mr. Chairman, thank you very much for the opportunity to be 

here. Distinguished Members of the Committee. We appreciate you 

having the hearing on this EB-5 Regional Center extension. It is 

very important to our economy. It is very important to the job creating initiatives we are all eager to promote. And I and all of my 

colleagues appreciate your valuable time in conducting this hearing 

today. 

I am president of Jay Peak Resort located in northern Vermont. 

We are a beautiful, marvelous, physical facility in rural Vermont. 

We have marvelous assets and characteristics, but we also have 

some of the highest unemployment and most challenging socioeconomic issues that anyone faces in Vermont. 

Jay is one of the most significant employers in Orleans County, 

a place of great rural agricultural character. However, despite all 

these issues that I mentioned that are challenging, the most profound economic challenge that we have seen in generations in 

Vermont and the Nation, the difficulties we are seeing these days. 

I am very optimistic about the future of our community and its citizens. 

We are seeing in our facility the significant creation of the biggest positive life changer a person needs, a job, a job that will sustain them and their families with benefits and a future that inspires and rewards their economic and human spirit. 

We are seeing this employment creation at Jay Peak and our 

surrounding communities in this terribly troubled economic times 

solely because the EB-5 Foreign Investor Program exists and is 

helping us. 

Over a decade ago in 1997, I had the opportunity to work with 

Senator Patrick Leahy and our governor at the time, Howard Dean, 

to make the Vermont Regional Center happen. 

In today’s economy, what is strangling the small business community in Vermont and nationally is the lack of access to capital. 

Affordable capital is almost non-existent in this marketplace; however, through the EB-5 Regional Center Pilot Program, Jay Peak 

has raised over $200 million of equity capital, and we have welcomed over 400 investors from 56 countries. 

This capital has helped us build a wide range of facilities that 

we desperately need to be competitive, but it also helps us create 

full time job opportunities for so many citizens throughout Northern Vermont’s highest unemployment community. 

I have met personally almost every investor participating in Jay 

Peak. They are a group of wonderful people, so appreciative of the 

opportunity to live in the United States. I can tell you that their 

equity investment is changing our region in a profound and positive way. Once in the United States, they have continued to contribute as every one of them are well educated, successful people 

who have brought their family values and capital with them. 

Although Jay Peak is employing many hundreds of direct and indirect year-round employees, Jay is a small business in comparison 

with our national economy. As a matter of fact, with very few exVerDate Aug 31 2005 12:40 Nov 02, 2011 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6601 H:\WORK\IMMIG\091411\68299.000 HJUD1 PsN: 68299
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ceptions all of Vermont is made up of small businesses. The EB5 Regional Center Program is ideal for the small business community throughout America. 

Two years ago on an EB-5 trade mission to South Korea, Governor Jim Douglas, my partner Ariel Quiros, and myself visited 

with AnC Bio/Korea, a cutting edge biotech research and development company, that was looking for a place in the United States 

to create a U.S. affiliate. In the past 2 years, AnC Bio/Vermont was 

created, and tomorrow a 90,000 square foot AnC Bio/Vermont USA 

facility will be acquired where over 200 quality research and manufacturing jobs will result. 

Alex Choi, the chairman of AnC Bio/Korea, could have placed 

this facility anywhere, but he chose Vermont because of the quality 

workforce, the quality universities, and our ability to bring equity 

capital to the table, and create this wonderful facility. 

I would like to take a few moments in closing to let you know 

that extending this program permanently is vitally important to 

this program. If a project cannot plan, if an investor cannot plan, 

they cannot expect a good outcome. I urge the Committee, and I 

would urge the Congress, to extend this program and make it permanent. It is so vital to the projects as well as the investors. 

I also think it is very important to work closely with Commissioner Mayorkas to make sure that USCIS is as efficient as possible in processing the applicants. Our applicants need to be processed in a reasonably short period of time so they have predictability, the programs have predictability, and we will have the job 

outcomes that are so vital to our country right now. 

Mr. Chairman, I appreciate very much this time. I thank you 

again for holding this hearing, and at some point happy to answer 

questions that you might have. Thank you very much. 

[The prepared statement of Mr. Stenger follows:] 

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Mr. GALLEGLY. Thank you, Mr. Stenger, and thank you for being 

sensitive to the lights with your testimony. We appreciate it. 

And with that, we will move to Mr. Healy. Welcome, and we look 

forward to hearing your testimony. 

TESTIMONY OF DANIEL J. HEALY, CHIEF EXECUTIVE 

OFFICER, CIVITAS CAPITAL GROUP, DALLAS, TX 

Mr. HEALY. Thank you. Mr. Chairman and distinguished Members of the Committee, thank you again for the opportunity to testify this morning or this afternoon about the EB-5 Regional Center 

Program. 


