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IS THE INVESTOR VISA PROGRAM AN 

UNDERPERFORMING ASSET? 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 11, 2016 

Serial No. 114–58 

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 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 
(III) 

C O N T E N T S 

FEBRUARY 11, 2016 

Page 

OPENING STATEMENTS 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 1 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 3 

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

of California, and Member, Committee on the Judiciary ................................. 5 

WITNESSES 

Nicholas Colucci, Chief, Office of Immigrant Investor Program, U.S. Citizenship and Immigration Services 

Oral Testimony ..................................................................................................... 8 

Prepared Statement ............................................................................................. 11 

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

Oral Testimony ..................................................................................................... 18 

Prepared Statement ............................................................................................. 20 

Jeanne Calderon, Clinical Associate Professor, Stern School of Business, New 

York University 

Oral Testimony ..................................................................................................... 42 

Prepared Statement ............................................................................................. 44 

Matt Gordon, Chief Executive Officer, E3 Investment Group 

Oral Testimony ..................................................................................................... 57 

Prepared Statement ............................................................................................. 59 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable Jerrold Nadler, a Representative in 

Congress from the State of New York, and Member, Committee on the 

Judiciary ............................................................................................................... 6 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Material submitted by the Honorable Jerrold Nadler, a Representative in 

Congress from the State of New York, and Member, Committee on the 

Judiciary ............................................................................................................... 86 

Supplement to the Oral Testimony of Jeanne Calderon, Clinical Associate 

Professor, Stern School of Business, New York University .............................. 95 

Response to Questions for the Record from Nicholas Colucci, Chief, Office 

of Immigrant Investor Program, U.S. Citizenship and Immigration Services 96 
(IV) 

OFFICIAL HEARING RECORD 

UNPRINTED MATERIAL SUBMITTED FOR THE HEARING RECORD

Material submitted by the Honorable John Conyers, Jr., a Representative in Congress from the State of Michigan, and Ranking Member, Committee on the Judiciary. The material is available at the Committee and can also be accessed at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=104454.pdf 

Material submitted by the Honorable Darrell E. Issa, a Representative in Congress 

from the State of California, and Member, Committee on the Judiciary. The material is available at the Committee and can also be accessed at: 

http://www.gao.gov/assets/680/671940.pdf 

Material submitted by the Honorable Darrell E. Issa, a Representative in Congress 

from the State of California, and Member, Committee on the Judiciary. The material is available at the Committee and can also be accessed at: 

http://blogs.rollcall.com/beltway-insiders/u-s-citizenship-not-sale-commentary 

Material submitted by the Honorable Bob Goodlatte, a Representative in Congress 

from the State of Virginia, and Chairmanr, Committee on the Judiciary. The material is available at the Committee and can also be accessed at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=104454.pdf 
(1) 

IS THE INVESTOR VISA PROGRAM AN 

UNDERPERFORMING ASSET? 

THURSDAY, FEBRUARY 11, 2016 

HOUSE OF REPRESENTATIVES

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Committee met, pursuant to call, at 2:16 p.m., in room 2141, 

Rayburn House Office Building, the Honorable Bob Goodlatte 

(Chairman of the Committee) presiding. 

Present: Representatives Goodlatte, Chabot, Issa, King, Gohmert, 

Jordan, Poe, Chaffetz, Marino, Gowdy, Labrador, Collins, DeSantis, 

Walters, Buck, Ratcliffe, Trott, Bishop, Conyers, Lofgren, Jackson 

Lee, Chu, DelBene, Jeffries, and Cicilline. 

Staff Present: (Majority) Shelley Husband, Chief of Staff & General Counsel; Branden Ritchie, Deputy Chief of Staff & Chief; 

Zachary Somers, Parliamentarian & General Counsel; Kelsey Williams, Clerk; George Fishman, Chief Counsel, Subcommittee on Immigration and Border Security; (Minority) Perry Apelbaum, Staff 

Director & Chief Counsel; Danielle Brown, Parliamentarian & 

Chief Legislative Counsel; Gary Merson, Chief Immigration Counsel; Micah Bump, Minority Counsel; Joe Ehrenkrantz, Legislative 

Aide; and Rosalind Jackson, Professional Staff Member. 

Mr. GOODLATTE. Good afternoon. The Judiciary Committee will 

come to order. Without objection, the Chair is authorized to declare 

recesses of the Committee at any time. We welcome everyone to 

this afternoon’s hearing on ‘‘Is the Investor Visa Program an 

Underperforming Asset.’’ I’ll begin by recognizing myself for an 

opening statement. 

In 1990, Congress created the Investor Visa Program, EB-5 for 

short. About 10,000 green cards each year go to aliens who invest 

in a business and will create 10 jobs. Congress’ goal was to create 

new employment for U.S. workers and to infuse new capital into 

the country and to target investments to rural America and areas 

with particularly high unemployment, areas that can use the job 

creation the most. Finally, Congress was clear that the goal was 

not to provide immigrant visas to wealthy individuals. 

I am a supporter of the Investor Visa Program and believe that 

it has contributed in real ways to economic development. Unfortunately, over the years the program has strayed further and further 

away from what Congress envisioned. It is thus not performing at 

the high level that we deserve. 
2 

The Immigration Act of 1990 provided that alien investors must invest $1 million. However, the Department of Homeland Security 

may in the case of investments made in a targeted employment 

area, rural or high unemployment, specify a lower amount. Since 

1990, over 25 years, this has been $500,000. 

Finally, DHS has the authority to increase the minimum investment amounts. Over the last quarter century, the minimum investment amounts have never been adjusted for inflation. As a result, 

the real value of each investment has fallen by almost 50 percent, 

depriving the U.S. economy of billions of dollars a year. 

The Department of Homeland Security now plans to take the 

long-overdue step of adjusting the levels to account for inflation. 

Congress wanted to incentivize investments through a lower investment amount in areas with a scarcity of jobs that find it hard 

to attract capital. As DHS has stated, Congress did this ‘‘in order 

to spur immigrants to invest in firms that are principally doing 

business in and creating jobs in areas of greatest need.’’ 

Congress’ expectation was that the vast majority of EB-5 inves- tors would invest $1 million. Yet, last year almost all investor visas 

went for $500,000. Why? Well, as one EB-5 attorney has put it, 

most investors are interested in realizing permanent residency for 

a lower price tag, the logic being, why pay $1 million for a green 

card when I can get it for $500,000? 

Not surprisingly, this has led to rampant gerrymandering. As 

DHS Deputy Secretary Alejandro Mayorkas has stated, this involves the deliberate drawing of TEAs to include prosperous areas 

that should not be subject to the reduced capital requirements. 

Let me give one example. A proposed hotel and conference center 

in Laredo, Texas, was located in a census tract with 1.4 percent unemployment, far less than the 12.5 percent required to be a TEA. 

So what did the project do? Here is a map of the project stretching 

200 miles, all the way to the high unemployment area of Brownsville, Texas, in order to make the numbers work. 

And here is the vaulted conservatory with baby grand piano at 

the 926-foot Four Seasons Hotel and Private Residences at 30 Park 

Place in Tribeca, which describes itself as ‘‘perfectly pitched luxury,’’ that will, ‘‘introduce a new caliber of luxury living.’’ Beverly 

Hills magazine says it is ‘‘poised to be one of Manhattan’s most 

prestigious addresses,’’ and a ‘‘new paradigm in sophisticated living.’’ Prices vary from $2.6 million to over $60 million for one condo 

in that building. 

30 Park Place wanted to market EB-5 visas for $500,000. However, since the unemployment rate there is only 3.8 percent, New 

York State developed a project map that went upstream along the 

East River in order to lasso enough high unemployment areas to 

qualify. 

Unfortunately, the Department of Homeland Security has facilitated such abusive gerrymandering. The USCIS accepts as binding 

maps approved by State agencies, even though, as The Wall Street 

Journal points out, they are eager for economic development and 

have little stake in Federal immigration policy. 

Projects in affluent areas will always get the lion’s share of EB5 investments. Even if immigrants have to invest more, they prefer 

the higher degree of safety and the prestige. 
3 

However, we want to ensure a healthy percentage of projects locate in rural and depressed areas. Even if we could determine that 

a project’s workers commute from high unemployment areas, which 

generally can’t be done, that is not enough. We want to revitalize 

distressed areas, and to do that, projects actually have to be located 

in those areas. 

Let me mention two other issues. First, in instances where a 

project is financed by EB-5 and conventional capital, the Department of Homeland Security allows foreign investors to receive credit for all the jobs to be created, even those paid for by other people’s 

money. DHS’ inspector general has concluded that DHS regulations 

‘‘allow foreign investors to take credit for jobs created with U.S. 

funds’’—in one case, even though EB-5 funds accounted for only 18 

percent of the capital. This practice makes a mockery of the jobcreation goal of the EB-5 program. 

Finally, as I stated, visas for the wealthy was not a goal of the 

EB-5 program. It was to attract investors with entrepreneurial talent. As Phil Gramm stated during Senate consideration: ‘‘If people 

have been successful in business, they can bring that talent, and 

the fruits of that talent, a million dollars, to this country.’’ 

However, currently aliens can acquire investment funds through 

inheritance or a gift and there is no real regulatory requirement 

that they be entrepreneurs. They can simply be limited partners 

with no role in management. It is not surprising that the vast majority of EB-5 investors now are limited partners. If the EB-5 program is reformed, it can be become a turbo-charged engine for economic growth. 

I look forward to today’s hearing. And I would add that if we’re 

not successful in making reforms for this program, the program is 

going to either expire or become irrelevant because of the enormously long waiting list that has already developed for these green 

cards. Those who have profited from this are killing off a program 

that is intended to create jobs and real economic development in 

this country. 

I now recognize the Ranking Member of the Committee, the gentleman from Michigan, Mr. Conyers, for his opening statement. 

Mr. CONYERS. Thank you, Mr. Chairman, for a very strong set 

of observations to begin this hearing. 

We’re focusing today on the EB-5 Immigrant Investor Program. 

When Congress established the program in 1990, the intention was 

to create jobs for American citizens and to bring new investment 

capital to the United States. 

I believe the EB-5 program can have a positive effect on distressed urban and rural communities by providing a source of jobs 

and investment. However, there are fundamental questions about 

how the program is currently being used and whether adequate integrity safeguards exist. 

To begin with, the current practices used to draw targeted employment areas must be reformed. To help incentivize investment 

and job creation in rural or high unemployment areas, the EB-5 

program offered a reduced investment level of $500,000 for projects 

in designated target employment areas. 

However, as reported by The Wall Street Journal, as well as 

many other news sources, the vast majority of EB-5 investment 
4 

funds are going to projects in some of America’s most affluent areas 

that qualify as targeted employment areas only because of gerrymandering. By stringing census tracts together from high unemployment neighborhoods to wealthy ones, project developers have 

been able to take advantage of the lower targeted employment area 

investment level while still investing in projects in more desirable 

and affluent areas. 

