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					USF Debate 2010-2011                                                                                           EB-5
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                                                   EB-5 CARDS

Rich Immigrants, in Families of Five, Can Buy Green Cards for $100,000 Each
By David North, January 11, 2010

The headline above was not the headline used by the Washington Post of January 9 over an immigration policy
story; the Post's bland take was: "Immigrants invest in U.S. businesses in exchange for visas", but either
heading would have been equally accurate.

The rich have always had a way to avoid troublesome programs that weigh on the rest of us. During the Civil
War, on the Union side, a young man could avoid the draft by hiring a substitute. During the Vietnam War, if
you could afford to stay in graduate school for years, you could avoid that war's draft, as former Vice President
Cheney did. And it is true in the immigration process as well.

The visa in question is the EB-5. If you are an alien and want to come to the U.S. on a permanent basis, you can
invest as little as $500,000 in a government-approved entity and get an immigrant visa for yourself, your
spouse, and your three children (in this example), meaning that the visas would cost you $100,000 each.

The program is not yet over-subscribed, so there are no waiting lists, as there are with most immigrant visas.
The upper limit to the program is 10,000 visas a year, but the number of visas issued in the fiscal year ending
September 30, 2009, was 4,218, according to the article written by N.C. Aizenman. (The reporter, by the way,
should not be blamed for the headline; she wrote the story, and headline was, in all likelihood, written by
someone on the copy desk.)

The required size of the investment varies -- if you invest in a government-approved regional center, it is half a
million dollars; if you invest in something else, in the broader economy, it costs you a minimum of $1 million.
The investments are supposed to be ones that will create ten jobs after the passage of two years, and the jobs
must go to someone other than family members. For the DHS rules on the program, see here.

The Post article did not bother to divide the amount of money by the number of visas you can acquire, as we
did, nor did it discuss how the creation of ten-jobs provision would be enforced. It did make the point that one
visa recipient interviewed was not expecting much money back from his investment but felt that the payment
brought significant non-monetary benefits to his family.

The U.S. is not alone in handing out immigrant visas to the rich for a specified investment. Canada and
Australia, for example, do the same thing. Full disclosure: I was once retained by the Australian embassy in
Washington to study their investment visa program, and I did so here and in that nation.

The perceived problem with the Australian program was not a lack of applicants (they got lots of them from the
Far East, notably nervous Hong Kong millionaires); what the Aussies wanted was a way to encourage a little
more diversity in the program. They wanted more American and Canadian entrepreneurs, without doing
anything to discriminate against the clientele they already had. I was unable to find a magic bullet for them.

Regarding the EB-5 program, we should be grateful for small favors. The program sells immigrant visas, and
thus green cards, but not citizenship. There have been plenty of small states that have sold citizenship to those
willing to pay a substantial fee.

                       For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                                            EB-5
Gonzo                                                                                                                            2/28
The program in the South Seas island kingdom of Tonga had a wonderful quirk. You could become a Tongan
citizen for a fee, but you would not be allowed to visit Tonga. After a while the U.S. State Department, and
some other nations' governments, said that they would not honor passports that did not allow you to visit your
new homeland. Those decisions were real blows to the Tongan treasury, because Tonga does not regard itself as
a nation of immigrants.

Then there was the late 20th century scam operated by one of those quasi-independent nations in the central
Pacific, all three of which are semi-colonies to the U.S. One of them, the Republic of the Marshall Islands, had
a program for selling its citizenship to the rich in Hong Kong which had a different quirk. The price for a
passport was not published – the Marshallese government sold them for whatever the traffic would be bear. This
trade died out, too, when the U.S. government said that the easy access to America, guaranteed by a treaty with
the islands, applied only to native-born Marshallese, and to those aliens who had spent at least five years in the
islands before becoming naturalized citizens. Thus the purchased passport would not help you get into the

Unfortunately, the Fiji-based Pacific Islands Monthly, for which I wrote about such matters, was killed by its
owner, Rupert Murdoch, in 2000, and electronic references are not possible.

A Precious Capital Source For Small Biz
Katy Finneran, 01.06.10, 06:06 PM EST

Under the U.S. government's EB-5 program, foreign investors are writing checks in exchange for visas.

Under the Immigration Act of 1990, the U.S. Congress set aside 10,000 annual visas for foreign investors
looking for opportunities in America. Those carrots are coming in handy during what remains a debilitating
credit crunch for U.S. entrepreneurs.

Rather than wait a year or longer for other immigrant visas, foreign investors--through the so-called EB-5
program--can snag a slice of equity and a quick-and-dirty U.S. visa in just three-to-six months; plus, unlike
other immigrant visas that might expire in a few years, the EB-5 flavor offers permanent residency. EB-5
minimum requirements: a $1 million investment from a lawful source in a new or existing commercial
enterprise that directly creates at least 10 U.S. jobs. Investors can put up as little as $500,000 if the company is
in a rural area or in a county sporting 150% of the average national unemployment rate. (Canada has a similar
program, called the Canadian Business Immigrant Investment Program, though it doesn't impose any job-
creation requirements.)

EB-5 is catching fire in the latest downturn. In 2007, the U.S. Citizen and Immigration Services (USCIS) approved 473 petitions--
called I-526 forms--for foreign investors. That figure rose to 640 in 2008, and jumped to 1,256 in 2009. Since October 2006, U.S.
companies have raised more than $1 billion and have created over 20,000 jobs (directly and indirectly) through EB-5, estimates the

"What businesses in America need more than anything is capital," says Bill Stenger, president of Jay Peak
Resort, a ski destination in Orleans County, Vermont, and an EB-5 participant. Since 2005, Stenger has raised
$80 million from 160 investors in 20 countries (from South Africa to Thailand) through EB-5, and says he has
another $40 million in the pipeline. Stenger typically let go 600 of his 700 employees during off-peak season;
with help from EB-5, Jay Peak now retains 90% of its employees year-round, and all hail from the nearby
community. In December Stenger opened a $20 million, 57-suite hotel, and construction also is underway for an
indoor ice rink a $70 million hotel, indoor waterpark, spa and conference center. "For the first time in memory,
Orleans County doesn't have the highest unemployment in Vermont," crows Stenger. "Everyone attributes this
to our projects."
                          For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                            EB-5
Gonzo                                                                                                            3/28
Henry Liebman, co-founder of American Life, a Seattle-based real estate developer specializing in the
renovation of industrial facilities, swears by EB-5. Liebman used to practice law and only dabbled in
development. But from 1996 to 1998 he raised $40 million through EB-5 and invested it several properties.
Today he presides over a $100 million (revenue) company.

American Life is one of the oldest EB-5 "regional centers." Unlike ordinary EB-5 participants, regional-center
visa holders are allowed to create 10 jobs directly or indirectly, lowering the hurdle for approval. Say, for
example, a Starbucks ( SBUX - news - people ) opens next to an EB-5 funded hotel: Those baristas count
toward the 10-person job-creation requirement. Of the 10,000 annual visas available through EB-5, 3,000 are
reserved for regional centers, the ranks of which have tripled, to 73, in the last year.

American Life has raised a total of $450 million through EB-5. "The countries always change," says Liebman.
"U.K. and Korea were the biggest. Now it's India, Iran, China--they come from everywhere!" As for jobs
created, he adds: "I've never sat down and added up every economist report, but we'd have a city. Nearly

What about all those newly minted residents? "We stay in touch with our investors who live all over the U.S,"
says Jay Peak's Stenger. "Many are retired and live in Florida, the Carolinas or the Southwest. Many are young
families who have careers in the U.S. Some are doctors, some are engineers. One is a retired surgeon from
South Africa who is doing graduate work at Harvard starting a new career at 60. Many investors are in college
or grad school and this investment will allow them to live and work in the U.S. after graduation."

Of course, like any government-run effort, EB-5 has its shortcomings. The dollar threshold to participate is
quite high, and foreigners looking for visas often prefer the cheaper $500,000 option. Says one EB-5
entrepreneur in Florida, who requested anonymity: "A great majority of EB-5 participants are willing to do the
$500,000, but can't do the $1 million."

Other entrepreneurs complain that EB-5 runs about as efficiently as the DMV. Investors can wait up to a year
for approval; some get denied and have to reapply. Quality control isn't exactly great, either: If you want to file
a complaint, there's no centralized authority to process it. Liebman's charitable assessment: "You get
inconsistent adjudication."

Then again, when it comes to raising capital these days, suffering a little hassle is better than being grounded

Immigrants invest in U.S. businesses in exchange for visas
By N.C. Aizenman
Washington Post Staff Writer
Sunday, January 10, 2010

The number of foreigners willing to invest $500,000 to $1 million in a U.S. business in exchange for a visa
roughly tripled in the past fiscal year, as dozens of cash-strapped enterprises and local governments scrambled
to attract wealthy foreign backers through a previously obscure provision of immigration law.

Under the EB-5 visa program, immigrants who can demonstrate that their investment created or preserved at
least 10 U.S. jobs after two years are granted legal permanent residency along with their spouses and children.

                          For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                             EB-5
Gonzo                                                                                                             4/28
Although immigrants are allowed to establish businesses under the program, most prefer to invest in "regional
centers" -- public or private enterprises that are certified by the government to receive funds from EB-5
investors and that can count jobs indirectly created by the investment toward the 10 required.

The minimum outlay mandated is $1 million, but immigrants can reduce that to $500,000 by investing in a
regional center or establishing businesses in areas designated as economically disadvantaged.

The program was established in 1990, but potential investors and businesses were often dissuaded by the U.S.
government's slow and inconsistent administration of the complex rules. In the past year, however, a gradual
streamlining of procedures coincided with the recession and credit crunch to dramatically boost interest in the

In a matter of months, more than 50 private and public enterprises were certified as regional centers, increasing
the total from 23 to 74. Three are in the Washington area.

With so many more investment opportunities to choose from, the number of immigrants (including investors
and their immediate family members) who obtained EB-5 visas jumped from 1,443 in fiscal 2008 to 4,218 in
the 2009 fiscal year that ended Sept. 30, according to the State Department.

Most were granted to people from Asia, particularly China and South Korea. Several scholars said they expect
the number to double again this year.

"What happens with programs like this is that sometimes, all of a sudden they get discovered, and then
intermediaries begin to really promote them both here and internationally," said Demetrios Papademetriou,
president of the Migration Policy Institute, a Washington think tank that recently released a report about the

Statistics on the total invested through the EB-5 program are not available, but the capital infusion has been a
boon to Washington area businesses. The Capitol Area Regional Center, a real estate investment fund based in
the District, has been working to raise a projected $250 million from immigrant investors for use in Washington
area construction projects.

Perhaps the greatest potential beneficiaries are nonprofit agencies such as the District's Anacostia Economic
Development Corp., which was approved as a regional center in June. Over the next three years, the group
hopes to raise $50 million from immigrant investors to develop real estate projects and small businesses in
wards 7 and 8 -- a princely sum compared with the $2 million in private capital it raised for its last major
building project in Anacostia.

