Immigration EB-5 Visa Program Seeks to Pump Investment Dollars Into New Orleans by Larry Luxner At least 500 to as many as 1,000 wealthy foreigners and their immediate families could be granted permanent U.S. residency each year in exchange for helping to bankroll the rebuilding of New Orleans following Hurricane Katrina. The prized green cards come courtesy of the little-known EB-5 visa program, whereby non-Americans are granted U.S. residency if they invest at least $1 million in a commercial enterprise and create a minimum of 10 direct U.S. jobs in the process. But if the investment is made in a specially designated “targeted employment area” (TEA) suffering from high unemployment or economic crisis, then the immigrant investor is required to invest only $500,000 and create 10 direct or indirect jobs. That’s where William B. Hungerford Jr. and Timothy O. Milbrath come in. Last October, their Maryland-based company, NobleOutReach LLC, was awarded an exclusive 30-year contract with the city of New Orleans to perform all of the operational and financial aspects of the city’s EB-5 investment activities. “Our objective is to market internationally and get the word out. Then, once those investors have been identified, we would bring them into an LLC [limited liability company],” Hungerford told The Washington Diplomat in a lengthy interview last month. “Our focus is unique in that they would come into a venture fund. It’s a typical mutual fund where investors pool their dollars. Normally, they’d invest directly in a project, and if it’s successful, that’s great. We’ve set up the venture fund to allow investment to be pooled with U.S. investment, and the businesses that are created from within that fund produce the jobs.” NobleOutReach, with offices in Gaithersburg, Md., Washington’s Watergate building and the New Orleans suburb of Metairie, was incorporated in April 2005 with the intention of helping foreign nationals invest in the United States, in return for the chance to gain permanent residency in this country. After Hurricane Katrina, the worst natural disaster in U.S. history, struck the region on Aug. 29, 2005—flooding 80 percent of the city, dispersing the city’s 450,000 inhabitants and causing more than $14 billion in damages to residential property in Orleans Parish alone—the two men shifted their focus to New Orleans and the U.S. Gulf Coast. “Today, as a result of the massive devastation, New Orleans is a ‘greenfield’ of ‘ground-floor’ investment opportunities,” according to a company fact sheet. “NobleRecoveryFund investors are poised to invest in opportunities at currently depressed values, purchase real estate at very low market prices, and reap the significant rise in values and the excellent benefits of early investing as these opportunities unfold and flourish.” “We’re giving these people an option,” explained Milbrath, a retired Air Force colonel who was chief of staff of the White House Military Office during three presidential administrations and worked in the United Arab Emirates before joining NobleOutReach. “You can live in Moscow, for example, and still invest in the New Orleans recovery effort. The city was totally devastated, so this is a good time to get in there and share in the profits. This is not a charity. We’re going in with private equity.” He added: “When a person makes that $500,000 investment, he has no recourse to that money. It’s not guaranteed. That investment is at full risk, but it doesn’t affect the green card process. He and his immediate family still get green cards, regardless of the outcome of the investment.” Moreover, the green card application is given preferential treatment, so applicants don’t wait the usual lengthy processing times. The NobleRecoveryFund, a NobleOutReach venture fund, was created in December 2006 as a limited liability partnership. The fund pools investment dollars and allows the partners to diversify their investment risk, collectively share financial rewards, and, where required for EB-5 immigrant investors, benefit from the job creation and economic benefits of the entire portfolio of investments. Known as EB-5 because it’s the fifth category in the “employment-based” visa program, the program was created by Congress in 1990 but ran into problems early on. “People were not investing their full $1 million, just part of it, and saying they would pay later. But there were no guarantees. So in 1998, the INS [Immigration and Naturalization Service] cracked down and imposed new, tighter restrictions on the program,” explained Stephen Yale-Loehr, a prominent attorney who teaches immigration and asylum law at Cornell Law School. “Now they believe investors are doing this properly, and that’s why the program is starting to pick up again. But there is still careful scrutiny by the immigration agency to make sure that the investors comply with all the requirements. You have outsiders like NobleOutReach doing the initial vetting to make sure the investors are legitimate. Then the petition gets filed, and the immigration agency does its own due diligence.” Yale-Loehr, a member of the EB-5 Investors Committee of the American Immigration Lawyers Association, said that these days, U.S. Citizenship and Immigration Services (USCIS)—a division of the Department of Homeland Security—requires that the investment funds be put up ahead of time. “The money has to be there, at least in escrow, sitting in the bank before they file their petition with USCIS. They also require five years of tax returns from that individual to make sure the money to be invested was obtained legally.” In addition to New Orleans, according to Yale-Loehr, designated “regional centers” exist in Philadelphia, Seattle, California’s Imperial Valley, eastern Washington state, Las Vegas, parts of Iowa and South Dakota, and the entire states of Hawaii and Vermont. Applications are currently pending for Milwaukee, Houston, northern Texas and southwestern Kansas. “Others were approved in the 1990s, but for whatever reason, so few people were applying, they abandoned their applications,” Yale-Loehr said, adding that “most any city would be glad to get some new infusion of capital to help it grow. New Orleans previously had a regional center, but they never did anything with it.” Hungerford said the U.S. government believes total investment through the EB-5 program into these regional centers has been running about $300 million to $400 million annually, but that by the end of 2008, it could jump to $1 billion a year. A maximum of 10,000 green cards may be issued annually under the EB-5 program, of which 3,000 are set aside for these designated regional centers. Yet last year, only 1,000 people even applied under the program, of which just 10 percent were approved by USCIS. “Only a few hundred people a year have gotten green cards in this way,” said Yale-Loehr. “A lot of them are from Europe, Canada, Korea and China. For whatever reason, I haven’t seen many investors from Latin America or the Middle East.” Hungerford and Milbrath would like to change that. Next Page