This practice has been strongly criticized by the Leadership Conference on Civil Rights. It notes that the EB-5 Regional Center Program has dramatically deviated from its original purpose: to spur 

job creation and development in rural and high unemployment 

areas. Steering investments to projects in our cities’ wealthiest 

neighborhoods at the expense of urban and rural communities that 

need it most is not what Congress intended when it established 

targeted employment areas and the lower investment level. 

The congressional district, for example, that I represent suffers 

from an unemployment rate of more than 300 percent the national 

average. I’m pleased to say today that we are starting to come 

back, but it’s slow and tough. But for those Americans living in 

urban poverty, in my city of Detroit and in many other cities across 

the country, manipulation of targeted employment areas has diverted a potential source of jobs and neighborhood improvement 

away from those it was intended to help. 

As the Leadership Conference points out, it is not enough to have 

development in more affluent areas where low-income workers 

might commute to, because the projects will still leave these communities of concentrated poverty no better off in terms of development and infrastructure after their conclusion. 

Also, the EB-5 program suffers from the absence of good data on 

projects and jobs created. In order to receive a green card, a foreign 

investor must prove that the investment will create at least 10 jobs 

for U.S. workers. Under the Regional Center Program, investors 

can account for the 10 jobs by counting direct, indirect, and induced 

jobs. I wonder what an induced job is. These indirect and induced 

jobs are calculated by econometric models. 

While some data exists on the more than $13 billion of foreign 

direct investment since 2008, there’s very little hard information on 

actual jobs created by EB-5 regional centers. We don’t know whether these are jobs that are paying a living wage, whether they offer 

long-term employment, and whether they have benefited workers 

from distressed communities. The AFL-CIO shares these concerns 

and states that increased data will shed light on whether the program is meeting its mandate to spur growth and create jobs and 

in underserved areas. 

So in conclusion, I remain committed to working with Chairman 

Goodlatte and others on this Committee to improve the EB-5 program. The reforms that Chairman Goodlatte, Senate Judiciary 

Chairman Grassley, Senate Judiciary Ranking Member Leahy, and 

I negotiated last year demonstrate that meaningful, bicameral, bipartisan reform is possible. 

I thank the Chair, and I return any time remaining. 

Mr. GOODLATTE. The Chair thanks the gentleman. 
5 

It is now my pleasure to recognize the Ranking Member of the 

Subcommittee on Immigration and Border Security, the gentlewoman from California, Ms. Lofgren, for her opening statement. 

Ms. LOFGREN. Thank you, Mr. Chairman. 

The EB-5 investor visa has proven to be an important job creation program. It provides financing to public-private projects, infrastructure, and other ventures, including nursing home facilities 

for senior citizens outside Dallas, Texas, a charter school in Buffalo, New York, and redevelopment of the Hunters Point Shipyard 

in the Bay area. 

Now, my State of California took steps to reform its policy to 

avoid gerrymandering, and in my own district it has allowed, the 

EB-5 program has allowed a new hotel to be constructed near the 

airport to help revitalize the San Jose airport corridor. This project 

was, in fact, the first hotel built in that airport area in 20 years. 

Yet, as important as the EB-5 financing has been since the banking and economic crisis of 2008, it pales in comparison to the potential of a visa program for startup entrepreneurs to create new 

American jobs and businesses. 

I support long-term reauthorization of the EB-5 program, so long 

as it includes much-needed reforms. The required investment levels 

are outdated, immigrant investors need security protections, and 

government agencies charged with oversight and enforcement need 

new authorities. 

I support reform of the targeted employment area requirements 

so that we ensure that EB-5 investments result in job creation in 

communities that need it most, whether they be urban or rural. In 

this respect, it is important that any EB-5 reform be balanced so 

that communities across the country have the opportunity to compete for EB-5 investments. 

For these reasons, my good friend and colleague from Chicago, 

Mr. Gutierrez, and I introduced the EB-JOBS Act. Our EB-5 reform bill requires disclosures by regional centers and authorizes 

sanctions ranging from fines to debarment and termination of regional center designation for misrepresentations or other program 

violations. It provides for site visits, it prohibits regional center 

participation for persons who were found liable within the past 5 

years of a criminal or civil violation relating to fraud. 

I’m pleased to say that these and other transparency and integrity measures are included not just in our bill, but in bipartisan reform efforts, and they are widely agreed upon among EB-5 financiers and developers. They should be enacted before the program 

is reauthorized at the end of this fiscal year. We should also raise 

the minimum investment levels, which have not been changed in 

over 25 years, since the program was first enacted. And here again 

we have agreement across party lines. 

Now, I know that reform of targeted employment area rules has 

been a major point of contention. But with balance and compromise 

we should be able to reach an agreement that works for urban and 

rural areas, for affluent and distressed communities, and that recognizes that workers do commute to job sites. There is no reason 

we shouldn’t be able to reach an agreement that is consistent with 

the program’s original intent and works in concert with other programs that direct investments to distressed areas, including enter-
6 

prise zones, a Republican idea advocated by Speaker Ryan’s mentor, the late Jack Kemp, the New Markets Tax Credits. 

However, as I said at the outset of my remarks, far more important than an investment visa is a new startup visa for entrepreneurs. Our bill, the EB-JOBS Act, includes provisions that 

incentivize economic growth and job creation by creating new green 

card categories for entrepreneurs who establish startup businesses 

and create jobs for American workers. 

Foreign-born entrepreneurs, many of them educated at U.S. universities, have contributed immensely to our economy. They have 

been a driving force for innovation in Silicon Valley and the continued prominence of America’s technology sector. Nearly half, 24 out 

of 50 of the country’s top venture-funded companies, have at least 

one immigrant founder. 

In fact, immigrants are twice as likely to start businesses as native-born Americans, and immigrant businesses, including small 

nontech businesses, have grown at 2.5 times the national average. 

Companies back home like Intel, Google, Yahoo, and eBay were all 

founded by immigrants and now employ tens of thousands of people. 

The startup visa would require significant venture capital or seed 

financing for innovative ideas and products or the creation of new 

businesses that can already demonstrate job creation in the U.S. 

Immigration has historically made our economy stronger. The inclusion of a startup visa expansion in our bill embraces that history 

and encourages the world’s thinkers and doers to join us. 

While this hearing is focused on the EB-5 program, I remain 

committed and will work tirelessly to pass startup visa legislation. 

Today, more than ever, immigration is being used to divide us, 

and much needs to be done to fix our broken immigration system. 

But I am pleased that we can recognize programs that work. And 

I look forward to working with Chairman Goodlatte, Ranking Member Conyers, and others on a bipartisan, bicameral effort to make 

important reforms that will allow the EB-5 program to be reauthorized. 

I thank you, Mr. Chairman, and yield back the balance of my 

time. 

Mr. GOODLATTE. Thank you very much, Ms. Lofgren. 

Without objection, all other Members’ opening statements will be 

made a part of the record. 

[The prepared statement of Mr. Nadler follows:] 

Prepared Statement of the Honorable Jerrold Nadler, a Representative in 

Congress from the State of New York, and Member, Committee on the Judiciary 

Mr. Chairman, the EB-5 program has been a tremendous job creator and economic development tool throughout the country. According to one estimate, EB-5 investments in New York State alone have created and supported more than 57,000 

jobs in the last five years. Many of these are good, union jobs. 

EB-5 funding has been essential to financing important public-private projects in 

my district, like the Pier A and Battery Maritime Redevelopment projects that are 

helping reclaim great public spaces for new and beneficial uses. It has also been a 

critical tool in financing major construction projects that provide thousands of jobs 

throughout New York City. 

Right now, the largest construction project in the United States is in my district. 

It’s called Hudson Yards, and EB-5 funding is an important part of its funding. This 
7 

project alone will generate 23,000 construction jobs and help improve local infrastructure. 

Unfortunately, there is a misperception that the EB-5 program only benefits New 

York City and other urban areas. But EB-5 investment supports jobs up and down 

the East Coast, across the Midwest, and on the West Coast. Some critics of this program fail to recognize the ripple effect that major development projects can have 

throughout the country. 

When a developer in New York City breaks ground on a new project, they place 

orders for construction parts—glass, steel, concrete—that come from suppliers all 

across the country. For example, the ’upstream’ and ’downstream’ effects of Hudson 

Yards alone have even found their way to Lynchburg, Virginia, in the Chairman’s 

district, where Hudson Yards has placed an order for 24,000 tons, or approximately 

$100 million worth, of steel from the Banker Steel Company. 

Certain critics of the EB-5 program like to say that some regional centers are, 

in effect, gerrymandering census tracts to create Targeted Employment Areas and 

take advantage of the lower investment criteria. But this criticism fundamentally 

misunderstands the economy and scale of a major urban center like New York. Unlike some parts of the country, where a census tract may stretch for many miles, 

in New York, it might be only a couple of blocks. It would be a mistake to constrict 

TEAs in such a way that ignores this reality. 

Furthermore, in a major urban area, it is rare for workers to live in the same 

neighborhood as their job. But that doesn’t mean that their home neighborhood is 

not directly relevant to the economic development an EB-5-financed project may 

generate. When the workers return home, often to a distressed community, they 

spend their income there, bringing further economic development to that neighborhood. That is exactly what this program was intended to do. 

It is unfortunate that much of the debate surrounding the EB-5 program has been 

characterized as a battle between urban vs. rural, or New York against the rest of 

the country. I believe we can reform the program in such a way that everyone can 

compete on a level playing field, regardless of geography. I also support a range of 

integrity measures that would prevent fraud, and better data collection to ensure 

an accurate measure of the quality and economic impact of the jobs that are created. 

I hope Chairman Goodlatte and Ranking Member Conyers will continue to work 

with all of the relevant stakeholders to see that this is accomplished. 

Mr. GOODLATTE. We welcome our distinguished witnesses today. 

And if you’d all please rise, I’ll begin by swearing you in. 

Do you and each of you swear that the testimony that you are 

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

the truth, so help you God? 

Thank you. 

Let the record reflect that all of the witnesses have responded in 

the affirmative. And I’ll now begin by introducing them. 

The first witness is Mr. Nicholas Colucci. Mr. Colucci is the Chief 

of Immigrant Investor Program at the U.S. Citizenship and Immigration Services, a position he assumed in December of 2013. In 

this role, Mr. Colucci leads IPO’s staff of adjudicators, economists, 

and program support specialists in administering the EB-5 program. 

Mr. Colucci joined USCIS with more than 21 years of experience 

with the Bureau of Alcohol, Tobacco, Firearms and Explosives and 

the Department of the Treasury. Mr. Colucci received his BA 

magna cum laude from Long Island University and his MBA from 

Loyola University. 

