Immigrant Investor Program: Additional Actions Needed to Better Assess Fraud Risks and Report Economic Benefits
Highlights
What GAO Found
The Department of Homeland Security's (DHS) U.S. Citizenship and Immigration Services (USCIS) administers the Employment-Based Fifth Preference Immigrant Investor Program (EB-5 Program) and collaborated with its interagency partners to assess fraud and national security risks in the program in fiscal years 2012 and 2015. Unique fraud risks identified in the program included uncertainties in verifying that the funds invested were obtained lawfully and various investment-related schemes to defraud investors. These assessments were onetime efforts; however, USCIS officials noted that fraud risks in the EB-5 Program are constantly evolving, and they continually identify new fraud schemes. USCIS does not have documented plans to conduct regular future risk assessments, in accordance with fraud prevention practices, which could help inform efforts to identify and address evolving program risks.
USCIS has taken steps to address the fraud risks it identified by enhancing its fraud risk management efforts, including establishing a dedicated entity to oversee these efforts. However, USCIS's information systems and processes limit its ability to collect and use data on EB-5 Program participants to address fraud risks in the program. For example, USCIS does not consistently enter some information it collects on participants in its information systems, such as name and date of birth, a fact that presents barriers to conducting basic electronic searches that could be analyzed for potential fraud, such as schemes to defraud investors. USCIS plans to collect and maintain more complete data in its new information system; however, GAO reported in May 2015 that the new system is nearly 4 years delayed. In the meantime, USCIS does not have a strategy for collecting additional information, including some information on businesses supported by EB-5 Program investments, that officials noted could help mitigate fraud, such as misrepresentation of new businesses. Given that information system improvements with the potential to expand USCIS's fraud mitigation efforts will not take effect until 2017 at the earliest and that gaps exist in USCIS's other information collection efforts, developing a strategy for collecting such information would better position USCIS to identify and mitigate potential fraud.
USCIS increased its capacity to verify job creation by increasing the size and expertise of its workforce and providing clarifying guidance and training, among other actions. However, USCIS's methodology for reporting program outcomes and overall economic benefits is not valid and reliable because it may understate or overstate program benefits in certain instances as it is based on the minimum program requirements of 10 jobs and a $500,000 investment per investor instead of the number of jobs and investment amounts collected by USCIS on individual EB-5 Program forms. For example, USCIS reported 4,500 jobs for 450 investors on one project using its methodology instead of 10,500 jobs reported on EB-5 Program forms for that project. Further, investment amounts are not adjusted for investors who do not complete the program or invest $1 million instead of $500,000. USCIS officials said they are not statutorily required to develop a more comprehensive assessment. However, tracking and analyzing data on jobs and investments reported on program forms would better position USCIS to more reliably assess and report on the EB-5 Program economic benefits.
Why GAO Did This Study
Congress created the EB-5 visa category to promote job creation by immigrant investors in exchange for visas providing lawful permanent residency. Participants are required to invest $1 million in a business that is to create at least 10 jobs--or $500,000 for businesses located in an area that is rural or has experienced unemployment of at least 150 percent of the national average rate. Upon meeting program requirements, immigrant investors are eligible for conditional status to live and work in the United States and can apply to remove the conditions for lawful permanent residency after 2 years.
GAO was asked to review fraud risks and economic benefits for the EB-5 Program. This report examines USCIS efforts under the EB-5 Program to (1) work with interagency partners to assess fraud and other related risks, (2) address any identified fraud risks, and (3) increase its capacity to verify job creation and use a valid and reliable methodology to report economic benefits. GAO reviewed risk assessments and processes to address fraud risks, verify job creation, and report economic benefits.
Recommendations
GAO recommends that, among other things, USCIS conduct regular future risk assessments, develop a strategy to expand information collection, and analyze the data collected on program forms to reliably report on economic benefits. DHS concurred with our four recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| United States Citizenship and Immigration Services | To strengthen USCIS's EB-5 Program fraud prevention, detection, and mitigation capabilities, and to more accurately and comprehensively assess and report program outcomes and the overall economic benefits of the program, the Director of USCIS should plan and conduct regular future fraud risk assessments of the EB-5 Program. |
U.S. Citizenship and Immigration Services (USCIS) is responsible for administering the Employment-Based Fifth Preference Immigrant Investor Program (EB-5 Program). In 2015, we reported that USCIS had collaborated with its interagency partners to assess fraud and national security risks in the program in fiscal years 2012 and 2015, but that these assessments were onetime efforts that did not have documented plans to conduct regular future risk assessments, in accordance with fraud prevention practices, which could help inform efforts to identify and address evolving program risks. To strengthen the program's fraud prevention, detection, and mitigation capabilities, we recommended that USCIS plan and conduct regular fraud risk assessments. USCIS concurred with the recommendation, stating that it would continue to conduct at least one fraud, national security, or intelligence assessment on an aspect of the program annually. In September 2015, USCIS stated that the agency would conduct its next fraud, national security, or intelligence assessment in fiscal year 2016 and one assessment annually thereafter. In May 2017, USCIS completed the assessment, which was approved by USCIS leadership in March 2018. USCIS also provided documentation of its plans for conducting future risk assessments of the program. Conducting regular fraud risk assessments should help strengthen USCIS's fraud prevention, detection, and mitigation capabilities for the EB-5 program while also enhancing overall fraud risk management efforts.
