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Report to Congressional Committees: 

United States Government Accountability Office: 

GAO: 

April 2005: 

Immigrant Investors: 

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

GAO-05-256: 

GAO Highlights: 

Highlights of GAO-05-256, a report to congressional committees: 

Why GAO Did This Study: 

In 1990, Congress established an investor visa category, referred to as 
EB-5, whereby immigrants are granted conditional residence and after 2 
years, permanent residence status in the United States if they invest 
in a commercial enterprise that will benefit the U.S. economy and 
create at least 10 full-time jobs. The Basic Pilot Program Extension 
and Expansion Act of 2003 (P.L. 108-156) mandates that GAO provide 
certain information regarding the EB-5 employment category. In response 
to the mandate, this report provides information immigrant 
participation, including the number of participants, their countries of 
origin, and the number who sought U.S. citizenship. Also, this report 
includes information about the types of business established and where 
they were established. 

What GAO Found: 

The number of visas granted under the EB-5 category has been a small 
fraction of the approximately 10,000 allocated annually by the 
authorizing legislation. According to State Department records, a total 
of 6,024 visas have been issued to immigrant investors and their 
dependents since 1992. As of June 2004, 653 investors (not including 
dependents) had met this immigration category’s requirements and 
received permanent legal resident status. 

Number of Visas Issued by Year, Fiscal Years 1992 through 2004

[See PDF for image]

[a] Since decisions for applications are not necessarily rendered the 
same year they are received, numbers of visas issued in a year may be 
from applications submitted in prior years.

[End of figure]

The immigration officials and lawyers who represent immigrant investors 
that we interviewed attribute the low participation to the rigorous 
application process and the uncertainty of meeting the requirements 
that can result in the permanent residency benefit. They also cited, as 
a potentially negative impact on future applicants, the failure to 
issue implementing regulations to adjudicate hundreds of EB-5 permanent 
residence applications that have left investors in conditional resident 
status—some for as long as 10 years. In 2002, Congress mandated that 
the regulations be issued by March 2003. The regulations were initially 
drafted but continue to be under review by the Department of Homeland 
Security. DHS cited many difficult and competing demands associated 
with establishing the new department and meeting its mission challenges 
as reasons the regulations have not been completed.

About 83 percent of investors and their dependents who were granted 
permanent resident status through the EB-5 category are from Asia. EB-5 
participants have invested an estimated $1 billion in a variety of 
businesses (e.g., hotels/motels, manufacturing, restaurants, real 
estate, and farms). GAO estimates that 41 percent of the businesses 
were established in California. 

What GAO Recommends: 

To better achieve the economic benefits of the EB-5 visa category, GAO 
recommends that the Secretary of the Department of Homeland Security 
finalize and issue regulations necessary to provide final adjudication 
to those cases dependent on these regulations.

In commenting on our recommendation, DHS stated that the regulations 
have been, and remain a priority within the department.

www.gao.gov/cgi-bin/getrpt?GAO-05-256.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Paul Jones at (202) 512-
8777 or jonesp@gao.gov.

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

EB-5 Participation Is a Small Fraction of the Visa Allocation: 

Immigrant Entrepreneurs with Permanent Resident Status Have Invested an 
Estimated $1 Billion in a Variety of Businesses, Primarily in 
California: 

Conclusions: 

Recommendation: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology1: 

Objectives: 

Overview of Our Scope and Methodology: 

Number of Immigrant Investors and Country of Origin: 

Immigrant Investors and Their Businesses: 

Processing of Immigrant Investor Visa Applications at the Two USCIS 
Service Centers and Criteria Used for Approvals and Denials: 

Views of Immigration Lawyers: 

Data Reliability: 

Appendix II: Immigrant Investor Program Application Process1: 

Immigrant Investors' Initial Application: 

Application for Conditional Resident Status: 

Application to Change Conditional Residency Status to Permanent 
Residency Status: 

Application for U.S. Citizenship: 

Appendix III: Comments from the Department of Homeland Security1: 

Appendix IV: GAO Contacts and Staff Acknowledgments1: 

GAO Contacts: 

Staff Acknowledgments: 

Tables: 

Table 1: Number of EB-5 Visas Issued, by Country of Origin, Fiscal Year 
1992 through 20041: 

Table 2: Estimated Number of Immigrant Investors Who Have Sought U.S. 
Citizenship, Fiscal Years 1992 through June 2004: 

Table 3: Types and Estimated Number of Businesses Established by 
Immigrant Investors with Permanent Resident Status, Fiscal Years 1992 
through June 2004: 

Table 4: States Where Immigrant Investors Established Business 
Operations, Fiscal Years 1992 Through June 2004: 

Figures: 

Figure 1: EB-5 Application Process: 

Figure 2: Number of Visas Issued by Year, Fiscal Years 1992 Through 
2004: 

Figure 3: EB-5 Application Processing Flow: 

Abbreviations: 

AAO: Administrative Appeals Office: 

CLAIMS: Computer Linked Application Information Management System: 

DHS: Department of Homeland Security: 

DOJ: Department of Justice: 

EB-5: employment-based visa category, fifth preference: 

INS: Immigration and Naturalization Service: 

IVAMS: Immigrant Visa Allocation Management System: 

MFAS: Marriage Fraud Amendment System: 

RFE: request for evidence: 

USCIS: U.S. Citizenship and Immigration Services: 

United States Government Accountability Office: 

Washington, DC 20548: 

April 1, 2005: 

The Honorable Arlen Specter: 
Chairman: 
The Honorable Patrick J. Leahy: 
Ranking Minority Member: 
Committee on the Judiciary: 
United States Senate: 

The Honorable F. James Sensenbrenner, Jr.: 
Chairman: 
The Honorable John Conyers, Jr.: 
Ranking Minority Member: 
Committee on the Judiciary: 
House of Representatives: 

To promote job creation and encourage foreign investment in the United 
States, Congress created an additional employment-based immigrant visa 
category (preference benefit) as part of the Immigration Act of 1990, 
P.L. 101-649, as amended. This category, commonly referred to as EB-5, 
allows immigrant investors to receive conditional resident status in 
the United States for a 2-year period upon the investment of $1 million 
(or $500,000 in targeted employment areas) in a U.S. business that 
creates at least 10 full-time jobs. If the investors meet the 
requirements, they can apply for permanent legal resident status. The 
EB-5 immigrant investor category began in 1992 and is administered by 
the U.S. Citizenship and Immigration Services (USCIS), a component of 
the Department of Homeland Security (DHS). Under the authorizing 
legislation for the EB-5 category, approximately 10,000 immigrant 
investor visas may be issued each year.[Footnote 1]

The Basic Pilot Program Extension and Expansion Act of 2003 (P.L. 108- 
156), mandates that we provide certain information regarding the EB-5 
category. In accordance with the mandate, this report provides 
information on: 

* the level of participation, including (1) the number of individuals 
who have received immigrant investor visas in each year since the 
category's inception, (2) their country of origin, and (3) the number 
of immigrant investors who have sought U. S. citizenship, and: 

* the businesses established by immigrant investors, including (1) the 
types established, (2) their locations and whether they remained in the 
same location, and (3) the number of jobs created.

To perform our work, we reviewed applicable laws, including the 
Immigration Act of 1990 and the 21st Century Department of Justice 
Appropriations Authorization Act (P.L. 107-273 (2002)), as well as 
studies, analyses, and other relevant literature covering the EB-5 
category. Also, we reviewed USCIS and Department of State policies and 
guidelines related to EB-5. We analyzed State Department data to 
determine the number of visas issued under the EB-5 employment category 
from 1992 through June 2004 as well as the immigrant investors' and 
their dependents' countries of origin. USCIS electronic databases do 
not include information on where immigrant investors established their 
businesses, the extent to which the businesses remained in the original 
location, the types of businesses established, the number of jobs 
created, or the number of immigrant investors who applied for U.S. 
citizenship. Therefore, to obtain this information, we conducted a 
manual review of a random probability sample of 90 case files. We also 
interviewed USCIS headquarters officials in Washington, D.C., as well 
as USCIS service center officials in California and Texas to obtain 
information about immigrant investor application processing procedures 
and their opinions on other EB-5 issues. Further, to obtain 
perspectives on the EB-5 category from nongovernmental sources, we 
interviewed four immigration lawyers in the private sector who were 
knowledgeable about the EB-5 application process. We did not 
independently corroborate the opinions provided by USCIS officials and 
immigration lawyers that we interviewed. Our selection of immigration 
lawyers was based primarily on the recommendations of the American 
Immigration Lawyers Association. We conducted our work from March 2004 
to February 2005 in accordance with generally accepted government 
auditing standards. Appendix I presents more details about our 
objectives, scope, and methodology.

Results in Brief: 

The number of visas granted under the EB-5 category has been 
considerably less than the approximately 10,000 designated annually by 
the authorizing legislation. According to State Department data, a 
total of 6,024 visas have been issued to alien entrepreneurs and their 
dependents since 1992. The annual number of visas issued peaked at 
1,570 in 1997 and, since then, has declined. Our analysis of USCIS data 
indicates that as of June 2004, an estimated 653 investors (not 
including dependents) had met the EB-5 requirements and received 
permanent legal residency. The USCIS officials and immigration lawyers 
that represent EB-5 participants that we interviewed attribute the 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 
on over 900 EB-5 cases--some of which date to 1995--precipitated by a 
change in USCIS's interpretation of regulations regarding financial 
qualifications.[Footnote 2] In 2002, Congress mandated in the 21st 
Century Department of Justice (DOJ) Appropriations Authorization Act 
(P.L. 107-273) that USCIS issue regulations to implement congressional 
directives by March 2003 to address these pending cases. According to 
USCIS officials, they initially drafted the regulations. However, the 
regulations have been under review and revision primarily between USCIS 
and the Department of Homeland Security, Office of General Counsel, 
since March 2003. Many difficult and competing demands associated with 
establishing the new Department of Homeland Security and meeting its 
mission and management challenges were cited by DHS as a reason the 
regulations have not been issued.

