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After the struggling economy significantly slowed demand for H-1B nonimmigrant work visas for the 2010 fiscal year, some Pennsylvania immigration law firms have turned their attention to wealthy foreign investors.

According to H. Ronald Klasko of immigration boutique Klasko Rulon Stock & Seltzer in Philadelphia, H-1B visa applications comprise the "nuts and bolts and bread and butter work" for many immigration firms, but a weakening job market in 2009 changed that.

The first day of filing for H-1B visas each fiscal year is April 1 and, according to Klasko, it's not unusual for the number of filings during the first week, and sometimes the first day, to exceed the fiscal year quota of 85,000 visas.

For FY2010, however, the first day of filings was April 1, 2009, but the cap wasn't reached until almost nine months later, on Dec. 21.

In the weeks leading up to Dec. 21, H-1B work picked up significantly, but prior to that, Klasko said, it was a "totally bizarre time" at his firm and one in which it became necessary to focus on other types of visa applications.

Enter the EB5 immigrant investor program, which awards visas to wealthy foreigners willing to invest $1 million -- $500,000 in high unemployment or rural areas, as well as in virtually all designated "regional centers" -- in a commercial enterprise that will employ 10 full-time U.S. workers.

Klasko has spent much of his time recently traveling overseas in an attempt to educate foreign investors about the program, which he calls "the hottest thing going on right now in immigration."

The program has been around for close to two decades but, according to Klasko, "hasn't really become popular or been used much until about four or five years ago and hasn't really totally boomed until the last year or two."

China, Korea and Japan are the largest three investors in the EB5 program, according to Klasko, but "in many parts of the world it's unknown."

That's why Klasko has been traveling the world to promote the program.

The United Kingdom, Canada, Russia, Switzerland and South Africa are some of the countries in which interest in the program is starting to pick up, Klasko said.

Robert S. Whitehill, chairman of Fox Rothschild's immigration group in Pittsburgh, said that, beginning in 1998, the number of EB5 cases in the country dropped sharply.

That year, the U.S. Immigration and Naturalization Service issued four precedent decisions retroactively tightening restrictions on investments, which resulted in lawsuits and effectively halted the program until 2002.

Whitehill said it wasn't until 2006 or so that interest in the program really picked up again and, by 2008, it was commonplace to see regional center representatives at every immigration conference.

"There was a time when the EB5 was moribund, it was dead," he said. "It has certainly come back to life."

Like Klasko, Whitehill said he has seen a recent uptick in inquiries about the program in his own practice.

He attributes this phenomenon to a host of factors beyond the slowdown of H-1Bs, such as the diminished value of the American dollar compared to the euro and the recent emergence of newly wealthy people in China, as well as in Russia and other oil-rich countries.

James J. Orlow, of Philadelphia immigration boutique Orlow Kaplan & Hohenstein, said it's a fair assessment that a "selected number" of immigration attorneys who typically handle employment-driven cases have turned their attentions to EB5 cases in the failing economy but was quick to point out that this type of work is not for everyone.

Orlow said EB5 cases tend to be very complex and time-consuming and can often extend beyond the expertise of the average immigration lawyer, but the payoff can be significant.

"These are cases that call for an intense amount of work and provide substantial fees and you pay attention to them instinctively," Orlow said, adding that the nature of EB5 cases is such that they tend to be relatively few and far between even with interest in the program booming.

Whitehill agreed.

"These are not garden variety cases," he said. "They are highly technical, require a particular type of client and not everybody has the wherewithal to invest the requisite amount of money."

A PROGRAM TO SPUR JOB CREATION

According to the U.S. Department of Homeland Security, Congress established the fifth employment-based, or EB5, visa category in 1990 pursuant to the Immigration Act of 1990 and set aside 10,000 visas annually for foreign investors.

Originally, the only option in the program was for an individual to invest either $1 million in a commercial enterprise or $500,000 if the enterprise was located in a rural area -- one with a population of less than 20,000 -- or an area with unemployment rates 150 percent or more of the national rate, according to the DHS.

In this option, an investor is issued a two-year temporary green card and, in order to apply for a permanent green card, must prove after those two years expire that the investment directly created 10 U.S. jobs.

In 1993, according to the DHS, Congress created the Immigrant Investor Pilot Program reserving 3,000 of the 10,000 allocated visas for foreigners investing in designated regional centers across the United States.

Through this program, investors can combine their investments in regional centers and are permitted to demonstrate that their investments either directly or indirectly created 10 U.S. jobs.

This option also requires investors to show they've met the employment requirement at the end of two years in order to apply for a permanent visa.

According to Klasko, the money invested in a regional center is paid directly to a limited partnership that varies in size from project to project.

Klasko's firm is counsel to Pennsylvania's two regional centers -- the Philadelphia Industrial Development Corp. and the Pennsylvania Regional Center -- as well as the Hawaii Regional Center and the LA Film Regional Center, all of which fall under the umbrella of CanAm Enterprises, a New York-based company that promotes immigration investment funds.

CanAm oversees the Pennsylvania Regional Center in conjunction with the state Department of Community and Economic Development.

According to Klasko, CanAm recommends his firm's legal representation to interested investors, but they are under no obligation to hire the firm.

Both the PIDC Regional Center and Pennsylvania Regional Center Web sites list a number of EB5 investor-funded projects in both Philadelphia and Pittsburgh that are under way.

According to the PIDC Regional Center Web site, current undertakings include, among others, the Philadelphia Convention Center expansion and the redevelopment of a former U.S. Naval Base into a business campus called the Navy Yard.

According to the Pennsylvania Regional Center Web site, current projects include the construction of a Pittsburgh headquarters for Lions Gate Films and the development of Bakery Square, a mixed-use business center in the city's East Liberty neighborhood.

WHAT KIND OF EB5?

The U.S. Bureau of Citizenship and Immigration Services, or USCIS, has estimated in the past that 90 percent of EB5 investments are made through regional centers.

Klasko said there are numerous advantages to the regional center EB5 application process compared to the individual EB5 process.

First and foremost, he said, individual EB5 applicants are usually required to invest $500,000 more than regional center investors are unless the enterprise is located in a rural or high unemployment area.

Also, Klasko said, it's often very difficult for individual EB5 applicants to prove that their investments have directly created 10 new jobs.

"Most startup companies don't have 10 employees," he said.

And for those individual EB5 applicants looking to purchase an existing business and restructure it to form an eligible new enterprise, the restrictions imposed by the USCIS have "pretty much made that impossible."

"Our rules on expanding existing businesses are pretty tough to meet," Klasko said. "Investors have to show net worth will increase by at least 40 percent, as well as adding 10 employees."

Philadelphia-based immigration attorney Steven P. Barsamian agreed that obtaining an individual EB5 visa is a difficult process.

"Remember these are employment-creating visas," he said. "So not only did you just spend $1 million to buy a company, but you now have to hire 10 U.S. workers ... before you can apply to make that visa a permanent resident card. And then that process takes quite a while for approval."

The requisite investment amount and the employment quota of regional centers, on the other hand, are pre-approved by the USCIS, according to Whitehill, who said "the regional center route is decidedly easier for the investor."

The USCIS Web site, as of Jan. 8, lists 79 approved regional centers in 28 states plus the U.S. territory of Guam.

Klasko said that 18 months ago the number of approved regional centers nationwide was only about 20.

"Without exaggeration, in the last six months, I've had at least 30 developers contact me about regional centers," Klasko said.