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Feb 16, 2016
E3iG’s CEO Testifies in Before the United States House of Representative Judiciary Committee Hearing entitled, “Is the Investor Visa Program an Underperforming Asset”

NEW YORK, Feb. 16, 2016 /PRNewswire/ — E3 Investment Group is proud to announce that Chief Executive Officer Matt Gordon appeared before the United States House of Representatives Judiciary Committee as an expert witness at the committee’s February 11, 2016 hearing on the EB-5 program. The hearing examined the issues and causes that have prevented the EB-5 program from maximizing its creation of social value for America. According to Mr. Gordon, “It was a great honor to be called by Chairman Goodlatte before the committee and have the opportunity to help shape the policy debate.” Mr. Gordon’s appearance before the committee continues his involvement in the public policy arena having made in presentation in front of senior legislative staff of the Senate Immigration Sub-Committee this past November.

Mr. Gordon continued, “It is very clear that the EB-5 program has not lived up to its potential. The poor regulation of targeted employment areas, in particular the accepted rampant practice of gerrymandering, has deprived truly distressed economic and rural areas from receiving their fair share of EB-5 investment capital.” The full webcast of the hearing can be seen at this link:

Mr. Gordon’s written testimony can be found at this link:

The other witnesses appearing with Mr. Gordon at the hearing were: Mr. Nicholas Colucci, Chief, Immigration Investor Program U.S. Citizenship and Immigration Services; Ms. Rebecca Gambler, Director, Homeland Security and Justice Issues; and Ms. Jeanne Calderon, Clinical Associate Professor, Stern School of Business, New York University.

In his testimony, Mr. Gordon cited the Initiative for a Competitive Inner City’s ( work on how EB-5 capital can be used in distressed urban areas. According to Kim Zeuli, Ph.D., Senior Vice President and Director of Research at ICIC, “Mr. Gordon presented important testimony on how those in the EB-5 community and investors can be better motivated to apply EB-5 capital to distressed communities in America. There are a great many American cities that would benefit greatly from foreign direct investment into their communities.”

Mr. Gordon also testified about his involvement with the More American Jobs Alliance, or MAJA. According to MAJA founding member Shae Armstrong of CP Homes in Dallas, Texas, “We created MAJA to help refocus the EB-5 program on the creation of actual jobs in rural and distressed areas. E3 Investment Group, through its E3 Cargo trucking company, is leading by example. E3 Cargo is headquartered in Indianapolis, Indiana, and is now in Southaven, Mississippi. All E3 Cargo locations are in single census tract targeted employment areas, helping bring investment capital to these areas in need and fulfilling the true policy intent behind the EB-5 program. We are proud of Mr. Gordon’s important testimony and proud to have him as a founding member of MAJA.”

According to Mr. Gordon, “MAJA has been singularly instrumental in helping set the policy agenda with respect to desperately needed reforms to the EB-5 program. MAJA represents all those in the EB-5 community, including regional centers, direct sponsors, investors and the communities into which they invest, who believe in the policy ideals of the program. I look forward our efforts in the coming months to help enact EB-5 reform legislation.”

Dec 9, 2015
A Higher Bar for all EB-5

Yesterday, December 7, 2015, the SEC announced settlements and the filing of one law suit against US immigration attorneys for allegedly acting as unregistered brokers in violations of the Federal securities laws. The timing could not have been more poignant. Both behind the scenes and occasionally in public articles and letters, there is a pitched battle being fought for the future of the EB-5 program. One on side are those who support the immediate and meaningful reform of the EB-5 program currently contemplated for inclusion in the Omnibus spending bill. On the other are generally larger real estate based Regional centers who want nothing more than to continue the business as usual of enhancing their wealth with sometimes blatant disregard of the rule of law and the societal purpose to create jobs for Americans who need them the most.

This action by the SEC is the case in point showing that reform is needed and it is needed now. Beyond the enhanced securities laws provisions contained in the reform bill, reform would send the clear and convincing message that those who participate in the EB-5 program must do so in a more compliant, more policy consistent manner than before. For the last ten years or more, the largest EB-5 sponsors have benefitted from the use of billions of dollars of essentially subsidized capital by virtue of the EB-5 program. It is time at long last, to reform the EB-5 program, so that those who cannot or will not play by the rule, so that those who do not deliver their fair share to America, simply get out of the EB-5 program.