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| United States Citizenship and Immigration Services | To strengthen USCIS's EB-5 Program fraud prevention, detection, and mitigation capabilities, and to more accurately and comprehensively assess and report program outcomes and the overall economic benefits of the program, the Director of USCIS should develop a strategy to expand information collection, including considering the increased use of interviews at the I-829 phase as well as requiring the additional reporting of information in applicant and petitioner forms. |
In August 2015, we reported on the Department of Homeland Security's (DHS) U.S. Citizenship and Immigration Services's (USCIS) administration of the Employment-Based Fifth Preference Immigrant Investor Program (EB-5 Program), including efforts to assess and address fraud risks in the program. We reported that while USCIS had taken steps to address the fraud risks it identified by enhancing its fraud risk management efforts, USCIS's information systems and processes limited its ability to collect and use data on EB-5 Program participants to address fraud risks in the program. We also found that USCIS did not have a strategy for collecting additional information, including some information on businesses supported by EB-5 Program investments, that officials noted could help mitigate fraud, such as misrepresentation of new businesses. Consequently, we recommended that USCIS develop a strategy to expand information collection, including considering the increased use of interviews at the I-829 phase and requiring the additional reporting of information in applicant and petitioner forms. As of September 2017, USCIS had developed a data collection plan documenting a strategy to expand information collection on the program and shared documentation of steps already taken as part of that strategy. In particular, in fiscal year 2017, USCIS published revised forms submitted by EB-5 applicants and petitioners to improve data collection, increase transparency, and enhance program integrity. The strategy also included actions underway to expand the use of site visits and petitioner interviews to allow USCIS to verify information submitted on forms. Further, USCIS reported establishing a new division to manage form I-829 adjudications and also reported developing a process to ensure that site visit results are incorporated into petitioner interview selection criteria, among other things. Developing a strategy for collecting such information should better position USCIS to identify and mitigate potential fraud.
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| United States Citizenship and Immigration Services | To strengthen USCIS's EB-5 Program fraud prevention, detection, and mitigation capabilities, and to more accurately and comprehensively assess and report program outcomes and the overall economic benefits of the program, the Director of USCIS should track and report data that immigrant investors report, and the agency verifies on its program forms for total investments and jobs created through the EB-5 Program. |
We found that USCIS's methodology for reporting program outcomes and overall economic benefits of the EB-5 Program was not valid and reliable because it may have understated or overstated program benefits in certain instances. We recommended that USCIS track and report data that immigrant investors report, and the agency verifies, on its program forms for total investments and jobs created. In response, in May 2019, USCIS reported to us that they had (1) updated all EB-5 forms to better collect data to support enhanced reporting; (2) improved data capture at the time of lockbox receipting of two of four EB-5 program forms (forms I-526 and I-829); (3) deployed a new case tracking system; and, (4) established a Data Analytics and Quality Branch to analyze and quantify EB-5 data. Lockbox receipting of two other forms (forms I-924 and I-924A) is pending OMB approval, according to USCIS officials, and should enable receipt of these forms in the lockbox and transmittal into USCIS's case tracking system for analyses. Analysis of data reported directly on the program forms should help enable USCIS to more accurately and comprehensively assess and report program outcomes and the overall economic benefits of the program.
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| United States Citizenship and Immigration Services | To strengthen USCIS's EB-5 Program fraud prevention, detection, and mitigation capabilities, and to more accurately and comprehensively assess and report program outcomes and the overall economic benefits of the program, the Director of USCIS should include a discussion of the types and reasons any relevant program costs were excluded from the Commerce study of the EB-5 Program. |
In 2015, we reported, based on our review of the U.S. Citizenship and Immigration Services' (USCIS) Employment-Based Fifth Preference Immigrant Investor Program (EB-5 Program), that USCIS had commissioned the Department of Commerce's Economics and Statistics Administration (ESA) to conduct a study of the economic impact of the EB-5 Program. We found, based on our review of the study's preliminary scope and methodology, that the study would address some, but not all, shortcomings of prior studies pertaining to assessing the overall benefits of the EB-5 Program. For example, the study was to use information submitted by immigrant investors on EB-5 Program forms and entered into the Intranet Computer Linked Application Information Management System (iCLAIMS) to more specifically and reliably report program benefits. However, the study would not include program costs, which are important for assessing a program's net economic impact. To address this shortcoming, in an effort to more accurately and comprehensively assess and report program outcomes and the overall economic benefits of the program, we recommended that USCIS include a discussion of the types and reasons any relevant program costs were excluded from the Commerce study. USCIS concurred with our recommendation, stating that it would recommend to the Department of Commerce that a description of potential costs not assessed as part of the study be included when the study was published--later that year. In a September 2015 update, USCIS further stated in its 60-day letter that it had already made the recommendation to the Department Commerce. In October 2016, USCIS provided a final copy of the study which we reviewed and determined that it does not include a discussion of potential costs of the EB-5 Program. The report does briefly cite, however, the absence of data required for conducting a meaningful analysis of the social costs of the program as a reason why a discussion of potential program costs was not included. We believe, as published, the report does not meet the intent of our recommendation, which was to inform the reader that there are potential costs, in addition to benefits, associated with the program, and to identify what the potential program cost types are. Given that ESA did not need the actual data in order to have included such a discussion of potential program costs in the report, GAO is closing this recommendation as not implemented.
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