"Normally, to get equity capital to these areas is almost impossible," said Michael Wallach, chief operating
officer of the corporation. "These two wards have the highest unemployment rate in the city and the lowest

But because the primary motivation of the immigrant investors whom Wallach is wooing is to create enough
jobs to meet the visa requirement rather than to maximize the return on their investment, they might prove less

'It was worth it to me'

                       For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                              EB-5
Gonzo                                                                                                              5/28
Program participant Eric Canal-Forgues, a law professor and businessman from France, is a case in point. In
2007, he invested $500,000 in a regional center that funded construction of Comcast's headquarters in

He said it is unlikely that he will get more than a 1 percent return by the five-year point at which he will be
allowed to withdraw his money. That will barely cover the roughly $50,000 in administrative costs of his
investment, let alone the loss of value because of inflation.

But Canal-Forgues, 47, who has moved with his wife and two children to Miami, said he has no regrets. "I
knew the conditions going in, and it was worth it to me," he said. He said that Miami was attractive because of
its financial opportunities and that he plans to open a franchise of children's clothing stores.

But more than anything else, he said, "we really wanted our children to be raised in a dual culture, French and
American, especially because I think the educational system at the university level is much stronger here than in

Statistics suggest that many EB-5 applicants might also find the program appealing because it is considerably
speedier than other options: Nearly 70 percent of immigrants granted investor visas in fiscal 2009 were from
China or South Korea, countries whose nationals face decade-long waits for family-reunification visas because
of quotas on the annual number allowed in from any one country.

Concerns about fraud

That immigrant investors are more focused on obtaining visas than maximizing profits -- combined with the
government's limited capacity for oversight -- has caused even some avid proponents of the EB-5 program to
worry that a profusion of fraudulent or ill-advised ventures might soon flourish alongside legitimate ones.

"The thing that concerns me most is that some fly-by-night [operation] will lose a large group of investors'
money, and it will poison the well for the rest of us," said David Morris, founder of EB-5 America, a
Washington regional center that invested $20 million to refurbish the Sugarbush ski resort in Vermont in past
years and is now raising money for construction projects in the District.

Yet Morris also notes that some of the stricter rules of the EB-5 program -- including the rigid timeline by
which the job creation requirement must be met -- do not always mesh with the realities of the business world,
with consequences for both immigrant investors and potential business ventures.

For instance one of Morris's clients, Rodrigo Martinez, a Mexican immigrant who lives in Arlington County,
was initially keen to invest in a project to renovate the historic O Street Market at Seventh and O streets NW.
"The fact that you are helping to have a positive effect on the community that you're joining, I really liked that
idea," said Martinez, 27.

But fearing that construction delays would prevent that project from creating sufficient jobs in time, Martinez,
who attended law school in the United States and now works as a business consultant, switched his money last
year to the Sugarbush resort instead.

Supporters of the EB-5 program also complain that the government's review process for approving potential
regional centers is still too slow, especially at a time when a similar Canadian visa program is attracting three
times as many immigrant investors.
                       For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                              EB-5
Gonzo                                                                                                              6/28
Stephen Yale-Loehr, a professor at Cornell University's law school and executive director of a trade association
of regional centers, said the number of EB-5 visas being granted falls well short of the maximum 10,000
allowed each year.

"There's a lot more that we could be doing to promote the EB-5 program so that it can achieve its true potential
in this economic recession," he said.

Bipartisan support

Powerful members of Congress on both sides of the aisle agree. In a rare bipartisan convergence on an
immigration issue, Sens. Patrick J. Leahy (D-Vt.), chairman of the Judiciary Committee, and Jeff Sessions (R-
Ala.), the ranking member, recently joined forces in an effort to make the regional centers permanent. (The
centers were established under a pilot program that has been extended several times since the 1990s).

Leahy said he was impressed by the millions of dollars that EB-5 visa holders have invested in ski resorts such
as Jay Peak and other projects in the distressed northeastern region of Vermont.

Because of legislative wrangling unrelated to the EB-5 program, Leahy had to settle for a three-year extension
in the fiscal 2010 Homeland Security Appropriations bill adopted in the fall.

Still, Leahy predicted that not only will all aspects of the program soon be made permanent but also that the
annual number of visas might be increased.

"Once it's permanent, I think we're really going to see the true value of this," he said. "At a time when we're
seeing so many of our jobs exported out of the country, this creates jobs in the United States."

CIS Ombudsman March 18, 2009:
 The Citizenship and Immigration Services Ombudsman, established by the Homeland Security Act of 2002, provides
independent analysis of problems encountered by individuals and employers interacting with U.S. Citizenship and
Immigration Services, and proposes changes to mitigate those problems.
The Citizenship and Immigration Services Ombudsman (Ombudsman) has reviewed the United States Citizenship
and Immigration Services (USCIS) policies and processes concerning the Employment Creation EB-5 immigrant
visa,1 and formed several recommendations that USCIS should implement to stabilize and energize the program.
In passing employment creation legislation, Congress sought to attract entrepreneurial immigrants to the United
States who would invest capital to create jobs for U.S. workers, and thereby stimulate the economy.2
Congress allocates approximately 10,000 immigrant visas per year to the EB-5 category (including derivative visas
for the spouses and minor children of investors), although less than 1,000 visas are used annually.3 This
underutilization is caused by a confluence of factors, including program instability, the changing economic
environment, and more inviting immigrant investor programs offered by other countries.
In recognition of the present turmoil in the U.S. economy, it is incumbent upon USCIS to take all necessary and
appropriate steps to facilitate a healthy, vigorous, and smooth-running employment creation immigrant visa program.

CIS Ombudsman March 18, 2009:

                       For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                                  EB-5
Gonzo                                                                                                                  7/28
Purpose and Terms of the EB-5 Program
Pursuant to INA § 203(b)(5), Congress established the fifth employment-based (EB-5) preference category in 1990
for immigrants seeking to enter the United States to engage in a commercial enterprise that will benefit the U.S.
economy and directly create6 at least ten full- time jobs.7 The minimum qualifying investment amount is $500,000
for commercial enterprises located within a rural area8 (or targeted employment area),9 and is otherwise
Congress allocated 10,000 immigrant visas annually for this employment-based preference category. Figure 1
depicts actual EB-5 usage from FY 1998 through FY 2007.
A Senate Committee Report stated that the EB-5 provision was ―intended to provide new employment for U.S.
workers and to infuse new capital in the country, not to provide immigrant visas to wealthy individuals. . . .‖ 11
The legislative history suggests that Congress anticipated that as many as 4,000 foreign investors and their families
would seek U.S. lawful permanent residence (LPR or ―green card‖ status), bringing in fresh investment funds
totaling an estimated $4 billion and creating 40,000 jobs annually.12
Pilot Regional Center Program
To encourage use of the EB-5 visa category, Congress established the Immigrant Investor Pilot Program in 1993 and set
aside 3,000 of the allocated 10,000 visas for investors who invest within designated “regional centers.”13 This program
eventually became referred to as the “Regional Center Pilot,‖ and legislation was introduced in 2008 to make the
Regional Center Pilot permanent.14 Under the pilot, foreign investors can pool their investments into Regional
Centers which make large investments that create jobs. Regional Center investors are permitted to demonstrate
through ―reasonable methodologies‖ that their investment resulted in the creation of ten or more direct or indirect
jobs. More specifically, investors within EB-5 Regional Centers are permitted to use statistical formulas and models
to demonstrate a correlation between their investment of capital into a specific business and indirect jobs created in
other businesses within the greater community. In Regional Center cases, these indirectly generated jobs may be
used to satisfy the job creation requirement.
According to the Congressional Research Service, the South Dakota International Business Institute‘s Dairy
Economic Region program (SDIBI South Dakota Dairy) provides an EB-5 Regional Center story that illustrates how
the successful implementation of an EB-5 program can positively impact a community.15 Approved in June 2005, the
SDIBI South Dakota Dairy program attracted more than 60 immigrant investors who infused approximately $30
million into the South Dakota economy. Their combined investment was leveraged to secure approximately $90
million in bank financing for various dairy investment projects. These EB-5 investments directly created 240 jobs.
Using RIMS II16 modeling to predict the correlation between monies invested and employment creation, the
combined investment also is credited with generating an additional 638 indirectly-created jobs, and over $360
million in additional funds to the region.17
According to the SDIBI South Dakota Dairy Director, the “paramount” EB-5 program issue is whether “USCIS [has]
sufficient resources to quickly adjudicate EB-5 immigrant visa petitions. If the adjudication process is too long . . . the
opportunity cost may make a South Dakota dairy investment unappealing to foreign investors.” 18 Similar sentiments
were expressed to the Ombudsman by other stakeholders. They emphasized that the EB-5 program generally, and the
Regional Center Pilot particularly, needs stability and predictability to attract foreign investors.
Foreign Competition and Response
It is generally understood that in enacting the EB-5 provisions contained within the Immigration Act of 1990,19
Congress intended to establish an immigrant investment program to rival those enacted by other countries,
specifically Canada and Australia.20 However, by the time the EB-5 program became law, Canada‘s Immigrant
Investor program was in existence for four years (since 1986). See Figure 2 below for use of this program.
Under the Canadian program, foreign business persons establish eligibility by proving that they have “two years of
business experience,” a net worth of at least CDN $800,000, and by affirmatively expressing that they are willing to
deposit CDN $400,000 into designated government guaranteed securities for a period of five years. 21 Unlike the EB-5
program, the Canadian Immigrant Investor program is a passive program: a qualifying investor is not required to

                        For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                                 EB-5
Gonzo                                                                                                                 8/28
open a business, or hire and manage employees. Rather, the investment itself is assumed to spur significant
economic activity and create jobs.
Uncertainty Has Plagued the EB-5 Program From Its Inception
Initial delay in the issuance of EB-5 rules, followed by changes in interpretation of the rules, has led to uncertainty in
the EB-5 program since inception.
Between 1993 and 1997, the Immigration and Naturalization Service (INS) issued General Counsel interpretive
guidance on key legal issues, which was received favorably by several private sector companies specifically formed
to develop investment project opportunities for EB-5 investors.
The number of EB-5 immigrant visas issued increased from 583 in FY 1993 to 1,361 visas in FY 1997. However,
informal General Counsel guidance in the mid-1990s permitted investors to obtain status without actually
committing their entire investment amount to the business.22
Concerns of insider access, suspicions of abuse, misrepresentation, and fraud surfaced in the mid-1990s at the same
time that the EB-5 program was experiencing its most significant usage. Some of these concerns were later proven in a
federal court case leading to convictions for immigration fraud, wire fraud, money laundering, and conspiracy against
the principals and officers of an EB-5 investment business then operating as Interbank.23 The defendants in the case
attracted $21 million in investment funds from foreign investors who were seeking to lawfully obtain green card status
through the EB-5 program. The fraudulent investment scheme involved the juggling of funds through an offshore
financial institution, and the production and use of fake bank statements used in connection with underlying I-526
petitions filings. However, none of the individual 216 EB-5 investors were found complicit in the fraud. In fact, most
of the foreign investors suffered a total loss of their funds and were not granted green cards.24
In 1998, the USCIS Administrative Appeals Office (AAO)25 issued four precedent decisions26 that altered the
previously issued guidance and substituted new and more restrictive interpretations of the law. These changes caused
much concern among current and potential EB-5 investors, and introduced new and significant uncertainties into the
EB-5 program.
Following issuance of the AAO‘s precedent decisions, EB-5 visa applications dropped dramatically. Between FY
1998 and FY 2008, USCIS had an average approval rate of approximately 44 percent, as shown in Figure 4 below.
Many potential investors decided not to go forward with their EB-5 investments and filings. In addition, USCIS took
action to remove some existing investors from the United States based on the retroactive application of the principles
set forth in the precedent decisions. While most investors lost legal challenges, one group of affected investors did
successfully challenge the retroactive application of these decisions in one federal court. In reversing the denials, the
court found:
[Investors] relied on their understanding that their business and investment plans conformed to the requirements of
EB-5. They sold businesses, uprooted from their homelands, and moved to the U.S…. [They] sought no guarantee of
success, but a contingent promise that, if they held up their end of the bargain … they would obtain LPR status
promised by the EB-5 program. This was not unreasonable…. The reputation and integrity of the EB-5 program is
ill-served by the proposition that INS approval of an I-526 petition as satisfying EB-5‘s requirements cannot be
relied upon.28
In 2002, the President signed special legislation that attempted to rectify the situation. 29 However, new regulations
needed to implement this legislation remain outstanding, and these cases cannot be adjudicated until final rules are
issued. As a result, approximately 700 investors, most of whom are at the condition removal stage, have had their
immigration status placed on hold, some since 1995. 30 This long delay has adversely impacted these affected
investors (and their derivative family members) who have been unable to fully integrate into the United States.
It is widely believed that the EB-5 program has never truly fulfilled Congress‘ expectations. Experts may differ on
the cause, but citing to input from USCIS officials and immigration attorneys, a 2005 Government Accountability
Office (GAO) report attributed:
                  … low participation to a series of factors that led to uncertainty among potential
                  investors. These factors include an onerous application process; lengthy adjudication
                  periods; and the suspension of processing of over 900 EB-5 cases -- some of which
                  date to 1995 -- precipitated by a change in [USCIS‘] interpretation of regulations
                  regarding financial [qualifications.]31