If Regional Centers want to pay lawyers or Chinese agents as brokers, that is fine, so long as they comply with Federal Securities Laws. As the Regional Center is the sponsoring organization that allows the New Commercial Enterprise to gain the benefits of the EB-5 program, it should be responsible for the conduct of those it allows to operate under its wing. By the same logic, the Regional Centers should be responsible for making sure the NCEs have policies and procedures that help ensure the NCEs are fulfilling their obligations under Labor Laws (a point which many of the objectors pushed back on as an excuse for delaying the current reform efforts). A fair counterbalance to receiving the benefits is to be obligated by the burdens.

The EB-5 program was created ONLY to benefit American workers. Not lawyers, not sponsors/developers, not even the immigrant investors. The entire policy from giving the investors Green Cards, to effectively encouraging them to invest capital for the use by developers at discounted rates of return with long hold periods, was all wisely designed to result in true job creation and structural economic improvement for America. In the last several years, during the rapid growth of the program, greed has pushed many to break the law or pursue projects that did not really provide the benefits they were supposed to. It is time we raised the bar by embracing the reforms. They are not perfect, as no law ever is, but it is a vast improvement over the current regime and will clearly signal to all in the EB-5 community that the game is changed. It is time to do better. Please support the reforms so that time can be now.

Reprinted with permission.
Originally posted at: ILW.COM EB-5 Blog

Dec 7, 2015
EB-5 Program Regional Centers Oppose Being Compliant with Federal Labor Laws

As we inch closer to meaningful EB-5 reform, some regional centers, and related groups, in opposition have focused on one sentence of the draft bill:

(VII) a certification that the regional center has policies and procedures in place that are reasonably designed to ensure that the regional center and any associated new commercial enterprises and job-creating entities comply with Federal labor laws.

When I first heard of the opposition, I was shocked. After all, the EB-5 program is a JOB CREATION program that is supposed to benefit AMERICAN workers. It is not an entitlement program for large real estate development firms or other sponsors. The new requirement above is exactly the kind of reform the program needs to help ensure that the American people get the benefits they deserve for providing Green Cards to immigrant investors. Any objections to following the law should leave a foul taste in the mouth of anyone who wants the EB-5 program to produce the benefits it claims for our society. This is not even asking Regional Centers to certify that their NCEs are in fact compliant with the law. All that it requires is that they put ‘reasonably designed’ policies and procedures in place.

Is there any real burden at all? Shouldn’t every business in America have reasonable policies and procedures in place to help ensure that the business is in compliance with Federal Labor laws? It is true, Regional Centers are separate organizations (entities) from the New Commercial Enterprises that they sponsor to gain the benefits afforded by the EB-5 program, so this does require them to have an extra set of procedures in place. My answer to any objection is, Exactly! The Regional Center allows the NCE to get the benefit, so it makes perfect sense to require the regional center to have a reasonable set of policies and procedures in place to help ensure that America gets its share of the value of the grand bargain for allowing the EB-5 program to exist. Without this requirement, the Regional Center program would have an enormous moral hazard. The Regional Centers may then have little regard for the labor practices of the NCEs under their umbrella.

Some of the objectors have raised gloom and doom arguments about how this kind of regulation might create over reaching and unintended consequences under the Federal Labor Laws by ‘grouping’ Regional Centers together with the NCEs they sponsor. Once again, Exactly! They are grouped already. The Regional Centers should be underwriting the labor practices of their NCEs and if they do not comply, then THEY SHOULD NOT BE PART OF THE EB-5 PROGRAM! If there are labor laws or decisions by the National Labor Relations Board that are over-reaching or that create too great a burden on employers, then seek to amend those statutes or overrule those rulings. The current labor laws are the law of the land, too little, or too much.

