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Investment Visas: Swapping Boat People for Yacht People

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Give me your poor, your tired, your huddled masses. Or anyone with a half-million bucks to spare.

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There are huddled masses and there are moneyed masses. Guess which group gets fast-tracked to US citizenship?

Under President Obama's deportation deferral program, which began accepting applications last week, qualifying illegal immigrants that were brought to the United States as children -- and meet an extensive list of conditions -- may be granted a two-year stay.

If accepted, a person's legal status will not change; their expulsion from the country will simply be put off for a defined period, after which the political winds will determine his or her fate.

At the other end of the spectrum lies anyone with a half-million bucks to spare.

No longer relegated to Micronesian islands and other far-flung locales, "economic citizenship" is alive and well in America. As former Western regional INS commissioner Harold Ezell said back in 1991, "We've done a great job on boat people. I see no problem with a few yacht people."

Money Changes Everything

The sentence at the top of a website run by one of the approved "economic investments" prospective citizens can write a check to, Sugarbush Ski Resort, reads simply:

"Obtaining legal permanent resident status ("Green Card") in the United States for you and your family can be as simple as making a one-time investment of $500,000. And, these immigrant visas are issued as quickly as nine to 12 months."

While Americans like to think of our country as the world's de facto safe haven for the persecuted and the penniless, the so-called masses increasingly find themselves "stuck in line" for years, waiting to get in. But, as Sugarbush explains in its pitch to moneyed foreigners, those with $500,000 to spare qualify for green cards (as do their spouses and all unmarried children under 21) simply by writing a check.

"Never Before Has Such a Concept Been Embraced by Immigration Law"

Established in 1990 as a component of the Immigration Reform Act, signed into law by President Bush, and known technically as the EB-5 Immigrant Investor Program, 10,000 foreign nationals per year have been permitted to invest their way into the United States for over two decades. Intended to require a $1 million floor, investors need only put up half that if the investment is made in a "targeted employment area," or "TEA," where the jobless rate is higher than 150% of the national average.

Michelle Hua, managing partner of the Hua & Murga law firm in New York City, says the EB-5 program is, at its essence, "about job creation."

"EB-5 is meant to stimulate the economy and create American jobs which must be held by American workers," Hua tells me. "It creates a legal way for people to come to the US as immigrants -- presumably people of high net worth who will buy things, pay taxes. The law says if you invest in America, you can get a green card. If you follow the rules, this is the result."

Other immigration lawyers with clients not eligible for EB-5 take a different perspective.

"It just doesn't seem fair that some rich person can come along and buy residency," Matthew Guadagno, an immigration attorney in private practice, tells me. "I suppose there's the view that you're purportedly helping the economy, but for a guy who represents regular people, it feels wrong."

In the words of Vernon M. Briggs, Jr., Emeritus Professor of Industrial and Labor Relations at Cornell University in his paper The Immigration Act of 1990: Retreat from Reform which was published in the journal Poplulation & Environment:

The new statute...is ill conceived, deceptively designed, poorly timed, and subtly racist. Despite the chronic need for reform, the Immigration Act of 1990 cannot possibly be described as being in the national interest. It perpetuates and expands the worst features of the existing system while introducing new features that are both counterproductive and, in parts, unethical in the principles it projects.

Briggs zeroes in on the EB-5 program, calling it, among other things, "a source of shame" and presciently predicting that it would be virtually unenforceable:

In addition to its general misdirection, the Immigration Act of 1990 includes a host of dubious categories of workers to be admitted at part of the 140,000 work-related immigrants. For instance, it reserves 10,000 visas a year for the admission of millionaire "investors" who "promise" to create at least 10 jobs. This should be viewed as a source of shame. It introduces the principle that the rich of the world can buy their way into the United States. Never before has such a concept been embraced by immigration law. Aside from the fact that it will be almost impossible to enforce, it represents a reward of privilege that is unworthy of legal protection. The major beneficiaries of this new entry standard are the nation's immigration lawyers who were its chief proponents. Rewarding personal greed should have no place in the nation's immigration system.

No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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