                        For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                            EB-5
Gonzo                                                                                                            9/28
Citing the same GAO report, the Congressional Research Service‘s 2005 report to Congress on ―Federal Investor
Visas: Policies and Issues,‖ stated that EB-5 visa underutilization can be traced to:
                 [T]he rigorous nature of the LPR investor application process and qualifying
                 requirements; the lack of expertise among adjudicators; uncertainty regarding
                 adjudication outcomes; negative media attention on the LPR investor program; lack
                 of clear statutory guidance; and lack of timely application processing and
In 2005, USCIS established an EB-5 unit at USCIS headquarters, the Investor and Regional Center Unit (IRCU),33
and announced the agency’s intention to re-invigorate the EB-5 program.34 In the last few years, the EB-5 immigrant
visa category has attracted the interest of high net-worth investors seeking to immigrate to the United States. USCIS
reported to the Ombudsman that it received 1,257 Form I-526 petitions in FY 2008.
Despite a recent upswing in EB-5 filings, as discussed below, the Ombudsman has heard from stakeholders that
USCIS‘ decision to consolidate EB-5 adjudications at the California Service Center (CSC)35 has rekindled concerns
within the EB-5 investor community.
Case Processing Procedures
To acquire an EB-5-based green card, an investor must first make a qualifying investment, and then file a Form I-
526 petition (and supporting documents) with USCIS. Once the Form I-526 is approved, an investor who is in the
United States in lawful nonimmigrant status may file a Form I-485 (Application to Register Permanent Residence or
Adjust Status).36 Upon approval of the Form I-485, the investor is afforded conditional lawful permanent resident
status, which is valid for two years.
If the investor is outside the United States when the Form I-526 petition is approved, the U.S. Department of State‘s
National Visa Center will process the EB-5 immigrant visa through the local U.S. consular post with jurisdiction
over the place of residence. The EB-5 immigrant visa is used to enter the United States, which commences the two-
year conditional lawful permanent resident status.
Regardless of whether the investor adjusted to conditional green card status while living in the United States, or
acquired such status through consular processing, approximately 21 months later the investor must file a Form I-829
to remove the conditional status. In addition, petitioners must also provide supporting documents to establish that
they have satisfied all EB-5 qualifying conditions. Upon approval, a new ten-year unconditional green card is issued.
Prior to October 1, 2008, EB-5 related Form I-526 and Form I-829 filings were divided between the Texas Service
Center (TSC) and the CSC as part of USCIS‘ bi-specialization initiative. USCIS announced last year that beginning
on October 1, 2008, all Form I-526 and I-829 petitions would be adjudicated at the CSC.37
The Ombudsman met with EB-5 product line managers and adjudicators at the TSC and CSC in August 2008
regarding the scheduled consolidation of EB-5 adjudications at the CSC. At that time, there were two EB-5
adjudicators at the TSC, each with over ten years of experience. The Ombudsman learned that neither of these
seasoned TSC EB-5 adjudicators would relocate to the CSC to continue work on EB-5 filings. However, these
seasoned adjudicators trained ten CSC adjudicators who now supplement the EB-5 unit.
The CSC advised the Ombudsman that it expects the new complement of CSC EB-5 adjudicators to reduce
processing times. Final transition of all EB-5 related adjudications and oversight to the CSC, including IRCU
functions, occurred in January 2009.
Recent EB-5 Stakeholder Meetings and Feedback
Stakeholders advised the Ombudsman that they are concerned about delays in EB-5 processing times and the impact
on existing investors. Specifically, some expressed concern38 that adjudicators who are new to the complex EB-5
product line may seek to review previously settled guidance, or request new types of evidence from investors. 39
USCIS met with an EB-5 regional center trade association group in Washington on September 22, 2008. There were
four themes highlighted by EB-5 stakeholders at this meeting: program institutionalization, program enforcement,
minimization of program risk, and a need to increase program predictability.
Stakeholders believe that USCIS should not re-adjudicate the indirect job creation methodology when reviewing
individual Form I-526 and I-829 petitions. Since that meeting, USCIS advised the Ombudsman in December 2008
that the agency is continuing to review I-829s to determine if the originally presented methodology is valid and
appropriate, and whether the projected jobs were created or will be created within two years.40

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CIS Ombudsman March 18, 2009:
The underutilization of the EB-5 visa category is principally caused by significant regulatory and administrative
obstacles, as well as by uncertainties that undermine investor and stakeholder confidence. Given current economic
conditions, by adopting these recommendations USCIS will send a message that it accepts, understands, and will
implement Congress‘ intention that the EB-5 program serve as an employment creation engine for our nation.

Darren Silver (immg. Lawyer) July 26, 2010
Immigration Lawyer Darren Silver Explains How the EB5 investor Visa Provides a Diamond for the Battled Immigration Service.

An unpredicted and subtle boost to the Nation’s Economy is coming forward from an immigration option available to foreign
nationals looking to obtain U.S Permanent Residency. The EB-5 immigrant visa option allows wealthy foreign nationals to
invest at least $500,000 into the U.S economy, creating jobs for America and Residency for the investor.

Los Angeles, CA (PRWEB) July 26, 2010

The EB-5 Visa Investment immigration Program allows for an expedited and streamlined path for U.S
Permanent Residency for foreign nationals investors. In turn, the U.S receives an infusion of $1million or
$500,000 (certain locations) per Investor. In addition, and greatly more important in today‘s economy, the
Investor or his/her Business receiving the investment must show a creation of 10 new U.S jobs.

As a brief history, the Federal Government created the EB-5 Visa in 1991 so as to encourage foreigners to
invest in the U.S. The program required an investor to invest $1million or $500,000 in certain locations into a
business in the USA that would create 10 full time jobs paying at least the minimum wage. Once done, the
investor and his or her family would be entitled permanent residence in the USA, "Green Card." In 1993, the
predecessor to the USCIS provided to potential immigrants a second option within the EB5 program, entitled,
Regional Center Pilot Program. In this new configuration of EB-5, the investor would invest into a pre-existing
fund, or Management Company or Business as approved by the U.S. government. These Regional Centers are
typically diversified funds or private Business development projects that allow for an investor to infuse a set
investment and in return acquire a small ownership interest. The Regional Centers must utilize this foreign
infused investment to create 10 U.S direct or indirect jobs.

In 2004, the program was reorganized to allow for many levels of protection for the investors. The program was
classified as a "pilot" program and has been extend by Congress continuously every 3 years.

The numbers of approved Immigrant Petitions under the EB-5 program have been consistent over the last year,
ranging from 400 to 600 applications annually. However, 2009 saw a dramatic increase in EB-5 petitions.

Specifically, in 2007, the U.S. Citizen and Immigration Services (USCIS) approved 473 petitions for foreign
investors. That figure rose to 640 in 2008, and jumped to 1,256 in 2009.

Since October 2006, U.S. companies have raised more than $1 billion and have created over 20,000 jobs
(directly and indirectly) through EB-5. The number of Certified Regional Centers has risen steadily from 27 in
2008 to 80 in 2009 and it is predicted that the number will well surpass 100 by the December 2010.

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Mr. Darren Silver, a prominent Immigration Lawyer in the field, whose Firm Darren Silver and Associates
specializes in EB-5/Regional Center Immigration is cautiously optimistic about the upswing in both new EB-5
applications and new Regional Center Certifications.
Mr. Silver reasons that in light of the unpredictable Economic forecast, the EB- 5 Regional Center investment
program gives investors a safe and secure option for permanent residency. Mr. Silver is however concerned as
to the number of Regional Centers that have been approved in the past year. He warns that a few bad Centers
can unjustifiably tarnish the entire project. He cautions that investors must be careful when selecting a Regional

Leon Snaid (immg lawyer) July 8, 2010: Regional Centers Get Foreign Cash for Green Cards. Filings Almost Double for EB-5 visas.

The USCIS disclosed at an EB-5 Visa Stakeholder Meeting on June 16, 2010 that there were more petitions for green cards
through the EB-5 Visa category in the first 7 months of this fiscal year than in the entire 2009 fiscal year. Investment
opportunities known as Regional Centers accounted for approximately 90-95% of these petitions.

San Diego, CA (PRWEB) July 8, 2010

The EB-5 visa program gives green cards foreign investors to invest $1m in a new commercial enterprise that
will create jobs for 10 people. The amount is reduced to $500K in rural and high unemployment areas.

Regional Centers are investment opportunities that are approved by the USCIS for such investments. An
investment in a Regional Center does not guarantee the petitioner a Green card, but is an acceptance by the
USCIS that 10 new direct or indirect jobs will be created if the business plan comes to fruition.

According to the USCIS they received 1100 EB-5 visa petitions from October 2009 to May 2010 and approved
955 of such petitions. The petitioner initially receives a two-year Conditional Green Card and at the second
anniversary must prove that the business is operating according to the business plan and the money remains

Leon Snaid, a San Diego Immigration and Business lawyer says, ―U.S. businesses are reaching out for foreign
investors during the current cash crunch. In March 2007 there were 17 active Regional Centers. Today that
number has surged to 94 Regional Centers. There are also 65 Regional Center proposals that are pending at the

Snaid, who is certified as an Immigration Law Specialist by the State Bar of California‘s Board of Legal
Specialization and is also the author of Best Business Buddy, the Golden Rules and Strategies of Smart
Business says that the system for Regional Center designation is now becoming streamlined. In the past there
was no specific form used to apply for Regional Center designation. Now the USCIS has a proposed a Form I-
924 that will be submitted with each proposal. Snaid says that while the Application for a Regional Center will
cost $ 6,230.00, the USCIS expects that it will clarify the requirements, improve the quality of applications,
alleviate content inconsistencies and support a more efficient process for the adjudication.

