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INS insiders profit on immigrant dreams

Give me your tired, your poor,

Your huddled masses yearning to breathe free.

Over more than half a century, 12 million immigrants streamed into America,welcomed by the words of Emma Lazarus engraved at the base of the Statue ofLiberty.

But welcoming the tired and poor was hardly on the minds of a small groupof former government officials who helped design an immigration program toattract wealthy foreigners who could obtain prized green cards by investing$500,000 to $1 million in U.S. businesses.

The investor visa program was a little-noticed part of the ImmigrationReform Act, a sweeping law that reshaped the country's immigration policies.

President George Bush called the law "the most comprehensive reform of ourimmigration laws in 66 years." It was, he said as he signed the bill into lawon Nov. 29, 1990, "good for families, good for business, good for fightingcrime and good for America."

While his predictions may yet come true, a review of the decade-old lawshows that it has benefited one group not mentioned by the president -- formerINS officials and their associates who have pocketed millions in fees fromwealthy foreigners willing to invest their savings to join in the Americandream.

In the rush to cash in on the law, have left a trail of victims -- fromfamilies seeking a new beginning in America to struggling companies needing apromised infusion of cash to keep their workers employed.

Now, many of those families are facing the threat of deportation, whilemany troubled companies that were promised a boost from immigrant investorshave closed their doors, leaving hundreds of workers unemployed.

An investigation by The Sun has found:

* Some of the former INS officials who have profited most from the visavending business were instrumental either in formulating the program orlobbying for favorable interpretations of the program rules that aided theirbusinesses, at times working with the same INS staff they once directed.

* One of the most active participants in the visa vending has been GeneMcNary, INS commissioner from October 1989 to January 1993. By his estimate,after leaving the federal government, McNary acted as the attorney on 200 to250 applications for the program.* * The immigration act's main sponsor inthe House of Representatives, Rep. Bruce A. Morrison of Connecticut, went intobusiness with a California immigration consultant to market the investor visaprogram within days after his congressional term ended. Morrison's agreementwas dated Jan. 22, 1991, the month he left Congress.

* Former officials such as McNary, former INS general counsel MauriceInman and Diego Asencio, the former U.S. ambassador to Colombia and Brazil,had extraordinary access to and incessantly lobbied former colleagues in thegovernment for preferential treatment and obtained a series of highlyfavorable but questionable rulings on the requirements for the program thatonly years later were reversed.

"Diego Asencio, Mike Inman, Gene McNary are allowed to roam the visa Officeand INS whenever they please," lamented one frustrated State Departmentofficial in a memo that questioned the propriety of the former officials'activity. "They often just drop in without any warning and they walk about thebuilding like they still worked for the USG [U.S. government]. I feel like avery small but chubby mouse between two very hungry and big tomcats."

* The law required that immigrants invest $1 million in new or troubledU.S. businesses, or $500,000 in a business located in an area of highunemployment. In many cases, only a small fraction of the total -- often just$10,000 per investor -- went to the struggling companies.

* The intent of the law was that each immigrant's investment would createor preserve at least 10 American jobs. However, some of the falteringcompanies have closed and laid off workers, with at least one filing forbankruptcy. Elnor Bailey's clothing factory in Alabama was the sort ofbusiness the program was designed to help. But she received only $50,000, notenough to keep the factory from closing last fall. She was never told she wasentitled to substantially more money. "It makes me angry," she said. "Itreally does."

* When the INS finally did crack down on program abuses in December 1997,it did so with a vengeance, leaving hundreds of people in limbo -- includingmany immigrants who had tried to follow rules in effect at the time. As aresult of that reversal, hundreds of immigrants who thought they had found alegitimate way to live in the United States are facing not only the loss oftheir investments, but possible deportation.

"I saw the United States as my final shore," said one immigrant investor,Mario Carbini of Italy. Now, he said, "I don't know if I'm living anightmare."

Government officials who balked at approving questionable arrangements wereignored, or worse. Instead of having their concerns taken seriously, they weretold "just issue the frigging visa," said Melissa Arkley, a State Departmentofficial who helped to administer the investor visa program.

Even the former INS official who for years was at the center of theprogram's implementation acknowledges that it is deeply flawed. "My overallsense is that it's a mess," said Paul W. Virtue, who was general counsel forINS.

America for sale

The investor visa program was controversial from the start.