To be compliant, the Regional Centers must simply make sure their NCEs are trying to comply. It’s not particularly burdensome. Is it that hard to run an eVerify report? Or to hire an HR administrator or firm to comply? Millions of businesses do it every day. For goodness sake, it is not like the proposed regulation requires procedures to ensure that all indirect and induced labor associated with the project go to qualified workers, it is only their direct employees. Under the draft bill, that would only be 10%. It is only hard if the underlying business really cannot comply, if a large part of their workforce cannot pass eVerify. Then, it is a real problem. My answer to that is: GET OUT OF THE EB-5 PROGRAM. This is supposed to be about creating jobs for people who are authorized to work in America.

Just before I wrote this piece, I signed a letter pledging that my firm and all EB-5 business associated with it, would comply with paragraph VII quoted above. I will do this regardless of whether the reforms are passed. I call on all EB-5 sponsors to do the same so we can prove to America that we are serious about helping our country and not just enriching ourselves. If you agree, kindly, sign a letter with the text that follows and send to any (and preferably all) members of the House Appropriations committee and the leadership in both parties. Also, continue to voice your support for including the EB-5 reforms in the Omnibus bill this week. If you do not agree, kindly get out of the EB-5 program. I, and everyone in my organization, are working every day not only for ourselves, but to create the promised value for America. Are you?

Letter Text:

Dear Members of the United States Congress,

We the undersigned sponsors in the EB-5 program, including the sponsors of direct employment new commercial enterprises and USCIS approved EB-5 Regional centers, hereby pledge that our organizations enact policies and procedures that are reasonably designed to ensure any and all associated new commercial enterprises and job creating entities comply with State and Federal labor laws. Thus, we support Section 102(G)(VII) of the proposed bipartisan proposed legislation reauthorizing the EB-5 Regional Center Program.

Reprinted with permission.
Originally posted at: ILW.COM EB-5 Blog

Dec 4, 2015
The EB-5 Revolution has Begun

“God forbid we should ever be 20 years without such a rebellion”, said our founding father Thomas Jefferson. By all accounts, the EB-5 program is about 5 years overdue. The EB-5 program has come to a moment of truth in its quarter century history. The program has done much good, and some bad things have occurred in its name. At an increasing rate over the last several years, the program has started to forget its roots, as a job creation program, to become a small part of high-end large real estate project finance in a few prime cities in America. This is not the fault of the real estate developers who simply saw an opportunity in a program that was misunderstood by its administrators and mis-designed by Congress. Not being at fault, however, is not an excuse to leave a broken system unrepaired.

At its heart, the EB-5 program has the potential to be among the crown jewels of American immigration policy. Whether it can live up to that potential may largely be determined by the events in the next day or at most several days. Early in the day, yesterday, on December 2nd, compromise EB-5 reform language was proposed for inclusion in the Omnibus spending bill that must be enacted by December 11th to avoid a government shutdown. The bill contained real reforms. If enacted many things in the EB-5 program would change. And change it should. Change, especially to the most entrenched members of the EB-5 community is a scary thing. Despite a nearly non-stop barrage of negative press and SEC activity in the space over the last two years, many incumbent Regional Centers want nothing more than to be left alone so business as usually can continue undisturbed. As Rome burns around them, they see no peril at all in perpetuating the status quo. They fail to see that against a backdrop of trillions, EB-5’s few billions are at risk of getting cancelled entirely if the risks and distractions prove not to be worth the effort to our government. They fail to see that the blind acceptance of Chinese investors and agents is starting to change.

The bill is not the end of the EB-5 program as some complain, but rather, to quote another great leader, Winston Churchill, “It is [or would be] the end of the beginning.” With any ending, the next phase will require an adjustment process. Foremost, the shenanigans that were allowed in constructing TEAs would end and there would be no project grandfathering. The draft bill contains a very reasonable compromise that allows truly disadvantaged areas and the immediate proximate areas to qualify for the lower investment threshold. It is true that some projects, those in the most affluent areas, may no longer qualify as TEAs. To those developers, please stop whining. If you are fortunately enough to have the right to develop a plot of land in Manhattan, Los Angeles or Miami with a budget of hundreds of millions of dollars, whether or not EB-5 capital is part of your program will not matter one iota. Your project will get financed and you will make your many millions. A few less than without EB-5 capital, but so be it. Or maybe your investors would be willing to pay the 20% additional amount required to be part of a project in a premium location. Even if not, use the disappointment as a challenge and deploy the needed skill and efforts to a development that is slightly less lucrative, but that does qualify for EB-5, which then makes it worth a good bit more. Learn, adapt, adjust. A new challenge is simply an opportunity for those willing to take hold of it. The objecting Regional Centers are acting like the auto makers faced with mandated seat belts and then air bags a generation later. They screamed and predicted massive woes. Instead, the market embraced the newer better technology, which ultimately helped propel further growth. So too will be the path of an improved Regional Center program in EB-5.