Today marks the second time that Mr. Colucci has testified before Congress, after last week’s testimony before the Senate Judiciary Committee. I want to personally thank Mr. Colucci and his 

team and Legislative Affairs Liaison Mike Rodriguez for all the 

technical assistance they gave Mr. Issa, Mr. Conyers, Ms. Lofgren, 
8 

and me last year in formulating legislative reforms to the EB-5 

program. 

Our next witness is Ms. Rebecca Gambler, the Director of the 

U.S. Government Accountability Office’s Homeland Security and 

Justice Team. Ms. Gambler leads GAO’s work on border security, 

immigration, Department of Homeland Security management, and 

elections issues. 

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

Studies. Ms. Gambler is a graduate of the U.S. Naval War College 

and holds master’s degrees from Syracuse University and the University of Toronto. 

Our next witness, Ms. Jeanne Calderon, is a clinical associate 

professor at the New York University Stern School of Business 

where she teaches courses in the areas of law, ethics, professional 

responsibility, and real estate. She’s a graduate of Cornell University and the Georgetown University Law Center. 

Sitting behind her is her husband, Mr. Gary Friedland, who is 

a scholar in residence at the NYU Stern School of Business and affiliated with Stern Center for Real Estate Finance Research. Since 

2014, Ms. Calderon and Mr. Friedland have been analyzing the 

EB-5 immigrant visa program and how it is utilized as a source of 

capital for commercial real estate projects. 

Our final witness is the CEO of E3 Investment Group, Mr. Matt 

Gordon. E3 is a private equity group that has established E3 

Cargo, a trucking company, all of whose equity financing comes 

from the EB-5 program. Mr. Gordon has written extensively on 

legal topics related to EB-5 organizational structure and EB-5 policy. 

Mr. Gordon is a licensed attorney in New York and began his career practicing mergers and acquisitions law on Wall Street. Mr. 

Gordon received his BS in public policy analysis from Cornell University and his JD cum laude from the University of Pennsylvania 

School of Law 

Welcome to all of you. Your written testimony will be entered 

into the record in its entirety. I ask that you summarize your oral 

testimony in 5 minutes or less. To help you stay within that time, 

there’s a timing light on your table. When the light switches from 

green to yellow, you have 1 minute to conclude your testimony. 

When the light turns red, that’s it, your time is up, it signals that 

your 5 minutes have expired. 

Mr. Colucci you may begin. Welcome. 

TESTIMONY OF NICHOLAS COLUCCI, CHIEF, OFFICE OF IMMIGRANT INVESTOR PROGRAM, U.S. CITIZENSHIP AND IMMIGRATION SERVICES 

Mr. COLUCCI. Chairman Goodlatte, Ranking Member Conyers, 

and distinguished Members of the Committee, I’m pleased to speak 

with you today about the EB-5 Immigrant Investor Program. My 

name is Nicholas Colucci, and since December 2013, I’ve been chief 

of USCIS’ Immigrant Investor Program Office, or IPO, which administers the EB-5 program. I came to USCIS with more than 20 

years of regulatory and law enforcement experience with the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Finan-
9 

cial Crimes Enforcement Network, where I managed diverse teams 

dedicated to combating money laundering, fraud, and terrorist financing. 

I share the Committee’s dedication to ensuring the integrity of 

the EB-5 program. I will tell you today about the steps we’ve already taken and those we are planning to further strengthen our 

administration of the program. I thank the Committee for your continued support and interest in the EB-5 program. 

USCIS has built a strong foundation that supports its administration of the program. Most significantly, in 2013 USCIS realigned 

the EB-5 program into IPO, or the Immigrant Investor Program 

Office, and relocated it to Washington, D.C., where we hired staff 

with expertise in economics, law, business, finance, securities, and 

banking to manage the complex EB-5 caseload. 

USCIS also created a Fraud Detection and National Security Division and embedded its personnel to work alongside IPO’s adjudications officers and economists. In addition to enhancing USCIS’ 

ability to better detect fraud risks, which was noted by the Government Accountability Office in its August 2015 report, this structure 

has improved our ability to work closely with partners across the 

Federal Government to quickly identify and respond to fraud and 

national security concerns and to develop strategies to mitigate 

these risks. 

Additionally, consistent with GAO’s recent review of the EB-5 

program, USCIS is working to refine data systems to better collect 

program information and has entered into an interagency agreement with the Department of Commerce to conduct a valuation 

study of the EB-5 program. 

Since establishing IPO, USCIS has undertaken several initiatives to strengthen the program, including more than doubling the 

embedded Fraud Detection and National Security staff in fiscal 

year 2015 and more than tripling the number of overseas 

verification requests in support of EB-5 adjudications, providing ongoing antifraud training to increased IPO staff’s awareness of potential fraud schemes, undertaking a thorough review of existing 

regional centers and terminating those that failed to submit required information or promote economic growth, expanding security 

checks to cover regional center businesses and certain executives, 

and publishing an updated classified intelligence assessment of the 

EB-5 program in fiscal year 2015. 

We have accomplished much to strengthen the integrity of the 

EB-5 program, but as Secretary Johnson noted in his May 2015 letter to the Committee, there remains more to be done. USCIS plans 

to propose potential regulatory action, including changes to make 

targeted employment area designations more consistent, increase 

minimum investment amounts that have remained unchanged for 

25 years, and require business plan filings in advance of investor 

petitions. 

Additionally, USCIS has worked closely with congressional staff 

to identify key legislative enhancements to strengthen the program, including providing USCIS with specific statutory authority 

to ensure the Regional Center Program is free of bad actors, to impose graduated sanctions where appropriate, and to collect the information we need to better oversee the program. 
10 

If implemented, these common sense reforms would create immeasurable benefits for the program. With the continued support 

of this Committee, I’m confident that the EB-5 program can fully 

realize its goal of stimulating the U.S. economy through job creation and capital investment, while safeguarding national security 

and program integrity. 

We look forward to continuing to work with this Committee to 

further then strengthen the EB-5 program and to provide technical 

assistance if requested to any EB-5-related legislation. 

Once again, I appreciate the opportunity to be here today. I’m 

happy to answer your questions. Thank you. 

[The prepared statement of Mr. Colucci follows:] 
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Mr. GOODLATTE. Thank you Mr. Colucci. 

Ms. Gambler, welcome. 

TESTIMONY OF REBECCA GAMBLER, DIRECTOR, HOMELAND 

SECURITY AND JUSTICE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. GAMBLER. Good afternoon, Chairman Goodlatte, Ranking 

Member Conyers, and Members of the Committee. I appreciate the 

opportunity to testify at today’s hearing to discuss GAO’s work reviewing the Immigrant Investor, or EB-5, Program. 

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

encourage capital investment in the U.S. by foreign investors in exchange for lawful permanent residency and a path to citizenship. 

Under the program, immigrant investors are to invest $1 million 

in a commercial enterprise or $500,000 if the business is in a targeted employment area. The investment is to result in the creation 

of at least 10 full-time jobs. 

Immigrant investors and their eligible dependents receive 2-year 

conditional green cards. If they meet requirements, including their 

investments resulting in at least 10 full-time jobs, they can apply 

to remove the conditional basis of their green cards. About 10,000 

EB-5 visas are made available to qualified applicants each fiscal 

year, and the number of EB-5 visas issued each year has grown 

substantially over time. 

My remarks today will address two key aspect of USCIS’ oversight and management of the EB-5 program. One, the extent to 

which USCIS has assessed and addressed fraud risks. And two, 

USCIS’ methods for verifying job creation and reporting economic 

benefits. 

First, USCIS has taken some action to assess and address fraud 

risks to the program. For example, in recent years USCIS and 

partner agencies have conducted various assessments of fraud 

risks. USCIS has also increased its fraud unit staffing and has conducted fraud awareness training. 

While these and other actions have been positive steps, USCIS 

faces challenges in its efforts to identify and mitigate fraud risks. 

For example, USCIS officials have noted the constantly evolving 

nature of fraud risks and USCIS is working to implement our recommendation to plan and conduct regular fraud risk assessments. 

Further, USCIS’ information systems and processes make it difficult for the agency to effectively collect and use data on the EB5 program to identify potential fraud. USCIS has also not regularly 

interviewed immigrant investors when they submit applications to 

remove the conditions on their permanent residency. 

To strengthen USCIS’ fraud detection and mitigation capabilities, we recommended that USCIS develop a strategy to expand information collected from applicants and petitioners. USCIS concurred with our recommendation and is taking steps to address it, 

such as planning to begin interviews later this year. 

Second, with regard to verifying job creation and reporting economic benefits, USCIS has increased its capacity in these areas. 

For example, USCIS has increased the size and expertise of its 

workforce and improved its training on the adjudication process. 

However, our work indicates that USCIS does not have a valid and 
19 

reliable methodology for reporting on the program’s economic benefits. 

Specifically, USCIS’ methodology may understate or overstate 

program benefits in certain instances. This is because USCIS’ 

methodology is based on the minimum program requirements of 10 

jobs and a $500,000 investment per investor, rather than data collected by USCIS about the number of jobs created and amounts invested. 

We recommended that USCIS track and report such data. This 

is data that immigrant investors report and the agency verifies on 

program forms. DHS concurred and plans to revise its systems and 

processes to implement this recommendation. 

In addition, USCIS’ methodology allows immigrant investors to 

claim all jobs created by projects with both EB-5 and non-EB-5 investors. We and others have previously raised questions about this 

practice as it makes it difficult to determine whether the funds invested by EB-5 investors actually created U.S. jobs. In some cases, 

without the practice of allowing immigrant investors to claim jobs 

created by investments from other sources, a higher investment 

amount would be required for investors to meet the job-creation requirements. 

In closing, while the EB-5 program seeks to stimulate the economy by promoting job creation and encouraging capital investment 

by foreign investors, it also has unique fraud risks that must be 

identified and addressed. USCIS’ ability to apply a valid and reliable methodology for reporting EB-5 program outcomes and economic benefits is also important for program accountability and to 

provide the public and Congress with more complete information to 

evaluate the program and make reauthorization decisions. 

Again, thank you for the opportunity to testify. And I’m happy 

to take any questions that Members may have. 

[The prepared statement of Ms. Gambler follows:] 
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Mr. GOODLATTE. Thank you, Ms. Gambler. 

Welcome, Ms. Calderon and Mr. Friedman. 

TESTIMONY OF JEANNE CALDERON, CLINICAL ASSOCIATE 

PROFESSOR, STERN SCHOOL OF BUSINESS, NEW YORK UNIVERSITY 

Ms. CALDERON. Chairman Goodlatte, Ranking Member Conyers, 

and distinguished Members of the Committee. Thank you for inviting me to testify, I have been a professor at the NYU Stern School 

of Business for almost 30 years. My Stern colleague and husband, 

Gary Friedland, is sitting behind me. We have co-authored two 

major papers—— 

Mr. GOODLATTE. Really almost put that microphone, like, within 

an inch of your mouth. Then we will be able to hear you much better. 