Our analysis indicates that about 83 percent of applicants approved for 
the EB-5 category are from Asia, including Taiwan, South Korea, and 
China. We estimate that about 38 percent of the immigrant investors who 
have met the EB-5 requirements and been approved for permanent 
residence applied for U.S. citizenship, although seeking citizenship is 
not a requirement.

Immigrant investors invested in a variety of business types that have 
generally remained at their initial locations. The immigrant 
entrepreneurs invested primarily in hotels or motels, manufacturing 
companies, real estate companies, domestic sales companies, farms, 
import/export companies, restaurants, and technology companies. We 
estimate that 41 percent invested in businesses in California. Very few 
investors relocated their businesses to a state other than the one 
listed on the investor's initial EB-5 application. Specifically, of the 
653 investors who have met the EB-5 requirements and been approved for 
permanent residence, we estimate that 644 (or 99 percent) of the 
businesses remained in the same state. We also estimate that from 
fiscal year 1992 through June 2004, immigrant entrepreneurs who 
completed the EB-5 benefit requirements and attained permanent legal 
residency, invested about $1 billion.

We could not determine a reliable estimate of the number of jobs 
created by immigrant investors because, during the application review 
process, USCIS adjudicators only ensure that each business created the 
minimum requirement of at least 10 jobs but do not apportion the 
creation of additional jobs between EB-5 investors and non-EB-5 
investors. For example, if there are non-EB-5 investors involved or the 
investment is part of a greater overall business expansion, USCIS 
credits the individual immigrant investor with all the jobs created, 
rather than trying to determine exactly how many jobs are attributable 
to the immigrant investor's portion of the investment.

Delay in issuing implementing regulations has left hundreds of visa 
holders in limbo for as long as 10 years, contributing to a negative 
perception of the employment-based category and potentially limiting 
investment in the United States.[Footnote 3] Therefore, we recommend 
that the Secretary of the Department of Homeland Security finalize and 
issue the regulations necessary to provide final adjudication in these 
cases. In commenting on our recommendation, DHS stated that the 
regulations have been and remain a priority within DHS, they are 
working to resolve complex issues regarding the EB-5 implementing 
regulations, and they are working with the Department of Justice.

Background: 

Under the authorizing legislation for EB-5, approximately 10,000 visas 
may be issued each year to investors and their dependents. One category 
sets aside 3,000 visas for investors making investments in targeted 
employment areas.[Footnote 4] Another category sets aside an additional 
3,000 visas each year for a special pilot program.[Footnote 5] This 
visa category is for alien entrepreneurs who make qualifying 
investments in a business located within a "regional center."[Footnote 
6] The remaining EB-5 visas are available to immigrant investors who do 
not invest in a targeted area or a regional center. Any of the 
approximately 10,000 immigrant investor visas not issued remain unused 
and do not carry over to subsequent years.

Figure 1 provides an abbreviated description of the application process 
immigrant investors must follow to be approved for the EB-5 category, 
obtain conditional resident status to establish the business, and 
complete the EB-5 requirements to attain permanent resident status. 
While not shown, after 5 years from the date conditional resident 
status is granted, the investor may apply to become a naturalized U.S. 
citizen.[Footnote 7]

Figure 1: EB-5 Application Process: 

[See PDF for image]

[A] Immigrant investors may choose to immigrate from abroad by applying 
for a visa at the U.S. consulate in their home country. If the U.S. 
consulate denies the visa, no further action is taken.

[End of figure]

Appendix II presents additional details about EB-5 processing 
procedures and the criteria USCIS uses to make approval and denial 
decisions.

EB-5 Participation Is a Small Fraction of the Visa Allocation: 

The participation of immigrant investors (and their dependents) has 
been well below the annual EB-5 visa category cap of approximately 
10,000. Our analysis of State Department and USCIS data show that, as 
of June 2004, 6,024 visas have been issued to immigrant investors 
including their dependents and an estimated 653 investors (excluding 
dependents) had met the EB-5 requirements and been approved for legal 
permanent resident status. Most immigrant investors who have been 
approved for the EB-5 category came from Asia.

The Number of Immigrant Investors Is Far Fewer than the Number of 
Allocated Visas: 

According to State Department data, a total of 6,024 visas have been 
issued to immigrant investors and their dependents under the EB-5 
category since its inception in 1992 through fiscal year 2004. 
Approximately 10,000 EB-5 visas per year (potentially 130,000 visas 
through fiscal year 2004) have been authorized to be issued to 
individuals and their dependents if the principal investor agrees to 
make the required investment, establish a business in the United 
States, and create at least 10 full-time jobs. According to USCIS, 
there is no way to determine the number of potential applicants or the 
number of applicants who have applied for the category. Figure 2 shows 
that the number of visas approved under EB-5 since 1992 is a small 
fraction of the approximately 10,000 per year visa allocation set by 
its authorizing legislation.

Figure 2: Figure 2: Number of Visas Issued by Year, Fiscal Years 1992 
Through 2004: 

[See PDF for image]

[A] Since decisions for applications are not necessarily rendered the 
same year they are received; the number of visas issued in a year may 
include applications submitted in prior years.

[End of figure]

Factors Contributing to Low Participation: 

USCIS officials and immigration lawyers that represent EB-5 
participants attributed the low participation to a series of factors 
that contributed to uncertainty among potential investors. These 
factors included the suspension of processing of hundreds of EB-5 
applications in 1998 and the subsequent issuance of several precedent 
setting decisions intended to clarify how adjudicators should interpret 
EB-5 regulations.

USCIS Views: 

USCIS officials cited several possible contributing factors as reasons 
for the low participation and approval rates as follows: 

* Rigorous nature of the EB-5 application process versus other 
employment-based visa applications: According to agency officials, many 
potential immigrants may have other options to achieve lawful permanent 
resident status that are less difficult to qualify for, less expensive, 
and more certain. For example, other employment based immigrant visas 
do not require a substantial investment of money to establish a 
business and hire employees. Also, other employment visas, such as 
those for professionals with advanced degrees or priority workers 
including persons who have a well-documented and extraordinary ability 
in the sciences, arts, education, business, or athletics, may be easier 
for immigrants to obtain because the immigrant's employer is 
responsible for completing the application and complying with the 
applicable USCIS regulations.

* Lack of expertise among adjudicators: USCIS officials said that prior 
to 1998, EB-5 adjudicators were not sufficiently trained to properly 
adjudicate EB-5 applications, which typically involve complex business 
and tax issues. After the additional guidance (discussed below) was 
issued, USCIS officials changed the EB-5 training curriculum to provide 
adjudicators with training that addressed the complexities of EB-5 
applications and helped to ensure that appropriate decisions would be 
rendered in accordance with applicable statutes, regulations, and 
agency policy. According to agency officials, the improved training may 
have resulted in fewer applications being approved and, therefore, 
contributed to a lower approval rate.

* Uncertainty of the outcome of adjudication: The statute provides for 
a 2-year conditional residence period but does not guarantee investors 
lawful permanent resident status at the end of the period. The required 
investment and employment creation must be established to the 
satisfaction of USCIS prior to approving the investor for permanent 
legal resident status. Potential investors may be deterred by the 
uncertainty that USCIS may determine that they did not meet the EB-5 
terms. Agency officials said that the 1998 changes in the USCIS 
interpretation of the EB-5 regulations (discussed below) have 
contributed to this uncertainty. Further, the undetermined status of 
hundreds of EB-5 applications waiting for promulgation of new 
regulations may have a negative effect on attracting new applicants. 
Also, a history of federal litigation prompted by the precedent 
decisions where the courts have taken various positions may have 
contributed to uncertainty regarding the future interpretation of EB-5 
law and regulations.[Footnote 8]

* Public awareness and media attention: Publicity regarding EB-5 (also 
discussed below) has been negative and may have contributed to 
decreased interest in the EB-5 visa category and a resulting drop in 
the number of alien entrepreneurs applying for EB-5.

Immigration Lawyers' Views: 

All of the immigration lawyers we interviewed said that although 
immigrants still want to participate in the EB-5 category, the 
suspension of adjudications of hundreds of investors' applications has 
deterred participation. They also cited subjectivity within the 
adjudication process and the length of time it takes for USCIS to 
adjudicate the various petitions as having contributed to the decline 
in EB-5 participation. As a result the U.S. is not realizing the full 
economic potential of EB-5. Specifically, these lawyers noted the 
following: 

* Requirements may be too restrictive: Overly restrictive and sometimes 
ambiguous requirements are a significant deterrent to participation by 
potential immigrant entrepreneurs. The 1998 decisions made it even 
harder to obtain approvals of EB-5 applications and have resulted in 
investors looking for other alternatives, such as other employment- 
based visa options that are not contingent on capital investment and 
job creation. Further, qualifying a person for EB-5 status is one of 
the most complicated subspecialties in immigration law. A sophisticated 
knowledge of corporate, tax, investment, and immigration law are 
required. In many cases it may be more practicable for investors to 
come to the United States through other visa categories or pursue 
immigrant investor programs in other countries such as Australia and 
Canada.

* Rigorous documentation requirements: The documentation USCIS requires 
from investors seeking entry through the EB-5 category is extensive. 
Potential investors are repeatedly required by the EB-5 adjudicators to 
provide additional evidence, making the process more difficult. The 
process of requesting and receiving additional evidence can add up to 4 
months' processing time for each request.

