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Seven EB-5 Immigrant Investor program reforms on the table

(Business News) The EB-5 Immigrant Investor program has some flaws that policymakers could potentially help to fix this year, but what reforms are actually on the table?

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What is going on with the EB-5 Immigrant Investor program?

Under the EB-5 Immigrant Investor program, immigrants can earn their green card by investing in American companies. The program is “good for everyone,” says Ali Jahangiri is CEO and Publisher of EB5 Investors Magazine and a board member of the organization Gen Next, Inc.

AGBeat columnist, Monica Moffitt states that “Many of China’s new rich are looking for businesses to start/run and most have a penchant for risk. Instead of solely investing in large publicly traded companies, they are looking for innovative ways to tap into new markets. Programs like EB-5 Immigrant Investor make these investment opportunities a reality.”

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Jahangiri notes that the EB-5 “gives foreign investors the opportunity to invest money in U.S. businesses, and if those businesses create enough jobs, those investors and their families get green cards. However, the program is not without its flaws and red tape, holding it back from its full potential.”

Because of the flaws, there are several reform proposals on the table which Jahangiri says are designed to “fix the issues and make the program healthier, safer and even more beneficial for all the players involved.” In his own words below, he outlines seven of those reforms:

1. Assure Quality

The EB-5 program is getting more government attention these days. Unfortunately, even the agency in charge (USCIS) isn’t always clear and consistent when issuing and enforcing regulations. The Office of the Inspector General (OIG), part of the Department of Homeland Security (DHS), wants Immigration Services to make a checklist of quality assurance steps, which is a step in the right direction. Moreover, the DHS is calling on the agency to make sure this list is checked off consistently across all applications and petitions.

2. Work Together

EB-5 is a lot of work. The program is at the intersection of immigration, national security and economic development. With stakes this high, you want all the appropriate experts involved. The inspector general of the DHS wants different agencies to pool their resources and skills, so that all aspects of the program are covered. It’s the coming together of specialized minds that make great things happen.

3. Regulate Gerrymandering

EB-5 investors invest a reduced amount if the project is in an area with high unemployment. Because of this incentive to invest, project developers often go to great lengths to get their project qualified as being in a “targeted employment area” (TEA), drawing boundaries in increasingly creative ways. So far USCIS has yet to issue consistent guidelines, instead leaving it up to the states to decide. Over concern that big developers are taking advantage of the program, people like Congressman Darrell Issa are fighting back against this so-called gerrymandering.

4. Prevent Fraud

Not everyone plays nicely. Some business developers are willing to lie to potential foreign investors and encourage them to fund risky projects, while telling them success is guaranteed. A bad investment not only costs EB-5 investors their money, but also their ability to immigrate to the United States, while giving the entire industry a black eye. OIG, USCIS and the SEC recognize this, and want to beef up controls to prevent fraud.

5. Measure Impact

The EB-5 program does a lot of good. But exactly how much good? OIG wants to know. Economic studies have been done to show how these investments foster both direct and indirect jobs, but the federal government doesn’t publish any official numbers. The DHS wants USCIS to take charge, but USCIS wants to pass the buck to someone else. It remains to be seen who will come to be responsible for measuring the program’s success.

6. Raise Investments

Though the United States is arguably the most popular immigration destination, we have one of the lowest minimum investment amounts of similar international programs. To make sure the program is in line with market rates of consumer goods and services, Senator Patrick Leahy has proposed to base the minimum investment amount on the Consumer Price Index, ensuring that each investment is making the same relative economic impact, whether the EB-5 project is carried out in 2014 or 2054.

7. Work Faster

United States Citizenship and Immigration Services try their best to approve petitions quickly, but there’s still a giant backlog. In some cases, EB-5 investors have to wait almost two years for visa approval. This holds up the process for everyone, including the American beneficiaries of the job creating enterprises, as investors are hesitant to commit capital before they know the projected timeline of their visa application. If investors won’t invest, projects can’t build and jobs can’t be created. Such a great program shouldn’t be so hindered, and should instead be adapted to improve and grow.

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

Business News

Too connected: FTC eyes Facebook antitrust lawsuit

(BUSINESS NEWS) Following other antitrust hearings, we’re expecting to hear more about the FTC’s antitrust lawsuit against Facebook, soon.

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Facebook being crossed out by a stylus on a mobile device.

Facebook might be wishing it had kept the “dislike” button.

On September 15, the Wall Street Journal announced that the Federal Trade Commission was preparing a possible antitrust lawsuit against the social media titan. Although the FTC has not made an official decision on whether to pursue the case, sources familiar with the situation expect a determination will be made on the matter sometime before the end of 2020. Facebook and the FTC both declined to comment when asked about the story.

The news comes following a year-long investigation by the FTC that has looked into anti-competitive practices by the Menlo Park-based company. This past July, the United States House of Representatives held hearings in which they grilled the CEOs of Amazon, Apple, Google, and Facebook regarding their business practices. In August, Facebook CEO Mark Zuckerberg also testified in front of the FTC as part of the department’s antitrust probe into the organization.

The FTC seems to be especially interested in Facebook’s past acquisitions of WhatsApp and Instagram, which they believe may have been done to stifle competition. In internal emails sent between Zuckerberg and Facebook’s former CFO David Ebersman back in 2012, the 36-year-old seemed worried that the apps could eventually pose a threat to the social media conglomerate.

“These businesses are nascent but the networks established, the brands are already meaningful, and if they grow to a large scale the could be very disruptive to us,” Zuckerberg wrote to Ebersman, “Given that we think our own valuation is fairly aggressive and that we’re vulnerable in mobile, I’m curious if we should consider going after one or two of them.”

When Ebersman asked him to clarify the benefits of the acquisitions, Zuckerberg stated the purchases would neutralize a competitor while improving Facebook.

