USGAO: Big City EB-5 TEA Scammers Send 36% of Total EB-5 Investment Dollars To Rich Areas
The U.S. Government Accountability Office (“GAO”) just issued a report which FINALLY quantifies the extent of TEA abuse by the largest EB-5 developers who manipulate unemployment data in order to qualify projects in rich neighborhoods as “targeted employment areas”, simply because prospective EB-5 investors would rarely if ever pay double the non-TEA investment amount (currently $1M U.S., as opposed to $500,000 for TEA-approved projects.) I am VERY happy to report that the truth about where EB-5 money is REALLY going is finally out.
The report, which looked at the EB-5 immigrant investor program over a three-month period last year, found that just 12% of investment went toward projects located in a census tract with an unemployment rate of at least 8%, even though those projects benefited from a provision earmarked for high-unemployment areas. A large chunk—36%—were for projects located in a census tract with an unemployment rate of 4% or lower. Here’s the link to an excellent summary article in the Wall Street Journal:
These metrics are being greeted with shock even by the most vehement TEA-abuse critics in Washington. Think about it…the companies which currently consume the vast majority of EB-5 investor slots are steering OVER ONE THIRD of the billions raised to the richest, LEAST needy neighborhoods. The numbers are staggering, and the GAO’s review confirms what many of us have been saying for years: the megadevelopers are WELCOME to raise EB-5 money for their beautiful high-rise buildings in Miami, Manhattan, LA, etc….but investors need to pay the FULL statutory EB-5 investment amount required by the law for enterprises in affluent communities, as in $1 million today, and more after the new law takes effect. The GAO report will give Congressional reformers the teeth they need to finally level the EB-5 playing field and let those of us who are bringing EB-5 jobs to LEGITIMATELY poor and rural areas have the TEA 50% investment advantage Congress intended since the law was created in 1990.
Party’s over, Big EB-5: keep your TEA fudging out of our pastures and HUB zones and blighted areas, get busy trying to find EB-5 investors willing to invest double what the need to invest in a bona fide TEA and, for the first time in EB-5 history,…let’s play fair.
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