* Lack of clear guidance: Some parts of the statute governing the EB-5 
category are subjective and open to adjudicator interpretation. For 
example, one of the EB-5 requirements is that the business must 
"benefit the U.S. economy." However, the statute provides no guidance 
on what types of investments meet this criterion. Thus, adjudicators 
are generally left to their own judgement as to the value, or benefit, 
of the proposed investment.

* The lack of timeliness in processing and adjudicating applications: 
The lawyers said that, in their experience, it takes from 5 to 7 years 
for their clients to complete a program that is often advertised as a 2-
year conditional residency program.

Precedent-Setting Decisions: 

According to USCIS officials, one factor that has contributed to 
reluctance of aliens to participate in the EB-5 employment category can 
be traced to program changes in 1998. The changes resulted from a 
series of events beginning in 1996 and 1997. During this period State 
Department consular officers and then Immigration and Naturalization 
Service (INS) EB-5 adjudicators began questioning the financial 
arrangements in some EB-5 applications. As a result, the INS General 
Counsel examined a sample of cases exhibiting the questionable 
financial arrangements and on the basis of this review determined that 
hundreds of EB-5 applications that had been approved contained the 
following financial characteristics: 

* The businesses were financed with debt and not equity investments in 
the new business.

* The immigrant investor was not personally at risk for the required 
investment of money.

* The full statutory amount of capital was not made available for use 
by the business for employment creation or business operations.

* The promissory note used to meet the minimum capital requirement did 
not have a fair market value equivalent to the statutorily required 
investment amount.

* The guaranteed payment on the immigrant investor's cash contribution 
in the plan was allowed to be used to make payments on the promissory 
notes, resulting in an insufficient infusion of new capital into the 
business.

In December 1997, the INS General Counsel issued an opinion finding 
that the financial characteristics involving the debt arrangements and 
other mechanisms designed to limit the investors' risk did not comport 
with the statute and regulations governing EB-5. Further, the General 
Counsel concluded that INS was not bound by its previous decisions in 
adjudicating these EB-5 applications (i.e., Form I-526) and that it 
could revoke previously approved applications containing the business 
arrangements at issue.[Footnote 9] As a result of this opinion, 
adjudicators were to determine if previously approved EB-5 applications 
comported with the law and identify which applications, if any, should 
be revoked. Also, the INS General Counsel opinion recommended that INS 
establish guidelines for adjudicating applications with the 
aforementioned business arrangements as well as future applications.

Hundreds of Prior Approved Applications Have Been on Hold for Years: 

In March 1998, INS suspended EB-5 processing on about 900 cases with an 
approved EB-5 application (i.e., Form I-526) and a pending application 
for permanent resident status (i.e., Form I-829) that reflected the 
business arrangements at issue. The suspension was to allow INS to 
develop guidance on how adjudicators should interpret the EB-5 
regulations. As part of this process, the Administrative Appeals Office 
(AAO) selected a sample of the applications in question and adjudicated 
them using the INS General Counsel's legal opinion and other case 
law.[Footnote 10] On the basis of its review of these applications, AAO 
determined that the financial arrangements included in hundreds of 
applications did not comport with the statute and EB-5 regulations. 
Therefore, in June and July 1998 AAO issued what has become known as 
"precedent-setting decisions" that clarify how adjudicators should 
interpret EB-5 regulations.[Footnote 11] From this point forward, 
adjudicators were required to follow the new interpretation of the EB- 
5 regulations as described in these decisions when adjudicating EB-5 
applications.

In August 1998, INS removed the hold on application processing and EB- 
5 adjudicators determined that most of the suspended applications 
should be denied. However, according to USCIS officials, the majority 
of the denial letters were never processed and the cases remained 
pending.

By 2002, those investors whose cases were pending continued to remain 
in conditional resident status waiting for action by USCIS. According 
to USCIS officials, there has been an increase in litigation stemming 
from delays in issuance of the implementing regulations. Many of the 
affected aliens have filed legal actions against the department. 
Further, investors who were affected by the changes resulting from the 
1998 decisions lobbied Congress for help. In 2002, Congress addressed 
the pending applications through a provision in the 21st Century 
Department of Justice Appropriations Authorization Act[Footnote 12] 
requiring USCIS to implement regulations that would allow those 
immigrant investors whose initial EB-5 application was approved between 
January 1995 and August 1998 to address deficiencies in their 
applications for permanent residence and amend them to comply with 
USCIS's new interpretation of the EB-5 regulations. Although the 
implementing regulations were to be issued within 120 days of the 
passage of the act (March 2003), as of March 2005, DHS had not issued 
the regulations.

According to USCIS officials, they initially drafted regulations that 
would allow the department to implement congressional directives in the 
2002 act. These draft regulations have been under review and revision 
primarily between USCIS and the Department of Homeland Security, Office 
of General Counsel, since March 2003. A spokesman for the DHS Office of 
General Counsel stated that the size and complexity of the government 
reorganization necessary to establish the new Department of Homeland 
Security and the resulting need to prioritize among competing demands 
with limited staff has delayed work on the new EB-5 regulations. 
Further, the DHS Office of General Counsel said that there are 
outstanding issues regarding the promulgation of the regulations but 
that these issues are considered to be ongoing internal department 
deliberations which they would not discuss.

Until implementing regulations are established, the 2002 act does not 
allow USCIS to deny any of the applications on hold for permanent 
residency or place any applicant in removal proceedings. As a result, 
according to USCIS officials, some immigrant investors have been in the 
United States for over 10 years without completing the EB-5 
requirements and being granted permanent legal resident status. 
Further, immigration lawyers that we interviewed told us that failure 
to issue the new regulations has deterred potential investors from 
participating and caused hardships for some of the investors forced to 
remain in conditional resident status. For example, to maintain their 
conditional residency in this country, investors who had their cases 
suspended must obtain an extension of their legal resident 
documentation annually (commonly referred to as their green card) from 
USCIS. According to these immigration lawyers, this in itself is not an 
easy process.

Most Immigrant Investors Are from Asia: 

Most EB-5 investors have immigrated from Asia. As table 1 shows, 39 
percent of the EB-5 visas have been issued to individuals from Taiwan. 
Overall, 83 percent of immigrant investor visas were issued to 
individuals from Asia.

Table 1: Number of EB-5 Visas Issued, by Country of Origin, Fiscal Year 
1992 through 2004: 

Country (or geographical area) of origin[A]: Asia[B]: Taiwan; 
Number: 2,323; 
Percentage of total: 39%.

Country (or geographical area) of origin[A]: Asia[B]: South Korea; 
Number: 839; 
Percentage of total: 14%.

Country (or geographical area) of origin[A]: Asia[B]: China (mainland); 
Number: 752; 
Percentage of total: 12%.

Country (or geographical area) of origin[A]: Asia[B]: Hong Kong Special 
Administrative Region (S.A.R.); 
Number: 395; 
Percentage of total: 7%.

Country (or geographical area) of origin[A]: Asia[B]: India; 
Number: 130; 
Percentage of total: 2%.

Country (or geographical area) of origin[A]: Asia[B]: Japan; 
Number: 66; 
Percentage of total: 1%.

Country (or geographical area) of origin[A]: All other Asia; 
Number: 476; 
Percentage of total: 8%.

Country (or geographical area) of origin[A]: Total for Asia; 
Number: 4,981; 
Percentage of total: 83%.

Country (or geographical area) of origin[A]: All other countries by 
geographic area: 

Country (or geographical area) of origin[A]: Europe; 
Number: 546; 
Percentage of total: 9%.

Country (or geographical area) of origin[A]: South America; 
Number: 143; 
Percentage of total: 2%.

Country (or geographical area) of origin[A]: Africa; 
Number: 122; 
Percentage of total: 2%.

Country (or geographical area) of origin[A]: North/Central America[C]; 
Number: 214%; 
Percentage of total: 4%.

Country (or geographical area) of origin[A]: Australia/New Zealand; 
Number: 18%; 
Percentage of total: [D].

Country (or geographical area) of origin[A]: Total; 
Number: 6,024; 
Percentage of total: 100%.

Source: GAO analysis of Department of State data.

[A] Immigrant visas are numerically limited by category and by country 
of origin, which in most cases is a person's country of birth rather 
than his or her current citizenship.

[B] Turkey is included as part of Asia.

[C] North America excludes the United States but includes Canada, 
Greenland, Mexico, all the countries of Central America, and the island 
countries and dependencies of the Caribbean.

[D] Less than 0.5 percent.

[End of table]

Immigrant Investors May or May Not Apply for U.S. Citizenship: 

As previously mentioned, seeking U. S. citizenship is not a requirement 
of the EB-5 category. Also, USCIS does not track the status of 
immigrant investors once they have completed the EB-5 requirements and 
been approved for permanent residence. However, as shown in table 2, we 
estimate that 38 percent of approved immigrant investors had applied 
for U.S. citizenship, 61 percent had not applied, and 1 percent were 
ineligible to apply, as of the time of our review.[Footnote 13] Our 
methodology for these estimates is explained in appendix I.

Table 2: Estimated Number of Immigrant Investors Who Have Sought U.S. 
Citizenship, Fiscal Years 1992 through June 2004: 

Applied for U.S. citizenship; 
Estimated number: 247; 
Estimated percentages: 38%.

Did not apply for U.S. citizenship; 
Estimated number: 399; 
Estimated percentages: 61%.

Ineligible to apply for U.S. citizenship[A]; 
Estimated number: 7; 
Estimated percentages: 1%.

Total; 
Estimated number: 653; 
Estimated percentages: 100%.

Source: GAO review of USCIS files.

