Lucky rich Russians?

The lawyer on the phone sounds cheerful. In Miami it is not yet three in the afternoon; in Moscow it is late in the evening. He does not speak Russian, but immediately understands what I mean by “grey salary”. Later, I check the online dictionary and find that “grey salary” (“seraya zarplata”) translates into English as “paying under the table.”

But explanations are not needed; the lawyer is well-versed in Russian terminology. He is also well-versed in Russian rules of the game. We are talking to an immigration lawyer who helps foreigners obtain green cards through the EB-5 visa programme.

The US Congress created the program back in 1990 “to stimulate the U.S. economy through job creation and capital investment by foreign investors.” The programme allows foreigners to obtain a residence permit in return for investing at least US$500,000 in so-called targeted employment areas. The investor will have to wait for a few years, but they can eventually get a green card and, possibly, even recoup the investment. 

Like the European Union member states’ golden visa schemes, the EB-5 immigrant investor programme is often criticised and has previously been linked to fraud and dubious projects.

But the US Citizenship and Immigration Service (USCIS) continues to issue about ten thousand green cards to investors under the scheme each year; see for example, statistics for 2019. Citizens of China and India have to wait the longest for EB-5 green cards – up to ten years – due to the large volume of applications from these countries. According to the lawyers we spoke to, Russians can count on receiving a conditional green card in about two years.

Applying is easy enough. First, the investor puts money into an approved project. Until very recently, the required sum was at least US$500,000 – a price tag that almost doubled in November 2019. The investor then submits a declaration and must prove that money was obtained through legal means.

Numerous law firms, regional centres – USCIS-approved economic units that manage investment projects for the programme – and private consultants are ready to assist EB-5 hopefuls at each stage of the process.

In 2016, Transparency International Russia contacted ten Russian agencies and seven US lawyers. We posed as a potential investor wishing to apply for an EB-5 visa and asked for advice. We said that we had the money but hinted at its illegitimate origin.

All ten Russian intermediaries assured us that this would not be a problem. Consultants were quick to suggest ways to falsify documents regarding the origin of funds. They urged us to sign a contract as soon as possible and submit the cases to US lawyers.

Six out of seven US lawyers said that legal origin of the invested money had to be proved.

One, however, suggested contacting an experienced colleague who specialises in Russian investors and can help prepare documents in a way that avoids suspicions as to the legality of the funds. 

Three years after carrying out our experiment for the first time, we decided to try it again to find out whether the players had changed their way of working. We held ten more interviews with US lawyers based in California, New York, Florida, Arizona and London.

Our story was as follows: The father of the “investor” worked for many years as a deputy governor in a Russian region and retired five years ago. There are no documents confirming that he earned the money in his official employment as deputy governor: his “white” salary was modest, and the remainder of the income was not recorded on paper and taxes were not paid on them.

All of the lawyers said that it would be necessary to confirm the legality of the money, but nine out of ten suggested ways this could be arranged, including:

• provide work contracts from friends who are in business,
• sell real estate, or
• enter a nominal contract with friends or relatives for the sale of an apartment and obtain a loan secured by an apartment.

Some referred to the experience of their previous clients, who did just that, and one lawyer said that we did not need to prove that taxes were paid on the salary:

One lawyer said that her clients who were deputies in the Russian legislature had no trouble obtaining EB-5 visas but ran into difficulties at the final stage of obtaining a green card. She complained that US government officials are now asking more questions and recommended obtaining a loan secured by real estate.

We called their Moscow office (two of the US lawyers had offices in Russia), which proposed a solution:

From 2016 to 2019, nearly 33,000 foreigners made investments under the EB-5 programme, contributing around US$18.5 billion to the US economy. There is no way of knowing just how much of that money was of legal origin.

Investment migration programmes offered by the EU member states and the US offer rich foreigners an opportunity to acquire residency and citizenship rights.

But evidence is mounting that these schemes also serve as a mechanism for the criminals and corrupt to transfer ill-gotten money overseas, enabling capital flight from Russia and other concerned countries.

In 2018 and 2019, the US Immigration Service issued green cards under the EB-5 programme to 150 Russian nationals. Since the US government does not publish the names of these investors, the Russian public can only guess who they are. A popular response when asked how one obtained a green card is that they have won it in the lottery.

As we say in Russia, fools are lucky.

Updated on 29 September 2020; changes to the section 'Investigation continues – 2019'.