Ms. CALDERON. Oh, I didn’t realize. Should I start again? 

Mr. GOODLATTE. Pull it really close, yeah. Move it over real close 

to you. 

Ms. CALDERON. This morning I will make four points. The original congressional intent in 1990 was to limit the TEA designation 

to rural and depressed inner-city areas. But Congress should consider taking a fresh look to incentivize project types and locations 

that it deems appropriate in today’s world. 

Gerrymandering is census tract aggregation that sometimes permits projects located in luxury areas to qualify for the TEA discount. CIS contributed to the current gerrymandering system, but 

has the authority to remedy this as an alternative to legislative solution. And finally, creating appropriate visa reserves might be as 

important as redefining a TEA to simulate investment in certain 

locations or project types. 

Since 2010, the program has been primarily used for real estate 

projects. EB-5 serves as a government subsidy to developers because the visa motivates the investor to accept a negligible rate of 

return that results in a below-market interest rate loan, a major 

savings to the developer. 

This subsidy is available to all developers, whether or not the 

project is located in a TEA. In general, the minimum investment 

amount is $1 million project, except if the project is located in a 

TEA the amount is reduced to $500,000. A TEA is defined simply 

as any rural location or, if an urban area, it meets a defined high 

unemployment standard. 

The legislative history illuminates congressional intent. Senator 

Boschwitz cosponsored, with Senator Phil Gramm, the amendment 

that added the TEA framework to the Senate bill that became the 

1990 Immigration Act. He emphasized that the reduced amount 

was primarily aimed to stimulate immigrant investment in rural 

areas, but also intended for depressed areas or inner cities. Senator 

Paul Simon, in a conference report, expected that most investors 

would invest at the $1 million level. 

Contrary to this original intent, under the current system virtually all projects qualify as being located in a TEA, including 

those in luxury areas. So all immigrants invest at the discounted 

amount. The reauthorization provides Congress with the opportunity to take a fresh approach as to which locations or project 
43 

types should be incentivized without being constrained by the original intent. 

To test whether new TEA definitions meet Congress’ objectives, 

perhaps it should map the locations in key cities to verify which 

areas would likely be incentivized. ‘‘Gerrymandering’’ is a term applied to census tract aggregation to expand the boundaries of the 

areas to qualify as a TEA. 

Census tracts are added to the project’s tract with the aim that 

the combined area’s unemployment rate meets the high unemployment standard. If the project is located in a census tract that meets 

the standard, the area is a TEA. If not, then gerrymandering allows the addition of census tracts to the project’s tract until the 

combined area meets the high unemployment standard. This could 

be as simple as adding one bordering tract or it could necessitate 

adding virtually a countless number until the standard is met, 

often relying on a remote tract’s poor economic conditions to justify 

the TEA designation. 

The problem occurs because each State creates its own rules to 

define a TEA. How did this happen? CIS has been fostering gerrymandering since 1991. When the EB-5 law was passed, CIS’ predecessor chose to delegate its authority to make all TEA designations 

to the individual States without any rules, oversight, or audits. The 

States motivated to promote economic development approve virtually every project. 

As Chief Colucci has acknowledged, CIS has the power to correct 

this. It could establish uniform, objective TEA rules for the States 

to apply or it could revoke the States’ authority and transfer it to 

the CIS national office as contemplated by the Senate reform bill. 

Should I finish? 

Visa reserves. The reform bill that died in December proposed to 

reduce the spread to $200,000 for the minimum investment amount 

between TEA and non-TEA projects. Since the immigrant’s sole 

reason to invest is to secure the visa, a visa reserve that moves the 

investor toward the front of the visa line for investments in certain 

project types or locations may become more important than investing $200,000 less on a very low interest loan. This becomes especially important as the visa waiting period approaches 8 years for 

Chinese investors. 

Visa reserves may be an effective tool to incentivize certain investments, but Congress should be mindful of which project types 

or locations gain the visa priority. Those investors who aren’t 

granted the visa reserve may decide not to invest in this program. 

Thank you. 

[The prepared statement of Ms. Calderon follows:] 
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Mr. GOODLATTE. Thank you. 

Mr. Gordon, welcome. 

TESTIMONY OF MATT GORDON, CHIEF EXECUTIVE OFFICER, 

E3 INVESTMENT GROUP 

Mr. GORDON. Chairman Goodlatte, Ranking Member Conyers, 

and other Members of the Committee, thank you for allowing me 

to testify on this important topic. My name is Matt Gordon, and 

I am Chief Executive Officer of E3 Investment Group. We are a 

New York City-based private equity firm whose mission is the harmonious synthesis of economic and social value creation. We focus 

exclusively on the direct side of the EB-5 program, as all of our 

partner investors’ capital creates more than 10 jobs each, so we do 

not need the econometric labor creation calculations afforded to the 

regional centers. 

E3 Investment Group’s flagship, of which I am chairman, is E3 

Cargo, an Indianapolis, Indiana-based trucking company. I am also 

one of the founding members of the More American Jobs Alliance, 

or MAJA. MAJA’s constitutional principle is to maximize the social 

impact for America from the jobs created by the EB-5 program, in 

particular by focusing on the creation of the jobs in true economically distressed and rural areas. 

Since coming to the EB-5 program, I have done a significant 

amount of policy and academic work. I’m the editor of the EB-5 

legal treatise entitled ‘‘The EB-5 Book’’ and I have helped lead researchers of ICIC.org with their work related to EB-5 capital in 

distressed urban communities that culminated in a policy forum at 

the Harvard Kennedy School. 

The apt title of this hearing questions whether the EB-5 program 

is underperforming. Unfortunately, the answer is resounding yes. 

The EB-5 program consistently fails to maximize social value created for the green cards that our country invests in the process. 

The goal of the program is not to enrich real estate developers 

or others, like myself, who use the EB-5 program as a capital-formation vehicle for their businesses. The goal is to create jobs for 

America, and the sponsors are never worthy of protecting or perpetuating for their own sake. 

An important part of the program was the creation of the policy 

behind targeted employment areas. Target employment areas are 

supposed to turbocharge the social benefit resulting from the job 

creation by focusing it in economically distressed areas. Simply put, 

job creation in distressed areas is more valuable to our society. The 

mechanism to incentivize this behavior is the lowered investment 

threshold from $500,000 for investments that are made in a TEA. 

TEA policy has been a failure, because it is not only possible but 

relatively easy to get any location in America designated as a targeted employment area. Despite the policy goal of wanting to help 

distressed urban and rural communities who desperately need the 

additional investment capital, virtually all EB-5 capital goes into 

prosperous, wealthy areas. 

There are those who believe that TEAs are working just fine and 

want to perpetuate the status quo. Their argument is premised on 

a labor mobility model to support the idea that TEAs are fulfilling 

their policy objective if the project built in a low unemployment 
58 

area draws workers who live in high unemployment areas. To 

frame this debate, it is either about helping the area or about helping the people who may or may not come from the area to work. 

I submit that a geographically anchored framework must prevail. 

Structural investment in an area has the premise to effect structural economic change to that area and its population. Labor is always mobile, areas are not. A TEA is a targeted area and so it 

should remain. 

Some frame the debate as urban versus rural. I submit that it 

is about helping the geographical areas that have versus the areas 

that have not. The idea is to give places like Indianapolis, Memphis, Southaven, Mississippi, or the Bronx not only a chance, but 

an advantage against projects located in Los Angeles, Manhattan’s 

West Side, and Miami. 

The advocates for those who seek to have the status quo maintained, either currently or under new rules by another name, suggest that sticking to the policy premise would be the death knell 

of the program. Nothing could be further from the truth. The issue 

is about whether we can address these changes and for the betterment of the entire program. 

It is very much likened to the automakers when first seatbelts 

and then airbags were mandated. They cried, they said it would be 

impossible detriment on the industry, and then market simply adjusted. So too will the EB-5 market adjust to proper and reasonable 

changes to the TEA rules and regulations. It should not be about 

maximizing the number of projects that qualify for the benefit, but 

maximizing the benefit for the communities that are supposed to 

get it. 

If we get this right, then maybe some of the regional centers who 

support the current rules and invest in wealthy areas will instead 

focus their energies and effort in Indianapolis, Memphis, and the 

Bronx. That would be truly something. 

In the end the question is simple: if Congress wishes to maximize 

the social impact of the program, then it must provide an incentive 

for both investors and sponsors to create jobs in truly economically 

distressed areas. This incentive can take the form of either a materially reduced investment amount or segregating visas for investors 

in true TEAs. 

Thank you for the time. And I am happy to answer questions 

that the Committee might have. 

[The prepared statement of Mr. Gordon follows:] 
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Mr. GOODLATTE. Thank you, Mr. Gordon. 

We will now begin the questioning of the witnesses under the 5- 

minute rule, and I’ll begin by recognizing myself. 

Mr. Colucci, USCIS has reported that, from program inception 

through 2014, the EB-5 program has created a minimum 73,730 

jobs and more than $11.2 billion in investments. How many more 

jobs and investment funds could the program have created if the 

minimum investment amounts had been indexed for inflation? 

Mr. COLUCCI. Chairman, that is not a statistic that I have personally calculated, nor have my staff members calculated. However, 

as outlined in the Secretary’s letter to this Committee, that is a 

legislative enhancement we currently seek, is to increase the minimum investment amount. And as also mentioned in that letter, if 

that is not something Congress is able to do, we are prepared and 

we are working to increase this amount through regulation. 

Mr. GOODLATTE. Well, as far as back as 1987, the INS recommended that the minimum investment amount in an investor 

visa program be adjusted periodically based on some criteria, such 

as the Consumer Price Index. And I am pleased that Secretary 

Johnson has indicated that USCIS intends to exercise its authority. 

Do you intend to fully recapture the value lost to inflation over the 

past quarter century? 

Mr. COLUCCI. I think, sir, that we still need to study exactly 

where we set or propose to set those investment amounts. I do 

think that we would certainly look at what Congress did as part 

of a number of the bills that address this area. 

Mr. GOODLATTE. In instances where a capital development 

project is financed by a combination of EB-5 and conventional capital, DHS currently allows foreign investors to claim credit for jobs 

created by other people’s money. The DHS inspector general revealed one instance in which EB-5 investments accounted for 18 

percent of the project’s equity and yet the foreign investors took 

credit for all the jobs the project created. Doesn’t this make a 

mockery of the Investor Visa Program’s job-creation goal? 

Mr. COLUCCI. Sir, as you pointed out in your opening statement, 

this is something through our regulation that we do allow, EB-5 investors to take job-creation credit from non-EB-5 sources. We recently did some analysis and found that, without that, there would 

be about 160 industries that would not qualify for EB-5 funding because they could not create those jobs on their own. 