[A] This estimate results from one case in our sample in which the 
alien was ineligible to apply for U.S. citizenship because she had 
previously renounced her citizenship. She reentered the United States 
as an immigrant through the EB-5 category.

[End of table]

Immigrant Entrepreneurs with Permanent Resident Status Have Invested an 
Estimated $1 Billion in a Variety of Businesses, Primarily in 
California: 

Over the life of the EB-5 employment category immigrant investors have 
established a variety of businesses and on the basis of the sample of 
cases we reviewed, we estimate that a total of $1.04 billion was 
invested through 2004 by immigrant investors who have been granted 
permanent residency. Of the estimated 653 investors who have met the EB-
5 requirements and been approved for permanent residence, most 
maintained their business in the same state during the 2-year 
conditional period, with 41 percent establishing their businesses in 
California. USCIS officials did not have reliable data indicating the 
total number of jobs created solely as a result of investments by EB-5 
participants.

Immigrant Investors Established a Variety of Businesses by Investing an 
Estimated $1 Billion: 

Hotels and motels make up an estimated 19 percent of all businesses 
created by immigrant investors granted permanent resident status (123 
of 653 businesses). We classified the various types of businesses into 
10 broad categories. Table 3 shows the estimated number of businesses 
established in each category. To provide additional insights into the 
types of businesses established under EB-5, we also recorded for each 
broad category, where applicable, the types of products manufactured, 
sold, imported or exported, or produced as well as the types services 
offered.

Table 3: Types and Estimated Number of Businesses Established by 
Immigrant Investors with Permanent Resident Status, Fiscal Years 1992 
through June 2004: 

Business category: Hotel/motel; 
Estimated number: 123; 
Estimated percentage of total: 19%.

Business category: Manufacturing; 
Examples of business category components: Clothing, cabinets, computer 
equipment, convertible beds, corrugated boxes, food, furniture, health 
supplements, knit goods, rubber and plastics, telephone equipment, 
textiles, woven bags; 
Estimated number: 116; 
Estimated percentage of total: 18%.

Business category: Real estate; 
Examples of business category components: Property management, 
development, construction; 
Estimated number: 94; 
Estimated percentage of total: 14%.

Business category: Domestic sales; 
Examples of business category components: Clothing, airplane parts, 
artificial turf, granite, new cars, pharmaceuticals, toys, hair salons, 
retail food stores; 
Estimated number: 65; 
Estimated percentage of total: 10%.

Business category: Farms; 
Examples of business category components: Almonds, fish, fruit; 
Estimated number: 58; 
Estimated percentage of total: 9%.

Business category: Import/export; 
Examples of business category components: Airplane parts, clothing, 
gems/jewelry, home appliances, household decorator goods, seafood, 
textiles; 
Estimated number: 58; 
Estimated percentage of total: 9%.

Business category: Restaurants; 
Estimated number: 44; 
Estimated percentage of total: 7%.

Business category: Retirement homes; 
Estimated number: 22; 
Estimated percentage of total: 3%.

Business category: Technology; 
Examples of business category components: Computer services, long-
distance telephone service provider, wireless cable television 
development; 
Estimated number: 22; 
Estimated percentage of total: 3%.

Business category: Other businesses; 
Examples of business category components: Car wash, child care center, 
meat processing plant, nightclub, nursing home, security broker; 
Estimated number: 51; 
Estimated percentage of total: 8%.

Business category: Total; 
Estimated number: 653; 
Estimated percentage of total: 100%.

Source: GAO review of USCIS files.

[End of table]

To provide a measure of the EB-5 category's benefit to the U.S. 
economy, we obtained information about the dollars invested by 
immigrant investors. On the basis of the case files we reviewed, we 
estimate that the total of investments made by the 653 immigrant 
investors granted permanent resident status from fiscal year 1992 
through June of 2004 is $1.04 billion. Using a 95 percent confidence 
level, we estimate that the investment amount is between $784 million 
and $1.3 billion.[Footnote 14]

Immigrant Investors with Permanent Resident Status Established Business 
Operations Predominantly in California, and the Businesses Seldom 
Relocated: 

We estimate that 41 percent (265 of 653) of immigrant investors with 
permanent resident status established their businesses in California. 
Table 4 shows the states where approved immigrant investors established 
their businesses as well as our estimate of the number of businesses 
established in each state.

Table 4: States Where Immigrant Investors Established Business 
Operations, Fiscal Years 1992 Through June 2004: 

State: California; 
Estimated number: 265; 
Estimated percentage of total: 41%[A].

State: Maryland; 
Estimated number: 71; 
Estimated percentage of total: 11%.

State: Arizona; 
Estimated number: 53; 
Estimated percentage of total: 8%.

State: Florida; 
Estimated number: 44; 
Estimated percentage of total: 7%.

State: Virginia; 
Estimated number: 44; 
Estimated percentage of total: 7%.

State: Washington; 
Estimated number: 35; 
Estimated percentage of total: 5%.

State: Michigan; 
Estimated number: 26; 
Estimated percentage of total: 4%.

State: Colorado; 
Estimated number: 18; 
Estimated percentage of total: 3%.

State: Hawaii; 
Estimated number: 18; 
Estimated percentage of total: 3%.

State: Nevada; 
Estimated number: 18; 
Estimated percentage of total: 3%.

State: Georgia; 
Estimated number: 9; 
Estimated percentage of total: 1%.

State: Minnesota; 
Estimated number: 9; 
Estimated percentage of total: 1%.

State: Nebraska; 
Estimated number: 9; 
Estimated percentage of total: 1%.

State: New Jersey; 
Estimated number: 9; 
Estimated percentage of total: 1%.

State: Texas; 
Estimated number: 9; 
Estimated percentage of total: 1%.

State: Utah; 
Estimated number: 9; 
Estimated percentage of total: 1%.

State: Vermont; 
Estimated number: 9; 
Estimated percentage of total: 1%.

Totals; 
Estimated number: 653; 
Estimated percentage of total: 100%.

Source: GAO review of USCIS files.

Note: Estimated numbers and percentages may not total because of 
rounding.

[A] The confidence interval in this case exceeds plus or minus 10 
percent and is 30 percent to 51 percent.

[End of table]

We also found that few immigrant investors with permanent resident 
status relocated their businesses during the 2-year conditional period. 
Of the 653 approved investors, we estimate that 99 percent, or 644, 
maintained business operations in the same state throughout the 2-year 
conditional period. Specifically, we estimate that: 

* 79 percent, or 515, of the immigrant investors' businesses remained 
in same city and state;[Footnote 15]

* 20 percent, or 129, of the immigrant investors' businesses remained 
in the same state, but moved to a new city;[Footnote 16] and: 

* 1 percent, or 9, of the immigrant investors' businesses moved to a 
new city and state.

The Number of Jobs Created by Immigrant Investors Could Not Be 
Estimated: 

We could not determine how many jobs immigrant investors have 
established because of the way USCIS credits the number of jobs created 
by an investor's business. During the adjudication process, USCIS 
adjudicators ensure that each business creates the minimum requirement 
of at least 10 full-time jobs. But if there are non-EB-5 investors 
involved or the investment is part of a greater overall business 
expansion, USCIS credits the single EB-5 investor with the total of all 
jobs created even though many of the jobs are not the result of his 
portion of the investment.[Footnote 17] In one such example, USCIS 
credited a single immigrant investor with creating 1,143 jobs based on 
a $1.5 million investment. While this investment did not create all 
1,143 jobs, for adjudicative purposes, when the immigrant investor is 
the only one seeking the immigration benefit, all jobs are attributed 
to that investor, even if the capital of others is fueling the 
enterprise. In this example, the immigrant investor's capital infusion 
was only a small part of a multimillion dollar expansion of an existing 
business that involved multiple franchises and other non-EB-5 investors.

Conclusions: 

At the time the 1998 precedent decisions were published, more than 900 
EB-5 participants' applications were placed on hold, resulting in 
immigrant investors residing in the United States for as long as 10 
years under conditional residency status. According to immigration 
lawyers, the failure to issue the new regulations is creating hardships 
for the investors whose cases are on hold and has been a deterrent to 
new investors, thereby limiting the economic benefit to the United 
States. USCIS cannot act on the pending applications for permanent 
resident status or place any of those applicants in removal proceedings 
until the required regulations are promulgated. Despite a congressional 
mandate in 2002 that USCIS and DHS provide implementing regulations by 
March 2003 to address the pending applications, the regulations have 
not been issued. Drafted regulations have been under review between 
USCIS and DHS since March 2003. DHS officials stated that the 
transformations of legacy agencies into its department and related 
management and mission demands have contributed to the delay in issuing 
the regulations. However, they could not provide any assurance when the 
regulations would be issued.

Recommendation: 

Given the undetermined status and potential hardships imposed on 
hundreds of EB-5 applicants awaiting the promulgation of implementing 
regulations and that 2 years have passed since Congress required DHS to 
issue regulations for adjudicating these EB-5 applications, and to 
better achieve the economic benefits of the EB-5 category, we recommend 
that the Secretary of the Department of Homeland Security finalize and 
issue these regulations.

Agency Comments and Our Evaluation: 

We provided the Department of Homeland Security and the Department of 
State with a draft of this report for review and comment. The 
Department of State had no comments on the draft. In commenting on our 
recommendation, DHS stated that the regulations have been, and remain, 
a priority within DHS and that it is working with the Department of 
Justice to resolve complex issues regarding the EB-5 implementing 
regulations.

DHS also identified recent steps taken by USCIS to improve the 
administration of the EB-5 foreign investor program. Steps cited were 
the creation of the Investor and Regional Center Unit and plans to set 
a standard for timeliness in processing EB-5 cases.

