Federal court upholds INS in tightening visa program

Foreign investors must put up more money to gain U.S. residency

November 30, 2001|By Walter F. Roche Jr. | Walter F. Roche Jr.,SUN STAFF

Citing the threatened "perversion" of an immigration program that allows foreign investors to gain permanent U.S. residency, a federal appeals court has ruled the U.S. Immigration and Naturalization Service was justified in setting strict new standards.

The brief decision issued by the 9th Circuit Court of Appeals in San Francisco could mean that hundreds of foreigners who sought permanent green cards under a decade-old investor visa program will have to leave the country.

Under the program, established by Congress in 1990, foreigners can become permanent U.S. residents by investing at least $500,000 in an American business.

But, as The Sun reported last year, shortly after the law went into effect several companies began marketing a version of the program under which investors initially put up as little as $100,000. The balance of the required investment was made up in loans.

Though INS initially approved many of the visa applications, new standards requiring the full investment sum were adopted in decisions issued in 1998. The five-paragraph ruling concludes that the INS was justified when it retroactively set the new standards.

"The INS finally acted to prevent a perversion of the program contemplated in the statute and regulations," the court said. "The mischief that was avoided far outweighed any detriment to Golden Rainbow or anyone else."

The decision came this week in a case brought by the Seattle-based Golden Rainbow Freedom Fund, one of several firms set up over the past decade to market the investor visa program. The ruling follows another favorable decision for the INS this month from the same three-judge panel.

Attorneys for Golden Rainbow and its foreign investors had argued that it was illegal to apply the strict new rules to foreigners who had signed up for the program before the new standards were even proposed. The lawyers could not be reached yesterday for comment on the decision and whether they would seek an appeal.

Eileen Schmidt, a spokeswoman for the INS, said agency attorneys were still reviewing the decision.

"On first reading, obviously we are very pleased. This is a major victory," Schmidt said.

In the ruling, the panel acknowledged that the Golden Rainbow investors had relied on earlier INS approvals of similar investment plans, but the judges noted that the initial approval was conditional and subject to another review before permanent residency could be granted.

"The long and short of it is that they [the investors] lost their gamble that Golden Rainbow's creative financing approach would manage to get through the whole process," the court said.

"In other words," the ruling concludes, "retroactivity was not inappropriate."

The Golden Rainbow suit is one of several pending in federal courts across the country over the investor visa program. In the other case decided this month, the same judges upheld a lower court ruling throwing out a challenge to the INS rules by an investor visa firm based in Hawaii.

Ira Kurzban, who represents investors in AIS of Greenbelt in yet another investor-visa suit pending in federal court in Los Angeles, said he did not believe the decision would have any effect on that case, which he called "clearly distinguishable."

The judge in the AIS case ruled in May that the INS had to reconsider the case of one investor and determine whether the new retroactive standards put an unfair burden on him.

Stephen Yale-Loehr, an immigration attorney based in New York, acknowledged that the ruling marks a setback for participants in the program:

"Clearly the Ninth Circuit feels that the INS could do what it did. It's not good for the investors."

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