I would also say the reverse is true. There are many projects that 

are solely EB-5 funded, in addition to projects that—a ‘‘but for’’ scenario, in which we see lending letters from commercial financial institutions which state: We will not loan this money unless you go 

out and get that EB-5 financing. 

Mr. GOODLATTE. Mr. Colucci, I understand your argument, but 

doesn’t that again simply reflect the fact that the DHS has never 

adjusted the minimum investment levels for inflation? If you had 

done so, wouldn’t the number of jobs created by investments in all 

the industries you just referenced have increased commensurately? 

Mr. COLUCCI. Sir, that is correct. If we did—— 

Mr. GOODLATTE. I have a number of other questions, so let me 

keep moving. 
67 

Seventeen thousand six hundred ans sixty-two aliens with approved investor visa petitions, including their spouses and minor 

children, are waiting for visas to become available right now as we 

sit here, and you have on hand 21,855 pending petitions. When you 

factor in accompanying family members, if any reforms to the EB5 program only applied to prospectively filed petitions, such reforms would not actually take effect for over 7 years. Can such a 

delay be considered real reform? 

Mr. COLUCCI. Sir, those statistics you cite are accurate. We do indeed have approximately 21,000—— 

Mr. GOODLATTE. And an average of three green cards per petition, correct? So that’s over 63,000 pending green cards. At 10,000 

per year, we are getting over 6—closer to 7 years of backlog. And 

under those circumstances, if we only make reforms prospective in 

nature, those reforms won’t take place for 7 years. The program 

has generally not been authorized for as long as 7 years. So how 

are they meaningful reforms if they don’t take effect for that long 

a period of time? 

Mr. COLUCCI. Sir, you’re correct, any regulations that we would 

implement would likely be forward-facing or prospective increases. 

Mr. GOODLATTE. But for them to be effective, they would have to 

have some retroactivity if they are going to take effect in any way, 

shape, or form before 7 years from now. 

Mr. COLUCCI. Sir, I know that in some of the bills that were introduced there were provisions to increase additional fees for the 

petitions, the actual—the 526, the immigrant investor petition, and 

the removal of condition petitions that would add to the costs that 

are taken in by the United States Government. 

Mr. GOODLATTE. Let me turn to Ms. Calderon. Thank you, Mr. 

Colucci. 

You’ve written that gerrymandering has rendered the two-level 

investment threshold meaningless, and immigrants flocked to invest in luxury projects by major developers, and we gave some examples up here. Is this consistent with the intent of Congress to 

incentivize investments in rural and depressed urban areas? 

Ms. CALDERON. Thank you. And that’s actually why I mentioned 

the legislative history in the 5-minute presentation, that no, it’s not 

at all consistent with the two-tier system. 

The legislation that was first introduced had one tier, 1 million, 

it was only later that the two-tier system was introduced by Senators Boschwitz and Gramm, and they made clear throughout the 

Congressional Record that we found that the discounted amount 

was aimed at rural as well as depressed or inner cities. 

Mr. GOODLATTE. The intent was to get a higher amount for those 

investments in areas that didn’t qualify for rural or depressed 

urban areas. 

Ms. CALDERON. Yes. And apparently, I mean, the belief was that 

most investors would be investing at $1 million in 1990. 

Mr. GOODLATTE. Right. You write that if Congress seeks to 

incentivize development in areas which encounter difficulty in attracting the investment capital needed for economic growth, the 

commuter pattern construct would not be an appropriate way to 

designate a TEA. Could you elaborate briefly on that? 
68 

Ms. CALDERON. It’s a takeoff on the fact that regional centers, 

unlike Matt Gordon’s company, uses econometric models, basically 

is basing the job count not on direct jobs, but on the indirect and 

induced jobs. So there’s really no way of proving where the workers 

are coming from. He points out that the jobs may not be reflective 

of long-term jobs. We don’t know the location of their residences as 

well. 

Mr. GOODLATTE. Thank you. 

And lastly, Mr. Gordon, do you believe that the EB-5 program reforms that I drafted last year, along with Mr. Conyers, Mr. Issa, 

Ms. Lofgren, and Senators Grassley and Leahy, would have corrected the abuses that have cropped up in the Investor Visa Program? And do you think these reforms would make the program 

unattractive to developers or foreign investors? 

Mr. GORDON. I think that the draft bills—and there are many 

versions of them, so I started losing track of which parts we were 

at which points—but I do think that they went a long way, and 

also as part of the compromise negotiations that were taking place 

in December, to correct the ills of the program. 

Mr. GOODLATTE. With 63,000 people in the pipeline, 21,000-plus 

petitions, would they have scared off investors? 

Mr. GORDON. To some degree it might have. And remember, that 

pipeline really is a problem when you’re talking about investors 

from China, because due to the restrictions and the quotas for investors from each country, it wouldn’t actually affect investors coming from outside of China at all. 

Mr. GOODLATTE. Yeah, but 87 percent are from China. Is that 

not correct? 

Mr. GORDON. Yeah, that’s correct. 

Mr. GOODLATTE. Right. 

Mr. GORDON. So again, markets tend to normalize, and as people—— 

Mr. GOODLATTE. Normalize at a higher level of investment in 

areas that might be more targeted to rural and high unemployment 

areas. 

Mr. GORDON. Sponsors would react to the incentive structure. So 

if it was in their best interest to focus on nonprime real estate locations, if it was in their interest to do so, they would look for other 

opportunities. 

And likewise, they would also look for investors from locations 

where there might not be such a nonprice issue related to getting 

them to come on board. So maybe they’ll focus on other areas of 

the world than simply China. 

Mr. GOODLATTE. Thank you. 

The Chair recognizes the gentleman from Michigan, Mr. Conyers, 

for his questions. 

Mr. CONYERS. Thank you, Chairman Goodlatte. And I appreciate 

the testimony, the varied testimony from our four witnesses. 

I’d like to begin by asking unanimous consent to include in the 

record the testimony of Nancy Zirkin, who is the vice president of 

the Leadership Conference on Civil Rights. May I?* 

Mr. GOODLATTE. Without objection, it will be made a part of the 

record. 
69 

*Note: The material referred to is not printed in this hearing record but is on file with the 

Committee. Also, see Conyers Submissions at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=104454. 

Mr. CONYERS. Right. And the second statement I’d like to have 

included in the record is one from the AFL-CIO concerning this Investor Visa Program. I’d also like that included in the record, 

please.* 

Mr. GOODLATTE. Without objection, that will also be made a part 

of the record. 

Mr. CONYERS. I thank you very much. 

Now, we have a situation here where, Mr. Colucci, The Wall 

Street Journal estimates that 80 percent of all EB-5 projects need 

gerrymandering to qualify as high unemployment targeted employment areas. With respect to the reform of targeted employment 

areas, who has the authority to ensure that the gerrymandering is 

appropriate or should not be allowed, in your view? 

Mr. COLUCCI. Sir, through our regulation we allow the States— 

the States are the ones who put together targeted employment 

areas. And then through a policy memorandum, not only do we 

defer that to the States, but we indicate that we will look at their 

methodology. In other words, we will ensure that the area that 

they designated does indeed meet the 150 percent unemployment 

rate. 

Mr. CONYERS. And let me ask you this additional concern. What 

can the Department do to ensure meaningful incentives to invest 

in distressed areas, as we in the Congress wanted to by enacting 

this legislation in the first place? 

Mr. COLUCCI. Sir, as the Secretary indicated in his letter to the 

Committee, targeted employment areas are an area in which we 

were seeking a legislative enhancement. And short of that, as he 

also indicated, this is something that we can address through a 

regulatory solution that would go out for notice and comment to 

the public like any other regulatory solution. So we do have the 

power to define how targeted employment areas are put together. 

Mr. CONYERS. Turning to Matt Gordon. Some EB-5 investors 

claim that they won’t invest in projects outside traditional gateway 

cities because they believe those projects are safer and more likely 

to create jobs needed to support their visa applications. 

What do you think must be done to targeted employment areas 

to direct or drive investment to more economically distressed 

areas? 

Mr. GORDON. Thank you. That’s an excellent question. 

It’s supposed to be an economic incentive tool. For it to have any 

power or meaning, there needs to be a difference in the pricing. So 

targeted employment areas that are outside of the gateway cities 

need to have an investment amount that is materially lower than 

those in the gateway cities. 

There will always be those who want to live in prime areas and 

will be willing to pay the premium, and so too there will always 

be those who are only interested in investing in prime areas, and 

they too will be willing to pay the premium. 

Mr. CONYERS. How do we know? Let’s go to Ms. Calderon. How 

do we know if the jobs created are good jobs that pay a living 

wage? 
70 

**Note: The GAO Report referred to is not printed in this hearing record but is on file with 

the Committee. Also, see: 

http://www.gao.gov/assets/680/671940.pdf. 

***Note: The material referred to is not printed in this hearing record but is on file with the 

Committee. Also, see: 

http://blogs.rollcall.com/beltway-insiders/u-s-citizenship-not-sale-commentary. 

Ms. CALDERON. We don’t. We don’t know that. Again, because 

most of the investors are investing indirectly through a regional 

center structure and because the regional center structure is used, 

the job count is not based on direct jobs but, instead, on indirect 

and induced jobs. 

And the way to measure those we use economic models. We don’t 

count W-2s. We don’t check where the people are coming from, and 

we don’t check the length of the employment or the type of employment. 

Mr. CONYERS. Who should do this checking, and how do we correct that? 

Ms. CALDERON. USCIS could set out the standards for the States 

to apply if, again, the standards were objective and uniform, unambiguous. But I would think that it would be better for USCIS, in 

its D.C. national office, to take over that role. 

Mr. CONYERS. As I conclude, does anyone else want to add anything to their views to this question that I’ve asked? 

Mr. GORDON. I would just supplement that it’s a challenge under 

the current econometric models to actually gather this type of data. 

They’re not really the right tool for the question that you ask. It’s 

very different on the direct side of the program. I mean, we can tell 

you worker for worker by what they make, how long they work, 

and how their wages compare to national averages. That’s very, 

very easy. 

But when you’re using the type of input/output econometric models that’s currently accepted for regional center job protection, it’s 

going to be a difficult task. It might require a totally new type of 

accepted methodology. 

Mr. CONYERS. Well, thank you, Mr. Gordon. 

And thank you, Mr. Colucci. 

Mr. ISSA. Mr. Chairman, I have a unanimous consent. 

Mr. GOODLATTE. Yes. The gentleman is recognized. 

Mr. ISSA. Mr. Chairman, I ask unanimous consent—because it’s 

going to be needed—that the GAO report the gentlelady put in be 

put in the record from August 2015 entitled, ‘‘Additional Actions 

Needed to Better Assess Fraud Risk and Report Economic Benefits.’’** 

Mr. GOODLATTE. Without objection, it will be made a part of the 

record. 