According to DHS, the Investor and Regional Center Unit will establish 
a nationwide and coordinated program and will have oversight for all 
policy and regulation development, field guidance, form design, case 
auditing, and training regarding the EB-5 program. DHS said it believes 
this new unit will strengthen and protect the integrity of the program 
by guarding against past abuses and promoting the intent of Congress to 
encourage investment and increase employment within the United States.

DHS said the objective of the timeliness standard is to provide a 
reliable time frame from filing and adjudicating the petition to enter 
the program through to the targeted adjudication of the subsequent 
petition to remove conditions on the investor's residency.

DHS referred to the creation of the regional centers as a significant 
change to the EB-5 category. However, the first EB-5 regional center 
was approved in 1993, and the vast majority of regional centers were 
approved prior to 1998. Also, the option for a foreign investor to make 
a reduced investment of $500,000 in a targeted employment area, a rural 
area, or an urban area of less than 20,000 people is not unique to the 
regional centers. Foreign investors in regional centers are credited 
with jobs created directly or indirectly as a result of their 
investment whereas foreign investors in the regular EB-5 process must 
create at least 10 jobs directly in their commercial enterprise. The 
full text of DHS comments are provided in appendix III.

We are sending copies of this report to interested congressional 
committees and subcommittees. We will also make copies available to 
others on request. In addition, this report will be available at no 
charge on GAO's Web site at [Hyperlink, http://www.gao.gov/].

If you or your staff have any questions about this report or wish to 
discuss the matter further, please contact me at (202) 512-8777 or Bill 
Crocker at (202) 512-4533. Other key contributors to this report are 
listed in appendix IV.

Signed by: 

Paul L. Jones: 
Director, Homeland Security and Justice: 

Appendix I: Objectives, Scope, and Methodology: 

Objectives: 

As mandated by the Basic Pilot Program Extension and Expansion Act of 
2003 (P.L. 108-156), we reviewed the fifth employment-based visa 
category (EB-5) for immigrant investors that was created in 1992 and is 
currently administered by U.S. Citizenship and Immigration Services 
(USCIS), a component of the Department of Homeland Security.[Footnote 
18] Specifically, this report provides information on: 

* the level of participation, including (1) the number of individuals 
who have received immigrant investor visas in each year since the EB-5 
category's inception, (2) their country of origin, and (3) the number 
of immigrant investors who have sought U.S. citizenship, and: 

* the businesses established by immigrant investors, including (1) the 
types of commercial enterprises established, (2) the businesses' 
locations and whether they remained in this location, and (3) the 
number of jobs created by the immigrant investors' businesses.

Overview of Our Scope and Methodology: 

We reviewed applicable laws, including the Immigration Act of 1990 
(P.L. 101-649 (1990)) and the 21st Century Department of Justice 
Appropriations Authorization Act (P.L. 107-273 (2002)), as well as 
studies, analyses, and other relevant literature covering the EB-5 
category. Also, we reviewed USCIS and Department of State policies and 
guidelines relating to EB-5.

To obtain information on our objectives, we reviewed a random 
probability sample of 90 approved EB-5 cases (discussed in more detail 
below). We also conducted interviews and site visits with USCIS 
headquarters officials as well as service center officials in 
California and Texas--the two USCIS service centers that process 
immigrant investor applications. Further, to obtain perspectives from 
nongovernmental sources, we interviewed four immigration lawyers in the 
private sector who were knowledgeable about the EB-5 category. We did 
not independently corroborate all of the opinions provided by USCIS 
officials and immigration lawyers that we interviewed. Our selection of 
immigration lawyers was based primarily on the recommendations of the 
American Immigration Lawyers Association.

More details about the scope and methodology of our work are presented 
in the following sections.

Number of Immigrant Investors and Country of Origin: 

USCIS's Computer Linked Application Information Management System 
(CLAIMS), the initial source of data entry for information from EB-5 
applications, has a documented history of unreliability.[Footnote 19] 
Therefore, we obtained information on the number of immigrant investor 
visas and country of origin from an alternative source--the Department 
of State's Immigrant Visa Allocation Management System (IVAMS). The 
State Department is required by statute to maintain a complete, 
current, and accurate accounting of the number and origin of aliens 
within all visa categories.

We obtained State Department data to determine the number of visas 
issued (to both alien entrepreneurs and their dependents) under the EB- 
5 category by year since the its inception in 1992 through fiscal year 
2004. We also analyzed the data by the country of origin to determine 
the countries with the most visas issued.

Immigrant Investors and Their Businesses: 

Because reliable data for addressing these objectives were not 
available in electronic format from either USCIS or the State 
Department, we conducted a file review of EB-5 cases that had been 
approved for permanent residence. Because of the labor-intensive nature 
of the case file review, it was not feasible to individually review the 
files for all approved immigrant investors since the EB-5 category's 
inception in 1992. As a basis for selecting a sample, we obtained from 
USCIS an electronic list of all EB-5 participants who have received 
permanent residence approval since the category's inception in 1992 and 
selected a simple random probability sample from these approved 
applicants. We identified the sample cases from the agency's Marriage 
Fraud Amendment System (MFAS)--an electronic database used to manage 
and process EB-5 applications for permanent residence.[Footnote 20] 
MFAS tracks EB-5 participants by name, file number, home address, and 
other information.

At the time of our sample selection of case files, the MFAS database 
reflected 1,893 EB-5 cases. Of these, according to USCIS data, 804 had 
an approved application for permanent legal resident status (Form I- 
829). Another 866 EB-5 cases were shown to have applications for 
permanent legal residency in pending status. The remaining 223 cases 
were primarily shown to be denied, closed, or otherwise terminated.

We planned to draw our sample from the population of 804 approved case 
files. An initial review of the data showed that 93 files belonged to 
dependents, so we eliminated these files from consideration leaving a 
total population of 711 approved immigrant investors. Of the 711 
approved investors, we randomly selected a probability sample of 111 
case files for review.

The physical files are not maintained in one location. Some files may 
be at the Texas or California service centers, while others may be 
located at one of the 33 USCIS district offices across the country, 
while still others may be located at the USCIS records storage facility 
in Missouri. Therefore, USCIS officials agreed to locate and retrieve 
the files we randomly selected as our sample and ship them to the Texas 
Service Center for our review. In examining the files as they were 
retrieved, still more files that the USCIS database showed were 
investors were actually dependents of investors.

From our probability sample of 111 immigrant investor files, we 
identified 8 ineligible files (4 of these files belonged to dependents 
and 4 did not contain a Form I-829). From the remaining 103 files in 
the sample, we obtained 90 usable files. This represented an overall 
response rate of 87 percent. USCIS was not able to provide the 
remaining 13 files during the course of our fieldwork. We were able to 
get information from all 90 usable files on most of the items we 
measured. For some items, we were not able to get information from a 
small proportion of the 90 usable files. In conducting our analysis, we 
assumed that missing information would be similar to information we 
obtained on the items we measured. Our estimates may be biased to the 
extent that the information differs. The response rates to individual 
items varied among items. Considering the error rate in the MFAS 
database regarding the proportion of files that were actually 
dependents and not investors, we estimated that the total population of 
approved immigrant investors is approximately 653.

With our probability sample, each member of the population had an equal 
and nonzero probability of being selected. Each sampled application was 
subsequently weighted in the analysis to account for selection 
probabilities and nonresponse. Because we followed a probability 
procedure based on random selections, our sample is only one of a large 
number of samples that we might have drawn. Since each sample could 
have provided different estimates, we express our confidence in the 
precision of our particular sample's results as a 95 percent confidence 
interval. This is the interval that would contain the actual population 
value for 95 percent of the samples we could have drawn. As a result, 
we are 95 percent confident that each of the confidence intervals in 
this report will include the true values in the sample population.

All percentage estimates from the sample have been rounded to the 
nearest percent and have margins of error of plus or minus 10 percent 
unless otherwise noted. The 95 percent confidence interval for the 
estimated total of $1.04 billion invested ranges from $784 million to 
$1.3 billion.

We used a data collection instrument in our file review to record 
information from the following USCIS forms filed by the EB-5 
applicants: 

* Form I-526 (Immigrant Petition by Alien Entrepreneur) is an 
application submitted to USCIS by an entrepreneur who is applying for 
the EB-5 category.

* Form I-485 (Application to Register Permanent Residence or Adjust 
Status) is an application submitted to USCIS by an immigrant who is 
residing in the United States and who wishes to obtain permanent 
resident status. If USCIS approves this form, the immigrant is issued a 
conditional green card. In the case of the EB-5 category, USCIS places 
a 2-year condition on the resident status to give the investor 
sufficient time to establish his business in accordance with the EB-5 
requirements.

* Form I-829 (Petition by Entrepreneur to Remove Conditions) is 
submitted to USCIS by a conditional resident who obtained such status 
through the EB-5 category and who wishes to apply for permanent 
resident status as a result of satisfying all the EB-5 requirements.

* Form N-400 (Application for Naturalization) is an application 
submitted by immigrants who wish to become U.S. citizens.

For a small proportion of the 90 case files, some data items were not 
filled in. In those few cases we assumed that the missing data, if 
filled in, would be proportional to similar data available in the 
universe of case files. Therefore, our estimates may be biased to the 
extent that the actual data, if available, may have differed.