Ten years ago, after the legislation was introduced, Rep. Doug Bereuter, aNebraska Republican, warned: "If the [Senate] has its way, 4,800 foreign fatcats would be permitted to buy their way into American citizenship, contingentupon their employment of 10 American workers for at least two years.

"The issue goes to the heart of what we, as Americans, and our nation areall about," he told House colleagues. "This member would deeply regret tolearn that our principles, our values and, indeed, American citizenshipitself, is for sale to the highest bidder."

Former Democratic Sen. Dale Bumpers of Arkansas, a longtime critic, saidrecently: "Under the best of circumstances this was a terrible idea. It wasjust an outrageous concept to me."

Under the program, known technically as EB5, up to 10,000 visas a year canbe issued to investors and members of their family who invest $1 million in aU.S. company for the purpose of creating 10 jobs. A smaller investment of$500,000 qualifies if the investment is made in rural or high unemploymentareas.

Investors who qualify get a conditional green card for two years and then apermanent green card if INS is satisfied that the investment is still in placeand was not fraudulent.

Although some 80,000 investor visa petitions could have been approved sincethe law was passed, only 3,547 petitions were approved through 1999, accordingto INS data.

While the law creating the investor visa program was passed in 1990, theeffort to win approval began years before.

"This one provision," declared Illinois Democrat Paul Simon during a 1986Senate debate, "will generate over $8 billion annually in new investments insmall and independent U.S. businesses, and provide up to 100,000 new jobs forAmericans."

The impetus for the visa program came from a similar strategy in Canadathat was attracting millions of dollars from wealthy Hong Kong residents. Whynot have some of that money come to the United States, supporters argued,especially since the country was suffering through an economic downturn.

Though the legislation failed in 1986, it was renewed in 1989 and in 1990,when the investor visa program was included in a massive immigration bill. AHouse version was filed by Rep. Bruce Morrison, a Democrat who chaired thesubcommittee on immigration. The Senate version was filed by Sen. Edward M.Kennedy, a Massachusetts Democrat.

Changes in the immigration law had been recommended by a commission chairedby the Rev. Theodore M. Hesburgh, former president of Notre Dame University.

"It smacked of being able to buy citizenship," said Hesburgh recently. "Ithink I was the only one who voted against it. I just didn't feel right aboutit."

During the brief House debate on the measure, Rep. John W. Bryant, a TexasDemocrat, expressed strong objections.

"This provision is an unbelievable departure from our tradition ofcherishing our most precious birthright as Americans," said Bryant. "Have weno self-respect as a nation? Are we so broke we have to sell our birthright?"

Even the bill's sponsor expressed reservations. The idea "leaves a badtaste in my mouth," Morrison said. But "there is a lot of foreign investmentgoing on right now. Who do you want, someone who puts down roots or just putsdown his money?"

Court records show that Morrison, who was leaving Congress after anunsuccessful bid to become governor of Connecticut, went into business with aCalifornia immigration consultant named Maria Hsia. His job was to market theinvestor visa program to foreign investors.

His contract, dated Jan. 22, 1991, called for payments of $10,000 per monthfor six months. Morrison contends that Hsia owes him $20,580.50 in salary andexpenses.

Morrison, who now heads the Federal Housing Finance Board, said he sawnothing improper about going into the business after his term as long as hedid not try to gain preferential treatment based on his former position.

"No, it is not wrong," said Morrison. "What was I supposed to do for aliving?"

On March 15, 1991, Morrison's press secretary, Paul Donnelly, set up acompany in Hyattsville called Investment Immigration Consulting Co. Itspurpose, according to Maryland records, was to provide consulting and otherservices related to the investor visa program.

Harold Ezell, Western regional INS commissioner from 1983 to 1989, ran aninvestor visa consulting business in Orange County, Calif., before his deathin 1998.
"We've done a great job on boat people. I see no problem with a few yachtpeople," Ezell said in 1991, soon after the law went into effect.

But the efforts of Morrison, Donnelly, Ezell and other insiders would soonresemble a skiff alongside an ocean liner. The investor visa program was aboutto get a boost from a major new player called American Immigration Services, aGreenbelt firm formed by a local real estate developer.

State records show AIS was incorporated in Maryland on Feb. 8, 1991. Soon,its board of directors boasted a who's who of the politically connected,including Diego Asencio, a former ambassador and assistant U.S. secretary ofstate for consular affairs. Bryant, the vehement critic, was recruited as aboard member at $20,000 a year.

Bryant said he was recruited by Asencio precisely because of hisopposition.