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My name is Daniel Healy. I am the chief executive of Civitas 

Capital Group in Dallas, Texas. We are a boutique asset management firm, and we manage the City of Dallas Regional Center in 

a public/private partnership with the City of Dallas, Texas. 

Jobs are at the top of the agenda here in Washington and at 

kitchen tables across this Nation. With that in mind, my message 

here today is that the EB-5 Regional Center Program is an extremely effective catalyst for job creation. Congress should act now 

to permanently reauthorize it. 

The City of Dallas Regional Center, or CDRC, is a unique public/ 

private partnership. The city envisioned creating a regional center 

to facilitate economic development, but they recognize that investment management is best left to the private sector. Civitas collaborated with the city to design a regional center that reflects the probusiness, pro-growth culture that has made Dallas a magnet for 

employers and families alike. 

USCIS approved the CDRC in late 2009, and we identified our 

first project in February 2010. In the short time since then, just 17 

months, the CDRC has committed to six high quality investments 

totaling $91 million. 

The CDRC is providing low cost, flexible capital for projects across a range of industries, including $15 million for a call center, 

$5.5 for a boutique hotel, and $8.5 million to help the oldest chain 

of Tex Mex restaurants in the country open four new locations. 

At its core, the EB-5 Program is about jobs, and I am very 

pleased to report that the first CDRC investments are forecasted 

to create a total of 1,499 jobs in Dallas. That figure exceeds the 

minimum job creation requirement under EB-5 rules by more than 

50 percent. 

Civitas is expanding its activities to new markets, including 

Houston, San Antonio, and Austin. We are working closely with the 

City of Amarillo on their ambitious downtown redevelopment plan, 

which will include a 300-room hotel and a minor league baseball 

stadium at a cost $120 million. But without $40 million in flexible, 

low cost EB-5 capital, that project would be impossible in today’s 

credit markets, and Amarillo would lose a rare opportunity to create more than 1,000 jobs and revitalize their downtown. 

Members concerned that the Regional Center Program has been 

underutilized in the past should rest easy because those days are 

over. Civitas is hardly alone in grasping the huge potential of the 

EB-5 Program to facilitate economic activity and create jobs. 

When I began evaluating the EB-5 Program in 2008, there were 

perhaps 35 regional centers. Today there are 180 in 36 States, almost a six-fold increase in just 3 years. According to USCIS, just 

332 investors applied to participate in the program in Fiscal 2005; 

by contrast, petitions are on track to total more than 3,200 in Fiscal 2011, nearly a tenfold increase. 

The pace of new applications has accelerated dramatically since 

2009, with year over year growth averaging 77 percent. With 180 

regional centers competing for investors and more coming online 

every day, it is clear that the annual allocation of 10,000 EB-5 

visas will soon become a constraint on the program’s ability to create more jobs for U.S. workers and bolster local economic development, all at no cost to the U.S. taxpayer. 

17 

These statistics and my own experience with the CDRC demonstrate the EB-5 Program’s vast job creation potential. With unemployment above 9 percent, Congress should see the value this 

program delivers across the Nation. That is why I strongly urge 

Congress to act on permanent reauthorization now. Even with a 

full year until the expiration date, I can testify to many personal 

experiences with respect to investors who are already hesitant to 

apply because the program may sunset before their petition is approved. 

I would like to conclude by acknowledging the good work of the 

men and women at USCIS. Director Mayorkas is hosting a stakeholder meeting shortly after this hearing, which I am looking forward to attending. I applaud his plans for improving the program’s 

administration, and I am particularly encouraged by the announcement yesterday that premium processing of investor petitions and 

the ability to communicate directly with adjudicators by e-mail will 

soon be available. 

While I realize premium processing will take time to implement, 

allowing e-mail contact with adjudicators is a step that can be 

taken immediately and will lead to a more collaborative, productive, and cost effective adjudication process. In my written testimony, I have included additional suggestions for improvements to 

this critical program. 

Mr. Chairman, thank you again—excuse me—for the opportunity 

to appear before you and your colleagues today. Thank you also for 

your support of the Regional Center Program and for pushing its 

reauthorization forward during these challenging times when it is 

most needed. 

I hope you found my testimony useful and informative, and I am 

pleased to answer your questions. 

[The prepared statement of Mr. Healy follows:] 

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Mr. GALLEGLY. Thank you very much, Mr. Healy. 

And now, we will hear from Mr. Mendelson. Mr. Mendelson? 


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TESTIMONY OF JASON MENDELSON, MANAGING DIRECTOR, 

FOUNDRY GROUP, BOULDER, CO 

Mr. MENDELSON. Thank you. As a co-founder and managing director of Foundry Group, an early stage venture capital firm based 

on Boulder, Colorado, and as a board member of the National Venture Capital Association, it is my privilege to be here today to 

share with you my perspective on the critical role that immigration 

entrepreneurs play in job creation, innovation, and economic 

growth in the United States. 