Mr. ISSA. Additionally, I have a unanimous consent that an editorial published in Roll Call by Senator Dianne Feinstein entitled 

‘‘U.S. Citizenship Should Not Be for Sale’’ be placed in the 

record.*** 

Mr. GOODLATTE. Without objection, it will be made part of the 

record. 

Mr. ISSA. Thank you, Mr. Chairman. 

Mr. GOODLATTE. And I would ask unanimous consent that a letter to myself and Ranking Member Conyers from IIUSA, Invest In 
71 

 Note: The material referred to is not printed in this hearing record but is on file with 

the Committee. Also, see Goodlatte Submission at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=104454. 

the USA, if you will, dated February 10, 2016, be made part of the 

record.** ** 

Mr. GOODLATTE. And, without objection, it will be made. 

And the Chair now recognizes the gentleman from California, 

Mr. Issa, for his questions for 5 minutes. 

Mr. ISSA. Thank you, Mr. Chairman. 

And I want to thank all of you for being here. 

Ms. Gambler, I want to thank you for your report. I think it’s insightful. I also appreciate the fact that all of you seem to have followed our attempts, albeit at least temporarily in vain, to reform 

EB-5. 

Mr. Colucci, I’m going to apologize in advance that you’re the 

person in the hot seat, but let’s go through a couple of things that 

I think need to be on the record. 

First of all, you’re saying that you can do regulatory reform to 

fix many of the ills pointed out by the GAO’s report last year, 

right? Is that correct? 

Mr. COLUCCI. Yes, sir, there are reforms—— 

Mr. ISSA. Okay. And, to date, you have not put any out for public 

comment. Is that correct? 

Mr. COLUCCI. We have not, sir. We were working on a regulatory 

reform in 2014, and when Congress signaled its intent to pass a 

comprehensive bill with respect to EB-5, we moderated our efforts 

in 2015. However, now that the bill did not pass, we are reengaged 

on our efforts. 

Mr. ISSA. So let’s go through this. 1990, there was regulatory authority to fix some of these things. Nothing happened. That was 

George Herbert Walker Bush. So then he left. President Clinton 

got 8 years. He didn’t do anything. He left. George W. came in. He 

had 8 years. He didn’t do anything. Now we are in the 8th year 

of President Obama, and you’re saying that because we thought we 

were going to fix something you stalled. 

Well, let’s go through some of these things. And, again, I apologize in advance, but you saw the Chairman’s 200-mile long farce 

of a gerrymandering with no possibility that people were actually 

going to go 200 miles to a job. And you allowed it because, if I understand correctly, you feel you don’t have the authority to fix that, 

to deny it. Is that correct? 

Mr. COLUCCI. I’d like to make two comments: We did actually 

pass a regulation with respect to the regional center program in 

the 1990’s, and I believe it was 1993; with respect to that particular slide that was shown that indicated that 200-mile targeted—— 

Mr. ISSA. Well, whether it’s that or the up the Hudson River one, 

they’re both pretty egregious. Wouldn’t you agree? 

Mr. COLUCCI. Well, the one in particular in Texas, we are not 

able to find that that was officially submitted by a petitioner for 

a targeted employment area. We are continuing to look, but we 

have not located that. 

With respect to the one that was shown for New York, you know, 

what I would point out is they are all contiguous census tracts. 
72 

What I don’t think was shown there is there actually are census 

tracts that border the river and some land—— 

Mr. ISSA. But that’s not the question. The question is, isn’t it obvious that the discount that was in the legislation before some voters were born, that will be voting in this election, the legislation 

intended to discount for the enhancement of employment. And if 

they include census tracts in which the employment is unlikely to 

come from there, then, in fact, they’re just throwing it in when— 

you know, and let’s just be honest. People do not come 100 miles 

to a job. Isn’t that correct? 

So you had the ability to—and correct me if I’m wrong. Did you 

have the ability to deny them if you felt that they were including 

areas which would not have led to employment, but they were scoring the employment? Yes or no, please. Do you have the authority 

to deny? 

Mr. COLUCCI. If an area that has been designated by a State is 

a geographic area traditionally within a metropolitan statistical 

area, we do not have the authority to deny. 

Mr. ISSA. Okay. So you don’t have the authority, which means 

you do need congressional action to fix that? 

Mr. COLUCCI. Well, sir, what we can do is define targeted employment area within our regulations. But as the Secretary noted 

in his letter, we did recommend some sort of a legislative enhancement in this area. 

Mr. ISSA. Okay. And for all those years I mentioned, there has 

been no increase in the amount necessary. I might note that Singapore is $2 million. It’s about $1.5 million for Britain, and yet we’re 

half a million dollars. 

Mr. Gordon, let me the just ask you a question. I’ll try to get it 

very simple. If Congress determined that the original intent of this 

was job creation based on real investment in permanent jobs, 

wouldn’t it be reasonable to stop loaning a minority amount of 

money to help real estate be built that creates temporary jobs, 

often simply rebuilding a hotel? 

Mr. GORDON. Generally, yes. 

Mr. ISSA. Okay. 

And Mr. Colucci, my final question, I suspect, is going to be, you 

know, I hear you saying that you don’t have the authority, but are 

you really telling the American people that if only 1 percent of the 

jobs came from money on an EB-5, that they still would be entitled 

to count 100 percent of the jobs? In other words, if $500,000 came in out of $500 million, the $500 

million, all from other sources, should be able to count toward the 

job creation. You told me that you didn’t see something wrong with 

that, and I believe you said you didn’t see something wrong because many programs wouldn’t qualify without using the non-EB5 money. Is that what you’re telling us, that we should put up with 

considering all the jobs created, including the ones that have nothing to do with the so-called investor? 

Mr. COLUCCI. Sir, what I did point out is that our regulations do 

indeed allow it, and there are about 160 industries that would not 

be able to participate in the EB-5 program—— 

Mr. ISSA. Because they don’t create enough jobs with the investment money. 
73 

Mr. COLUCCI [continuing]. Because they don’t create enough jobs. 

Mr. ISSA. And the Congress intended the investment money to 

create a certain amount of jobs, and they don’t do it. So what you’re 

saying is you believe the rules have to be stretched to allow for creation beyond what is actually created by the investment. 

Mr. GOODLATTE. The time of the gentleman has expired, but the 

gentleman is welcome to answer the question briefly. 

Mr. COLUCCI. I would just say, sir, that is allowed through our 

regulation and that was after a significant notice and comment period in, again, as I mentioned, the 1990’s. 

Mr. ISSA. Mr. Chairman, I’ll note that during that notice and 

comment, I wasn’t a Member, but I am now. And I disagree with 

that ruling. 

Mr. GOODLATTE. And the Chair shares your concern. 

The Chair recognizes the gentlewoman from California, Ms. 

Lofgren, for 5 minutes. 

Ms. LOFGREN. Thank you, Mr. Chairman. 

Just a couple of comments. I listened carefully to my colleague 

from California, and, you know, I think it needs to be pointed out 

that Congress has reauthorized the EB-5 program numerous times, 

both with Republican and Democratic Presidents, with Republican 

and Democratic majorities in the House and Senate. So, you know, 

it isn’t until this day that we’ve actually had the kind of substantive hearing that I think we clearly need. 

And part of the reason for that is that this was a program that 

was kind of quiescent. It never hit the 10,000 visa mark. It was not 

really a very active thing until the financial crisis hit, and now it’s 

a live matter. And I think it’s good that we’re examining, how is 

this meeting the goals that we had for development, for job creation, economic development in our country? 

And unlike so many other elements of our immigration law, the 

focus isn’t on the immigrant. It’s on the investment. And that’s why 

I’m so glad that we’re here. You know, as we were working through 

how to structure this, you know, if your focus is on immigration, 

it doesn’t mean that you know economic development and what is 

the right way to approach that. 

I would note that California has, I think, really led the way in 

trying to not abuse this program by adopting the twelve census 

tract rule. That may not be perfect, but I think it’s a start. And 

I give them credit for trying to make sure that the investments 

went where they are needed, and that may be something that we 

may want to look at for this next reauthorization, understanding 

that we’re going to, I think, continue to look at this. 

You know, I was very interested, Ms. Calderon, in your testimony. I really had never thought about the visa reserve issue. 

When you’re oversubscribed, the issue—I mean, these are people 

who want to get permanent residency in the United States. And I 

was interested in your comment, Mr. Gordon. They don’t have to 

live where they invest. I mean, you know, they get to live anywhere 

in the United States. It’s just, do they get the visa? Is this really 

going to create jobs? 

And I’m wondering, since our two-tier investment didn’t really 

produce the result we wanted in terms of investing in disadvantaged communities, maybe we just do visa—put the backlog people 
74 

without regard to origin, maybe throw out the per-country limits, 

and say it’s going to be $2 million apiece. But if you go into a rural 

disadvantaged area or an urban disadvantaged area, you go to the 

top of the backlog. Do you think that would work, Ms. Calderon or 

Mr. Gordon? 

Ms. CALDERON. I think that it would certainly help, because, obviously, the immigrant is investing to obtain the visa—— 

Ms. LOFGREN. Right. 

Ms. CALDERON [continuing]. And to obtain the visa in the fastest 

time possible and to hopefully receive back his investment in as 

short a time as possible. 

Ms. LOFGREN. Right. But if you’re the investor and you’re looking 

at, I could be in this line for 10 or 15 years and have a guaranteed 

visa, or I can take a higher level of risk, but next year, my family 

and I can get to where we want to go, that’s a balancing act, but 

maybe time does matter for these people. 

Ms. CALDERON. I certainly agree—in our research, we’re not out 

in the field. So I have no idea if, in fact—and there probably will 

be some immigrants who won’t be able to afford, won’t be able to 

obtain the funds necessary to—— 

Ms. LOFGREN. But that’s really not our question. 

Ms. CALDERON. Exactly. 

Ms. LOFGREN. So provided there are an adequate number of investors, we don’t care if everybody qualifies. What we care about 

is their investment being made, right? 

So I guess that goes to the next question, which is if we were 

to raise the dollar amount to where it would be through inflation 

or similar to Singapore or some other countries to $2 million, say, 

or $1.5 million even, do you think that we would have sufficient investment interests for the great benefit of getting a permanent residence in the United States? 

Ms. CALDERON. Being, again, that we are not out in the field—— 

Ms. LOFGREN. Right. 

Ms. CALDERON. [continuing]. I don’t have any practical experience. It sure seems that, at least based on the mainland Chinese 

immigrants’ interest in the United States, that it would continue. 

Ms. LOFGREN. Finally, and I don’t know that you can answer 

this, but I would recommend to the Committee that we have some 

more exploration of this. We have treated all investments and all 

job creation as identical basically. And I don’t know that that is the 

right approach. We have the capacity to identify a menu of investments that provide the most benefit for the United States. 