The bill requires all Regional Centers to have 10% direct jobs. Read another way, that’s one whole job per investor. One, the smallest possible integer. Is that so much to ask? The currently accepted econometric methodologies fail to prove two important points. Firstly, that the jobs created will have a long duration and secondly, whether the created induced and indirect labor actually goes to American workers. This requirement simply insists that America, the “we the people,” get one single eVerified job per investor to insure, at a minimum, some verified value to our society in exchange for the coveted lawful permanent residency. Again, some Regional Centers complain that their current way of doing projects would not qualify. The answer is, so change. Evolve. If you are building an office building, add a call center or health clinic as part of your plan. If you are building a warehouse, add a trucking company. If you don’t know how to do it, joint venture, engage with other professionals. One job per investor would require 10% of the EB-5 capital. If you can do that at the present $500K level (which many who focus on Direct EB-5 know how to do), then at $800K investment levels, it would require a little over 7% of the EB-5 capital to work. Or simply gross up the budget for the new requirement.

The anti-fraud, securities laws and verification requirements are needed reactions to a history of abuses that have only recently garnered regulator attention. No one can nor should object. It’s a pain and expensive, but deserved. If the industry had done a better job at policing its own ranks, the heavy hand from above would not have been needed. This can and will force the marginal and fraudulent players from ever wanting to try their hand at the game.

This doesn’t need to be a war, it should, in fact, be a celebration of the next chapter in the evolution of the EB-5 program. I call on everyone to reach out to their Senators and Representatives in Congress (especially those on Judiciary and Appropriations Committees) to express strong support for inclusion of the EB-5 reform language in the Omnibus bill. Let us work together to build a better EB-5 program and with it a better America.

Reprinted with permission.
Originally posted at: ILW.COM EB-5 Blog

Sep 18, 2015
EB-5 TEA’s: A policy Perspective

Targeted Employment Areas – TEAs – were supposed to be about bringing desperately needed investment capital into economically distressed areas. The thesis goes, create employers in those areas and the jobs are likely to go to those who live there. The current EB-5 program抯 treatment of TEAs, in all but a minority of cases, does anything but that. The current rules allow the combination (gerrymandering) of affluent and distressed areas to create a larger area that satisfies, on average, the TEA unemployment rate requirements. Because of this, as pointed out in the recent Wall Street Journal article, the program抯 capital flows in increasing volumes to high profile construction projects in affluent neighborhoods, such as Hudson Yards on Manhattan’s West Side. The clever counter-argument admits that the neighborhoods benefiting from the EB-5 capital development doesn’t need the money, but that it’s ok, because the people who work in these projects come from the economically distressed areas that we wanted to help in the first place. Ron Klasko published a solution premised on this logic that would allow already accepted “area of intended employment’ to serve as the basis for determining the geographical boundaries of a TEA. (

But what about the economically distressed neighborhoods? So the workers who travel from them get the jobs in the affluent areas. Under a trickle down (or maybe trickle across) theory of econometrics, these households then spend more money in their downtrodden areas, which is enough to help revitalize the depressed areas. Maybe. Or maybe the workers pick up and leave as soon as they can afford it. Assuming they have enough disposable income (to matter) from their new jobs (assuming the salaries were above subsistence wages), that seems just as likely a result as the trickle-across econometrics. In the end, the distressed neighborhoods stay, well, distressed. Even worse, the most employable of the population demographic have left.