"Diego thought that since the enterprise was going to ask the investors toput up their money and they would have to trust the company, my having been acritic might help their credibility," said Bryant, who is no longer on the AISboard.

Also on the AIS board were William Clark Jr., a former ambassador and StateDepartment official; Prescott S. Bush, the brother of the president who signedthe 1990 law; and Jack F. Matlock Jr., a former ambassador. McNary, the formerINS commissioner, was signed up as legal counsel. The first INS regulationsgoverning the investor visa program were issued under McNary's signature onNov. 29, 1991.

The owner of AIS was Donald Laskin, a Maryland developer, who soon afterAIS was formed became the subject of a federal investigation. In October 1996,Laskin pleaded guilty to bank fraud in a Prince George's County land deal. Hedeclined to comment for this article.

By all accounts, the investor visa program got off to a slow start. For thefirst two years there weren't many applications -- nowhere near the 10,000 peryear allowed under the law.

But internal memos and other records show it was not long before effortswere under way that would open the floodgates to applications. Leading thoseefforts was a small group of former INS officials, along with Asencio -- all,at least initially, affiliated with AIS.

According to court records, Maurice Inman, a former general counsel at INS,quickly emerged as an important player. He appeared initially as an adviser toAIS and would reappear as a key figure in a rival company. Two other AISofficials, Asencio and former INS Commissioner McNary became familiar figuresin government offices dealing with the program.

Wearing his adviser's hat, Inman turned to Paul Virtue, who had been hiredby Inman before he left the INS in 1986. Virtue was to emerge as INS' expertand the key administrative decision-maker on the investor visa program.

"Paul Virtue, who I knew extremely well, became the decision-maker, theboss," Inman said.

Every time we put a deal together, Inman said, we'd take it to INS and goover it in detail before formally submitting it. He said someone from INS --he didn't know who -- had given his name to prospective investors.

The Virtue rulings

Occasionally during discussions with INS, agency officials would recommenda change and "we would comply," Inman said. "You've got to havepredictability. People are putting their lives and their savings on the line."

"Predictability" came in the form of two key legal opinions issued byVirtue on Sept. 10, 1993, and June 27, 1995. The memos were to completelychange the shape and scope of the investor visa program -- and became a boonto AIS.

The rulings stated that investor visa applicants could pool their money andform limited partnerships. Immigrants could meet investment requirementswithout putting all the money up in cash. A promissory note could be used.

Making the program more appealing, the rulings allowed investmentagreements to include provisions ensuring that investors would not lose money.Initially, applicants need put up only $125,000 in cash, not the $500,000 or$1 million spelled out in the law.

Under Virtue's rulings, investors could get permanent green cards beforebeing required to follow through with the full amount of the investment. Theresult was that investors could put up $125,000 and promise to pay the rest,knowing that they would never have to do so.

The effect of the rulings was reflected in INS statistics. In 1995, 417investor visa petitions were filed. In 1996, the number rose to 801, and in1997, to 1,496.

The flood of approved investor visa programs included that of a firm calledWall Street Financial Corp., based in Hawaii. According to filings with theSecurities and Exchange Commission, the company attracted more than $1 millionin investments through the investor visa program. Wall Street Financial,records show, invested that money in a multimillion-dollar resort in Belize,not in businesses in the United States.

Gerhard Walch, the firm's president, said the program was approved by theINS. He failed to respond to requests for further information, including thenumber of Wall Street Financial investors who obtained green cards. INSofficials declined to comment.

The sudden surge of investor visa applications and approvals triggeredconcern in the Department of State, where consular officers were required toreview the applicants.

A perception was growing among State Department officials that the ruleswere being bent to accommodate a small group of former INS officials,according to interviews and State Department cables, e-mail and otherdocuments obtained by The Sun. Those memos questioned the legality of the AISinvestments, comparing the operation to a Ponzi scheme.

"Bill, you should know that Diego Asencio, Mike Inman, Gene McNary areallowed to roam the Visa Office and INS whenever they please," Sylvia L.Hammond, a State Department official, wrote to William Martin, then a consularofficer in Tokyo, on Feb. 14, 1997. "They often just drop in without anywarning and they walk about the building like they still worked for the USG[U.S. government]. I feel like a very small but chubby mouse between two veryhungry and big tomcats."

Another State Department official, H. Edward Odom, wrote to consularofficial Wayne G. Griffith: "Everyone in the department and in INS who hascome into contact with these cases has immediately detected the odor of them."