I would like to thank the Chairman for recognizing that this 

issue is critical to our country’s future. I would also like to thank 

Ranking Member Lofgren and my own congressman, Jared Polis, 

for their leadership and support of the startup visa legislation. 

At a time when we are in desperate need of both fiscal responsibility and economic stimulus, the Startup Visa Act will create 

American jobs at no cost to the Federal Government. Each day that 

passes without this legislation, another company builder is turned 

away, and jobs are created elsewhere. On behalf of the venture capital and startup communities, I urge Congress to send a message 

that our company is open for business and eagerly welcome job creating entrepreneurs to our shores. 

The startup visa legislation recognizes two elements that have 

been critical in driving U.S. economic growth and job creation, 

which are venture backed companies and immigration. Separately, 

these elements have helped to differentiate our country from all 

others. When harnessed together, they will be instrumental in 

maintaining our global leadership. 

According to a 2011 IHS Global Insight report, companies, such 

as Apple, Genentech, and Starbucks, that were founded as small 

startups of venture capital now account for 12 million jobs and $3.1 

trillion in revenues in the U.S. in 20101. That equates to 11 percent of private U.S. employment and 21 percent of our country’s 

GDP. 

While America’s startup economy would not be what it is today 

without venture capital, the same can also be said for immigrant 

entrepreneurs. A 2006 NVCA report entitled ‘‘American Made,’’ 

found that approximately 25 percent of U.S. public companies that 

were venture financed, including Intel, Google, Sun Microsystems, 

and Watson Pharmaceuticals, were founded by immigrant entrepreneurs. The same study revealed that nearly half of current 

startups have immigrant founders. These are companies that are 

hiring American workers. They are paying taxes and they are creating value for American shareholders. 

Anecdotally, I would estimate today that a third or more of the 

business plans that my firm receives have an immigrant as part of 

their founding team. 

In my written testimony, I discuss my experience with Stratify, 

just one of our portfolio companies founded by immigration entrepreneurs. The company created more than 400 U.S. jobs before it 

was sold in 2007, garnering over $150 million to shareholders and 

employees. More than half a dozen of Stratify’s alumni have gone 

on to become founders or early employees of other startups. Yet despite the strength of this success story, it is my belief that it would 

26 

be much more difficult to replicate it today given our current immigration policies. 

The current path to a green card is fraught with complex requirements, limitations, and delays, sending a message to these 

talented people that we do not want them here. Foreign-born graduates who earn their degrees here and want to stay and build businesses are often forced to return to their native country because of 

our restrictive policies, despite these entrepreneurs attending federally and State-subsidized universities. In effect, we are subsidizing the world’s entrepreneurship and not realizing any return. 

At TechStars, a seed stage investment program my partners and 

Jared Polis helped found, we see opportunities lost each year, most 

recently in the Boston program where four of the 12 companies had 

immigrant founders from Israel, the United Kingdom, India, and 

Estonia. In three cases, the founders had to return to their home 

countries after the program. We estimate that in the immediate 

term, 20 high paying jobs were lost to these countries, yet the ultimate loss to the U.S. over time will be much, much greater. 

And it is the same story in other TechStars programs in New 

York, Seattle, and Boulder. Immigrant founders want to stay and 

create fast-growing companies with high paying jobs, but are forced 

back to their native countries, such as Canada, Israel, and England. We should give them every reason to stay in the U.S. Ironically, our policies are showing them the door. 

This negative dynamic is made worse by the fact that the U.S. 

is no longer the only destination for high tech startup companies. 

In the last decade, countries such as India and China have adopted 

the American venture capital model and accelerated their growth 

by offering government incentives to move there. And the world’s 

venture capital dollars are following these entrepreneurs abroad. 

Once a company is started in a specific location, its economic benefits remain geographically tied to that region. 

Despite all of these government incentives, the United States is 

still the preferred location to start these types of businesses. But 

this will not be the case if we keep sending founders out of country. 

Reforming high skilled legal immigration policy should be a congressional priority. When we turn away immigration entrepreneurs, not only do we lose bright people, but then we end up 

competing against them in the global marketplace. The startup 

visa legislation will help support job creation and innovation right 

here. 

We appreciate the bipartisan support this Committee has given 

to this initiative, and we stand ready to work with you to get the 

startup visa legislation signed into law. Thank you. 

[The prepared statement of Mr. Mendelson follows:] 

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Mr. GALLEGLY. Thank you, Mr. Mendelson. 

Now, we will hear from Mr. Pishevar? 

