Lee runs Maslink, a firm that connects cash-hungry American businesses with Chinese investors keen to move to the United States. His company is part of a global cottage industry that has popped up in recent years to profit from a program that allows foreigners who invest in certain small U.S. businesses to get on the fast track to U.S. residency and citizenship.
Interest in the immigration program, known as EB-5, is so high that Maslink, which already has offices in Shanghai, Beijing, Hangzhou and Chongqing, is expanding to two more Chinese cities.
Firms like Maslink, and the U.S. companies that pay them, promote EB-5 as a quick, easy way to gain legal entry to the United States -- and to make a potential profit in the bargain.
The pitch is effective. In 2010, nearly 2,000 would-be immigrants, many from China, applied for EB-5 visas, the most ever in a single year, according to U.S. Citizenship and Immigration Services (USCIS), the agency that oversees the program. The surge has been driven in part by a 20-fold increase in the number of U.S. companies looking to participate.
But an examination of EB-5 by Reuters suggests immigrants should think twice before investing in the limited partnerships and unregistered securities that U.S. companies and promoters like Maslink are encouraging them to buy.
Over the past two decades, thousands of immigrants have been burned by misrepresentations that EB-5 promoters make about the program, both inside and outside the United States. Many have lost not only their money but their chance at winning U.S. citizenship.
"I always tell the people who approach me that the EB-5 investment program is a risky business," said Brian Su, a Springfield, Illinois-based immigration consultant who publishes a popular blog on the program. "If you cannot bear the loss, the total loss of your investment, don't play this game."
But those risks are downplayed by almost everyone involved in the program -- including the USCIS itself. Chris Bentley, the agency's spokesman, for instance, said "the overwhelming majority" of EB-5 investors and their dependents go on to qualify for permanent resident status. An analysis of USCIS's own data, however, suggests that's not true. Nearly half the immigrant investors who won EB-5 visas during its 20-year history have failed to obtain permanent residency.
The rise in recent years of an unregulated industry paid to fill the EB-5 pipeline with rich foreigners has only added to the dangers. The U.S. businesses the immigrants are now steered to -- by firms like Maslink and by U.S. immigration attorneys -- are often the ones paying the highest commissions, not the ones offering the best investments, according to the industry insiders who spoke to Reuters.
"It's the Wild West," said Henry Liebman, a Seattle attorney and developer who has been doing EB-5 funded projects almost since the program's inception.
"You're dealing with a bunch of unregulated companies, most of them small, that aren't registered with anyone and can do whatever they want," he said. "It's definitely buyer beware."
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