"Again, nobody likes the situation, especially having to deal with caseswhich are pushing the envelope on legality and which also involve the formerhead of CA [consular affairs]," referring to Asencio. "We are alluncomfortable."

In a Valentine's Day 1997 e-mail to Donna Hamilton, then-principal deputyassistant secretary of state for consular affairs, Griffith complained thatINS and the State Department were "caving in" to "heavy political pressure."

As one example of how the former INS officials were able to get their way,State Department visa official Melissa Arkley described a September 1997meeting attended by AIS attorneys William Cook and Gene McNary, the visaoffice and the INS.

At the meeting, Arkley wrote: "AIS representatives made a number ofassertions which INS, led by Paul Virtue, appeared to accept without question.... Among other statements, Mr. Cook characterized the EB-5/T-5 program as'selling green cards' with the only problem being the price at which thegovernment was selling them."

Arkley wrote that AIS officials boasted about their conversations withVirtue. "They have frequently asserted that they had 'just spoken to Paul' orthat Paul Virtue had 'promised' them that their investor agreements were infull compliance with the current regulations," she wrote.

Arkley, a consular officer in the State Department's central office for twoyears ending in mid-1999, said her colleagues failed to respond to concernsabout the investor visa program coming from embassies around the world.

"We rolled over and played dead," Arkley said. "Not only did we notadvocate [on behalf of consular officers], we put our foot on their throatsand told them to shut up. 'Cease and desist! Just issue the frigging visa,' iswhat we told them."

Finally, though, the drumbeat of opposition within the INS and StateDepartment led then-INS general counsel David Martin to issue a memo on Dec.19, 1997.

The opinion struck down many of the rules issued by Virtue, includingprovisions that ensured that final payments would never have to be made, theuse of a portion of the immigrant's contribution to pay expenses such asattorney and finder's fees, and the guaranteed return on the cash portion ofthe investment. The ruling tightly restricted the use of promissory notes.

Even after the Martin ruling, concerns about preferential treatment wereraised within INS.

"There continues to be a lack of serious will by this office to addresssquarely and in a forthright manner the ongoing ethical problem created byproviding inordinate access to former INS officials," INS attorney S.Alexander Gisser wrote in a May 15, 1998, memo to his boss, David Dixon. "Thistype of special accommodation should stop, once and for all."

The memo concluded: "I hope you haven't forgotten that it was the Office ofGeneral Counsel which, in large part, created this mess by accommodating theseofficials inappropriately in the past."

Inman had been warned that rule changes might be in the works, but said theMartin memo caught him by surprise.

"When I heard about the memo, this got my attention in a big way," Inmansaid. "They [INS] kept telling us to cool it. Don't worry."

He first called Paul Virtue, whom he said had assured him repeatedly thatany changes would not be retroactive. Inman said Virtue "reiterated thepromises that had been made by him that the rules would not be changed."

But the changes did come. And they were retroactive.

In a series of "precedent rulings" in 1998, INS made the reversal official,striking down applications involving types of promissory notes, guaranteedinvestment returns and other key elements of the AIS programs.

Inman said he learned around that time that Virtue, who had become thesubject of an internal investigation by the INS inspector general's office,had been taken off the investor visa program.

Virtue said he has heard nothing since being interviewed by the inspectorgeneral's office several months ago about its probe into allegations that hemight have been unduly influenced by former INS officials. Virtue said hisrecusal was voluntary and not related to the investigation.

By the time of Virtue's recusal, Inman had stopped working with AIS andjoined another investment visa firm, American Export Partners. Inman said hedisagreed with AIS officials' decision to limit the initial investment fromvisa applicants to $125,000.

"We parted over the decision to embark on the $125,000 program -- $125,000was not enough. Our clients [firms seeking investment money] needed more,"Inman said.

American Export was also hit by the INS rulings, and its lawyers filed suitlast spring in U.S. District Court in South Carolina alleging that the newpolicy contradicted at least four written opinions from the INS administrativeappeals office and "promises and representations" made by INS.

Among other documents, the lawsuit cited Paul Virtue's 1993 and 1995 memos.

Asked in an interview how often he received assurances from INS officialsthat his programs were in compliance, Inman said: "Maybe 30 or 40 times."

But Inman insists that his access was proper and of little consequencecompared to that of McNary.

"I knew who to call, but that's the only benefit," Inman said. "McNary hada hell of a lot more contacts than I ever dreamed of ... and more currentcontacts than I ever dreamed of."

