From the U.S. Government Accountability Office, www.gao.gov Transcript for: Immigrant Investor Visa Fraud Detection Description: Audio interview by GAO staff with Seto Bagdoyan, Director, Forensic Audits and Investigative Service Related GAO-16-828: Immigrant Investor Program: Progress Made to Detect and Prevent Fraud, but Additional Actions Could Further Agency Efforts Released: September 2016 [ Background Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. It's September 2016. Foreign nationals who make substantial investments in businesses that create at least 10 jobs can get a conditional green card with a path to citizenship through the Immigrant Investor Program. In the past, GAO has found limitations in the way that U.S. Citizenship and Immigration Services manages fraud risk related to this program. A team led by Seto Bagdoyan, a director in GAO's Forensic Audits and Investigative Service, recently followed up on these concerns. Jacques Arsenault sat down with Seto to talk about what they found. [ Jacques Arsenault: ] What is the Immigrant Investor Program and why is at risk of potential fraud? [ Seto Bagdoyan: ] The Immigrant Investor Program, also known as EB5, is a federal program that allows foreign nationals to obtain permanent resident status or a green card after a two-year period during which they invest between half a million and a million dollars in a project that creates or preserves 10 jobs or more. The program is at risk because of its inherent nature. These are foreign nationals we're dealing with, and we have limited visibility into their backgrounds and especially their sources of funds, and also we have concerns about the regional centers that bundle these investments. These are U.S. entities, and in the past they've been alleged to have engaged in things such as securities fraud. [ Jacques Arsenault: ] And they can come in from anywhere? [ Seto Bagdoyan: ] From anywhere. The current makeup of the applicant pool is about 90 percent Chinese nationals. That has changed over the years but now it's predominantly from that country. [ Jacques Arsenault: ] Now, one of the things that your report pointed out is that these applications, they're not digital, they're in paper, and they can be extremely long. It seems like that can have impacts on both how they're processed as well as oversight and kind of catching potential fraud. Can you talk about how that happens and what impact it has? [ Seto Bagdoyan: ] Yeah, that's right. Well, we're talking about an average of about 10,000 applications a year. Most of those have over a thousand pages of documents, and the current estimate we have is that you're dealing with 14 million pages of documents. And hardly any of them are digitized. They're in paper files, which makes it virtually impossible to do any kind of deep dives in terms of data analytics, trying to find the types of information that would throw off an indicator of potential fraudulent activity. [ Jacques Arsenault: ] So these applications are just sort of reviewed individually, and there's no sense, there's no way to look across them? [ Seto Bagdoyan: ] Basically yes. It's not necessarily a check-the-box exercise, but they are looking for completeness, compliance first and foremost, and if they find something that doesn't quite look right, they don't have a lot to work with in terms of follow-up. [ Jacques Arsenault: ] So then what is USCIS doing to try to address this risk management issue? [ Seto Bagdoyan: ] What they've done fairly recently is create a new dedicated entity. It's called the Fraud Detection and National Security Directorate. It's essentially their fraud unit, if you will. And they've also, at our encouragement and recommendation, performed certain risk assessments, some of which are classified, and we haven't been able to obviously comment on them in public, and they've made some very small progress in terms of digitizing some of the information that they have in their application files. However, that effort has been lagging for years, and there is really no change in its status. [ Jacques Arsenault: ] And what's GAO's recommendation in its report then? [ Seto Bagdoyan: ] In this report, we're making just one recommendation, which is for USCIS and FDNS to perform a risk profile analysis, which is a deeper dive based on risk assessments, and essentially that would give them an idea of what their real risks are and allow them to prioritize those risks and kind of give them a roadmap of what to do to mitigate the risks that they identify and prioritize. [ Jacques Arsenault: ] And finally, what would you say is the bottom line on this report? [ Seto Bagdoyan: ] The bottom line is that, as I mentioned before, this is an inherently risky program. You're dealing with a lot of money, and you're also dealing with exclusively foreign nationals applying, and the visibility into their backgrounds is very limited, and even more importantly we don't have hardly any information in terms of their source of funds, whether they're legitimate, they're illicit, or have some kind of tinge of any kind. And basically what FDNS and USCIS, its parent, need to do is continue to implement the recommendations we've made, give them some impetus to address the risks that we've identified. [ Background Music ] [Narrator:] To learn more, visit GAO.gov and be sure to tune in to the next episode of GAO's Watchdog Report for more from the congressional watchdog, the U.S. Government Accountability Office.