[Congressional Record (Bound Edition), Volume 161 (2015), Part 13]
[Senate]
[Pages 18593-18594]
[From the U.S. Government Publishing Office, www.gpo.gov]




               REFORMING THE EB-5 REGIONAL CENTER PROGRAM

  Mr. LEAHY. Mr. President, I have championed the EB-5 Regional Center 
Program for many years. I have done so because I have seen its ability 
to generate investment and create jobs in distressed communities. But 
the program is facing some pressing challenges. Reports of rampant 
fraud and abuse raise serious concerns and threaten to cripple the 
program's integrity. The incentives Congress established to invest in 
high unemployment and rural communities are also routinely abused, 
undermining a core objective of the program--to spur growth and create 
jobs in underserved areas. The Regional Center Program is set to expire 
on December 11. It should be reauthorized, but we should not extend it 
blindly. There is bipartisan consensus that the program is in dire need 
of reform, and we cannot squander this opportunity.
  I have long sought reforms to the Regional Center Program. Last 
Congress, my EB-5 amendment to Comprehensive Immigration Reform 
provided the Department of Homeland Security additional authority to 
revoke suspect regional center designations or immigrant petitions. It 
also provided for increased reporting, background checks, and 
securities oversight. My amendment was unanimously approved in the 
Judiciary Committee, but unfortunately the improvements it contained 
have all had to wait, as the House of Representatives failed to allow a 
vote on the bipartisan immigration reform bill that passed the Senate 
last Congress.
  In the past year, only more concerns have emerged. In January, I 
joined Senators Grassley, Corker, Johnson, and others in requesting 
that the Government Accountability Office, GAO, audit the EB-5 program. 
The GAO report released in August detailed fraud vulnerabilities within 
the program and questioned its economic impact. Separate reports from 
the Department of Homeland Security's Office of Intelligence and 
Analysis and Office of the Inspector General highlighted additional 
issues that need to be addressed.
  I am also troubled by the fact that the incentives Congress created 
to promote EB-5 investment in rural and high unemployment areas have 
been rendered meaningless. Investors are provided a discount if they 
choose to invest in rural or high unemployment areas, known as targeted 
employment areas or TEAs. At present, however, the most affluent 
neighborhoods in the country routinely qualify as TEAs by selectively 
stitching together otherwise unrelated census tracts. Department of 
Homeland Security Secretary Johnson rightly described this practice as 
gerrymandering. I do not suggest that affluent areas should not benefit 
from EB-5; they should. But they should not qualify for incentives 
intended to benefit high unemployment and rural areas. These areas 
typically do not have access to significant capital and often struggle 
to create jobs.
  Secretary Johnson himself called for significant reforms to 
strengthen the Regional Center Program. In a letter to the Judiciary 
Committee last April, he asked for authority to quickly act on criminal 
and national security concerns, additional protections for investors, 
enhanced reporting and auditing, improved integrity of TEAs, increased 
minimum investment amounts, and more.

[[Page 18594]]

  I have now worked for over 2 years to develop legislation that would 
provide a necessary overhaul of the Regional Center Program. In June, I 
was joined by Chairman Grassley in introducing this reform-oriented 
legislation, S.1501. Since then, Chairman Grassley and I have worked 
with House Judiciary Chairman Goodlatte on a bicameral bill based on 
S.1501.
  This bicameral bill would provide the Department with the authorities 
and investigative tools necessary to address national security concerns 
and fraud. The reforms include further expanding background checks, 
conducting a more thorough vetting of immigrant investors and proposed 
investments, and providing for the ability to proactively investigate 
fraud, both in the United States and abroad, using a dedicated fund 
paid for by certain program participants. The bill would provide 
greater protections for investors and clarity and shorter processing 
times for project developers. It would also raise minimum investment 
thresholds so more money goes to the communities that need it. And it 
would help to restore the program to its original intent, by ensuring 
that incentives to invest in distressed and undercapitalized areas are 
restored.
  Such reforms would answer the concerns raised by Secretary Johnson, 
the Department's inspector general, the GAO, and others, instilling 
both confidence and transparency in the program. I believe these 
reforms would result in a secure EB-5 program that creates American 
jobs and promotes economic growth throughout our country. We cannot 
continue to leave the Department ill-equipped to administer this job 
creation program. We know what is needed to fix it. And we should fix 
it now.

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