Zises — whose day job is chief of staff of the Illinois Housing Development Authority — says the EB-5 program has become littered with questionable schemes that fail to create jobs or provide green cards for investors. In Tianjin, he surveyed the conference activity and said: "I can't believe some of these people are selling these projects with a straight face."
The program's successes have recently been overshadowed by accusations of fraud and federal lawsuits.
"The best analogy I can think of is the subprime mortgage crisis," where predatory lenders were accused of similar activity, said Ann Lee, a senior fellow at the Demos public policy group in New York who has tracked the program's growth in China.
"There is a danger that if the (Obama) administration ... is turning a blind eye to all of its problems, then this could be an area where you have serious financial fraud and other major issues," Lee said. "Instead of being a way to promote better relations (with China), it can actually have the opposite effect if they don't fix it."
U.S. Citizenship and Immigration Services officials said the agency recently increased its staff of inspectors and has begun working with the Securities and Exchange Commission and other federal agencies to root out questionable cases.
Sen. Patrick Leahy, D-Vt., who is sponsoring legislation to make the regional center portion of the program permanent, says fully authorizing EB-5 would lead to better oversight, though the bill he introduced in May does not call for increased scrutiny.
Leahy's office declined to make the senator available for an interview last week. Last December, the senator acknowledged during a congressional hearing about the program that "there is always room for improvement."
In China, brokers authorized by the Chinese government to serve as gatekeepers for both local investors and regional center representatives have been accused of deception. The roughly 180 companies that employ the brokers charge the American regional centers as much as $60,000 to promote projects to Chinese investors, according to the head of a Beijing-based umbrella group for those companies.
In addition, the companies charge the investors themselves as much as $12,500 in fees and sometimes collect lucrative commissions from the regional centers when investors sign on, said Charles Qi, president of the Beijing Entry & Exit Association.
Often those arrangements are doomed to fail, Qi said, noting scores of cases in which investors put money into projects that ultimately did not create the required number of jobs. "At least 50 percent of Chinese applicants to this program will lose their money and will (never get) their green card," Qi predicted.
Statistics from China are unavailable. But overall the program seems to work for most foreign investors. Just 16 percent of investors granted an EB-5 visa since the program's inception did not later qualify for legal permanent residency, according to U.S. Citizenship and Immigration Services, while nearly 26 percent of those who invested money in projects were found ineligible for an EB-5 visa.
Still, Punyu Ho, a Chicago-based financial adviser, said some of his company's wealthy Chinese clients have been burned after investing through EB-5. During trips to China, Ho attends weekly seminars in Beijing, Shanghai and other cities, highlighting specific projects open to EB-5 investment.
Chinese brokers routinely dismiss the merits of competing regional center projects while touting their own.
"You don't know what to believe," said Fu Haiwen, 24, an owner of a Hong Kong comic book company who is investing in an elderly care center in Crivitz, Wis., directly through a Chicago developer. Ho said Chinese brokers frequently suggest — sometimes using only a photo op — that a venture has been endorsed by the U.S. government. "The Chinese, they believe in government," Ho said.
U.S. Citizenship and Immigration Services Director Alexander Mayorkas said his agency has improved its oversight of the program. In addition to hiring more staff and working with other federal agencies, Mayorkas said, his agency has heightened its efforts to ensure that the "source of funds" for an investment is legal.
Earlier this year, news broke that a Mexican government official wanted for embezzling several million dollars from his government had secured an EB-5 visa to escape into the U.S. In China, there have been news reports of corrupt government officials parking their assets abroad through EB-5 and other immigrant investor programs.
"What is of critical importance to us as an agency is whether the representations that are made to us ... are truthful," Mayorkas said.
Despite the concerns, about 2,000 investors attended the immigration expo in Tianjin, on the coast of the Bohai Sea about an hour from Beijing by bullet train.
Inside the convention hall, guests were greeted by a honeycomblike array of promotional displays. The EB-5 section, by far the largest, featured a mix of proposals for restaurants, senior centers, hotels and other ventures that aimed far higher.
At a booth with a picture of the Chicago skyline, Heidi Li, a director at the Chicago Educational Association, sought to sell a couple on the merits of investing in new classrooms and programs at the College of Chicago, a small school for foreign students.
Instead, she fielded questions about the city's South Side.
"It's not unsafe," Li assured them in Mandarin.
Carrying her 2-year-old daughter, Liu Shujing walked out of the conference eager to start a new life in the U.S., away from the heavy Tianjin smog that paints the horizon a rusty brown and leaves a pungent taste on the lips.
"We're looking for a higher standard of living and, also, a breath of fresh air," Liu said through an interpreter.
At the booth where she was offered the choice between a McDonald's or a ferry boat service to Cuba, Guo Wen, an accountant with Motorola, marveled at the world of possibilities opening before her.
"It's like a supermarket," Guo said, giddily. "Yeah, you can choose what you like!"
Fast track to the American dream
Wealthy Chinese and other foreigners are jumping at a U.S. investment program that offers a big carrot: permanent residency. But sometimes it isn't that easy.
We've upgraded our reader commenting system. Learn more about the new features.
The Baltimore Sun encourages civil dialogue related to our stories; you must register and log-in to our site in order to participate. We reserve the right to remove any user and to delete comments that violate our Terms of Service. By commenting, you agree to these terms. Please flag inappropriate comments.