Senator Patrick Leahy (D-Vermont) has worked to reform the EB-5 Regional Center program for years. His EB-5 amendment to Comprehensive Immigration Reform passed the Senate in 2013, but the House of Representatives failed to allow a vote on the bill. He also requested that the Government Accountability Office audit the program and pressed the Department of Homeland Security (DHS) to do what it can to improve the program administratively. Then last year he co-authored a broad, bipartisan reform bill supported by both chairmen and ranking members of the Senate and House Judiciary Committees. These reforms would provide DHS a dedicated anti-fraud fund and increased authority to terminate bad actors, as well as require additional background checks, annual financial reporting, audits, mandatory site visits of projects and regional centers, and increased disclosures to investors and protections for investors in case a project or regional center is terminated. The reforms in the Leahy-Grassley bill would also promote EB-5 investment in distressed and undercapitalized areas as Congress intended. Unfortunately, congressional leaders inexcusably blocked these reforms last December.
“I’m shocked and saddened by what state and federal investigators have found," Leahy said in a statement issued Thursday evening. "I’m especially heartbroken for the people of the Northeast Kingdom, whose high hopes for these projects have been dealt a harsh blow. My thoughts are with the many families impacted by this. It is a good sign that both the federally appointed receiver and the state are doing what they can to keep these businesses open and to keep these Vermonters employed. I am also aware that hundreds of investors who believed in these projects now do not know if they will see their money or any immigration benefits. It is a terrible situation all around.
“The allegations here are extraordinarily serious, and as a Senator I don’t comment on pending enforcement matters. I have supported the EB-5 Regional Center Program because it can generate significant investment and create real jobs in rural areas. Several Vermont businesses have benefited from this program, including Sugarbush Ski Resort and Country Home Products. But there is no question that the program is in dire need of reform, and I have worked for many years to convince Congress to enact reforms and to improve it. Fraud and abuse cannot be tolerated, no matter where it occurs. Even where there is no indication of fraud, the incentives that Congress created to direct EB-5 investment to underserved areas are regularly abused. Given the significant problems plaguing this program, I will continue to push for meaningful reform. Without reform, I believe the time has come for the program to end.”