―Anyone wishing to receive Regional Center status for a business opportunity should expect a thorough analysis
of their business plans and more particularly their economic analysis of how the proposed jobs will be created.
The security laws of the USA require many disclosures, when someone seeks funding from the public. The
Regional Center requirements add a second layer of disclosures and business analysis.‖ says Snaid.

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Gonzo                                                                                                         12/28
Snaid offers interested investors his ―20 Starting Questions that you Must Ask a Regional Center‖ on his web
site at: He says that this is only the start of the due diligence that is
required before investing. A person must use the services of professionals, because once the money is invested,
you have very little control over the business. While the EB-5 visa requires an investor to have policy-making
decisions, an investor‘s input is minimal, when there are many investors.

Snaid suggests that a potential investor should first consult with an immigration attorney before seeking out a
Regional Center investment. There are strict rules relating to the tracing of investment funds and certain sources
are unacceptable.

Kelsey Swanekamp August 7, 2009: Visa center seeks foreign investors.

Buffalo might soon see an influx of funds from foreign investors into the United States. The city now has a
regional center to channel funds from foreign investors wishing to immigrate in exchange for investing
$500,000 or more in projects that create U.S. jobs.

Known as the EB-5 visa category, short for ―fifth employment-based preference,‖ the program offers green
cards to potential immigrants who will invest the required funds and create 10 or more jobs for Americans.

The Buffalo center, which operates from 300 Delaware Ave., was started by four shareholders who received
federal approval in February.

The regional centers began 15 years ago as a pilot program, one that Congress has since reauthorized for short-
term periods. Through them, investors can pool their funds and take a hands-off approach on project

Cornell University Law School professor Stephen Yale-Loehr testified before the U.S. Congress on July 22
about the benefits, setbacks and possible improvements of the current immigrant investor program.

He hopes to convince lawmakers to make the program permanent, because until that happens, he says, foreign
investors will be hesitant to participate.

The new center

A second regional center in Syracuse serves Upstate New York, and a third center is located in New York City.
Throughout the United States, there are about 60 approved centers – including those in Washington, D.C., San
Francisco and Colorado – with another 40 applications pending approval.

To become a certified regional center, an enterprise, corporation or regional government body must submit an
application to the U.S. Citizenship and Immigration Services detailing the proposed economic impact of the
center. The process takes about six months.

The Buffalo Regional Center is modeled after an EB-5 center in Seattle, said shareholder Bill Reich, a Buffalo
immigration attorney.

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USF Debate 2010-2011                                                                                         EB-5
Gonzo                                                                                                        13/28
His partners in the venture are Moises Sudit, a professor of engineering at the University at Buffalo; Western
New York developer Elliot Lasky, president of North Forest Development Corp.; and Henry Liebman, a lawyer
connected with the Seattle regional center.

Reich, a lawyer with the firm Serotte Reich Wilson LLP, declined to reveal how much money each has invested
in the center‘s startup. He said the team hopes to identify a workable project within four months, after which
they will recruit EB-5 investors.

The center will focus on renovating existing structures for commercial and residential use, he said. ―This will
rejuvenate the city,‖ he said. ―It will be part of the renaissance.‖

Who wants in

Yale-Loehr of Cornell said that most interest in the program comes from countries such as India, China and
Korea, where citizens face visa backlogs that make it difficult to come to the United States.

While the EB-5 visas don‘t reduce the number of other visas available to non-investor immigrants, they are
exclusive to the wealthy, said Sophie Feal, the supervising immigration attorney with the Volunter Lawyers
Project of Buffalo.

―In a capitalist society, investor money is what we value. People with money are valued,‖ she said. ―Hopefully,
Congress will also value the working class who are willing to give their labor.‖

In his testimony last month, Yale-Loehr discussed the economic impact of existing EB-5 programs. One such
project is a $26 million, 156-room hotel across from the Children‘s Hospital in Aurora, Colo., an area described
in his testimony as being devoid of hotels. The hotel, when completed, will provide 200 jobs.

However, Yale-Loehr testified, of the 10,000 green cards available for EB-5 immigrants, less than one-tenth are
used – only 806 in 2007.

This underutilization could be due to difficulty in qualifying for the EB-5 green cards and a hesitancy on the
part of foreign investors because of frequent changes in immigration policy.

One investor’s experience

Eric Canal-Forgues, a French attorney, immigrated to the United States using an investor visa in November

―The system is attractive but marred with some uncertainties,‖ he said.

For Canal-Forgues, it took one year to complete the necessary applications and another to schedule an interview
with the American Consulate in Paris.

Next July, he must begin another process to prove that his investment did create 10 jobs, he said. Through an
EB-5 center in Philadelphia, he is involved in the construction of Comcast Corp. headquarters there.

Read more: Visa center seeks foreign investors - Business First of Buffalo

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USF Debate 2010-2011                                                                                           EB-5
Gonzo                                                                                                          14/28

NYT March 16, 2008: For Foreign Investors, Profit Isn‘t Only Goal.

BRIAN GOULDING recently moved with his wife, Majella, and three young children to Wilmington, N.C.
―It‘s gorgeous here,‖ he said, referring to the region‘s temperate climate.

But Mr. Goulding also has a strong interest in the colder environs of northern Vermont and, specifically, the
success of a new hotel at the Jay Peak ski resort, five miles from the Canadian border. If the hotel, expected to
open next fall, succeeds, Mr. Goulding and his family, who are from Ireland, will be allowed to remain in the
United States.

The Gouldings are among the beneficiaries of a program that grants foreigners legal residency in the United
States if they invest in job-creating businesses. ―If, in two years, the project has delivered the employment to the
state of Vermont,‖ Mr. Goulding said, he will receive a permanent green card. ―If the project collapses,‖ he
said, ―I won‘t.‖

But Bill Stenger, the president and chief operating officer of Jay Peak, doesn‘t see much danger of the project
failing. At a time when bank loans are becoming harder to get, Mr. Stenger said he had received the money he
needs to construct the hotel — $17.5 million — from 35 investors, all of whom are hoping to become
permanent residents of the United States.

Under the program, known as EB-5, a foreigner receives a green card for investing $500,000 in a business in a
rural or high-unemployment area. With currency exchange rates what they are — the dollar has fallen sharply
against the euro and British pound — the required investment ―is very affordable to many foreigners,‖ Mr.
Stenger said.

To tap into that source of capital, Mr. Stenger formed an alliance with Rapid USA Visas, which has offices in
Naples, Fla., and in London. The company‘s clients are looking to make their homes in the United States — in
many cases, as retirees in the Sun Belt. (Under the law creating the EB-5 visas, they need never set foot in the
state where the money is invested.)

―It‘s win-win-win,‖ said Steve Yale-Loehr, an EB-5 expert who teaches immigration law at Cornell University:
the business gets capital, residents get jobs and the investor gets a green card.

The program hasn‘t always been a hit. In the 1990s, what was then the Immigration and Naturalization Service
had a hard time keeping tabs on whether EB-5 investments were creating jobs. ―There were fears that the
program wasn‘t achieving its intended purpose,‖ Mr. Yale-Loehr said. But the agency, renamed Citizenship and
Immigration Services, has since found a way to streamline the process by permitting entities outside the federal
government, called regional centers, to screen investors and monitor job creation.

As a result, Mr. Yale-Loehr said, ―the EB-5 program has risen from the ashes.‖ Of the 10,000 EB-5 visas
available each year, 5,000 are set aside for investors in regional centers.

Altogether, there are 17 regional centers, Mr. Yale-Loehr said, and about that many applications pending. Mr.
Stenger said he worked with state and federal officials to win ―regional center‖ designation for the entire state
of Vermont.

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USF Debate 2010-2011                                                                                           EB-5
Gonzo                                                                                                          15/28
Right now, Mr. Stenger said, Jay Peak has room for about 1,800 guests; the new, 78,000-square-foot hotel
building is part of a plan to nearly triple that capacity. The building will contain 56 one- and two-bedroom
suites and one three-bedroom penthouse, Mr. Stenger said. There will also be a day spa, a Vermont country
store, several restaurants and a ski rental center in the building.

Mr. Stenger is also planning another hotel and a water park, which will be financed by 150 EB-5 investors and
which will help draw visitors year-round.

Jay Peak isn‘t the only resort to benefit from Vermont‘s regional center designation. At Sugarbush resort in
Warren, Vt., about 60 miles south, an EB-5 program is being used to finance four new buildings. The first — a
40,000-square-foot guest services center, containing stores, equipment rental facilities and space for children‘s
programs — will break ground this spring. Three condominium hotels will follow, beginning in 2009.

EB-5 investors have to show that the money they are using was earned legally. At Jay Peak, all 35 investors
passed that test, according to Mr. Stenger, who noted that, in addition to Britain, there were participants from
Canada, Mexico, Scandinavia and South Africa. His company, formally called Jay Peak Ski and Summer
Resort, held the investors‘ money in escrow until their applications were approved by the federal government,
he said.

Mr. Goulding, who is 48 and semiretired from the airplane leasing business, said he wrote his check last April
and received his temporary green card six months later. He said that accounting and legal fees added about 10
percent to his $500,000 investment. He said he expects to receive a permanent green card in 2009.

AFTER five years, the partnership may choose to sell the hotel‘s 57 units as condominiums, paying Mr.
Goulding his share of the proceeds. Mr. Stenger noted that unlike some businesses that have no tangible assets,
the Jay Peak partnership will have the 57 units and the right to sell them. (Technically, each investor will own
1/35 of each one, Mr. Stenger said.)

―The Jay Peak investors appreciate that there‘s an exit strategy,‖ said Douglas Hulme, the chief executive of
Rapid USA Visas, who is based in Naples, Fla.

Mr. Stenger said Jay Peak‘s EB-5 program is expected to produce 2,000 jobs in the area, which ―is very
meaningful for this part of Vermont.‖ Some of the 2,000 are what the government calls ―indirect jobs,‖ meaning
they won‘t be at Jay Peak itself but at businesses in the surrounding area that will benefit from expansion at the

Mr. Goulding has met with Mr. Stenger, and he said he is satisfied that Jay Peak is ―conservatively managed.‖
And it was a good sign, he said, that when Jay Peak drilled for water for the new hotel, ―they hit a gusher.‖

When the new hotel is completed, each investor will be entitled to two weeks‘ accommodations a year. Mr.
Goulding and his family plan to spend those weeks skiing. ―Not having a huge amount of snow in Ireland, as in
none, Jay Peak provides a wonderful experience,‖ he said.

He won‘t be checking on the business.

―The beauty of an EB-5 for me,‖ he said, ―is that I don‘t have any day-to-day responsibilities.‖

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Matt O'Brien (Contra Costa Times) 05/23/2010: Pay to stay: Visa program offers green cards to immigrants -- for a price.
OAKLAND -- In bustling Oakland Chinatown, an office full of empty cubicles sits ready to greet executives --
all of them newly arrived immigrants who have paid as much as $500,000 for the privilege of living here.

Blocks away at Jack London Square, local developers have transformed a harbormaster building into a meeting
place where they hope to channel foreign investments into new hotel construction.

In Napa and Sonoma counties, another venture hopes to woo would-be investors with wine tours, and convince
them to buy some vineyards in the process.