TESTIMONY OF SHERVIN PISHEVAR, MANAGING DIRECTOR, 

MENLO VENTURES, MENLO PARK, CA 

Mr. PISHEVAR. Thank you, Mr. Chairman. 


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My name is Shervin Pishevar. I am a managing director at Menlo Ventures. We have $4 billion under management and a new 

$400 million fund that we are investing out of. 

Yesterday we announced the Menlo Talent Fund, which is specifically for early stage seed stage companies where we will decide 

within 24 to 72 hours to invest up to $250,000 to a million dollars 

in new companies. 

I am testifying before you today as a venture capitalist, an entrepreneur, and an angel investor who has founded five U.S. companies, and invested in 40 other startups that have gone on to innovate and create jobs in America. From my vantage point and home 

in Silicon Valley, I witness each day the value that startups can 

bring to a region and to our country. I am also an immigration entrepreneur. 

I would like to read a quote that inspires me and many other 

people in Silicon Valley every day, ‘‘Never doubt that a small group 

of thoughtful, committed people can change the world. Indeed, it is 

the only thing that ever has.’’ It is a quote by Margaret Mead, and 

I believe that it captures the ethos of Silicon Valley. 

People from around the world are inspired to come to Silicon Valley, to come to America and pursue their dreams. I am privileged 

to testify today on behalf of countless foreign entrepreneurs who 

would like nothing more than to do what I have done—build companies and pursue their dreams here in the United States. 

I was born in Iran in 1974. My family was poor. We survived persecution, the Iran-Iraq War, and fled to the United States in 1975 

when I was 5 years old. There, my father took a job as a taxi driver 

in Washington, D.C. driving some of you congressmen. And my 

mother cleaned hotel rooms. 

When I got accepted to the University of California at Berkeley, 

I remember how proud my parents were. I received the Presidential Fellowship to continue to continue my high school science 

project, which led to finding a new way to selectively lice malariainfected red blood cells. Berkeley filed a patent on that discovery, 

and I was the sole inventor, and that inspired me to actually become an entrepreneur. 

In 1994, at the computer lab at Berkeley, I came across a program called NCSA Mosaic, created by Mark Andreessen. I quickly 

imagined all that I could do, and with my friends, we developed an 

idea called the web operating system, webOS. A mentor encouraged 

me to start my own company, and in my senior year I began to 

pursue my American Dream. 

I took a job as a security guard at night to make enough money 

so I could work day and night on my business. After a number of 

fortunate breaks and cold calling Jamie Diamond in his office, the 

company found investors and we launched. And I was on my way 

with the first of many startups. 

History shows us that the location of innovation drives where the 

economic value is created. Nowhere is that more true than in Silicon Valley, where the economy thrives on technological breakthroughs and innovations that occur each day. If you look at the 

top startup regions around this country, you will see a familiar 

combination of successful research universities, a cadre of highly 

motivated entrepreneurs, and a system of capital and mentorship 

38 

that supports the growing of businesses. It is a benevolent circle 

that begins with that innovation. Where the innovation goes, the 

value flows. 

Immigrant entrepreneurs are an integral part of the Silicon Valley ecosystem. Studies have shown that Silicon Valley has a higher 

concentration of foreign-born entrepreneurs, technologists, scientists than any other region in the U.S. According to the 2006 

‘‘American Made’’ study, 40 percent of U.S. publicly-traded venture 

capital companies operating high tech manufacturing were started 

by immigrants. The story of privately-held venture backed companies is even more compelling, where almost half of the companies 

across the U.S. had foreign-born founders. 

The U.S. innovation pipeline is well fueled by immigrants, and 

it is our responsibility to ensure that we do not unintentionally divert this energy to other nations overseas. 

The startup visa legislation applies two very important filters so 

that when the United States accepts an immigrant entrepreneur 

who has received venture investment, we can have the confidence 

that we are getting the best and the brightest talent from around 

the world. 

First, there is the selection filter, which applies to any individual 

enterprising enough to leave one’s home and pursue their dreams 

in an attempt to innovate and grow a business in a new country. 

The second filter is the venture capital vetting process, which only 

funds those companies that have the highest chance to succeed. 

The result will be creating a network of highly motivated, well supported entrepreneurs who will generate value and perpetuity here 

in America. 

To wit, the ‘‘American Made’’ survey has reported that nearly 

two-thirds of immigrant founders of privately-held companies, venture backed companies, have started or intend to start more companies in the United States. Like me, they have become serial entrepreneurs and angel investors, and will continue to serve our 

economy well by building innovative companies, one after the 

other. 

Reforming the legal immigration process so that our highly motivated immigrant entrepreneurs can grow their businesses in America must be a congressional priority. I am encouraged by the growing bipartisan support for the startup visa proposal, but for this 

bill to become law, we will need more than bipartisan support. We 

will need bipartisan compromise. The stalemate has gone on too 

long. 