Where Immigrant Investors Established Business Operations and whether 
the Business Remained in That Location: 

Where immigrant investors established their businesses and whether the 
businesses remained in these localities was determined from the 
business addresses listed on two forms that applicants file during the 
EB-5 process. We recorded the city and state of the business at (1) the 
time the applicant applied for the EB-5 category using the Form I-526 
and (2) the time the applicant applied for permanent residence using 
the Form I-829. Using these business addresses, we determined the 
cities and states where applicants established their businesses when 
they applied for EB-5 status and whether the applicants' businesses 
remained in these locations while completing the EB-5 requirements. Our 
analysis is limited by the fact that this conditional period typically 
lasts 2 years and does not cover the time period after immigrants have 
been approved for permanent residency. Using this information, we 
statistically projected the tendency of all businesses established by 
EB-5 applicants to remain in their original locations.

Types of Commercial Enterprises Established, Investment Amounts, and 
Number of Jobs Created: 

We determined the types of commercial enterprises established, the 
dollars invested, and the number of jobs created based on the 
information supplied by applicants on Form I-829 (Petition by 
Entrepreneur to Remove Conditions) and various supporting documents 
(such as bank statements, federal or state income tax returns, 
quarterly tax statements, payroll records, and employment tax 
documents).

Number of Immigrant Investors Who Have Sought Permanent U.S. 
Citizenship: 

USCIS computerized systems (CLAIMS) had data on the number of EB-5 
applicants who have been approved for permanent U.S. citizenship. 
However, as mentioned previously, information in the CLAIMS database 
was not always accurate. Therefore, during our file review, we 
determined if applicants sought U.S. citizenship by the presence of a 
Form N-400 (Application for Naturalization) in the file and whether 
this application was approved by USCIS. We statistically projected 
these results.

Processing of Immigrant Investor Visa Applications at the Two USCIS 
Service Centers and Criteria Used for Approvals and Denials: 

To determine how immigrant investor visa applications were processed, 
we interviewed USCIS managers and EB-5 adjudicators; reviewed relevant 
statutes, policy guidance, and training manuals; and visited the USCIS 
service centers in California and Texas. During the site visits, we 
paid particular attention to differences, if any, between the two 
service centers regarding processing procedures and the criteria used 
for approvals and denials.

Views of Immigration Lawyers: 

To obtain perspectives on the EB-5 category from nongovernmental 
sources, we interviewed four immigration lawyers in the private sector 
who were knowledgeable about EB-5 application process. Our selection of 
interviewees was based primarily on the recommendations of the American 
Immigration Lawyers Association. Because we interviewed a 
nonprobability sample of immigration lawyers, the views and opinions of 
these lawyers cannot be regarded as representative of the views and 
opinions of all immigration lawyers.

Data Reliability: 

To assess the reliability of State Department data on the number of 
individuals who have received visas under the Immigrant Investor 
Program and their country of origin, we interviewed knowledgeable 
agency officials about the data and electronically tested the data to 
identify obvious problems with completeness or accuracy. On the basis 
of these steps, we determined that the State Department visa data were 
sufficiently reliable for the purposes of this report.

To examine the reliability of the data contained in USCIS EB-5 files, 
we conducted independent checks of selected data from 20 immigrant 
investor files that were pending USCIS review by undertaking online 
searches on the respective firms in the Lexis-Nexis and Dunn and 
Bradstreet databases. We also visited four of the investor businesses 
and interviewed the alien entrepreneurs who had met the EB-5 
requirements and been approved for permanent residence to verify the 
veracity of the information contained in the files that we used in the 
report. We also interviewed knowledgeable agency officials about the 
data. To ensure accurate recording and entry of the EB-5 file data into 
our database, each entry was double-checked against the relevant case 
file by an analyst who had not initially entered the data. We 
determined that the EB-5 case file data were sufficiently reliable for 
the purposes of this report.

[End of section]

Appendix II: Immigrant Investor Program Application Process: 

To participate in the Immigrant Investor Program--or EB-5 employment 
category----an individual must seek and obtain approval from the U.S. 
Citizenship and Immigration Services.[Footnote 21] Participation in the 
program occurs after approval at three major steps in the application 
process.

* First, the immigrant investor applies for the EB-5 category (while 
either residing abroad or residing in the United States) by submitting 
USCIS Form I-526.

* Second, the immigrant investor applies for conditional resident 
status after the Form I-526 is approved either by submitting a Form I- 
485 or by filing paperwork with the State Department. After obtaining 
conditional resident status, immigrant investors have a 2-year 
probationary period to establish their business and meet the EB-5 
requirements.

* Finally, the immigrant investor applies for permanent resident status 
by submitting USCIS Form I-829. When eligible, immigrant investors may 
apply for U. S. citizenship. However, this is not a requirement of the 
program.

Figure 3 shows the application process for the Immigrant Investor 
Program.

Figure 3: Figure 3: EB-5 Application Processing Flow: 

[See PDF for image]

Legend of USCIS forms: 

Form I-526 (Immigrant Petition by Alien Entrepreneur): 

Form I-485 (Application to Register Permanent Residence or Adjust 
Status): 

Form I-829 (Petition by Entrepreneur to Remove Conditions): 

Form I-290B (Notice of Appeal to the Administrative Appeals Office): 

Form I-551 (Alien Registration Card): 

[A] The Administrative Appeals Office adjudicator can deny (dismiss) 
the appeal, approve (sustain) the appeal by overturning the service 
center's decision, return (remand) the appeal to the service center if 
new issues surface during the appeal review, or reject the appeal if it 
is not submitted by the deadline.

[B] Adjustment of status refers to the USCIS procedure allowing 
individuals in the United States to apply for permanent residence by 
filing Form I-485.

[C] The Department of State's National Visa Center is the central 
processing point for immigrant visas issued abroad.

[D] Lawful permanent residents are immigrants who are legally allowed 
to reside permanently in the United States.

[End of figure]

Processing of immigrant investor applications occurs at two of USCIS's 
service centers--the California Service Center, located in Laguna 
Niguel, California, and the Texas Service Center, located in Dallas, 
Texas. Adjudicators review the pertinent forms and make approval and 
denial decisions at each step in the process. We found that both the 
California and Texas service centers use the same processing procedures 
and review criteria when reviewing immigrant investor applications. The 
following narrative provides more detail on the information 
adjudicators consider when reviewing EB-5 applications.

Immigrant Investors' Initial Application: 

The initial application Form I-526 must be accompanied with additional 
documentation supporting (1) the business proposal, (2) the investment 
of money, (3) the number of full-time jobs to be created, and (4) the 
applicant's management role in the business.

* Business proposal--The application should clearly outline and 
describe the type of business, where it is to be located, how it is to 
be financed, the investor's banking relationships, and information 
about the business (e.g., its customer base, number of employees, and 
source of inventory or raw materials). Although the immigrant investor 
is not required to submit specific supporting documents, USCIS officers 
will likely require a comprehensive business plan or other documents 
outlining the business proposal with Form I-526. Also, if the business 
already exists, articles of incorporation, a set of audited financial 
statements, or, if in the proposal stage, pro forma financial 
statements should be part of the proposal package.

* Investment of money--Documents supporting the investment must show 
evidence that the investor has the funds to meet the program's 
requirement, $1 million (or $500,000 for investment in targeted 
employment areas).[Footnote 22] Speaking anecdotally, an adjudicator 
said this requirement is often the weakest part of the proposal. The 
documents need to show the source of the funds and that the immigrant 
investor is personally at risk for the money. In addition, the investor 
must show that the money is from legitimate sources, such as a lending 
institution. Investors may also be expected to provide copies of past 
income tax returns, including tax returns from their country of origin, 
to show their history of financial resources. Other documents 
supporting this section of the proposal would include personal bank 
statements; sales documents if, for example, the money was being 
obtained from the sale of other property; documents showing the 
transfer of money; and letters of reference from financial 
institutions. An officer noted that many of the applications he sees do 
not adequately document the investment criterion. For example, many 
investors find it difficult or are unwilling to show the source of 
funds. Also, some immigrant investors structure the financing 
arrangements so that the financial risk is to the business and not the 
immigrant investor himself. Finally, some immigrant investors fail to 
show investment or proposed investment of the required amount of funds.

* Creation of jobs--Immigrant investors must document that the proposed 
business venture will generate at least 10 full-time jobs. Current 
regulations allow for job sharing. However, the number of full-time 
positions must still equal 10. If the business is operating at the time 
the application is submitted, the immigrant investor should provide 
documentary evidence of employment with submission of payroll records, 
state employment records, and copies of Internal Revenue Service Form I-
9, Employment Eligibility Verification, for each employee.

* Applicant's role in the business--Immigrant investors must be 
actively involved in managing their businesses. Documentation proving 
this role would include, for example, copies of board minutes 
appointing the immigrant investor to a management position, copies of 
stock certificates, copies of tax records, or copies of articles of 
incorporation.

According to USCIS officials, because of the wide differences in the 
types and sizes of businesses involved, there is no single checklist or 
procedure to follow in reviewing petitions. However, as noted above, 
adjudicators stressed that the review of the application focuses on a 
feasible plan for the business, the immigrant investor's investment in 
the business meeting the required dollar amount, the creation of the 
required number of jobs, and the immigrant investor's role in the 
management of the business. A significant part of the training for 
adjudicators for reviewing petitions for this program centers on 
knowledge of business principles.

Throughout the application review process, if deficiencies in the 
petition or supporting documents are noted, the adjudicator summarizes 
them in a memo, a request for evidence (RFE), which is sent to the 
investor after the initial review is completed. The immigrant investor 
is granted 12 weeks plus 30 days to respond to the RFE. While waiting 
for the response, the case is placed on hold. Once the RFE is returned 
to USCIS with the information needed, the adjudicator completes the 
review of the petition. According to USCIS officials we interviewed, 
most Forms I-526 require that an RFE be sent to the investor.