“One way of looking at this is that what we’re really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc. now will give us a year or more to integrate their dynamics before anyone can get close to their scale again.” Zuckerberg said.

This isn’t the first time the FTC has investigated Facebook either. Last year the agency fined the company $5 billion for the mishandling of user’s personal information, the biggest penalty imposed by the federal government against a technology company. As a part of the settlement with the FTC in that case, Facebook also promised more comprehensive oversight of user data.

If the FTC does pursue an antitrust suit against Facebook, it could end up forcing the social media giant to spin off some of the companies it has acquired or place restrictions on how it does business. Considering how long it will take to file the litigation and prove the case in a courtroom, however, it seems that Zuckerberg will once again be “buying time.”

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Business News

What you need to know about the historic TikTok deal (for now)

(BUSINESS NEWS) No one really knows what’s happening, but the TikTok deal’s impact on business, US-China relations, and the open internet could be huge.

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Male black hands holding app opening TikTok app.

So, maybe you’ve heard that Oracle and Walmart are buying TikTok for national security!

Um, not exactly.

Also, Trump banned TikTok!

Sort of? Maybe?

But then he said he approved the Oracle-Walmart-TikTok deal!

We guess?

The terms of the proposal seem to shift daily, if not hourly. The sheer number of contradictory statements from every player suggests no one really knows what’s going on.

Just one example: Trump said the deal included a $5 billion donation to a fund for education for American youth. TikTok parent ByteDance, said, “Say what now?”

Here’s what we think we know (as of this writing):

Oracle and Walmart would get a combined 20 percent stake in a new U.S.-based company called TikTok Global. Combine that with current US investors in China’s ByteDance, TikTok’s parent, that would give American interests 53 percent. European and other investors would have 11 percent. China would retain 36 percent. (On Saturday Trump said China would have no interests at all. But that does not jibe with the reporting on the deal.)

Oracle would host all user data on its cloud, where it is promising “security will be 100 percent” to keep data safe from China’s prying eyes. But reporting has differed on whether Oracle will get full access to TikTok’s code and AI algorithms. Without full control, skeptics say, Oracle could be little more than a hosting service, and potential security issues would remain unaddressed.

Walmart says they’re excited about their “potential investment and commercial agreements,” suggesting they may be exploring e-commerce opportunities in the app.

The US Committee on Foreign Investment in the United States, which is overseen by Treasury Secretary Steven Mnuchin, still has to approve any deal.

As for the TikTok “ban” – which isn’t really a ban because current users can keep it – the Commerce Department postponed the deadline for kicking TikTok off U.S. app stores to September 27, to give time for the deal to be hammered out. Never mind that it’s still not clear whether the U.S. government has authority to do that. Unsurprisingly, ByteDance says it doesn’t in a lawsuit filed September 18.

Whatever happens with the whiplash of the deal’s particulars, there are bigger issues in play.

According to business news site Quartz, moving data storage to Oracle mirrors what companies like Apple have done in China: Appease the Chinese government by allowing all data hosting to be inside China. A similar move could “mark the US, too, shifting from a more laissez-faire approach to user data, to a more sovereign one,” says China tech reporter Jane Li.

More obvious: Corporate sales and mergers are now part of the parrying between the U.S. and China, which adds a whole new playing field for negotiations among businesses.

In the meantime, TikTokkers keep TikTokking. White suburban moms continue to lip sync to rap songs in their kitchens. Gen Z continues to make fun of the president – and pretty much everything else.

And downloads of the app have skyrocketed.

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Business News

Hobby Lobby increases minimum wage, but how much is just to save face?

(BUSINESS NEWS) Are their efforts to raise their minimum wage to $17/hour sincere, or more about saving face after bungling pandemic concerns?

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Hobby Lobby storefront

The arts-and-crafts chain Hobby Lobby announced this week that they will be raising their minimum full-time wage to $17/hour starting October 1st. This decision makes them the latest big retailer to raise wages during the pandemic (Target raised their minimum wage to $15/hour about three months ago, and Walmart and Amazon have temporarily raised wages). The current minimum wage for Hobby Lobby employees is $15/hour, which was implemented in 2014.

While a $17 minimum wage is a big statement for the company (even a $15 minimum wage cannot be agreed upon on the federal level) – and it is no doubt a coveted wage for the majority of the working class – it’s difficult to not see this move as an attempt to regain public support of the company.

When the pandemic first began, Hobby Lobby – with more than 900 stores and 43,000 employees nationwide – refused to close their stores despite being deemed a nonessential business (subsequently, a Dallas judge accused the company of endangering public health).

In April, Hobby Lobby furloughed almost all store employees and the majority of corporate and distribution employees without notice. They also ended emergency leave pay and suspended the use of company-provided paid time off benefits for employees during the furloughs – a decision that was widely criticized by the public, although the company claims the reason for this was so that employees would be able to take full advantage of government handouts during their furlough.

However, the furloughs are not Hobby Lobby’s first moment under fire. The Oklahoma-based Christian company won a 2014 Supreme Court case – the same year they initially raised their minimum wage – that granted them the right to deny their female employees insurance coverage for contraceptives.

Also, Hobby Lobby settled a federal complaint in 2017 that accused them of purchasing upwards of 5,000 looted ancient Iraqi artifacts, smuggled through the United Arab Emirates and Israel – which is simultaneously strange, exploitative, and highly controversial.

Why does this all matter? While raising their minimum wage to $17 should be regarded as a step in the right direction regarding the overall treatment of employees (and, hopefully, $17 becomes the new standard), Hobby Lobby is not without reason to seek favorable public opinion, especially during a pandemic. Yes, we should be quick to condone the action of increasing minimum wage, but perhaps be a little skeptical when deeming a company “good” or “bad”.

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