Immigration Appeals office takes another look at EB-5 center in South Dakota|
News Staff - March 22, 2017
WASHINGTON, DC – After recommending South Dakota’s immigrant-investor program be terminated because of multiple financial scandals, the Administrative Appeals Office of the U.S. Citizenship Immigration Services is now recommending it be remanded for further review.
At issue is the South Dakota Regional Center that handled foreign investments in South Dakota projects via the federal government’s EB-5 program. The program offers a short-cut to U.S. citizenship to immigrants who invest at least $500,000 in projects that creates at least 10 jobs in lower income areas.
In its recent decision, the Appeals Office determined that the positive as well as the negative aspects of the South Dakota Regional Center’s EB-5 operations were not balanced against each other in the earlier termination decision.
In that decision sent to the state on July 7, 2016 and again in September 2016, the U.S. Citizenship and Immigration Services said that the state’s participation should be terminated for reasons including the diversion of millions of investor dollars away from intended purposes. Those diversion include at least $1.7 million of investors’ money to an offshore holding company in Cyprus; more than $3 million for unapproved expenses; and another diversion of more than $12 million to initially service debt underwritten by a lending company in the British Virgin Islands and then to buy that same lending company. The USCIS described state official’s attempts to save and defend the program as “unpersuasive,” “erroneous” and “unacceptable.”
The report continued in saying those diversions and other issues "cast considerable doubt on the credibility of South Dakota, all of its operations, and its ability to promote economic growth in compliance with the Program.”
Now, the USCIS says it should have also considered what the South Dakota EB-5 program had accomplished in making it’s decision as to whether or not to terminate the federal funds coming to the state. In the appeal process, state officials claimed substantial economic activity has been generated by the regional center which in turn, has created thousands of jobs in South Dakota.
The use of EB5 federal money started in 2004 with then governor Mike Rounds. He has since stated the program has generated over 5,000 jobs in South Dakota. While some dispute that number, many projects are successful enterprises. Projects ranging from a power plant to a Black Hills hotel and casino to a turkey farm — were funded in whole or part by wealthy foreigners investing $500,000 each in exchange for a fast track to U.S. citizenship.
But several others have been significant financial failures resulting in bankruptcy and continue to cost hundreds of millions of dollars in state taxpayer money for ongoing legal proceedings.