The projects all hang on the promise of wealthy immigrants so eager to move to the United States they are
willing to risk their own money to do so. By investing in a troubled sector of the American economy, in a
venture that creates at least 10 full-time jobs, recipients of the investor visa, or EB-5, can get a green card.

"The majority of the inquiries come from China," said Christina Lau, director of the newly opened California
Wineries and Vineyards Regional Center, which is seeking immigrants to pump money into troubled North Bay
wine businesses. "It's amazing. Maybe they really have that much money to spend."

The number of immigrants getting EB-5 visas nearly tripled last year after a decade in which the 20-year-old
program languished because of disinterest, complicated rules and a tarnished reputation.

Congress allows up to 10,000 immigrants to come in on the visa each year, but most years attract fewer than

That is rapidly changing, as the number of visa-holders nationwide rose to 4,218 last year from 1,443 in 2008,
according to government statistics.

In order to get a green card, which allows a person to become a permanent resident of the United States,
investors have a choice: They can put $1 million into starting a new commercial venture or helping a troubled
American business. Or, they can invest $500,000 in a business venture located in an area with high

For the majority who choose the less expensive route, there are more than 80 regional centers across the
country, and 23 in California, that are authorized by the government to recruit immigrant investors and pool
their contributions into distressed regions.

Two years ago, there were only about 20 such centers, most of which are private companies, but the recession
has caused a spike in activity.

The operators of the centers are responsible for formulating the business plans. One center collects investments
to build Vermont ski lodges; another seeks investors to fund agricultural development in the jobs-scarce Central
Valley. In Hollywood, a new center is looking for money to finance moviemaking. And in the Bay Area, a
blossoming of new centers is focused on wine, real estate and green technology.

'Tremendous opportunity'

                        For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                             EB-5
Gonzo                                                                                                            17/28
"Basically, the banks are not lending, so if you really want to get things going, here is a tremendous
opportunity," said John Loh, an Oakland real estate broker looking to pool immigrant investments into local
business projects.

The commercial broker last year cofounded the East Bay Regional Center, also known as Golden State
Renaissance Ventures, and placed its headquarters inside the shop-lined Pacific Renaissance Plaza in Oakland

The urban mall known for its dim sum and pearl drinks is a place where newly arrived business people can get a
foothold in the U.S. market, he said. Loh and his business partner, lawyer Eric Chelini, have cleared out desk
space that newcomers to the city can rent for about $7 per square foot.

"They can have assistants if they want to, or rent out a desk," Loh said. "For Asians, this will be ideal. It feels
like home. And once they assimilate, they can go live in Piedmont or Lafayette or Walnut Creek."

For now, the cubicles remain empty as Loh and Chelini work to attract enough investors to make it happen. The
pair leave Wednesday for China, where they will meet with potential investors for their projects -- one Chelini
described as a software and real estate deal, and a second centering around surgical device manufacturing.

Their center is one of five now located in the Bay Area. A year ago, there were none.

In Palo Alto, a new California Energy Investment Center in Palo Alto will focus on the solar panel
manufacturing and installation industries, and in Santa Clara, the Green Energy Regional Center will focus on
investments in alternative energy technologies, mostly in the Central Valley.

The two Oakland centers and the center focused on the wine industry are in the early stages of development and
none has yet secured an immigrant's investment.

Many of the Bay Area centers were founded by experienced local business executives who thought this region,
already a popular destination for high-skilled immigrants, was a prime spot for a program where immigrants
bring new money to a down economy.

"It was the perfect storm. With the collapse of the finance capital markets, finance was tightening up," said
Brendan Heafey, vice president of Oakland's other new regional center, the Bay Area Regional Center in Jack
London Square.

Heafey, a broker, cofounded the company last year with James Falaschi, a developer responsible for much of
the square's recent redevelopment, and private investor Michael Hastings. In a tough market for real estate, the
trio is looking to tap into an international network of what Heafey describes as "high net-worth individuals"
who can jump-start Bay Area commercial construction.

"People are looking for new avenues for how to finance projects," Falaschi said.

The Bay Area Regional Center hopes to fund $100 million worth of local projects and create about 2,000 new
jobs beginning this year, said immigration lawyer Stephen Yale-Loehr, testifying in favor of the EB-5 program
at a congressional hearing last year.

Congress last year reauthorized the program for another three years, but has yet to make it permanent.

                       For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                           EB-5
Gonzo                                                                                                          18/28
High-unemployment areas targeted

The unemployment rate must have been 13.95 percent or higher in 2009 for a neighborhood, city or county to
be eligible for the $500,000 investment. In the Bay Area, that includes urban areas in Oakland, Richmond,
Pittsburg and East Palo Alto, but also rural places at the outskirts of the region, including parts of Napa and
Sonoma counties.

Since the EB-5 visa category was created by Congress in 1990, an estimated 20,000 full-time jobs have been
created through its use, and $1 billion has been invested into American businesses in the last decade, said
Sharon Rummery, spokeswoman for U.S. Citizenship and Immigration Services, which administers the

Although the program, more than most immigration policies, has wide and bipartisan support, the recent
proliferation of regional centers has been greeted with concern by some.

"People are looking at this either as cheap money or easy money, and it's neither," said Pat Hogan, who runs a
center based in San Bernardino County.

Hogan's center, the California Military Base Regional Center, last year signed about 100 investors, bringing in
about $50 million to bring new business to closed bases.

The center loans the money it gets from immigrant investors to local redevelopment agencies. That helps the
agencies raise enough money to match a federal grant, which is used to build new roads and office complexes at
the former military sites, he said.

"These are not fast food jobs," Hogan said. "Our model has worked well in helping the San Bernardino
community out of the employment (slump) they have had for 15 years."

One of Hogan's investors last year was Paul Little, who made the $500,000 investment and moved to Hemet
from Manchester, England. His father-in-law already lives nearby, one of the reasons for the move.

"We've been coming out here on vacation for nine, 10 years. We fell in love with California," Little said. "The
children were 8 and 10. We thought, if we're going to move to the states, we're going to do it now."

Little, a former travel company executive, sold the house he inherited from his parents in rainy Manchester,
where housing prices are triple those in Hemet, so he could raise enough money for the investment and the

"I expect to get it all back, plus maybe a little more," Little said. "Some of the other schemes say you're going to
make X amount but it's not guaranteed. That's why I wanted to go for the most solid-looking."

As he and his wife adjust to Southern California life and new jobs, their children, he jokes, are already shedding
their strong British accents.

"It's obviously really multicultural here. They love it," Little said. "They're not allowed to speak American to
me. But at school, they don't want to stand out. They use the English accent when they need it."

Fast path to residency

                         For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                           EB-5
Gonzo                                                                                                          19/28
Lau, a lawyer from San Mateo, says the exchange benefits both the area of investment -- in her case, Bay Area
wine country -- and the family willing to risk so much money to get here.

"I think the real motivation for people who go for the EB-5 is because it is the fastest way to get a green card,"
Lau said. "Once you commit your $500,000 into the U.S., you should be able to bring your wife and your
children here in less than a year's time."

Some regional centers come close to guaranteeing that investors will get their $500,000 back, but Lau said that's
a dangerous proposition.

"We tell them, upfront, 'Can you bear the risk of losing $500,000?' " she said. "They have to understand there is
the possibility they will definitely get their green card but not be able to receive their $500,000 (investment)

Loh, of the East Bay center, looks at the program through the prism of his own immigrant experience, viewing
the regional center as a project to help entrepreneurial immigrants. Born in China, he spent years trying to get to
the United States, finally arriving through the sponsorship of an immediate family member.

"The Chinese had to stand in line to come to America, and the average line was 20 years," Loh said. "So they
went to Australia, Canada. In America, you wait in line, or nothing."

Loh said the backlogs create hardships on families, who are forced to move around constantly if they want to do
business in the United States.

"The husbands become what we call astronauts," he said. "They commute to Asia. And we don't want them to
do that."

Australia and Canada both have similar programs which attract thousands of immigrant investors each year, and
many attribute the popularity of those programs to the greater guarantees immigrants have of getting their
money back. Still, the expansion of America's EB-5 program has generated enthusiasm as more local players
become aware of it and propose creative ways of channeling the money into useful projects.

"Their contribution goes beyond the $500,000," Hogan said. "They come here. They build homes. They buy
homes. They set up businesses. They pay taxes. Instantaneously, they are a super-productive component of our

The potential for abuse

Hogan and others nevertheless add a note of caution and a reminder that another sudden spike of interest in the
1990s caused the program to be effectively shut down for many years.

"Concerns of insider access, suspicions of abuse, misrepresentation, and fraud surfaced in the mid-1990s at the
same time that the EB-5 program was experiencing its most significant usage," said a report released last year
by an ombudsman for the immigration service. Some of those concerns led to criminal convictions and a bad
reputation that caused investors to steer clear.

When centers fail, those most at risk are the immigrants, who can lose all their money and their immigration
benefits, Hogan said. The EB-5 visa is conditional for two years, and investors only get a green card if
everything works out as planned.
                       For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                                              EB-5
Gonzo                                                                                                                             20/28
"His ultimate penalty could be, he's deported if he doesn't create the 10 new American jobs," he said.

Federal officials and most regional center operators said the problems that allowed fraud have been resolved,
though some also call for more clarity and flexibility in how projects and individual investors get government
approval. One of the hardest requirements to measure is the creation of 10 jobs for each immigrant who obtains
an EB-5 visa. Regional centers have to use economic modeling to show they can meet this commitment.

"The word is getting out that it's a more viable program than it was in the 1990s," Hogan said. "But unless
USCIS continues to regulate, and regulate hard, regional centers will commit suicide. They will push the
envelope. Too many people will get hurt."

Still, Hogan said, there are projects that do not fulfill the mission of investing in distressed areas.

"You have foreign nationals who can't even speak the language trying to inquire about an investment 2,000
miles away," Hogan said. "The potential is very big to set up a scammy program."

