Response to ILW EB-5 Editorial "Grassley and Leahy Pawns"
by Jeff Campion
The editorial entitled “Grassley and Leahy Pawns” published in ILW on February 1, 2016 misses the mark. Neither Grassley not Leahy have been pawns. Each has been extremely active in attempting to reform EB-5. The fact that consensus could not be reached in December doesn’t attest to anyone being a pawn. Rather, it attests to the complexities of the EB-5 program and the fact that it affects every state in the U.S. at no cost to taxpayers while creating jobs! This is a good – no great – thing. I address some of the misunderstandings in the editorial.
The editorial focused many points on China, its investors, and practices of migration agents in the country. Instead of shaking a finger at China, we should be extending a hand as a friend. As a result of China investment in EB-5, jobs are created, buildings are built, schools welcome students, restaurants are opened, roads are built, and new hotels greet visitors, to name a few industries all at no cost to U.S. taxpayers. The notion that we should stop processing I-526s from China misses the point. There has not been widespread allegation of illegitimate source of funds from Chinese investors. But, even if there were a question of the source of funds, this issue is what is exactly addressed at the I-526 phase.
Another issue raised had to do with migration agents in China. While the SEC clearly has authority in the U.S. to oversee U.S. securities and broker dealers, the editorial misses the mark when it asserts that migration agents dictate to the SEC. No one dictates to the SEC. NO ONE. But, the SEC must also balance U.S. laws (and their enforcement) with the sovereignty of another nation and its laws. For a China based (or offshore) migration agents that facilitates the sale of a security to be governed by U.S. law when they do not effectuate such transaction in the U.S. is, perhaps, an inappropriate application of U.S. law in a foreign country. Now, if the author would like to ensure that the offering issued by a U.S. entity is complying with U.S. securities laws, that is a different issue. I believe that the perceived issue put forth can be addressed stateside ensuring that offerings are compliant with all SEC laws and regulations, which by the way is a focus point for SEC this year.
With respect to reducing the investment amount, this seems odd. I am not sure why we would want a reduction. The belief that “dependence” on the China market will be exacerbated with a higher amount is unfounded as is the belief that a lower amount would mitigate it. The reality is that China has over 1.4 billion citizens, is the largest economy in the world, is generating millionaires at an astounding rate, and has an established migration system with its Entry/Exit Bureau (no other county has such an established system). It is for those reasons that there are so many Chinese investors. If the investment amount were less, the result in terms of percentages of EB-5 investors coming from China most likely would not change.
Lastly, the editorial questions whether there is consensus on integrity measures and who really holds the power. I was fortunate enough to be involved in negotiations on the Hill in December. This was not an issue as to whether certain Senators were more powerful. Rather, it was an issue of ensuring what our democracy stands for – that all voices are heard. All sides worked diligently to reach consensus on reforms. Unfortunately, time ran out. Regarding the integrity reform, there is widespread consensus on integrity measures and the need for reform. And, the overwhelming majority of stakeholders I am in contact with roundly support them.
I appreciate the passion in the editorial on February 1, 2016. Passion that fuels action to make change is always good. Hopefully, this passion combined with common sense reform will result in legislation that addresses the pertinent issues while protecting the stakeholders it was designed to protect.
Reprinted with permission.
Jeff Campion is an immigration attorney and the ceo of Pathways EB-5, Inc., a family of approved regional centers that covers nearly every major U.S. population area. He is also a founding member and Co-Chair of EB-5IC.