If an application is to be denied, the adjudicator prepares a letter 
(signed by the service center director) describing the reason for 
denial and mails it to the investor. The letter details the specific 
reasons for the denial decision and cites the applicable sections of 8 
C.F.R. § 204.6 (the regulations governing adjudications of Form I-526) 
that the investor's petition violated.

If the immigrant investor's application is denied, the investor may 
appeal the decision by filing Form I-290B, Notice of Appeal to the 
Administrative Appeals Office, to the service center that made the 
unfavorable decision. The appeal is forwarded to the AAO at USCIS 
headquarters for review. AAO adjudicators use the same criteria when 
reviewing immigrant investor applications as those used by service 
center adjudicators. The AAO unit may approve, deny, or remand the case 
to the service center, or reject the case if the appeal is filed 
untimely. If the appeal is denied, there are no further appeal rights 
within USCIS. The only remaining appeal option for the immigrant 
investor is through the U.S. court system. If the appeal is remanded, 
the AAO directs the service center adjudicator to review the case 
again. The remanded case would be reviewed again following the same 
procedures as if it were initially received.

If the immigrant investor application is approved, the Form I-526 
allows the immigrant investor to indicate his preferred option for 
applying for a conditional 2-year visa. One option is applicable if the 
immigrant investor is already in the United States under some other 
legal status. In this case, the immigrant investor may apply for 
"Adjustment of Status," with submission of Form I-485. The second 
option, consular processing, is available if the immigrant investor 
applied from abroad or chooses to go abroad and obtain a visa from the 
State Department.

Application for Conditional Resident Status: 

As previously mentioned, immigrant investors can choose how they wish 
to obtain their conditional resident status either by completing Form I-
485 and submitting it to USCIS or by completing a State Department visa 
application at a U.S. consulate abroad.

Form I-485 Processing: 

After the immigrant investor application is approved, the immigrant 
investor submits Form I-485 and supporting documents to the applicable 
USCIS service center. This procedure allows an eligible applicant to 
become a lawful permanent resident of the United States without having 
to go abroad and apply for an immigrant visa. The application process 
for Form I-485 is not exclusive to the Immigrant Investor Program 
because it is used to apply for adjustment of status under all types of 
visas.

The adjudicator in reviewing the Form I-485 and accompanying 
documentation (e.g., medical records, biographical information, the 
Federal Bureau of Investigation background check results, and the Form 
I 526, in the case of immigrant investors) may require an interview 
prior to application approval or denial. An adjudicator may request an 
interview for reasons such as evidence of criminal activity or unlawful 
residence status. USCIS policy requires that district offices handle 
all face-to-face contact, so these cases are referred to the USCIS 
district office with jurisdiction over the area where the investor 
applicant resides. After the interview, the district office makes a 
determination to approve or deny the Form I-485. If the Form I-485 is 
denied, the process is terminated and alien removal proceedings begin. 
If Form I-485 is approved, the investor is issued a conditional Form I- 
551, Alien Registration Card, which allows the investor 2 years' 
conditional residence to establish the business and meet the EB-5 
requirements.

Throughout the review process, if deficiencies in the petition or 
supporting documents are noted, the adjudicator summarizes these 
questions in a memo, an RFE that he sends to the immigrant investor. 
The immigrant investor is granted 12 weeks plus 30 days to respond to 
the RFE. While waiting for a response, the case is placed on hold. Once 
USCIS receives the response to the RFE, the adjudicator finalizes the 
review and makes the approval, denial, or referral decision.

Consular Processing: 

Investors who choose to apply for an immigrant visa abroad use consular 
processing. With consular processing, the investor does not submit an I-
485. Under this procedure, the State Department forwards a visa 
application to the immigrant investor, who completes the application 
and submits it to the U.S. consular office in the country of residence. 
A U. S. consular officer interviews the immigrant investor and 
determines whether to approve or deny the application. If the 
application is denied, the process is terminated and the immigrant 
investor is not allowed to enter the United States. If the visa is 
approved, the investor is issued travel documents that are presented to 
U. S. immigration authorities upon arrival in the United States.

With approval of a conditional visa (either with an approved Form I-485 
or through consular processing), the immigrant investor is granted 2 
years of conditional residency. During the conditional period, 
immigrant investors are expected to initiate their business venture (if 
they have not already done so) and meet the expectations set out in 
their approved Form I-526.

Application to Change Conditional Residency Status to Permanent 
Residency Status: 

Within 90 days immediately preceding the second anniversary of the date 
that the immigrant investor was granted conditional status, the 
investor is to submit Form I-829. Otherwise, if immigrant investors do 
not file the application within the required time period, they will 
lose their conditional status, and removal proceedings will begin 
requiring the immigrant to leave the United States.

With the petition to remove conditions, the applicant must provide 
evidence that the enterprise met the terms of the originally approved 
Form I-526. Filing this application extends the investor's conditional 
status for 1 year while the petition is processed. The Form I-829 must 
be accompanied by evidence that the immigrant investor made (or is in 
the process of making) the required investment and created (or will 
create within a reasonable time) 10 full-time jobs. The immigrant 
investor must also show that these actions were sustained during the 2- 
year conditional period. This evidence should: 

* verify that the investor invested or was actively in the process of 
investing the required capital (either $1 million or $500,000) in a 
commercial enterprise;

* show that the investor sustained the enterprise and the investment in 
the business throughout the period of conditional permanent residence; 
and: 

* verify the number of full-time employees at the beginning of the 
investment and at present.

The immigrant investor should include other available documentation if 
it is relevant to the commercial enterprise.

Throughout the review process, if deficiencies in the petition or 
supporting documents are noted, the adjudicator summarizes these 
questions in an RFE that he sends to the immigrant investor. The 
immigrant investor is granted 12 weeks plus 30 days to respond to the 
RFE. Once the USCIS receives the response to the RFE, the adjudicator 
finalizes the review and approves or denies the application. According 
to USCIS officials we interviewed, most Form I-829s require that an RFE 
be sent to the immigrant investor.

If the adjudicator determines that the case should be denied, a 
memorandum of recommendation of denial is sent to the USCIS district 
office with jurisdiction over the immigrant investor's residence. The 
memorandum is a detailed description of why the adjudicator believes 
that the petition should be denied. The memorandum details the specific 
reasons the petition should be denied and cites the applicable sections 
of 8 C.F.R. § 216.6 (the regulations governing adjudications of Form I- 
829) that the investor's petition violated.

Once the district receives the memorandum of recommendation of denial, 
a district office adjudicator prepares the denial letter (based on the 
memorandum), which is signed by the district director. Once the 
immigrant investor receives the letter, removal proceedings begin. The 
immigrant investor may appeal the denial before the immigration judge 
who presides over the investor's removal proceedings. If the 
immigration judge does not overturn the USCIS decision, the immigrant 
investor's only other appeal option is through the U.S. court system. 
If the adjudicator approves Form I-829, the immigrant investor is 
granted permanent resident status, indicating the immigrant investor is 
a lawful permanent resident with no further obligations under EB-5. 
USCIS no longer tracks the immigrant investor after he or she becomes a 
lawful permanent resident.

Application for U.S. Citizenship: 

Five years from the date of approval of the Form I-485 or the date the 
investor entered the United States (if the investor chose consular 
processing), the immigrant investor is eligible to apply for 
citizenship if the Form I-829 is approved. If the investor wants to 
become a naturalized U.S. citizen, a Form N-400, is submitted to USCIS, 
and if it is approved, the immigrant investor is granted citizenship. 
Immigrant investors are not required to apply for citizenship.

[End of section]

Appendix III: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

March 18, 2005: 

Mr. Paul L. Jones: 
Director, Homeland Security and Justice: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Jones: 

RE: Draft Report GAO-05-256, Immigrant Investors: Small Number of 
Participants Attributed to Pending Regulations and Other Factors (GAO 
Job Code 440281): 

The Department of Homeland Security (DHS), including U.S. Citizenship 
and Immigration Services (USCIS), appreciates the opportunity to 
comment on the Government Accountability Office's draft report and is 
pleased to report recent steps taken to improve the administration of 
the EB-5 foreign investor program.

The Government Accountability Office (GAO) recommended that DHS 
finalize and issue regulations that implement provisions of the 
Department of Justice Appropriations Authorization Act (P.L. 107-273) 
related to the EB-5 immigrant investor program. Those regulations have 
been, and remain, a priority within DHS. DHS is working to resolve the 
complex issues that must be addressed in the regulations, and is 
working with the Department of Justice with respect to their 
anticipated companion rulemaking.

On January 19, 2005, USCIS created the Investor and Regional Center 
Unit (IRCU), which will establish a nationwide and coordinated program. 
Given the documented past abuses in the alien investor program and the 
complexity and sensitivity of the issues and factors relating to 
investor cases, there is a need for centralized oversight and 
coordination, and uniform standards governing all aspects of EB-5 
matters. DHS and USCIS believe this new unit will strengthen and 
protect the integrity of the program by guarding against past abuses, 
and promoting the intent of Congress to encourage investment and 
increase employment within the United States.

The IRCU has oversight for all policy and regulation development, field 
guidance, form design, case auditing and training regarding the EB-5 
program. To carry out its mission, the IRCU will work closely with 
other offices within USCIS and the Department of State's Bureau of 
Consular Affairs in the administration of the law as well as in 
clarifying processing procedures regarding the adjudication of Form 1- 
526, Immigrant Petition by Alien Entrepreneur, and related Form I-829, 
Petition by Entrepreneur to Remove Conditions. The IRCU will also work 
with USCIS' Office of Fraud Detection and National Security to best 
ensure EB-5 and regional center program integrity, fraud detection and 
prevention.

