Another scandal involving a controversial visa program has highlighted the uncertainty over whether President-elect Donald Trump will support efforts in Congress to reform it.
The EB-5 visa program landed in the spotlight again after the Securities and Exchange Commission charged an Orange County attorney this week with scamming Chinese investors out of millions of dollars.
According to the SEC, Newport Beach attorney Emilio Francisco raised $72 million from investors through the EB-5 program, which gives foreigners a two-year visa and a chance at permanent legal status if they invest at least a half-million dollars in U.S. businesses that create at least 10 U.S. jobs.
The complaint alleges that Francisco and his investment firm, PDC Capital, stole at least $9.6 million of the investors' money, using part of it to buy a yacht. Calls and emails to Francisco and two of his businesses were not returned.
Among the issues the visa program has had is a problem with gerrymandering of what are called "Targeted Employment Areas," zones designated as economically troubled where foreigners can invest a minimum of $500,000 to get a visa, versus $1 million for wealthier areas. Real estate developers have exploited this provision to get foreigners to finance upscale projects in areas that are not economically depressed.
Congressional efforts to tighten the program have so far stalled. Earlier this month, Congress approved a temporary extension of EB-5 as-is until the spring.
By that time, the Trump administration will have settled into the White House. Trump has not indicated whether he has plans for EB-5. A California Trump spokesman reached Friday had no details.
Experts don't anticipate that Trump, a real estate developer, will be keen on pushing many changes to EB-5, in spite of his tough stances on immigration.
This kind of adventurous capitalism, shall we say, is the sort of thing he likes to do, and is probably unlikely to change," said EB-5 critic David North with the Center for Immigration Studies, a Washington, D.C. think tank that favors stricter immigration policies.
Trump-branded projects have benefited from EB-5 dollars. In addition, North said, "people who are his peers, real estate developers in New York, have been the principal recipients of this, so the pressures on him from people he knows and thinks well of will be heavy."
Louis DeSipio, a political scientist at UC Irvine, said the Trump administration is likely to look favorably on this aspect of immigration policy.
"I would imagine, despite his angry rhetoric about immigrants and immigration, that we would see a protection of EB-5 and maybe even an expansion," DeSipio said, "and he would argue that an expansion would lead to economic development."
There is optimism in investor circles that the odds will be in favor of EB-5, said Howard Ting, vice-president of YK America, an El Monte-based real estate developer that builds retail projects.
"My personal opinion is that he's pro-EB-5," he said. "The reason why is that he's a businessman, everybody knows that. EB-5 creates jobs."
Ting believes some proposed reforms may still come to pass, however, including raising the minimum EB-5 investment from $500,000 to $800,000.