The ‘‘American Made’’ survey reported that nearly all the immigrant founders and private companies would still start their companies in the United States if they had the choice. But nearly twothirds believe that it was currently more difficult to enter the 

United States and start a company than when they started their 

companies. When I think about that fact, that others like myself, 

the same commitment and talent and passion for technology and 

innovation are not being permitted into this country, which I now 

call home, I can only shake my head and ask why. 

I urge this Committee to ask themselves the same question and 

then act quickly and compromise to reverse an unfortunate path 

down which we have traveled for too long. I urge Members of ConVerDate Aug 31 2005 12:40 Nov 02, 2011 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6601 H:\WORK\IMMIG\091411\68299.000 HJUD1 PsN: 68299
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gress to come together, work together as a team, and create a package that is in the spirit of bipartisan compromise before year end. 

The American people are counting on you to do this for the good 

of the American economy. 

Thank you. 

[The prepared statement of Mr. Pishevar follows:] 

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Mr. GALLEGLY. Thank you, Mr. Pishevar. 

I would like to start by asking a couple of questions of Mr. 

Stenger. 

Where would Jay Peak Resort be today had it not been for the 

Regional Center Pilot Program? 

Mr. STENGER. Well, we would be a resort that would be confined 

largely to winter operation only. An incredibly capital intensive 

business like we are, that would be fraught with challenge. 

We currently have approaching 2,000 direct employees and indirect employees around our community. We have 450 construction 

workers working today, all Vermonters that would not would be 

working otherwise. 

So, I can tell you, Mr. Chairman, that were it not for the equity 

capital of this program, all the things that we have been able to 

do in the last few years would not have been possible, and especially since the banking challenges of 2008. Equity capital is just 

not available. And a resort like ours, we are vibrant, we are 

healthy. We are excited about the future. 

The EB-5 capital has made that possible in a rural, high unemployment area where now we are no longer the highest unemployment community in Vermont. We are up and coming, and it is because of this capital access that has made that possible. 

Mr. GALLEGLY. How many jobs specifically were created at Jay 

Peak as a direct result of the program? 

Mr. STENGER. I would say right now, as we enter into this current year where we open one of our newest facilities, we will approaching 800 to 900 direct new jobs. 

Mr. GALLEGLY. That are a direct result of the program? 

Mr. STENGER. Yes, and many, many hundreds more that are indirect—all of the contractors, all of the people who support those 

businesses. Vermont is a rural State in general, and in our part of 

the State, even more so. So, the indirect impact is profound 

throughout the region. 

Mr. GALLEGLY. How do you respond to those that claim that the 

Investor Visa Program simply allows aliens to buy green cards? 

Mr. STENGER. Well—— 

Mr. GALLEGLY. Some have made that accusation. 

Mr. STENGER. I appreciate that. What I see in our investors, and 

I think in all of the quality programs in the country, you see people 

who are interested in being in this country. They have the capacity 

to invest in a project that is job creating. 

Yes, they are getting a preference, but they are bringing something that we desperately need. We need equity capital. These 

things, and you asked the question earlier, what would we be if we 

did not have access to this? The banking community is just not 

available to us in the manner that we would like it to be. And that 

is not just true at Jay Peak; that is true for small business 

throughout this country. 

So, when our investors come, they bring their capital. They bring 

their good educations. Many of them invest in other communities 

that they live in. And it is truly a win-win-win situation in that 

they bring capital, they bring their education, they bring their family, they bring their love of this country and their desire to be here. 

50 

And it is a great economic benefit to us, and it creates jobs everywhere along the way. 

Mr. GALLEGLY. Mr. Healy, from your perspective, do you see any 

fraud or dubious investment vehicles in the Regional Center Program? 

Mr. HEALY. From my perspective, no, I do not regularly see fraud 

or dubious investments. I think what is important to keep in mind 

is that like any market, there is a range of investments. Our program at Civitas with the City of Dallas has a particular approach 

that we take that is different from Mr. Stenger’s, that is different 

from many other regional centers. Some of my competitors I would 

invest in; some I would not. But in terms of fraud or abuse, I really 

do not see that. 

I mean, we see a great number of investment opportunities. We, 

you know, try hard to monitor our competition and understand 

where the market is going. But where I have seen problems is not 

really in people entering the market or attempting to game the system. It is much more on the regulatory adjudication side. 

Mr. GALLEGLY. What competition do you see from the Canadian 

and Australian programs? 

Mr. HEALY. The competition from other countries’ programs, including those two that you mentioned, is sometimes quite stiff. 

Very recently, the Canadian program doubled the required investment because they had substantial demand and were looking to 

tamp it down. 