"My connections were current because I left INS after he [Inman] did,"McNary said.

The former INS commissioner said he waited more than a year after he leftINS in early 1993 before becoming involved in the immigration business. Aone-year wait is required under federal law.

"I probably talked to Paul [Virtue] three or four times -- a couple oftimes about the investor visa program," McNary said. "They were changing therules and I was just trying to find out what they were doing."

'McNary's baby'

But McNary's efforts on behalf of AIS were not limited to calls andmeetings with Virtue. An internal memo written by Dennis Janda, an official atthe INS service center in Dallas, recounts a series of key events for AIS andunderscores the role McNary had played in shaping the investor visa programwhile he headed INS.

In the memo, written in April 1996, Janda recounted discussions at INSheadquarters in 1991 in which top INS officials referred to the investor visaprogram as "McNary's baby" and said McNary "was basically scripting thedirection of this program."

Janda said in the memo that he was not surprised to learn of McNary'sinvolvement when a key AIS investor visa application landed on his desk in thesummer of 1995. The case was important because once it was decided, it woulddetermine the fate of hundreds of AIS applications to follow.

Janda, according to the memo, did not believe the application met "theletter or spirit" of the law. At the urging of superiors, he phoned McNary athis St. Louis law offices to discuss it.

Describing McNary as "the moving force" behind the program, Janda wrotethat McNary assured him that he had run the proposals by the head of the INSunit that would ultimately hear any appeal in the case.

Even after McNary submitted additional materials, Janda did not believe theAIS application met requirements.

According to Janda's memo, he spoke with the head of the appeals unit, whoaffirmed McNary's statements.

"I prepared notes to the file at that time regarding that importantdiscussion, and by default, approved the case as there would be no point insubjecting our office to needless criticism," the memo states.

McNary acknowledged speaking with Janda and sending him copies of earlierapprovals. He said he was simply doing his job. "I was an immigration lawyerat that point," McNary said.

Asked if he got preferential treatment, McNary, who is running for Congressfrom Missouri, said: "Absolutely not. To the contrary, not only was it arm'slength, it was an extra step I had to go through to ask for a meeting."

As a private attorney, McNary markets the expertise he gained as INScommissioner. A Web site for McNary's law firm states: "Mr. McNary returned tothe private practice of immigration law armed with a unique knowledge andunderstanding of immigration law and the operations of the federal agencywhich regulates and administers these laws."

Virtue, now in private law practice, strenuously denied giving favoredtreatment to Inman, McNary, companies they represented or any of the otherfirms in the investor visa program.

"There were allegations that I was unduly influenced by people representingcompanies in the program. I certainly deny unequivocally that there wasspecial treatment," he said.

Virtue acknowledged signing the two memos but said he did not prepare them,a task he said was performed by members of his staff.

Virtue acknowledged the meetings with Inman, McNary, Asencio and others,and the frequent phone calls from Inman. "Mike Inman probably called me fouror five times a day," Virtue said.

Asked if he assured Inman that any rule changes would not be retroactive,Virtue replied: "To the extent I could assure him at all, I felt we would bepublishing new regulations. ... He gives me credit for more authority than Ihad."

If he were to do it again, Virtue said, "I don't think I would haveentertained any direct contact or meetings with people representing thosecompanies. I would have made it clear [that] the general counsel's office isin the business of providing legal advice to our clients. ... While I tried tomake that clear, I would have put it in writing on the side of a buildingsomewhere."

Virtue said it was his belief at the time that the AIS programs"technically" complied with the law and regulations.

"Yes, clearly, they were taking advantage of the regulatory scheme as muchas they possibly could," he said.

But there were those inside INS who said Virtue's rulings created theproblem.

"Virtue's interpretations invited the abuse," said Benedict J. Ferro,former regional director in Baltimore. "They never made sense. They wereinconsistent with the law."

Splitting the fees

The companies and their principals were generating lucrative fees forthemselves and their associates. In a lawsuit in U.S. District Court inBaltimore, a former AIS employee alleged that the firm's programs providedonly $10,000 per investor to businesses, a small fraction of the $500,000 and$1 million required by law.

In a lawsuit alleging that AIS defrauded the government, Joaquin A.Tremols, who worked for the firm from Sept. 25 to Dec. 11, 1995, saidinvestors were required to put up only $125,000 in cash -- and that only$10,000 went to troubled companies.