For example, in rural areas, it might be certain kinds of agriculture that provide persistence employment. In inner cities, it 

might not be a construction project; it might be a small manufacturing project that would provide. 

So I’m wondering if you or some of the other academics that you 

associate with have the capacity to provide bang-for-buck information to the Committee as we think about what kind of guidance we 

want to provide to investors in this program. 

Ms. CALDERON. It certainly seems that the easiest type of project 

to receive incentivization regardless of its geographic location 

would be public infrastructure projects. If anything-with the increase in real estate development, if EB-5 funds it or otherwise, 
75 

that obviously puts more of a burden on the roads, the infrastructure. 

From our analysis of the drafts last December, it appears that 

that would not be controversial, that you’re all on board for that. 

Ms. LOFGREN. I see that my time is expiring, and I’ll stop as a 

consequence. 

But, Mr. Chairman, I hope that we can engage either in a public 

hearing or in some small group settings open to the public some 

further discussion on the kind of investments we might want to 

incentivize that would provide lasting value to the country. 

And, with that, I yield back. 

Mr. ISSA [presiding]. And I thank the gentlelady. I’ve had no better partner as we’ve tried to reform this than you, Ms. Lofgren. 

And, with that, we go to the gentleman from Texas, Mr. 

Gohmert, for 5 minutes. 

Mr. GOHMERT. Thank you, Mr. Chairman. 

And I appreciate you guys being here today. 

You know, just this month, this Administration has seen to the release of $100 billion for Iran’s use, the largest supporter of terrorism. They had given us fair warning that they were going to increase their spending on Hamas and Hezbollah with this huge 

amount of money we’re going to get. 

Are there any assurances that if Iran decided to come into the 

U.S. and invest that money in the United States, that they would 

not get an EB-5 visa and be able to buy strategic land in the 

United States with the money that this Administration released to 

them? 

Anybody? 

Mr. COLUCCI. Sir, I can just say that as part of our adjudication, 

we look at each individual who is a prospective immigrant who is 

participating in the EB-5 program. We have access to a variety of 

law enforcement, financial, commercial databases, and we can also 

check intelligence community holdings right on site. And we also 

do screen the funds that each investor proposes to invest to ensure 

by a preponderance of the evidence that it does come from legitimate sources. 

And we have extensive training in this area. And, in some cases, 

we even engage our partners overseas to do a little bit more due 

diligence for us when it’s a little bit up in the air. 

Mr. GOHMERT. So if somebody is under arrest in a foreign country, has obtained their money from questionable sources, those are 

not people that you want to grant an EB-5 visa to. Is that correct? 

Mr. COLUCCI. Sir, that is correct. We deny a number of individuals who we do not look at—we do not trust their source of funds. 

Mr. GOHMERT. Are you sure, though, that this desire to have foreign money come rushing into the United States doesn’t sometimes 

override the desire to make sure that we really get good investors 

in this country? 

Mr. COLUCCI. Sir, I can tell you that the adjudicators that we 

have hired have the utmost professionalism, and they would never 

in any way put bringing in another $500,000 into this country 

above national security or criminal concerns. 

Mr. GOHMERT. Okay. Well, that makes me feel so much better, 

except the first I ever heard of the EB-5 program—and, I mean, I’m 
76 

on this Committee. I guess, I should’ve been aware, but I didn’t 

until this story in February, exactly 4 years ago, from Jana Winter. 

It says: A former Mexican Government official wanted for embezzling millions was arrested in Texas this month, then promptly ordered released by the State Department in a case that has one lawmaker demanding answers. 

It says: A day after pulling rank on Smith County law enforcement officials, the State Department rescinded the order. But Hector Hernandez Javier Villarreal was gone. Villarreal, the former 

secretary executive of the Tax Administration Service of Coahuila, 

Mexico, was arrested in November on charges relating to an alleged scheme involving embezzling millions of dollars from the 

Mexican Government. He posted $1 million cash bond, got himself 

a U.S. visa and then skipped town. 

The sheriff in my home county at the time said: All we did was 

make a traffic stop; they didn’t have a front license plate. Police 

were given permission to search the vehicle, found $67,000 in cash 

and a shotgun. We ran the check on the shotgun, and then all of 

a sudden everybody in the Federal Government got interested. 

But they go onto say that the State Department intervened. 

Sheriff said: According to Homeland Security officials called to tell 

him the Federal diplomatic agency had ordered Villarreal and his 

wife released. Neither State Department nor ICE officials responded to FOX News’ request for comment. 

Villarreal was granted a visa days after posting a $1 million 

bond following his arrest in Mexico. The visa Villarreal was granted was an EB-5, which is given to foreigners who invest at least 

$500,000 in a business venture. Turns out, it wasn’t properly invested. 

And I appreciate your assurances a great deal that we would 

never do anything to compromise American safety. Unfortunately, 

you’ve already done it, and I have no assurance that you’re going 

to protect us any better in the future, and I think we ought to be 

suspending this program until such time we can be assured that 

American citizens are safe. 

And from constituents, as a result of this, I’ve heard from people 

in Longview, Texas, that they’ve lost bids to foreign investors because the foreign investors were able to get sweetheart interest 

deals they couldn’t get, so that local property was sold to foreign 

investors simply because they could get an EB-5 and they could get 

a better interest deal than American citizens could. That’s just not 

right. 

I yield back. 

Mr. ISSA. The gentleman yields back. 

We now continue on our Texas track, and we go to the gentlelady 

from Houston, Texas, Ms. Jackson Lee. 

Ms. JACKSON LEE. Let me thank the Chairman and the Ranking 

Member. 

Having heard of this particular investor visa, what I’ve heard 

today from members, however, is very refreshing and very important, because I think you’ve heard a sense of strengthening and reforming and, if necessary, reinventing this investor visa, but that 

it does have merit. 
77 

I’m very sorry to hear of the circumstances that my friend from 

Texas just enunciated. And, certainly, to find someone hiding from 

the law under an investor visa is, for me, horrific. 

But I do think Ms. Lofgren has it right that this is not an immigration visa per se; this is an investment visa, and it has some 

merit. But it does not have any merit for scoundrels who are avoiding the hand of the law in their own country or would be detrimental to any of our citizens. But if they can invest appropriately, 

then that would be important. 

I guess Texas is in the news, because I’m looking at a case that 

involved Webb County, a facility that was supposed to be in the 

hotel conference in Laredo, Texas, which had a 1.4 percent unemployment rate. That’s a problem. That was the gerrymandering. It 

happened to be in a case here, and they had to expand to other 

counties to get their unemployment rate where it needed to be, Mr. 

Colucci. 

I’m going to be—like one of the questioners, I hope that you see 

this hearing as being helpful, and so let me quickly ask a series 

of questions, because I would like for this visa to work and to work 

right. 

I quickly want to ask whether or not you have the capacity to 

raise the minimum—and I didn’t hear if that was asked before; I 

heard $1 million—but raise the minimum investment from 

$500,000 to $1 million. Can you do that administratively? 

Mr. COLUCCI. Ma’am, we are able to do that via a regulatory fix. 

The only caveat there is we have to consult with Bureau of Labor 

statistics and the State Department to do so, but we do have that 

ability. 

Ms. JACKSON LEE. And so is the minimum still at $500,000? 

Mr. COLUCCI. That is correct. 

Ms. JACKSON LEE. In this day and time, even with the markets 

collapsing, that is chump change. And I don’t say that for struggling families; I say that for rich investors. That is ancient numbers from a way, long time ago. So I am going to be on the record 

for saying it is too low an amount. 

The second is, what have you been doing to avoid Wall Street 

Journal reports that estimate 80 percent of all EB-5 projects need 

gerrymandering? What have you been doing in terms of reforming 

that or reviewing projects and not gerrymandering and saying 

you’re not just where the unemployment is? 

Mr. COLUCCI. Ma’am, this is something that the Secretary included in his letter to the Committee—— 

Ms. JACKSON LEE. I understand that. 

Mr. COLUCCI [continuing]. As a recommendation for a legislative 

enhancement. And it is something that we are taking a look at to 

do through a regulation in which we can further define and create 

greater consistency with respect to how targeted employment areas 

are put together. 

Ms. JACKSON LEE. Well, I’m going to say two points, because I 

have census tracts. Right now, the African American unemployment rate, for example, nationally is at 8 percent. Last year, or a 

couple years back, it was 12. It has been 15 percent. For unemployed youth, it’s 15 percent. And so I would venture to say 
78 

Latinos, youth, young people fall in some of the same categories, 

the elderly, et cetera. 

There is not a lack in rural areas for places for investment that 

are legitimate and true. And if it is a regulatory fix, I would encourage you immediately to do two things, which is the $1 million 

and the stopping of the gerrymandering. 

Let me go to Ms. Calderon very quickly, with your business mind. And I didn’t hear your specific reforms but a $1 million minimum investment, Ms. Calderon, the gerrymandering I’ve answered, but can you give me some other frameworks that would be 

very helpful. 

Ms. CALDERON. I think that, as a lawyer, might be where I feel 

most comfortable going, and that is in footnote 6 of our written testimony stated: Technically, the statute—and this is the 1990 statute—authorizes a third minimum investment level, an amount up 

to $3 million for areas of unemployment ‘‘significantly below’’ the 

national average unemployment rate. 

Ms. JACKSON LEE. Go ahead. Just expand. You’re saying up- wards of $3 million. What’s your floor, though? 

Ms. CALDERON. Well, I mean, I don’t feel comfortable saying that. 

I just think that Congress, this Committee should be aware of the 

fact that in the actual statute, there is a provision that, in 1990, 

Congress believed that certain areas, there could be investment by 

immigrants through this program, but it should be at a higher 

rate. 

Ms. JACKSON LEE. A higher rate of investment? 

Ms. CALDERON. Right. 

Ms. JACKSON LEE. Mr. Gordon, do you believe that as well? I 

know you had some reforms. 

Mr. GORDON. Sure. Categorically, there should be a tiered system 

in the market to reflect the amount of bang for the buck, as people 

are saying, or social value creation. In the communities in which 

we invest—Indianapolis; South Haven, Mississippi—in the office 

we just leased—we leased the 9th office of 19; there are still 10 vacant offices. 

Our money means something in this community. It’s not a fancy, 

rich community. A large trucking company in the area just pulled 

out, and we’re now hiring executives from that, people who would 

have otherwise lost their careers. The money matters. And having 

an advantage over getting investors’ attention, it matters as well. 

I lose interest to the vast majority of investors I interact with on 

a daily basis because we are not the fancy, you know, gleaming, 

you know, tower in a large gateway city. So we need an advantage 

to help build an America where the value will be greatest for our 

society. 

Ms. JACKSON LEE. I thank you. 

And that investment amount is what you’re saying makes value 

and creates jobs in census tracts that actually need it? 

Mr. GORDON. Absolutely. 