China was the top
generator of immigrants who obtained an EB-5, or investor visa, last year, followed by South Korea and Britain.
 China: 1,979
 South Korea: 903
 Britain: 326
 Canada: 85
 Japan: 84
 India: 72
 Russia: 60
 Netherlands: 38
 Mexico: 33
 South Africa: 31

Danielle Nelisse (Immigration Expert and attorney in San Diego) June 17, 2010: EB-5 Investors From China, South Korea, India and
other Asian Countries Investing in American Property Development.
The EB-5 Investment Program has brought in billions of dollars in direct foreign investment and created tens of thousands of jobs in
the U.S. EB-5 foreign investors and their families are offered a fast track to permanent green cards if they invest in American projects
that create jobs. The number of EB-5 green cards issued under the so-called ―investor‘s green card‖ more than tripled in 2009–in large
part due to the unique attributes the program presents for the American property developers.
To American property developers, the EB-5 green card program offers a new way to raise investment money, appealing to foreign
investors who see American residency status as an extra bonus for investing money in U.S. property. At the same time, American
companies view the program as a new source for wealthy Aisan international clients already committed to moving their families to the
For example, near Seattle, Washington, Steve Smith of Twin Development LLC is using the EB-5 investment program to raise $235
million to fund construction of the Sky Hotel and Residences, a 45-story mixed-use tower, including 400 condominiums. With little
―conventional‖ funding available, EB-5 investment funds are a way to ―broaden access to foreign capital sources while providing a
lucrative opportunity for international investors.‖ No bank financing will be involved in the project, Smith says. Twin Development
LLC is working with partners from South Korea, where he expects to raise the bulk of the money from EB-5 investors eager to
sidestep the long waiting list for U.S. visas. Another example of EB-5 investment is the $60 million raised from 100 EB-5 foreign
investors for the Brooklyn Navy Yards redevelopment in New York.
The EB-5 investment program is particularly appealing to wealthy Chinese, who may already have family members working or living
in the United States.. Despite the recent activity, EB-5 is still underutilized. The program allows for 10,000 visas a year, more than

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twice the number issued in 2009. About 70 percent of the EB-5 visas issued in 2009 went to investors from China and South Korea,
according to U.S. State Department statistics.
Although EB-5 investment green cards originally required a $1 million investment, the program now allows a $500,000 minimum, as
long as the project is located in a designated ―Regional Center Project,‖ typically an area of America hard hit by the economic crisis.
The program is also not ideal for all investors.
There is no guarantee by the U.S. government that the investment will be successful, nor is there any assurance that a green card will
be issued by the U.S. government. Proper analysis and due diligence is incredibly important to protect an investors interest and that
any investor, regardless of their country of origin should always make sure that they are working with an independent consultant in the
United States that can assist them in gathering information and verifying all the information that is provided by the representatives of
the proposed EB-5 investment.
The EB-5 investor‘s immigration application still needs to be reviewed and approved by the U.S. government, just like any other
green card application, and therefore the legal services of a qualified American Immigration Attorney should also be retained.
The EB-5 immigrant investor visa program is the most flexible in the world because it has no requirements as to age, business training
and experience, or language skills. EB-5 Permanent Residents need not be continuously present in the United States, and they can
maintain business and professional relations in their country of origin.
The EB-5 program also allows EB-5 investors a great deal of freedom because it does not require immigrant investors to manage their
investment on a daily basis, but rather, to ‗actively engage‘ in a business enterprise, meaning they can be limited partners and pursue
other professional or personal ventures.

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                                                STARTUP VISA CARDS

Udall supports the startup visa
MIT Technology Review Monday, July 19, 2010: Senator Mark Udall Co-Sponsors The Startup Visa Act of 2010.
I‘m extremely excited that Senator Mark Udall (D-CO), the senior senator for Colorado, has signed on as a co-sponsor of The Startup
Visa Act of 2010 that was originally proposed by Senators Kerry (D-MA) and Lugar (R-IN). Senator Udall joins his Colorado
colleague in the House, Jared Polis (D-CO), who has proposed Startup Visa legislation as part of his EB-5 reform bill.
In addition, our friends at SVB Financial (the parent of Silicon Valley Bank) have also formally endorsed the Startup Visa. My
partner Jason Mendelson wrote a post about a roundtable that Silicon Valley Bank hosted for members of ―the new Democrat
Coalition‖ which included Jared Polis. Shortly after this meeting, SVB formally endorsed the Startup Visa.
I‘m really proud that two of Colorado‘s members of Congress are leading the charge on the Startup Visa. I have deep respect for both
Mark and Jared, their understanding of the importance of entrepreneurship, and their vision for innovation in our country. I‘m also
grateful that SVB – which has been an integral part of the entrepreneurial activity throughout the US – for their support as well.
We are working on a few additional major announcements and endorsements in the next sixty days. I‘ve received a number of
requests for ways to help. At this point, if you are part of an organization that you think would be supportive of the Startup Visa,
please drop me an email and let‘s talk about ways to get a formal endorsement.

Startups are key to job creation but are hampered by a lack of capital which EB-5 visa holders aren’t willing or unable to fund
Carmen Nobel (CTV news) 7/20/2010: U.S. foundation finds startups key to job creation.
Companies more than a year old lose a combined average of one million jobs a year in the United States, while new firms add an
average of three million jobs, according to a report by the Kauffman Foundation based on information compiled from 1977 to 2005.
―If you really want to have a jobs agenda, then put money into expanding capital for startups,‖ says Tom Ruhe, director of
entrepreneurship for Kauffman. ―Without dispute, that is the job-creation engine in this country.‖
Several factors stymie startups:
1. Small-business lending remains tight
Bank loans to small businesses in the United States dropped to less than $670 billion in the first quarter of 2010 from $710 billion in
the second quarter of 2008, according to the U.S. Federal Financial Institutions Examination Council.
―The biggest problem for [new businesses] is getting money,‖ says Dave Ratner, owner of Dave's Soda and Pet City, a small chain of
pet supply (and soda) stores in Western Massachusetts. ―Banks are absolutely not lending money unless you're so credit-worthy that
you don't need the money.‖
The U.S. Small Business Administration (SBA) subsidizes loans for thousands of applicants who might not otherwise receive them,
but those loans have dropped off in recent months due to lack of stimulus money. And all SBA loans require a personal guarantee,
usually in the form of a large asset, from any applicant who owns at least 20 per cent of the small business. Critics argue this
requirement can deter applicants, especially in an economic downturn.
―At a time when a lot of Americans are worrying about losing their homes, how can you expect them to put up their house or their
401(k) as collateral?‖ Mr. Ruhe says.
The SBA argues that, subsidized or not, issuing loans without requirements is not a realistic business practice. ―You can't start a
business and expect everyone else to take all the risk,‖ says Michael Stamler, a spokesman for the SBA in Washington.
2. Immigrants can't start companies if the United States kicks them out of the country
The country‘s top university labs are full of non-U.S. citizens whose research could yield myriad technology startups. In fact,
immigrants founded 7,000 technology companies between 1995 and 2006, according to Kauffman.
During that time, about 25 per cent of tech companies in the United States had founders from other countries. The problem is that
while foreigners have good luck acquiring student visas, the visas run out once they stop being students and start starting companies.
The U.S. offers a visa for foreign investors, the EB-5, which requires a business investment of at least $1 million (U.S.) and the
creation of at least 10 jobs. But the EB-5 is little solace to entrepreneurs whose businesses are too new to be profitable, but who want
to stay in the country to make that first $1 million.

United States of America Green Card Lottery January 27, 2010: A new Entrepreneur Visa for US, will add more EB-5 visas.
United States congressman Jared Polis has proposed a new ‘start-up‘ visa which would make it easier for foreign entrepreneurs to start
companies in America.
Congressman Jared Polis proposed the new visa, with the aim to make it easier for entrepreneur immigrants. Without immigration
companies such as Yahoo and Google would not exist. The idea will be part of a proposed overhaul of the U.S. immigration system.
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―Every day the American economy is losing ground, not to mention high-tech jobs and technologies, to India and China because
foreign-born entrepreneurs cannot secure a visa to stay in the US,‖ he stated.
If implemented, the new start-up visa proposal would mean that many more Immigrants will qualify for America‘s EB-5 visa scheme.
Introduced in 1990 to help attract foreign capital, the EB-5 visa allows 10,000 foreign entrepreneurs to come to the U.S. However,
applicants must invest at least $1 million and create at least 10 full-time jobs.
Polis hopes to add a new class to the EB-5 visa that would allow entrepreneurs to attain a visa if they can attract $250,000 from a U.S.
venture capital firm or $100,000 from an angel investor. The new company would have to show that it could generate $1 million in
revenue and create at least 5 to 10 jobs.
A 2007 study, America‘s New Immigrant Entrepreneurs, undertaken by Duke University and University of California at Berkley
found that 25 percent of engineering and technology companies started in the United States between 1995 and 2005 had at least one
founder who immigrated to the country.
According to the study, these companies generated $52 billion in sales in 2005 and employ nearly 450,000 U.S. workers.

Maggie Shiels (Technology reporter, BBC News, Silicon Valley) 31 December 2009: New visa proposal to help create the next big
A proposal that will make it easier for foreign entrepreneurs in the US to start the next Google or Yahoo will be debated in the new
Congressman Jared Polis has proposed a start-up visa to entice "foreigners with good ideas" to stay in the US.
The issue has been gathering steam in Silicon Valley where half of all tech company founders are immigrants, according to Duke
University research.
The idea is part of a proposed overhaul of the US immigration system.
"Every day the American economy is losing ground - not to mention high-tech jobs and technologies - to India and China because
foreign-born entrepreneurs cannot secure a visa to stay in the US," he said.
Lost opportunity
Eric Diep, who has just turned 22, could be regarded as one entrepreneur who got away.
He came to Silicon Valley as a student like many immigrant founders who have helped start companies such as Google and PayPal.
Mr Diep was one of the first developers to get into social games with his application called Quizzes, initially launched on the social
networking site Facebook.
Over a year ago he started to apply for a visa to allow him to carry on working in the Valley, but he soon encountered problems.
"The reason it was so difficult for me was because I dropped out of university and the stipulation for a lot of visas is undergraduate
experience. My age also seemed to be an issue for the attorneys
"At the beginning it wasn't the expense in terms of legal fees but the big problem soon became one of distraction. I was trying to spend
as much time working on perfecting my product but then I would have to go away and figure out the legalities of applying for the
visa," Mr Diep told BBC News.
In the end, Mr Diep decided to base himself in his native Canada and travel back and forth to Silicon Valley.
"The flying is so tiring between the two places and it's expensive. At one point, I had no money left in my bank account but at the last
minute money came in and now I feel pretty fortunate that I can still do this.
"It was a pretty close call," he added.
He backs a start-up visa because, for him, being in Silicon Valley is where he needs to be.
"Being there at the time really launched me. I would never have spotted the social gaming opportunity had I not been there."
Visa details
The start-up visa is aimed at streamlining the country's EB-5 visa system which was initially introduced in 1990 to attract foreign
capital to the US.
Each year 10,000 EB-5 visas are available but to get one, applicants need to invest $1m and create 10 full-time jobs.
Mr Polis said he wants "a new class of eligibility" with the start-up visa.
It would be granted to foreign entrepreneurs if their business plan attracts either $250,000 from a venture capital operating company
that is primarily US based or $100,000 from an angel investor.
They must also show that the business will create five to ten jobs or generate a profit and at least $1m in revenue.
Some of these requirements may well be changed when the bill goes to committee in the new year.
"Immigration reform is a big discussion in Washington," said supporter Brad Feld, who is also a managing director with venture
company the Foundry Group.
"We think the start-up visa is an easy thing to talk about and get consensus around in terms of having a positive spin on
entrepreneurship and creating jobs."
Job creation
Some critics fear that making it easier for entrepreneurs to set up shop will hurt Americans by taking jobs away from them.
"I feel incredibly strongly that that is a misinterpretation of the proposal," said Eric Ries a venture advisor and author.

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"Some people have called those opposed to new immigration reform xenophobes and that is why I think it is important we craft this
proposal so it addresses those concerns. This is not a new visa category but reform of an existing but flawed category," he told BBC
The proposal's backers say that far from taking away jobs, new jobs will emerge that were never there in the first place.
"If the capital is available for the market, we should jump to bring those people here. Those jobs only get created once the founders
get funded. This is a market driven decision," said Dave McClure, an internet entrepreneur, investor and start-up advisor.
YouNoodle is a start-up company founded by two British entrepreneurs. It tracks the start-up sector and said the figures speak for
"If just ten thousand start-up visas were made available this would mean over 3000 additional new innovative and funded companies
would be based in the US every year," said Kirill Makharinsky, YouNoodle co-founder.
"They would generate more than 10,000 jobs on average every year. In the first 10 years that would add up to over 500,000 highly-
skilled new jobs
"So the upside is huge and the downside is negligible because no jobs are being taken away from US citizens," Mr Makharinsky told
BBC News.
And for Mr McClure, the consequences of not establishing a start-up visa class are obvious.
"We will lose out because we are not being competitive with the rest of the world," he said.
"There are similar programmes in Canada, the UK and Australia. They are all vying for the top entrepreneurs and if we only look at
our own citizens, we are only taking 10-20% of the world's talent into consideration here. That would be short-sighted in the extreme."