According to the lawsuit, of the $125,000, $10,000 went to McNary's lawfirm for legal fees; $15,000 was a finder's fee to the person who recruitedthe immigrant investor; $25,000 went to AIS for administrative and other fees;$65,000 went into a trust account; and $10,000 went to the troubled business.

"The trust account," Tremols' lawsuit states, "guaranteesx each investor a10 percent return on their investment per year."

Based on the 120 enrolled investors, the lawsuit estimates that $58 millionthat should have been invested in American businesses never was. The lawsuitalleges that McNary acted in a dual role -- as legal adviser to AIS whilesimultaneously providing legal services to investors who paid him a $10,000fee. McNary refused to discuss fees, but acknowledged handling 200 to 250investor visa applications.

Based on those figures and the fees alleged in the Tremols lawsuit, McNaryand his law firm could have collected legal fees of $4 million to $5 million.

A copy of McNary's standard contract with investor clients was attached tothe Tremols lawsuit. It includes a provision under which clients agreed toallow McNary's firm to represent both parties.

Tremols, who dropped his lawsuit late last year, declined to comment. StateDepartment cables that detail the AIS transactions corroborate the figures inthe lawsuit. Had he won the case, Tremols could have received a portion of anydamage award assessed against AIS.

William Cook, a former INS general counsel who represents AIS, defended thefirm's actions and said that because of uncertainly created by the INS policyshift, further payments from investors to the companies were never made. Askedrepeatedly to provide an accounting of how much money was provided to thecompanies, Cook never responded.

Cook, like other AIS officials, attributes the INS action, in part, tojealousy.

"There were a number of former INS people who made a reasonably largeamount of money in this program," said Cook. "McNary made millions. Inman mademillions."

Rhetoric and reality

In October 1995, McNary and other AIS representatives held a newsconference in Selma, Ala., to announce that up to $25 million would beinvested in local textile companies under the investor visa program. They saidthe money would give a much-needed financial boost to two Selma companies,Denim Specialists and Dallas Manufacturing, and help preserve 500 jobs.

McNary was quoted in a local newspaper as saying that although the initialinvestments wouldn't be large, "there is a potential for
$25 million over the long haul." Although the program had been slow in gettinggoing, he said, "we're over the hump and will be able to preserve those jobs."

That was the rhetoric. This was the reality.

In 1996, Denim Specialists filed for bankruptcy after being evicted fromits factory.

James Utsey of Selma, the owner of Dallas Manufacturing and two othertextile firms, was present at the new conference that day. He said he wasrepeatedly rebuffed in efforts to get more than the $100,000 initiallyprovided by AIS, which he said was in the form of a loan. The paymentsapparently represented the contributions of 10 investors.

"We had a fairly heated argument," said Utsey, outside his now dark andabandoned factory, recalling conversation with AIS officals. Eventually, AISwouldn't return his phone calls.

Asked if he was aware of what became of the companies in Alabama, McNarysaid he did not know.

When Congress established the investor visa program, it was with strugglingbusinesses like Bailey Creations in mind.

Elnor Bailey, now 74, started her company 13 years ago, partly to providejobs for neighbors in the depressed rural town of York, Ala., near theMississippi border. By the mid-1990s, she was running out of cash and afraidshe might have to close her factory and lay off workers. Then she heard aboutthe investor visa program. A talk with an AIS representative offeredencouragement that she'd be able to keep her business going.

Bailey said she received $50,000, which helped for a while. But billsmounted, and Bailey closed her company last September and laid off its 75workers.

Her factory sits idle. Patterns for the women's and children's clothingthat once poured off the assembly line hang on the walls. Dozens of sewingmachines are stocked at one end, covered in cobwebs.

Months after her plant closed, Bailey learned that more than $500,000 thatcould have kept her business alive was sitting in escrow in a bank account shecouldn't access and hadn't known existed.

"I didn't know there was any rest of the money," she said. "I can promiseyou if I had gotten $500,000, I would be in business."

State Department cables show government officials knew in 1997 that only asmall fraction of the money was going to Bailey's company, while AIS legal andadministrative fees ate up five times that amount.

"My mind keeps going back to 'It's the government,'" said Bailey. "Theyshould have been doing their job. You just can't put a program out there andnot monitor it."


Visas on a production line: A 1990 law created a program that has mademillions for companies that lure high-tech immigrants pursuing the Americandream. For some immigrants, the reality is indentured servitude.

How many H-1B visas? INS admits it might have issued 15,000 more visas thanallowed by law last year because of computer programming errors.

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