From a policy perspective that result leaves a somewhat unsatisfied feeling. The goal of the TEAs was to bring investment capital into the areas of high unemployment and rural areas to spur the development of those areas. That development would then lead to jobs in those areas, which could even lead to a re-population of those areas by increasingly higher earning cohorts, thus restoring the tax base and supporting the local businesses that exist in those areas and the new ones that might be created to support the upswing. It is the virtuous circle argument that was the focus of an EB-5 policy forum organized by, the leading foundation working on the redevelopment of inner cities ( at Harvard University’s Kennedy School of Government. See their white paper, Increasing Economic Opportunity In Distressed Urban Communities With EB-5 available at the following link: (

Labor will always be mobile, but anchoring capital to an area holds the real promise of structural revitalization. The policy to help the area, as originally intended, is sound and the current practice of gerrymandering has completely subverted that policy. Recognizing a static snapshot of commuter patterns as the justification for the gerrymandering leaves things no better off. Maybe it is time to recognize the problem for what it is and not kick the legislative can down the road any longer. If congress wants to create another program to support unemployed (or under-paid or under-employed) workers, then what Mr. Klasko proposes may be a sound proposal, at least in the short term. But if the point is to revitalize the areas, to use the precious foreign direct investment (EB-5 Capital) to help rebuild the downtrodden forgotten and ignored areas of this country and usher in true long term structural improvement, then it will not. Maybe it is time that investors who want to invest in high income areas simply have to pony up a greater investment amount as was always intended by Congress from the get-go. The point of the EB-5 program is not to ensure the supply of development capital for Class A real estate development projects in prime neighborhoods. It is to provide the most bang for the buck for the American people. With respect to TEAs, it was to provide an incentive to invest in the areas that need it the most.

Reprinted with permission.
Originally posted at: ILW.COM EB-5 Blog

Aug 26, 2015
Sleepless in Seattle

On August 24, 2015, the Securities and Exchange Commission filed suit against Washington (State) based Path America SnoCo Regional Center, its CEO and several related entities for allegedly misappropriating funds and committing fraud with respect to $136 million in EB-5 investments.

In this case, the SEC is attempting to shut down what seems to be a fairly significant bad actor. Among the alleged misdeeds, the Regional Center and the CEO are accused of diverting investor funds to other projects the CEO controlled, withdrawing hundreds of thousands of dollars of cash from casinos in Canada and using investor capital to purchase a private residence.

On the face of it, the case is somewhat unremarkable as the SEC is doing its job to protect investors from issuers engaging in fraud and thievery. It is somewhat notable that this civil action for injunctions and other relief does not come with a parallel criminal action from the US Justice Department. Perhaps that will come later and this action was only meant to immediately stop the continuing harm.

One interesting aspect of the case was the use, in a limited fashion, of escrow accounts. In this case, the investors placed 100% of their capital in escrow accounts, but according to the terms of the subscription agreements (and as described in the PPM), $400,000 of the $500,000 investment was to be released upon the filing of the given investor’s I-526 petition and the balance upon I-526 approval. So in effect, 80% of the investment capital had no true form of protection for any real length of time. For the release of the $400,000, there was no meaningful business or immigration related condition. One could imagine that the sponsor used this extraordinarily weak form of escrow in their marketing to help create a false sense of security on the part of the investors.

The cautionary tale of this case is that investors should do their sponsor diligence and think carefully about the structure of the deal. No matter what the structure or background of the sponsor, investors in all investments (EB-5 and non-EB-5) are vulnerable to a sponsor who has the intent to steal and defraud. Some things to watch out for that can help are whether the sponsor works with top professional service providers (lawyers and accountants). If they use escrow, do they use the strongest form (release only upon I-526 approval, for each investor with respect to his or her capital). While this cannot save an investor from bad deeds after approval, it’s hard to imagine the criminal sort putting in a structure which requires a significant waiting time, like full approval release.

I would like to congratulate the SEC for their hard working in helping ensure the integrity of the US EB-5 program. If anyone would like a copy of the case, simply send me an email to

©2015 Matthew Gordon

Reprinted with permission.

Originally posted at: ILW.COM EB-5 Blog