Intrinsicness ev. On an CIR tradeoff DA
Fred Wilson (a VC and principal of Union Square Ventures) July 20, 2010: Immigration Reform.

Last night my partners and I hosted a fundraiser for NY's senior Senator Chuck Schumer. I've written about my fondness for Chuck on
this blog before and I remain a fan and supporter.
Chuck told a story to a small group that had assembled before the larger event. He said that he was meeting with the CEO of Deutsche
Bank and asked him "do you think the US will be the world's leading economy twenty-five years from now?" The Deutsche Bank
CEO said "of course." Chuck said "not many Americans feel that way right now." And the CEO said "America is the only place in the
world where anyone, no matter what race, religion, background, can be accepted in business and society and realize their dreams and
make it to the top. That doesn't happen anywhere else."
I might disagree with the CEO just a bit. I think Australia and Canada are very similar to the US in that regard. But his point is
important and worth blogging about, which is what I am doing.
A welcoming society our history and that is the special sauce that the US brings to the world economy. We welcome entrepreneurs
large and small in the US and support them and celebrate their success and forgive their failures. And I am so very proud that I am a
citizen of this great country.
But we have turned inward in the wake of 9/11 and the "war on terrorism." And that is hurting us. The terrorists have achieved their
goals if they turn the US into a country that no longer welcomes the best and brightest from anywhere with open arms.
So I was thrilled to hear Senator Schumer's optimism last night that we will get "comprehensive immigration reform" in 2011, after
the midterm elections. I hope and suspect that will include visas for science, technology, engineering, and medicine (STEM) grads. I
hope and suspect that will include the startup visa. I hope and suspect that will include a lot more H1B visas.
Immigration reform is one of the most important issues in the startup political agenda which also includes net neutrality, patent
reform, and a number of other important issues. I know that many of you share my passion for this issue. Let's keep up the pressure on
our elected representative to do the right thing and give us comprehensive immigration reform as soon as possible.

Mary Kate Cary (writes speeches for political and business leaders) July 14, 2010: How Republicans Should Handle Immigration
Unemployment is stuck at nearly 10 percent nationwide these days and job creation seems to have nearly stopped, but Chris Farrell
writes in Bloomberg BusinessWeek that over the last 20 years, U.S. multinational corporations have contributed a majority of the
gains in productivity during good times, according to the McKinsey Global Institute. Farrell cites some great statistics about the
tremendous number of high-tech start-ups led by highly educated immigrants that have created many jobs for Americans. (Let's leave
aside the question of why the American higher education system is not producing more of our own inventors, engineers and high-tech
experts, just as we cannot seem to find enough Americans to fill jobs involving manual labor or farm work. That's a blog for another
In addition, "foreign nationals living in the U.S. were named as inventors or co-inventors in 24 percent of all international patent
applications filed in the U.S. in 2006. That's up from 7 percent in 1998. The influx of highly-skilled workers from India, Asia, Latin
America, and other corners of the world is also a boon to U.S. exports." He concludes:
... America's historic record, blue-chip economic research, and well-established business experience all suggest the payoff from
making it vastly easier for immigrants—especially educated immigrants—to stay permanently in the U.S. will be enormous. Tear
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down the walls that place obstacles to immigrants attending American universities and set up procedures for rapidly granting educated
workers permanent resident visas.
Create a mechanism for a permanent "entrepreneurial" visa for those immigrants with a hunger to create a business and a plan for a
job-generating startup. Instead of piling on more obstacles to prevent abuses of the current temporary H-1B visa system, why not
streamline the whole process and eliminate many of the restrictions that make it difficult for workers to travel, change jobs, or earn a
Republicans can sit by and let Democrats portray them as anti-immigrant and racially motivated on the immigration issue, or they can
emphasis pro-growth, pro-immigrant policies that bring more engineers, scientists, and high-tech computer experts to the United
States to reinvigorate our economy. It's a win-win policy for everybody: Republicans, immigrants, and Americans looking to get back
to work. Let Democrats spiral down into divisive language and ugly politics; Republicans should rise above and talk in clear, balanced
terms about securing the border and being generous to those who are willing to play by the rules.

SVB Financial Group July 15, 2010: SVB Financial Group Hosts Innovation Roundtable with Congressional Representatives and
Venture Capital Clients to Spur Innovation and Create Jobs.
One of the issues discussed at the roundtable was how to make sure that innovators with the best new ideas start and grow their
companies in the United States. SVB supports the proposal to create a special "Startup Visa," one of the items in the New Democrats'
platform. This proposal, which has been introduced in both the Senate and the House of Representatives (among others, by
Representative Jared Polis (CO), one of the roundtable participants), would make a category of existing, underutilized visas available
to individuals who demonstrate they have both the ideas and the financial backing to start a company that will create jobs in the
United States.
"It's critical to invigorate our innovation economy, thus critical that the Startup Visa is passed. The USA is currently the leader in
technology and entrepreneurship, in order to maintain that status, create jobs and continue to attract top talent to our country we need
legislature to support innovation. We wholeheartedly support the view of the New Dems and the opportunity Silicon Valley Bank
provided to us in facilitating this discussion," said Jason Mendelson, Foundry Group Managing Director.
"Everybody is better off when new companies are created here in the United States. The Startup Visa will help bring new ideas and
new capital together to create more U.S. companies and more U.S. jobs," said Dent.
"As a former entrepreneur, I know first-hand what it takes to build a company -- and I know what opportunities a successful company
can create for its workers, its suppliers, and its community. If an entrepreneur has an idea for a company that will attract investors and
hire workers, we should be welcoming and encouraging that entrepreneur to start their company in the U.S.," said Congressman Jared

Vivek Wadhwa (Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Executive in Residence at
Duke University) Dec 5, 2009: The Startup Visa And Why The Xenophobes Need To Go Back Into Their Caves.
Every time I publish a research paper on immigration or write an article for Business Week or TechCrunch, the xenophobes rush out
of their caves to launch mindless attacks. They fill the comment sections with bile, send me nasty emails and sometimes threaten to do
me harm. I was convinced that my last Business Week column on the Startup Visa presented such a compelling argument that even
these poor souls would support it.
After all, this visa is about creating American jobs and moving innovation here which would otherwise happen in other countries. We
can boost the economy without any cost to taxpayers. It‘s not about admitting H-1B visa holders who sometimes make Americans
compete for high-paying jobs, but bringing in entrepreneurs who expand the pie for everyone. Not only do the Democrats support this,
but so do the Republicans (their thought leader, Newt Gingrich blogged about my previous TechCrunch post on immigration and his
staff told me that he was a supporter of the startup visa). So this seems like a no-brainer.
But, no, logic doesn‘t prevail with this crowd. I got the same stream of hate mail that I‘m used to, and the xenophobes hijacked the
BusinessWeek reader feedback section again. Most of their statements are illogical and uneducated. But there are two potentially
meaningful arguments which opponents of the startup visa make, which are worth discussing: that the founders we are bringing in
aren‘t always the ―best and brightest‖ and that there is already a visa category for geniuses called the O-1 visa.
I know we‘re not always bringing in the best and brightest. Most are just average techies. I can offer myself up as an example. When I
came to this country in 1980 from Australia, I was just a low-level computer programmer. Yes, I took pride in being able to write the
slickest Assembler code (anyone remember what this is?). But I was pretty average in my education and skills. I had no PhD. I had no
patents. No one would ever have thought of giving me an O-1 visa. But I came, I worked hard, and I learned. And I developed ideas
for how to make better software.
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Years later, technology which I invented formed the basis of a software company which employed over 1,000 people and changed the
way enterprise client-server systems were built. I don‘t know my total value-add to the American economy but I certainly added
hundreds of millions of dollars over the life of my two startups. And now I‘m giving back to America by contributing my time and
energy to 3 great universities, Duke, Harvard and UC-Berkeley.
Now let‘s discuss the genius visa. Any immigration attorney will tell you that qualifying for this visa is so hard that even Einstein
wouldn‘t have cut it. You‘ve got to have a perfect academic record, have topped every class you took and have as many as 10
independent authorities say you walk on water. I happened to meet someone at a talk I gave at Berkeley last week, who qualified for
this. He has a remarkable story which shows how screwed up our immigration system is.
Alex Kosorukoff learned programming in high school in Russia and started working part-time as a software developer. He later joined
Ivanovo State Power University and worked part-time as a researcher in a Russian-American joint venture. He came across several
American books on entrepreneurship, read them, and started thinking about becoming an entrepreneur.
Alex persuaded two friends to start a company in 1991. (Let me remind you that this was very, very early in the transition in Russia
from Communism to Democracy). They built accounting software which became a big hit. Alex rode the rising tide of
entrepreneurship and launched several other companies. In 1995, he won a U.S. Information Agency ―Business for Russia‖ contest.
Part of the prize was an exchange program at Syracuse University‘s Maxwell School. He came to the U.S. for 2 months, learned more
about American business and went back home to solve some of our problems. (Like nearly all foreigners who come here, he fell in
love with America and wanted to share the American Dream).
Alex started researching why organizations struggle to scale well, why decision processes become more inefficient and why talented
employees leave. Alex looked around at the natural world and noticed that biological organisms do a better job of scaling up. He
designed a form of participatory organization based on evolutionary algorithms and prototyped it with a website that attracted
hundreds of participants in 1998-99. His research was discovered by Prof. David Goldberg (University of Illinois), who invited the
young Russian to join his lab. Dr. Goldberg‘s lab was amongst the top in the field of evolutionary computation.
Alex expected he would have the best of both worlds by coming to America—performing groundbreaking research and becoming an
American-style entrepreneur. Once he got to Illinois, however, Alex realized that neither his academic research aspirations nor his
entrepreneurial ambitions would be completely fulfilled. The university told Alex that he could not work outside the strict
classification of his visa, could perform no side work, and definitely could not launch a company. ―They even told me I couldn‘t
continue to run my website, since it had ad-generated income. I had to move it to Taiwan and have a friend over there run it for me,‖
Alex explains.
Since the focus of his research was forming companies using evolutionary computation, Alex realized he would not be able to take his
theorems and try them out in the real world, as he had done in Russia. ―I had to postpone all my entrepreneurial activities and resort to
simulation and doing related evolutionary computation research for other professors, but that meant a big switch away from my main
area of interest,‖ says Alex. Still, he managed to win a number of awards for his research.
In fact, Alex‘s work did manage to stimulate entrepreneurial activity. Garrett Camp, who founded Stumbleupon, read Alex‘s work and
used parts of it in conceiving a social sharing company which ultimately sold to EBay for $75 million. If you take Camp at his word,
Alex may have been modest in telling me this story. Says Camp, ―Alex pioneered the concept of human-based computation. His work
on human-based genetic algorithms provided a lot of insight during the design of StumbleUpon, and I referenced several of his papers
in my Masters thesis‖.
After Alex finished his Ph.D., he got an offer from StumbleUpon (ironically, a company that was founded in Canada in 2001 and later
relocated to Silicon Valley). StumbleUpon uses human-based evolutionary computation techniques as does Wikipedia. Alex was
clearly grateful for the offer. But it‘s pretty easy to tell that he is itching to start his own company, something he‘s done successfully
several times before in Russia in what might be considered a far harsher business environment. So what‘s he doing right now? Waiting
for his green card to be approved.
In the meantime, the unemployment rate in California is now over 12%, a near record high. The national rate is at 10%. Credit markets
are totally frozen and small businesses—the most dynamic part of the U.S. economy are suffocating for lack of operating capital. So
slightly tweaking a law to allow smart foreigners to jumpstart our economy would seem to be a really easy decision politically and
economically. Rather than listening to the emotion of misguided anti-immigrants, we need to listen to reason. After all, it is
immigrants like Alex who have started 25% of Silicon Valley‘s tech companies in recent times.