There is no question that when investors in other countries are 

considering emigrating, they look at other options. And one of the 

challenges that we face as regional centers is that while the United 

States remains the gold standard for many of the reasons that my 

colleagues have mentioned, the process for going through an EB5 investment is arduous, time consuming, expensive. 

Mr. GALLEGLY. I thank the gentlemen. My time has expired, so 

I would yield to the gentlelady from California, Ranking Member 

Ms. Lofgren. 

Ms. LOFGREN. Well, thank you very much. And to all the witnesses, it has been great to hear from all of you. 

I want to specifically say, Mr. Pishevar, what a thrill it is to see 

the person responsible for webOS. I mean, it is very cool that you 

are. 

You know, coming from the Valley, there are some things that 

are obvious to me, but may not necessarily seem as obvious in 

other parts of the country. One of the things, and I am interested 

in how you would see this fact factored into how this program 

needs to be fine-tuned. 

I mean, in the Valley, failure is a learning experience, and not 

every venture is going to hit on all cylinders. I mean, we see people, you know, be successful in later things. 

How in your judgment—we have got like in the bill, we have a 

2-year window to see whether this is going to take off or not. Twenty-five, maybe half of the ventures you fund, Mr. Mendelson, you 

in your testimony, are not going to make it. And yet, their founders 

may go on to found another business. How would you suggest we 

deal with that phenomenon? 

51 

Mr. PISHEVAR. Well, I think, first of all, 2 years is plenty enough 

time to realize if a venture is going to take hold or not, especially 

in the dollar amount we are talking. I have heard anywhere from 

$250,000 to $500,000 as a threshold to enact the startup visa. 

That is going to be plenty to get somebody nine to 12 to 18 

months. And we are going to know. 

Ms. LOFGREN. Okay. 

Mr. PISHEVAR. Either more money is going come and they are 

going to ramp up or not. So, whether they can turn around and create a second company, too, within 24 months, I do not think that 

happens. But it is certainly plenty for the first. 

Ms. LOFGREN. And we have got built into the visa the plan that 

either you create the jobs or you attract the additional capital. 

Mr. Pishevar, in your testimony, you were talking about the 

screens, I think, because, you know, I really think in this venture, 

the VC world is going to be better at sorting this out really than 

some government bureaucracy. 

Talk to us about how you evaluate ventures as an angel investor 

or in your VC capacity, and what that would mean for people who 

participate in this program? 

Mr. PISHEVAR. Absolutely. So, our philosophy at Menlo is that we 

invest in people, that people are the greatest asset class. And so, 

we look for the greatest talent that we can find regardless of where 

they are in the world. In fact, you know, we look at entrepreneurs 

from all over the world that we would like to attract and invest in. 

So, the filter really is around talent, and we invest in those people and those teams that we think have the greatest opportunity 

to build companies of consequence. 

So, I think that is really, you know, in terms of our philosophy, 

that we want to stick to that, that works. It is a great philosophy 

that, you know, this is all about people, that investment and entrepreneurship is about finding that band of gold that exists out there 

in terms of the greatest talent that we can find and back them. 

And to the other point that Mr. Mendelson was talking about, 

many of these companies within 24 months very quickly, you know, 

figure out that their initial idea was not working, and they can 

pivot to a new idea, even within the same structure of that company. 

Ms. LOFGREN. And space, yeah. 

Mr. PISHEVAR. And I completely agree that 2 years is more than 

enough time to realize that and realign the company as quickly as 

possible to the right opportunity. 

Ms. LOFGREN. Well, I think then the advice I am hearing you 

give, and it is one I believe in and we put in the bill, is that if the 

venture world is willing to put their capital on this, that is likelier 

to be a sound screen than the bureaucracy trying to second guess 

that decision. Is that basically what you are saying to us? 

Mr. PISHEVAR. Absolutely. I mean, venture capital firms have a 

huge responsibility to invest their limited partners’ money well. 

And they would not be in business if they did not have a high filter 

for quality and did an immense amount of due diligence on those 

teams and those companies that they are potentially investing. And 

so, it is a pretty rigorous process that, you know, I would not consider outsourcing to some other process. 

52 

Ms. LOFGREN. Right. The final thing I would ask, you know, we 

have got a quantified number of jobs that need to be produced in 

order to turn the visa from conditional to permanent. But, again, 

coming from the Valley, that is not just the jobs that are going to 

be grown, because if you have got an ecosystem, was we do in the 

Valley, it is not just the jobs that one company creates with that 

one. It is things spin off, other inventors, so that it really is creating—well, we are not creating. The ecosystem is there. It is preventing that ecosystem from degrading. 

Mr. MENDELSON. You know, I would add that the people are 

spinning off through the rest of the country. 

