The Startup Visa Fraud

By John Miano, May 12, 2011

Over the years industry lobbyists have come up with a number of different marketing campaigns for cheap labor in technology fields. In the past we have seen the "best and brightest" campaign and the "We educate them – why send them home?" campaign. The pitch from these used car salesmen is that all these H-1B workers are really entrepreneurs ready to start companies and build up the economy. America just needs to set these H-1B workers loose to revive the economy.

A search of the Library of Congress site turns up H.R. 1114, sponsored by Rep. Carolyn Maloney, and S.565, sponsored by Sen. John Kerry. A first level inspection should raise the reader's alert level. Both bills have the same title: "StartUp Visa Act of 2011." Both bills have the identical text. So both bills came from the same source.

What then is that common source?

The Representative and Senator could have gotten together; agreed on what they wanted in the bill; had legislative staff draft the bill; and sponsored the same text.

That is not likely.

Three identical drafting errors in both bills make it likely that the StartUp Visa Act was written by lobbyists; handed over to these members of Congress; who then sponsored it without regard to the errors.

This theory becomes a near certainty after examining the bills' text.

Rep. Maloney promotes this bill as a jobs bill. Her press release uses the words "job" or "jobs" eight times. It describes what the bill allegedly does, giving its three options; I interleave her descriptions with actual the bill text. From the press release:

Option One: Immigrant entrepreneurs living outside the U.S. would be eligible to apply for a StartUp Visa if a qualified U.S. investor agrees to financially sponsor their entrepreneurial venture with a minimum investment of $100,000. After two years, their business must have created 5 new jobs and raised not less than $500,000 in additional capital investment or generate not less than $500,000 in revenue.

And here is the corresponding bill text:

[203(b)(6)(A)(i)]
`(i)(I) who have proven that a qualified venture capitalist, a qualified super angel investor, or a qualified government entity, as determined by the Secretary of Homeland Security, has invested not less than $100,000 on behalf of each such entrepreneur; and
`(II) whose commercial activities will, during the 2-year period beginning on the date on which the visa is issued under this subparagraph--
`(aa) create not fewer than 5 new full-time jobs in the United States employing people other than the immigrant's spouse, sons, or daughters;
`(bb) raise not less than $500,000 in capital investment in furtherance of a commercial entity based in the United States; or
`(cc) generate not less than $500,000 in revenue;

Pretty close (but see below). It is option two where the description and the bill deviate. Maloney's press release states:

Option Two: Immigrant entrepreneurs currently living and working inside the U.S. on an unexpired H-1B visa; OR immigrant entrepreneurs currently in the U.S. who have completed a graduate level degree in science, technology, engineering, math, computer science, or other relevant academic discipline from an accredited United States college, university, or other institution of higher education would be eligible for a StartUp Visa if…
- They demonstrate annual income of not less than roughly $30,000 or the possession of assets of not less than roughly $60,000; and
- Have proven that a qualified U.S. investor agrees to financially back their entrepreneurial venture with a minimum investment of $20,000.
After two years, their business must have created 3 new jobs and raised not less than $100,000 in additional capital investment or generate not less than $100,000 in revenue.

The corresponding bill text:

[203(b)(6)(A)(ii)]
`(ii)(I) who--
`(aa) hold an unexpired H1-B visa; or
`(bb) have completed a graduate level degree in science, technology, engineering, math, computer science, or other relevant academic discipline from an accredited United States college, university, or other institution of higher education;
`(II) who demonstrate--
`(aa) annual income of not less than 250 percent of the Federal poverty level; or
`(bb) the possession of assets equivalent to not less than 2 years of income at 250 percent of the Federal poverty level; and
`(III) who have proven that a qualified venture capitalist, a qualified super angel investor, or a qualified government entity, as determined by the Secretary of Homeland Security, has invested not less than $20,000 on behalf of each such entrepreneur;

Right from the start you have to wonder why the person must have a graduate degree in technology from a U.S. school. That would exclude entrepreneurs from other fields. Why exclude entrepreneurs with graduate degrees from top schools around the world?

The reason becomes clear at the end of the section: The alleged requirement that jobs be created is missing.

This provision is simply a mechanism to import foreign workers and to attract foreign students to bloated graduate programs in technology fields.

The formula here is quite simple:

  • H-1B visa or U.S. Graduate Degree + $20,000 "investment" from a rich person = Green Card

There is an Option Three that I omit here only for brevity and leave as an exercise for the reader. To aid you in your analysis, note that throughout, the bill text only says create jobs in the U.S. There is no requirement that these jobs be filled with U.S. workers.

What happens if, after getting the Startup visa, the "entrepreneur" does not create any jobs? This is where craftsmanship of lobbyists comes to center stage. The bill contains a provision that appears to address this situation:

`(3) SPONSORED ENTREPRENEURS- The Secretary of Homeland Security shall terminate the permanent resident status of a sponsored entrepreneur and the alien spouse and children of such entrepreneur if the Secretary determines, not later than 3 years after the date on which such permanent resident status was conferred, that--
`(A) the qualified venture capitalist or qualified super angel investor who sponsored the entrepreneur failed to meet the investment requirements under section 203(b)(6)(A)(i); or
`(B) the entrepreneur failed to meet the job creation, capital investment, or revenue generation requirements under section 203(b)(6)(A)(ii).';

Refer back to the previous examples. The alien can be removed if he fails to meet the "investment requirements" under 203(b)(6)(A)(i) – but not if he fails to meet the job requirements of that section. The alien also can be removed if he fails to meet the job requirements of 203(b)(6)(A)(ii), but there are no job creation requirements in that section.

Rep. Maloney and her Senate counterparts give us a bill that they say will create jobs, jobs, jobs, jobs, jobs, jobs, jobs, jobs that has been carefully crafted to avoid requiring jobs (let alone jobs for Americans) actually be created.

I add a final note apropos President Obama's recent call for "comprehensive immigration reform." This startup visa bill is 11 pages long. The most recent "comprehensive" bills have been over 700 pages, loaded full of similar lobbyist mischief.