In an interview, Ishaan Khanna, President of the American Immigrant Investor Alliance (AIIA), tells us that grandfathering and reauthorization are separate issues, and the former should be the first priority of the industry. The reason this isn’t happening, says Khanna, is that big-city developers and their lobbying dollars are dominating the EB-5 conversation with Congress.
Ishaan Khanna not only leads EB-5’s most high-profile investor group, he also works as Vice President of Investor Acquisitions for EB5 United, a regional center that has raised over half a billion dollars in EB-5 investor capital. This makes Khanna uniquely familiar with both EB-5 investors and regional center perspectives on grandfathering and Regional Center Program reauthorization.
As such, Khanna brings some refreshing candor to the discussion about grandfathering and decoupling the issue from the Regional Center Program reauthorization. He also presents some unexpected criticism of the big players in EB-5.
1. What is the fight for grandfathering about — and who needs to fight it?
Khanna’s first priority is grandfathering. To him it’s an issue of basic fairness — taking care of existing investors who invested in good faith, but who are in processing limbo because they did not get admitted as conditional permanent residents before the Regional Center Program lapsed on July 1, 2021. And that fight must be taken up by the EB-5 industry.
“There is a lot of focus on program reauthorization and what the program itself will look like going forward,” he observes, “but the suffering of existing EB-5 investors has been absent from the discussions. I think it’s only fair that folks like us, who work in the EB-5 industry and have profited immensely, are obligated to fight for the many immigrant investors that have invested with us.”
2. Grandfathering and reauthorization two distinct issues — and Congress needs to know this
The press for the Regional Center Program reauthorization has dominated the headlines. Grandfathering past investors, on the other hand, has received little fanfare, and seems to be only mentioned as a footnote in the context of reauthorization.
But three times the industry has declared that reauthorization was just around the corner, and three times it was wrong. With every passing month that the program remains expired, this question becomes more relevant: In light of this growing wait, does it make sense to separate the grandfathering of past investors from reauthorization?
There may be value in letting lawmakers know that they can indeed help those immigrants who invested in good faith without necessarily green lighting the Regional Center Program. Or, that they don’t have to resolve both issues at the same time. The longer we wait for a Regional Center Program that can win consensus in Congress, the longer investors have to wait in limbo.
“To Congress, the EB-5 issue has been just one big issue, rolled into one,” Khanna says. “We witnessed that firsthand when AIIA went to DC and met with various legislative staff. Until they met with us, many had not even realized the damage this lapse was causing to people’s lives.”
While Khanna does not see grandfathering and reauthorization as mutually exclusive, he does see them as distinct from one another. “They are two separate issues. I think that the EB-5 industry should be doing the opposite of what they’re doing now — they should put grandfathering ahead of reauthorization. I think that it’s just a good business practice that you take care of existing clients before you focus on your future business. It is unfortunate that EB-5 industry members don’t see the upside to the business from treating their current customers well.”
This is an excellent point; however, a cynic might argue that the lack of attention is because there is no more money to be made from past investors.
3. Can grandfathering happen without the return of the Regional Center Program?
While Khanna is hopeful that both reauthorization and grandfathering can be achieved together, he doesn’t see that as the only possibility. “Our conversations with Congressional members have indicated that existing immigrant investors can be grandfathered without having the program reauthorized.”
Given that Khanna works for a regional center, his view on grandfathering without reauthorization may surprise some. “For our constituents, they are fine if there is no future Regional Center program. This view is also shared by my own employer, EB5 United, and several other investment issuers, attorneys, brokers, and foreign finders. These industry members have put their money where their mouth is, donated to us, and have even encouraged their existing clients to do the same.”
Ethics, Khanna points out, needs to be guiding the path of EB-5. But for some industry players, it is not. “To those of us in the EB-5 industry who value doing business in an ethical manner: We should not be comfortable raising additional EB-5 Regional Center financing ever again if it means that our existing clients are not treated fairly,” proclaims Khanna.
“Investment issuers, such as the one I work for, are committed to repaying our investors regardless of whether or not there is a future program. That should be the attitude that everyone should have. But it’s unfortunate that they don’t.”
4. Money talks — guess who’s dominating the EB-5 conversation?
The lack of political willpower to grandfather investors in limbo is unfortunate, but Khanna doesn’t blame politicians and their staff. To him, it’s an issue of properly educating the lawmakers and ensuring that all groups within the EB-5 world have a voice.
“I see it simply as our voices have not been heard. The voices that have dominated the conversation are mostly those of the big city developers who have basically used their pockets. You can see on Open Secrets [a research group tracking money in politics] just how much they have spent for their interests, and you can see what it takes to get a seat at the EB-5 negotiating table with Congress and lawmakers.”
Khanna selected these links to share with us and our readers as just a few examples of the amount big EB-5 organizations have paid for lobbying:
EB-5 Investment Coalition: $120,000 spent on lobbying in 2021 [editors note: the link first cited at the time of publishing no longer links to an active page]
American Alliance for Economic Development: $160,000 spent on lobbying in 2021
Related EB-5 Regional Centers Holding Group: $480,00 spent on lobbying in 2019
To Khanna, the connection between money and whose EB-5 interests are being served is clear — and it goes against the spirit of why EB-5 exists.
“Big developers seem to forget that Congress enacted EB-5 to create American jobs, not to protect their cheap financing,” he decries. “For investors like us, Green Cards for creating American jobs is essential.”
So, what needs to be done? Khanna advocates that the plight of existing investors needs to be the primary EB-5 narrative.
“When Congress members realize the magnitude of harm that these investors are experiencing from the lapse — which, let’s be clear, the industry has not made an effort to highlight — then not only would Congress realize that reauthorization and grandfathering are two separate issues, but I believe the United States government would do right by the more than 80,000 immigrants in limbo.”
5. What should individual investors and EB-5 professionals do?
EB-5 investors should know that the American Immigrant Investor Alliance is an organization formed and run by EB-5 investors to lobby Congress for fair treatment of those who have filed their petitions but are in limbo. It is a grassroots-funded non-profit organization.
Khanna urges support from the industry: “We rely on donations to make the positive change our community deserves. Our donors include individual investors, Regional Center owners, brokers, agents, and attorneys. We ask that you join us and donate to us.”
The fight for past investors must continue. With Khanna as a champion of the cause, investors can take some comfort in knowing that doing the right thing appears to be his only agenda.