Ms. LOFGREN. Yes. 

Mr. MENDELSON. I was in the Valley for 10 years before I moved 

to Boulder, and there are a lot of people from the Valley in Boulder 

and everywhere else. 

Ms. LOFGREN. I know that. 

Mr. MENDELSON. So, this is ecosystem is a nationwide thing, not 

just a particular geography. 

Mr. GALLEGLY. Thank the gentlelady. I want to remind Members, I have just been told, we are going to be called to a vote on 

the floor shortly. So, what I am going to try to do, if we can, wrap 

up so we do not have to ask you folks to stay while we go and vote 

and come back. If we cannot, we will go from there. 

So, with that, I would yield to Mr. Smith? 

Mr. SMITH. Thank you, Mr. Chairman. Mr. Stenger, let me ask 

you a question that we discussed earlier today because I think your 

answer will be of interest to other Members of this Subcommittee. 

In the case of your companies and projects and investment opportunities, I think you have 100 percent foreign investors. Why is it 

we cannot find more American investors to participate in these 

kinds of programs? 

Mr. STENGER. Well, I think our particular program is very attractive to EB-5 candidates around the world. And we have reached out 

to various parts of the world. 

And earlier the comment was made about Canada. We became 

very involved in this program in Jay Peak because of our close relationship with or our proximity to Canada. 

So, there is an investment market. There is interest in coming 

to this country. There is a tremendous amount of capital that is 

looking to become part of programs in the United States. So, we 

have reached out to various parts of the world to welcome investors 

to the United States. 

The return on investment is competitive to reach out to U.S. investors. We have other investments that U.S. investors can participate in. This particular EB-5 program is focused on foreign investors who have capital, who have a good background, and are capable of investing and making job creation occur in rural areas, such 

as ours. 

Mr. SMITH. Okay. 

Mr. STENGER. So, the program is specifically for the foreign investor, bringing capital, creating jobs in rural, high unemployment 

areas such as ours. And that is where we have focused, and we 

have seen substantive results and success. 

Mr. SMITH. Thank you, Mr. Stenger. 

53 

Mr. Healy, we’ve discussed this before as well, but how would 

you suggest we improve the program. A few minutes ago, you testified in response to another question that there were some individuals, some enterprises who gamed the system. How can we prevent 

individuals from gaming the system? How can we better protect investors? 

Mr. HEALY. Thank you for the question, Mr. Chairman. I think 

that the way that I would suggest that most of the regional centers 

that are operating now are very high quality and are not, you 

know, attempting to do anything that would be gaming the system. 

But I think that in order to ensure that that does not occur, all of 

the best practices suggested by IIUSA, which include complying 

with and being subject to the regulation of the SEC with respect 

to unregistered securities just to the extent that these regional center projects are structured as limited partnerships or other forms 

of unregistered securities, would be appropriate. 

I mean, my background is in institutional investments. I was the 

chief compliance officer at a broker dealer. We are approaching the 

threshold for being required to register as an investment advisor 

with the SEC anyway. 

This is not new to us, and I think for people that are operating 

at a high quality level, it is not going to be a problem. 

Mr. SMITH. Thank you, Mr. Healy. Mr. Mendelson, I do not know 

where my time went, but let me squeeze in a last question to you. 

And you said in your written testimony that in regard to these 

companies, 25 to 50 percent will not return our invested capital. 

What happens to those foreign investors in businesses that do not 

work out? 

Mr. MENDELSON. So, the investors? Well, I am a venture firm 

that takes money from other folks and invests it in. And in those 

25 to 50 percent, I get back less money than I put in, and I take 

a loss. While the VC, venture capital, diligence process is extremely 

rigorous, you know, these are high, high risk situations. And, you 

know, we fund less than .01 percent of all the business plans we 

get. And despite that, just on pure luck and who knows what, you 

can have some problems. So, it is a very tough screen. 

Mr. SMITH. Okay. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. GALLEGLY. Thank you, Mr. Smith. 

Mr. Conyers? 

Okay. I appreciate that, and we will then yield to Mr. Lungren 

for his 5 minutes? 

Mr. LUNGREN. Thank you, Mr. Chairman. 

Mr. Pishevar, it is good to see somebody that I can relate to. I 

also had expectations from my mom and dad I was going to be a 

doctor. And my dad did talk to me, but my mom cried for 2 weeks. 

But they would probably be happier with me sitting in your shoes, 

sitting in your seat than here as a Member of Congress, I might 

say. Actually, my dad was disappointed because I became a lawyer. 

The question I have got, Mr. Healy, is this. I am in support of 

this program and refining the program. But in answer to critics, I 

have noticed that a representative of your State has talked about 

how many jobs you create in your State and what a great job you 

do. And he has done a very good job of taking jobs out of my State 

54 

and putting them into your State. In fact, he has talked about how 

he loves to go on hunting expeditions to California where he bags 

an employer or two. 