Plan unpopular
Erick Schonfeld (Co-Editor of TechCrunch) Feb 24, 2010: The Startup Visa: Create Jobs, Get A Green Card.
A bill introduced today in the Senate by Democrat John Kerry and Republican Richard Lugar proposes a new type of visa for
immigrants who create startups and jobs in the U.S. A similar proposal is part of an immigration reform bill in the House. The Startup
Visa has been controversial and will no doubt draw fire from anti-immigrant forces and xenophobes. But if we are going to be giving
away visas, giving them to people who will help build the U.S. economy and create jobs is hard to argue against.
The Startup Visa Act of 2010 would create a two year visa for immigrant entrepreneurs who are able to raise a minimum of $250,000,
with $100,000 coming from a qualified U.S. angel or venture investor. After two years, if the immigrant entrepreneur is able to create

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five or more jobs (not including their children or spouse), attract an additional $1 million in investment, or produce $1 million in
revenues, he or she will become a legal resident.
The bill would carve out a new ―EB-6″ class of visas from the existing ―EB-5″ class of visas which has a higher threshold for
becoming a legal resident. So it‘s not really that radical. The EB-5 requires immigrants to invest at least $1 million in the U.S. and
employ ten people.
The Startup Visa sends the right message to prospective immigrants: create jobs, get a green card. A group of 160 venture capitalists
and angel investors support the bill, including Paul Graham, Brad Feld, Fred Wilson, Dave McClure, Ron Conway, Mike Maples,
Reid Hoffman, Chris Sacca, Jeff Clavier, Bijan Sabet, Josh Kopelman, and Chris Dixon. If you agree that the Startup Visa is a good
idea, you can find ways to support it here and here.

Eric Ries (creator of the Lean Startup methodology BusinessWeek named Ries one of the Best Young Entrepreneurs of Tech and in
2009 he was honored with a TechFellow award in the category of Engineering Leadership. He serves on the advisory board of a
number of technology startups, and has worked as a consultant to a number of startups, companies, and venture capital firms) March
21, 2010: The New Startup Arms Race.
There is no greater country on Earth for entrepreneurship than America. In every category, from the high-tech world of Silicon Valley,
where I live, to University R&D labs, to countless Main Street small business owners, Americans are taking risks, embracing new
ideas and -- most importantly -- creating jobs.
America's future prosperity depends on our ability to maintain this lead. But today, it is getting harder and harder to maintain. A quick
glance is the rear-view mirror reveals that other countries are catching up and at an alarming rate. Part of this is due to their
determination to overtake us, but part is due to structural changes in the nature of entrepreneurship.
Startups are the lifeblood of our economy. In the past two decades, they have accounted for nearly all the net job growth in our
country. Many of these companies are started by entrepreneurs, and are now household names: Google, Yahoo, eBay and Intel. But
many more are true American success stories, out of the limelight, quietly creating jobs and securing our future.
Take the example of Indiana's Passageways. Paroon Chadha came to the US for his graduate education, and was bitten by the
entrepreneurial bug immediately after school. He started Passageways Inc. immediately upon graduating, and has spent the last 8 years
struggling to work around visa restrictions. Luckily for the rest of us, he was able to find his path to a green card, and now employs 24
Americans in West Lafayette, Indiana. For every success story like Paroon's, there are dozens -- hundreds -- of similar cases that end
in failure.
Like other industries -- from publishing to automobiles -- entrepreneurship is in the process of being disrupted by globalization. The
cost of creating new companies is falling rapidly, and access to markets, distribution, and information is within the reach of anyone
with an Internet connection. The result is a profound democratization of the digital means of production.
When Steve Jobs and Steve Wozniak created Apple computer in a garage in Palo Alto, it heralded the beginning of the PC revolution
that ultimately dealt a death-blow to dozens of older companies. That could only have happened in Silicon Valley or one of a few
specialized technology hubs that had the manufacturing, engineering, and software specialists required to build their first products.
But when Mark Zuckerberg started Facebook in his dorm room in Boston, he unleashed a revolution, too. But something had changed
-- it's our good fortune as Americans that Facebook began in an American dorm, but there is nothing necessary about it. It could have
happened elsewhere. And it's our good fortune that Mark was already an American citizen, and so could move to Silicon Valley
without difficulty, where he now leads a company that employs hundreds -- and soon, thousands.
If the next Facebook, Google, or Amazon begins in another country, the economic growth that it sparks will benefit us, too. But the
jobs will be created over there.
The United States is locked in a new arms race for that most precious resource -- the future entrepreneurs upon whom economic
growth depends. Substantial research shows that immigrants play a key role in American job creation. For example, over 25% of the
technology companies founded between 1995-2005 had a key immigrant founder. These companies produced over $52 billion dollars
in sales in 2005, and employed 450,000 workers that year. Similarly, 24% of all the patents filed in the US in 2006 had a foreign
resident as inventor or co-inventor.
If we allow other countries to welcome these immigrants, support them and nurture them, we will lose out in this race. We will not
lose on their products -- after all, most of them are global. We will not necessarily harm investors, either: as capital is increasingly
global, they will be able to invest wherever good ideas are born. The cost will be felt in jobs -- thousands of new jobs that could
have been created here, but weren't.
There is much that public policy can do to support American entrepreneurs. Health insurance reform will make it easier for
entrepreneurs to take a chance on a new business without putting their family's health at risk. Tort reform will make it easier to take
prudent risks on new products in a number of sectors. And the clean energy revolution requires extensive policy support.
These policies are important, but they do not address this fundamental concern: America is losing the global arms race for
entrepreneurial talent. There is a solution, called the Startup Visa. There is a special visa for international investors that want to bring
capital to this country to start a business with. It's called the EB-5 visa, and we already set aside 10,000 every year for this purpose.
Yet this policy does nothing to bolster our position in the arms race -- the visa attaches to the investor, not the entrepreneur.
With a small change to the EB-5 definition, we can reverse that priority, making the visa available to qualified entrepreneurs seeking
to raise capital from American investors to create jobs, economic growth, and assure our future prosperity.
                           For every action there is an equal and opposite government program – Bob Wells
USF Debate 2010-2011                                                                                                                    EB-5
Gonzo                                                                                                                                  28/28
The Startup Visa Act of 2010 is currently pending in the Senate, co-sponsored by Senator John Kerry and Senator Richard Lugar.
Similar legislation, originally sponsored by Congressman Jared Polis, is being considered in the House. This bipartisan and bicameral
progress is the result of the thousands of people who have spoken out in support of this idea since the launch of last
year: entrepreneurs and investors, professors and students -- citizens from almost every state in the union (see a map here). This
grassroots support is essential as the Startup Visa bill has a chance to become law this year.
Every potential founder that has to leave this country in order to create their startup is a lost opportunity. These lost opportunities are
not consonant with American values, they are not smart public policy, and -- most of all -- they represent thousands of lost jobs.

Jobs and competitiveness
Brad Feld (an early stage investor and entrepreneur for over 20 years and is the co-founder of Foundry Group) 2/24, 2010: StartUp
Visa Act Introduced By Senators Kerry And Lugar.
Today, Senator John Kerry (D-MA) and Senator Richard Lugar (R-IN) introduced the StartUp Visa Act of 2010. The group of us
behind the Startup Visa project have been working closely with key members of each Senators‘ staff on this and we are incredibly
pleased with the proposed bill.
Following is the text from the press release announcing the bill:
―Senators John Kerry (D-Mass.) and Richard Lugar (R-Ind.), the Chairman and Ranking Member of the Senate Foreign Relations
Committee, today introduced legislation to drive job creation and increase America‘s global competitiveness by helping immigrant
entrepreneurs secure visas to the United States.
The StartUp Visa Act of 2010 will allow an immigrant entrepreneur to receive a two year visa if he or she can show that a qualified
U.S. investor is willing to dedicate a significant sum – a minimum of $250,000 – to the immigrant‘s startup venture.
―Global competition for talent and investment grows more intense daily and the United States must step up or be left behind,‖ said
Sen. Kerry. ―Everywhere Dick Lugar and I travel for the Foreign Relations Committee, we see firsthand the entrepreneurial spirit
driving the economies of our competitors. Creating a new magnet for innovations and innovators to come to the United States and
create jobs here will offer our economy a double shot in the arm – robust job creation at home and reaffirmation that we‘re the world‘s
best place to do business.‖
―Our country should strive to attract to the United States the most talented and highly skilled entrepreneurs. We should channel the
power of innovative thinkers from around the world and American investors towards creating jobs and encouraging economic growth
and future prosperity,‖ said Ranking Member Lugar.
The StartUp Visa Act of 2010 would amend immigration law to create a new EB-6 category for immigrant entrepreneurs, drawing
from existing visas under the EB-5 category, which permits foreign nationals who invest at least $1 million into the U.S., and thereby
create ten jobs, to obtain a green card. After proving that he or she has secured initial investment capital and if, after two years, the
immigrant entrepreneur can show that he or she has generated at least five full-time jobs in the United States, attracted $1 million in
additional investment capital or achieved $1 million in revenue, then he or she would receive permanent legal resident status.

W. David Gardner (Information Week Writer) March 4, 2010: Startup Visa Act Proposed To Create US Jobs.

Legislation supporting immigrants with the wherewithal to start companies in the U.S. has been introduced by Senators John Kerry
and Richard Lugar with the hopes that it would help create badly needed U.S. jobs.
Supported by a group of Silicon Valley investors who visited Washington this week, the bill would revise the E-5 visa program to
accredit any foreign entrepreneur who has raised at least $250,000 for a business venture. The bill calls for the creation of a new two-
year visa called EB-6 for successful applicants. More than 150 U.S. venture capitalists have supported the legislation.
Many U.S. computer and IT companies have been started by immigrants from foreign countries.
For instance a 2006 study of high-tech firms found that nearly half of the founders were immigrants. The study listed many foreign
immigrants who founded successful companies, including Intel's Andy Grove, from Hungary; Sun Microsystem's Andreas
Bechtolsheim, Germany, and Vinod Khosla, India; eBay's Pierre Omidyar, France; Yahoo's Jerry Yang, Taiwan; Google's Sergey
Brin, Russia; Nvidia's Jen-Hsun Huang, Taiwan; and Cascade Communications' Gururaj Despande, India.

                           For every action there is an equal and opposite government program – Bob Wells

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