Although not covered within the scope of GAO's review, a significant 
change to the program was the creation of 26 Regional Centers. Of the 
10,000 investor visas available annually, 3,000 are set aside for those 
who apply under a pilot program involving a USCIS "Regional Center." 
The foreign investor must demonstrate that a qualified investment is 
made in a new commercial enterprise located within an approved Regional 
Center and show that 10 or more jobs are created either directly or 
indirectly by the new commercial enterprise. In addition, the foreign 
investor may only have to devote $500,000 if the capital investment is 
in a Targeted Employment Area, a Rural Area, or a small urban area of 
less than 20,000 people within the Regional Center. Finally, USCIS is 
in the process of setting a standard for timeliness in processing EB-5 
cases, with the objective of providing for a reliable time frame from 
filing and adjudicating the Form I-526 petition through to the targeted 
adjudication of the subsequent Form I-829 petition to remove conditions 
on the investor's residency. We believe such improvements will 
facilitate growth in the use of the EB-5 visa as intended by Congress.

Sincerely,

Signed by: 

Steven Pecinovsky: 
Director: 
Departmental GAO/OIG Liaison Office: 

[End of section]

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Paul L. Jones, (202) 512-8777: 

William W. Crocker III, (202) 512-4533: 

Staff Acknowledgments: 

In addition to the above, James D. Ashley, David P. Alexander, Leo M. 
Barbour, Grace A. Coleman, David S. Dornisch, Ann H. Finley, Kimberly 
Michael, Miguel A. Salas, Jerome T. Sandau, and Ellen Wolfe made key 
contributions to this report.

[2] At this time, USCIS functions were carried out by the Immigration 
and Naturalization Service (INS), an agency within the Department of 
Justice. As of March 1, 2003, INS ceased to exist, and its functions 
were transferred to the U.S. Customs and Border Protection (CBP) and 
Immigration and Customs Enforcement (ICE) within the Department of 
Homeland Security's Directorate of Border and Transportation Security 
as well as USCIS. See Homeland Security Act of 2002, P.L. 107-296 
(2002).

FOOTNOTES

[1] Under the law, this preference category allots up to 7.1 percent of 
the worldwide level of immigration (approximately 10,000 visas 
annually) to qualified investors and their spouses and children. The 
allocation is not a target or a goal. See 8 U.S.C. §1153(b)5.

[2] At this time, USCIS functions were carried out by the Immigration 
and Naturalization Service (INS), an agency within the Department of 
Justice. As of March 1, 2003, INS ceased to exist, and its functions 
were transferred to the U.S. Customs and Border Protection (CBP) and 
Immigration and Customs Enforcement (ICE) within the Department of 
Homeland Security's Directorate of Border and Transportation Security 
as well as USCIS. See Homeland Security Act of 2002, P.L. 107-296 
(2002).

[3] According to USCIS, the majority of the investors and their 
dependents can retain conditional resident status while their 
application for permanent resident status is pending, but they have to 
apply for an extension every year.

[4] 8 U.S.C. 1153(b)(5)(B). Section 8 C.F.R. § 204.6(e) defines a 
targeted employment area as an area that, at the time of the 
investment, is either a rural area or an area that has experienced 
unemployment of at least 150 percent of the national average rate. 

[5] In 1992, P.L. 102-395 required the Secretary of State, together 
with the Attorney General, to establish this pilot program with an 
original allocation of 300 visas. In 1997, Congress expanded the number 
of permitted visas from 300 to 3,000 per year and in 2003, extended the 
program to October 1, 2008. Department of Commerce, Justice, and State, 
the Judiciary, and Related Agencies Appropriations Act of 1998, P.L. 
105-119 (1997) §116 (a); and the Basic Pilot Program Extension and 
Expansion Act of 2003, P.L. 108-156, §4(b).

[6] Section 8 C.F.R. § 204.6(e) defines a regional center as any 
economic unit, public or private, that is involved with the promotion 
of economic growth, including increased export sales, improved regional 
productivity, job creation, and increased domestic capital investment. 
A regional center seeking USCIS approval must submit a proposal showing 
how it plans to focus on a geographical region within the United States 
and to achieve the required growth. 

[7] Under the Immigration and Nationality Act, a legal permanent 
resident who has resided continuously in the U.S. for five years is 
eligible to apply for citizenship. 8 U.S.C. § 1427.

[8] There has been extensive litigation in the courts regarding the 
government's denial of applications for both participation in the EB-5 
category and permanent resident status upon completion of the 
category's requirements. In R.L. Investment Limited Partners and 
Wanxuan Zou v. INS, 86 F. Supp. 2d 1014 (D.C. Hawaii 2000) (RLILP), 
affirmed 273 F.3d 874 (9th Cir. 2001), the court upheld the 
government's denial of an application for an EB-5 application for the 
program that was virtually identical to certain applications approved 
before the issuance of the precedent decisions. In Chang v. U.S., 327 
F.3d 911 (9th Cir. 2003), however, the court held that INS could not 
automatically apply its more restrictive interpretation retroactively 
to investors who had already received conditional resident status and 
who were trying to have those conditions removed. Instead, the court 
ruled that the agency must allow these investors an opportunity to show 
how such a retroactive application would hurt them. The court noted 
that the immigrant investors in Chang were not similarly situated to 
the RLILP plaintiffs, because, in Chang, prior to the issuance of the 
precedent decisions, their applications for the EB-5 category had 
already been approved and the investors had made significant 
commitments.

[9] The opinion concluded that INS failed to understand the true nature 
of the investment plans it reviewed and that it, therefore, misapplied 
its own statute and regulations. The opinion reasoned that the fact 
that INS had, in the past, favorably adjudicated a number of petitions 
involving the business plans at issue did not, as a matter of law, 
prevent INS from denying future petitions involving such plans. 
Memorandum, David A. Martin, General Counsel, December 19, 1997, 
reprinted in 75 Interpreter Releases 332, 343, 345 (March 9, 1998).

[10] AAO is the appellate body that considers cases under the appellate 
jurisdiction of the Associate Commissioner for Examinations. As such, 
AAO can overrule, modify, and distinguish a prior precedent. 

[11] Under INS regulations, decisions relating to the administration of 
immigration law may be designated as precedents in future proceedings. 
Precedent decisions are binding on all service employees in the 
administration of the INA. They are to be published and made available 
to the public. 8 C.F.R. § 103.3(c).

[12] P.L. 107-273 (2002). 

[13] All percentage estimates from the sample have been rounded to the 
nearest percent and have margins of error of plus or minus 10 percent 
unless otherwise noted. 

[14] Additional money was invested by alien entrepreneurs who 
ultimately did not complete the EB-5 benefit process or have yet to 
have their petition for permanent legal resident status approved. We 
did not obtain investment data on immigrant investors who had not met 
all of the EB-5 requirements at the time of our review.

[15] As a result of data limitations, the confidence interval for this 
estimate exceeds plus or minus 10 percent and is 68 percent to 88 
percent. 

[16] As a result of data limitations, the confidence interval for this 
estimate exceeds plus or minus 10 percent and is 11 percent to 31 
percent. 

[17] 8 C.F.R. 204.6(g)(2) states that the number of full-time positions 
created for qualifying employees shall be allocated solely to those 
alien entrepreneurs who have used the establishment of the new 
commercial enterprise as the basis of a petition on Form I-526. No 
allocation need be made among persons not seeking classification under 
section 203(b)(5) of the act or among non-natural persons (e.g., 
corporations), either foreign or domestic.

[18] Aliens are allowed to enter the United States under immigrant and 
nonimmigrant visas. Immigrant visas are for those who wish to obtain 
permanent resident status in the United States and are categorized as 
either family or employment visas. Within each category, USCIS 
established a preference whereby certain visas are processed before 
others. For example, the first priority of employment-based visas (EB- 
1) refers to those deemed by USCIS to be priority workers--that is, a 
person who has a well-documented and extraordinary ability in the 
sciences, arts, education, business, or athletics. EB-5 refers to the 
fifth employment-based preference category. Nonimmigrant visas are for 
those aliens (such as students or those traveling for business or 
pleasure) who wish to enter the United States on a temporary basis.

[19] GAO, Homeland Security: Risks Facing Key Border and Transportation 
Security Program Need to Be Addressed, GAO-03-1083 (Washington, D.C.: 
Sept. 19, 2003); Homeland Security: INS Cannot Locate Many Aliens 
because It Lacks Reliable Address Information, GAO-03-188 (Washington, 
D.C.: Nov. 21, 2002); and Immigration Benefits: Several Factors Impede 
Timeliness of Application Processing, GAO-01-488 (Washington, D.C.: May 
4, 2001).

[20] According to USCIS officials, the Marriage Fraud Amendment System 
is used to process EB-5 applications because, like those immigrating 
upon marriage, EB-5 participants must undergo a conditional period 
prior to being granted permanent residence status.

[21] Aliens are allowed to enter the United States under immigrant and 
nonimmigrant visas. Immigrant visas are for those who wish to obtain 
permanent resident status in the United States and are categorized as 
either family or employment visas. Within each category, USCIS 
established a preference whereby certain visas are processed before 
others. For example, the first priority of employment-based visas (EB- 
1) refers to those deemed by USCIS to be priority workers--that is, a 
person who has a well-documented and extraordinary ability in the 
sciences, arts, education, business, or athletics. EB-5 refers to the 
fifth employment-based preference category. Nonimmigrant visas are for 
those aliens (such as students or those traveling for business or 
pleasure) who wish to enter the United States on a temporary basis.

[22] Section 8 C.F.R. § 204.6(e) defines a targeted employment area as 
an area that, at the time of the investment, is either a rural area or 
an area that has experienced unemployment of at least 150 percent of 
the national average rate.

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