Federal financing program draws praise and critics
By BILL DIPAOLO
Palm Beach Post Staff Writer
Updated: 6:08 p.m. Sunday, Jan. 2, 2011
Posted: 1:15 p.m. Sunday, Jan. 2, 2011
JUPITER, fl — The developer of Jupiter's waterfront Harbourside project has found a way to gain desperately needed cash: a federal program that lets foreign nationals gain U.S. citizenship in about two years in exchange for their $500,000 investment.
Developer Nick Mastroianni says that because American banks are not lending money, he has to go to China and South Korea to finance the $150 million hotel/marina project. And that's where the federal EB-5 financing program comes in.
The program allows foreigners, their spouses and children younger than 21 to win U.S. citizenship by investing money in projects in the United States. Each investment must create 10 direct or indirect jobs in two years.
"China is economically strong. We are weak. I go there because the investment money here has dried up," said Mastroianni, 47, an Abacoa resident.
But not everyone thinks EB-5 is such a good idea.
Linda Sartori, who lives near the prospective development, said it's unfair to let affluent foreigners cut to the front of the citizenship line.
"Under EB-5, my grandparents would not have made it here," said Sartori, whose grandparents were Italian immigrants. "We shouldn't let money determine if you can come to America."
She also noted that the U.S. Senate recently rejected the Dream Act, which would have allowed some illegal immigrants to earn conditional permanent residency by completing two years in the military or two years of college.
Mastroianni won approval in September from the Department of Homeland Security to develop Harbourside as an EB-5 regional center. The program was started in 1992, after the 1990-91 recession, to lure foreign investment and create jobs.
Florida has 16 EB-5 approved projects. Of those, three can operate statewide and two can operate solely in Palm Beach County. The rest can operate in specific metropolitan areas within Florida.
The approved Florida EB-5 projects include a restaurant/retail center in Sarasota, health care and cruise line operations in the Panhandle and construction and manufacturing firms in Miami. There are about 120 approved EB-5 projects in 35 states, including the Jay Peak Ski Resort in Vermont, scientific research centers in Los Angeles and dairy farms in Iowa.
About 180 more developers have applied and are undergoing the required checks by Homeland Security, said Luz Riazaba, a spokeswoman for the U.S. Bureau of Citizenship and Immigration Services.
"We look carefully at the viability of job creation. We don't want people to lose their big investment," Riazaba said.
With immigration laws tighter and banks lending less money, EB-5 applications by foreign investors have increased from about 1,400 in 2008 to about 4,200 in 2009. Since 1992, about 3,100 foreigners have been granted permanent citizenship using EB-5.
About $1.2 billion has been pumped into the economy by foreigners hoping to be citizens since 2000, according to Citizenship and Immigration Services figures.
Citizenship seekers undergo background checks, which take about six months after they deposit $500,000 into an escrow account. Criminal, financial and character checks are done. Federal figures for 2010 show that 165 people were rejected out of the 1,995 who applied, according to records from late in the year.
Supporters say Harbourside will be a "Mizner Park on the water," akin to the commercial hub in Boca Raton. EB-5 will allow the project to create up to 2,000 jobs - 800 full-time and the rest indirect, such as food vendors to restaurants, they say.
Despite background checks, Sartori said she fears that dangerous people could use the program to become citizens.
Riazaba of Citizenship and Immigration Services defended the program.
"Any person who has ever been arrested, cited, charged, convicted or detained by a law enforcement officer must provide certified copies of the arrest report, court disposition, sentencing, and any other relevant documents," said Riazaba via e-mail. "A USCIS officer will review the court documents and make a determination of eligibility."
EB-5 developers pay immigration brokers in China, South Korea and Venezuela to find prospective investors. The developers pay a finder's fee of between $10,000 and $30,000 when an investor agrees to pay the $500,000 to be an equity owner in the business, said Karen Mentor, a Hobe Sound immigration lawyer.
"The investors are taking a huge risk. They must do due diligence to make sure those jobs will be created," Mentor said.
The investors must make sure their $500,000 stays in the escrow account until they receive their conditional green card. Once the investor receives the conditional green card, the developer can spend the investment.
"There has been fraud," said Grant Kaplan, an immigration attorney from Boca Raton, saying that in some cases developers have taken the foreigners' money and then vanished. "But overall, EB-5 has been a reliable method for foreigners to win citizenship."
EB-5 Visa Program
- Step 1: The U.S. Bureau of Citizenship and Immigration Services does a criminal and financial background check on applicants that takes about six months. Applicants place $500,000 in an escrow account. The developer agrees to create 10 jobs with each investment.
- Step 2: If applicants pass a background check, they can live in the U.S. with a conditional green card for two years. Their investment money can be used by the developer. The applicants cannot vote and the card can be revoked.
- Step 3: If after two years the 10 jobs have been created, the applicants can apply for permanent U.S. citizenship. If the jobs are not created, the applicant loses the investment. The temporary green card is revoked.
Source: U.S. Bureau of Citizenship and Immigration Services