With a State that presumably is the best job creating State in 

the Union and has a lot of investment, why do you need to have 

a regional center to attract foreign investors when presumably you 

would be the place for people to want to invest that are already 

here? 

Mr. HEALY. Thank you for the question. There is always room for 

improvement, Congressman. 

In the City of Dallas, there are areas of Dallas that have been 

underserved for years that have very high unemployment rates. To 

give you an example that I will briefly summarize that I have written about in my written testimony, we just recently committed to 

an investment with an affordable assisted living developer to provide seniors’ housing for Dallas residents that are underserved in 

this market completely, because while the investment climate in 

Texas is indeed strong, there are always areas that are underserved and that, in particular, EB-5 capital can facilitate transactions occurring. 

Because the capital can be much lower cost, much more flexible 

than traditional institutional investment capital or bank financing, 

there are opportunities to create a great many jobs that would be 

missed without this program. 

Mr. LUNGREN. Okay. Mr. Pishevar, again, I am trying to respond 

to critics of the program. When I support the program, they would 

say—someone like you, you and your parents did not come here 

under a program like this, correct? 

Mr. PISHEVAR. Right. 

Mr. LUNGREN. And many of the entrepreneurs that you have 

talked about that have started companies did not come under a 

program like this. They came as refugees. They came under the 

regular immigration policy. But there was something about America and the opportunities here that attracted them to be able to 

succeed as you have. 

And so, they would say to me, well, why do we need a special 

program which, some people say, looks like you are buying a precious commodity, that is, the ability to become an American citizen, 

when folks such as you—that is not what attracted you here, and 

yet you succeeded. Can you give me a response to—— 

Mr. PISHEVAR. Absolutely. 

Mr. LUNGREN [continuing]. That kind of a criticism of this kind 

of a program. 

Mr. PISHEVAR. Thank you, Congressman. That is a great question. 

So, I believe deeply that we need to move away from passive immigration policy in terms of waiting and hoping that we will attract the types of immigrants that can actually build these types 

of, you know, companies and that kind of success, and begin to go 

into recruiting mode, to actually, you know, specifically attract 

these types of talented entrepreneurs who want to come to America, and be a magnet for them to come here. 

We have just seen it over and over again, both inside of Y 

Combinator and TechStars, in companies that I have invested in so 

55 

many. That those incredibly talented entrepreneurs that we want 

to fund many times have funded, run into immigration issues in 

terms of getting their visas to move here, move their companies 

here, and create jobs. 

It just happens, you know, in every single class of the companies 

that we see. In these incubators, we have a number of those. And 

I am spending a lot of time, you know, trying to help those entrepreneurs with—— 

Mr. LUNGREN. Mr. Healy, just one quick thing. I have been contacted by one of the regional centers in California, and they have 

complained about the lack of activity or action by the government 

agency that is supposed to approve this. Have you seen a similar 

thing? 

I mean, we have the commitment from the head of the government agency to do a better job. But have you seen that as well, 

that if we are going to have this program? I mean, I have got a 

situation where they suggest that the USCIS preapproved the 

project in September 2010. They still do not have final approval, 

and they have got investors hanging out there that—well, you 

know, whether they get here or they do not get here, hangs in the 

balance. 

Mr. HEALY. Yes, sir. Thank you. We have indeed seen similar situations. I have personally faced similar situations. I am very encouraged by the director’s recent announcements for plans to 

streamline the program, but there is no question that there is considerable work to do with USCIS to make sure that they have the 

internal capacity to process these applications in a timely manner, 

and the expertise that that will require. 

We are, as I mentioned, meeting with the director later this 

afternoon, and I expect to discuss that specifically. 

Mr. LUNGREN. Give him my regards, will you please? 

Mr. HEALY. I will. 

Mr. LUNGREN. Tell him I have a concern. 

Mr. HEALY. I will do that. Thank you, sir. 

Mr. GALLEGLY. Thank the gentleman. And before we adjourn, I 

would like to give special thanks for Mr. Polis for joining us today. 

Glad to have you here. 

And I would also like to especially thank all of our witnesses for 

your testimony today. 

Without objection, all Members will have 5 legislative days to 

submit to the Chair additional written questions for the witnesses, 

which we will forward and ask the witnesses to please respond as 

promptly as possible so that we can make the answers a part of 

the formal record of the hearing. 

Without objection, all Members will have 5 legislative days to 

submit any additional materials for inclusion in the record. 

And with that, I thank you again. 

And with that, the Subcommittee stands adjourned. 

[Whereupon, at 2:35 p.m., the Subcommittee was adjourned.] 

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