Ms. JACKSON LEE. Mr. Chairman—— 

Mr. ISSA. I thank the gentlelady. 

And I note that they’ve called the vote. 

If I can just, for the record, Mr. Colucci, if you change the 

amount under your rules, what will the effect be on those 65,000 
79 

or more in line? And just as quick as possible. We’re going to Mr. 

Marino. 

Ms. JACKSON LEE. Thank you for that, Mr. Chairman. 

Mr. ISSA. Yeah, I think it completes your thought. 

Mr. COLUCCI. I think my best answer would be that, in the past, 

when USCIS—and before us, INS—put forward new regulations 

with respect to immigration, it was always prospective looking as 

opposed to—— 

Mr. ISSA. Thank you. 

Mr. Marino. 

Mr. MARINO. Thank you, Mr. Chairman. 

Mr. Colucci, first of all, you come from one of my favorite agencies, ATFE. I did a lot of work with them over the years, and a 

great bunch of people. But since you drew the short straw here 

today, I have some questions concerning my prosecutorial background. 

And let me start out by, I was paying closest attention to Ms. 

Gambler’s statements about difficult to conduct fraud, difficult to 

conduct fraud interviews or investigations to talk to people. 

Let me ask you this, sir: Do you actually talk to the investors? 

Do you have face-to-face interviews with these people as to what 

their intentions are and where they’re coming from? And not only 

the investors. I want to more specifically talk about the city officials or the county officials who keep expanding these lines out 

blocks, hundreds of yards, miles, to get this money? 

Mr. COLUCCI. Sir, I think my best response to that would be: any 

investor who comes in from overseas is interviewed by the Department of State prior to being allowed to enter into the United 

States. And often they have the investor’s petition in front of them 

and can ask them questions based on the evidence that was submitted. 

Mr. MARINO. Okay. Do you ever go back after a certain period 

of time to see who was employed and how many are employed and 

where they are working? 

Mr. COLUCCI. Sir, we do, after the immigrant investor comes into 

the United States. After 2 years, they file with us a petition to remove conditions; in other words, so they can be here without conditions. We do not, as part of that—we do get the information, but 

we do not, as part of that—— 

Mr. MARINO. So you don’t go out and talk to—you don’t get a list 

of employees and you don’t call these people in or you don’t go to 

the job site and talk to them about—to see if they’re actually there? 

Mr. COLUCCI. Sir, we are about to actually launch something 

called a random site visit program and—— 

Mr. MARINO. Okay. I understand what you’re launching. And, 

again, I’m not targeting you, per se; I’m targeting the system here. 

Let’s switch gears a little bit, since we’re not going out and talking to the people that are supposed to be employed. Is there any 

conversation with the officials that are expanding these boundaries 

and as to why they are expanding the boundaries? 

Mr. COLUCCI. Sir, I can tell you that we often—I shouldn’t say 

‘‘often’’—we sometimes field calls from individuals within the 

States who are putting these boundaries together, and we do point 
80 

them to our regulation, which does allow them to put these boundaries—— 

Mr. MARINO. Okay. Let me go back a little bit here. Do you have 

the resources to do what I’m getting at? Do you have the investigators to go out and interview to see if these people are working? Do 

you have the investigators available to go out and say, I want a 

complete explanation as to why you’re expanding these boundaries? 

Because as a prosecutor for 18 years, I am automatically suspect 

of everything. 

So, given that fact, don’t you think someone should be looking at 

the dealings, the dealings between the officials that are expanding 

these lines and the people that are from out of the country or even 

within the country that are investing into these areas? I’m a little 

bit suspect as to: follow the money. 

Mr. COLUCCI. Sir, what I can tell you is, prior to coming into this 

position, that’s exactly what I did for 5 years. 

Mr. MARINO. I know. 

Mr. COLUCCI. That was my background is following the money. 

And so I agree with that assertion. That is something that we do 

every day with respect to those individual petitions. 

Mr. MARINO. I’m going to get right to the point. Is there any 

question—has anyone thought about the fact that given the—because the cities or the counties have the authority to expand the 

lines, has anybody ever thought about—is there any fraud taking 

place there? Is there any bribery taking place there? Is there any 

cash exchanging hands? This is something that I think is just ripe 

for oversight and investigation that probably could turn into a 

criminal investigation. 

Mr. COLUCCI. Sir, I’ve been with the program for about 2 years, 

and what I can tell you is that we have not seen an instance of 

outright fraud with respect to how a particular State puts together—— 

Mr. MARINO. But you don’t have the resources. I’m giving you a 

chance here to tell me. It sounds like you do not have the resources 

to look into these matters. Am I correct in making that assumption? And if you do, somebody better get off their can and fire 

somebody that should be doing these investigations. 

Mr. COLUCCI. Sir, I appreciate your comment and suggestions, 

and I would point to, we do have resources. We have a fraud detection and national security team, 20 strong, embedded within the 

program. And we also have fraud detection and national security 

specialists around the country. 

And if something did look like it merited a criminal investigation, I believe that would be—if it were something like graft, I believe that would be in the jurisdiction of the FBI. And we do have 

close relationships with the FBI in Washington, D.C., and we certainly would not hesitate to bring that to their attention. 

Mr. MARINO. I see my time is expired. 

I yield back. 

Mr. ISSA. Thank you. 

And we’re going to do a lightning round. 

We now have the gentlelady from California, Ms. Chu. 
81 

Ms. CHU. Yes. Mr. Colucci, I have seen firsthand how the EB5 program can spur development in a community, but of course, 

improvements must be made, especially with regard to fraud. 

But just last month in California, I attended a groundbreaking 

ceremony for a development in my district that was financed in 

part through the EB-5 program. And I do believe that this particular project will revitalize this area. 

But I am really concerned about the backlog. I see that, as of November 2015, there were 17,662 individuals with approved petitions. And then for the first time, in 2014, the annual cap on permanent resident visas for Chinese nationals was reached. With this 

current backlog, it may take between 6 to 7 years for these visas 

to become available. 

So, considering that the number of the EB-5 visa petitions have 

skyrocketed, can you tell me why you think they’ve skyrocketed, 

but in particular, what are you doing about this backlog? 

Mr. COLUCCI. Thank you for the question. 

I can tell you that no one in the program is satisfied with respect 

to where our processing times stand today. In some ways, we were 

a victim of the success of the program. Just as we were 

transitioning the program to Washington, D.C., the program truly 

spiked in popularity. 

From fiscal year 2013 to 2014, we had an increase of 70 percent 

of immigrant investors seeking to come into the country and then 

another 30 percent spike between 2014 and 2015. And I will say, 

leading up to the sunset dates, in September and December of this 

past year, we received an unprecedented surge in applications. 

We are working diligently to reduce this backlog. Last year, we 

actually approved close to 9,000 petitions, which is probably 2-plus 

years of visas. We do have 113—or 115, I should say, staff members on board right now, and we hope to hire up to 171 by the end 

of the fiscal year. 

And then just one final point. In a policy memorandum that we 

issued in May of 2013, it allowed developers and regional center 

principals the ability to use bridge financing, temporary financing 

and replacing that with financing through the EB-5 program. And 

that is because we didn’t want to stand in the way. We didn’t want 

our processing times to compromise economic development within 

the United States. 

Ms. CHU. You mentioned that there was a spike at the time of 

the deadline in each period. And is the fact that there is—are these 

short-term extensions, that that is affecting the increase in these 

petitions? 

Mr. COLUCCI. Yes, ma’am. I believe prior to the two spikes, as 

we mentioned in September and December, I believe we had about 

12,000 or so pending petitions. And now we’re in the neighborhood, 

as you mentioned, of about 21,000 or 22,000. So that greatly affected the number of filings we received. 

Ms. CHU. So, therefore, if the program were on a more even 

basis, you know, with regard to time extensions, we might not have 

these spikes. 

I would also like to raise the issue about the fact that there are 

10,000 visas, but in reality, the actual number of investors is far 
82 

less, you know, because the family members are considered part of 

that, correct? 

Mr. COLUCCI. That is correct. 

Ms. CHU. Yes. And so has the Administration explored the possibility of considering foreign investors and their immediate family 

members as a single unit in terms of counting the visas? We certainly see a precedent with this in the H-1B program where you 

only count the actual recipient under the quota and family members are excluded from the cap. 

Mr. COLUCCI. Yes, ma’am, that is correct. As, I think, the Chairman indicated, we believe approximately for every immigrant investor, that means two and a half or three other visas because of 

spouse and derivatives or children. 

Ms. CHU. But have you considered the idea of having them count 

as one unit? 

Mr. COLUCCI. I’m sorry? 

Ms. CHU. There’s 10,000, but in reality, if you looked at the actual number of visas—— 

Mr. COLUCCI. Right. There’s a cap of 10,000 visas that can be 

issued each year, so correct. 

Ms. CHU. But the actual number of actual investors is far, far 

less. 

Mr. COLUCCI. It’s probably 3,500 to 4,000. 

Ms. CHU. Exactly, yeah. Well, anyway, that’s my concern, and 

I’m saying consider the possibility of counting them as one unit. 

And, also, Ms. Calderon, you mentioned that the California 

model is a good starting place. And why is that? 

Ms. CALDERON. Well, at least it sets a limit on the number of 

census tracts that can be aggregated, and it sets the number at 12. 

We’re not sure what the significance of 12 is, but it’s better than 

many other States where there is no limit. And there are no stated 

guidelines that one can objectively follow regarding the aggregation 

approach that is used. 

In terms of the comment that was made by—— 

Mr. ISSA. If you could be brief, because Ms. Chu is going to miss 

her vote. 

Ms. CALDERON. Yes. I just wanted to say in terms of the States 

making the determination, in States, typically, there are economic 

development offices that are making these determinations, and 

they’re seeking that the project, the capital investment, be made in 

their State. 

Ms. CHU. Thank you. 

Mr. ISSA. Thank you. 

And I apologize, but this is going to conclude today’s hearing. A 

number of things I need to ask you. Would all of you be willing to 

answer additional written questions placed by those individuals 

who could not be here to ask them because of the short time? 

Thank you. 

Additionally, without objection, all Members will have 5 legislative days in which to submit additional written questions for the 

witnesses and additional materials for the record. That also includes 5 additional days if you have anything additional to put in, 

including Mr. Colucci. 

I thank you very much. We stand adjourned. 
83 

[Whereupon, at 3:58 p.m., the Committee was adjourned.] 

(85) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD
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Material submitted by the Honorable Jerrold Nadler, a Representative in 

Congress from the State of New York, and Member, Committee on the Judiciary 
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f 
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Supplement to the Oral Testimony of Jeanne Calderon, Clinical Associate 

Professor, Stern School of Business, New York University 

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Response to Questions for the Record from Nicholas Colucci, Chief, Office 

of Immigrant Investor Program, U.S. Citizenship and Immigration Services 
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