IN a conference room in an office building in downtown Shanghai, Jason Lee is literally selling the American dream.

Lee runs Maslink, a firm that connects cash-hungry American businesses with Chinese investors keen to move to the United States. His company is part of a global cottage industry that has popped up in recent years to profit from a program that allows foreigners who invest in certain small US businesses to get on the fast track to US residency and citizenship.

Interest in the immigration program, known as EB-5, is so high that Maslink, which already has offices in Shanghai, Beijing, Hangzhou and Chongqing, is expanding to two more Chinese cities.

Firms like Maslink, and the US companies that pay them, promote EB-5 as a quick, easy way to gain legal entry to the United States - and to make a potential profit in the bargain.

The pitch is effective. In 2010, nearly 2,000 would-be immigrants, many from China, applied for EB-5 visas, the most ever in a single year, according to US Citizenship and Immigration Services (USCIS), the agency that oversees the program. The surge has been driven in part by a 20-fold increase in the number of US companies looking to participate.

But an examination of EB-5 by Reuters suggests immigrants should think twice before investing in the limited partnerships and unregistered securities that US companies and promoters like Maslink are encouraging them to buy.

Over the past two decades, thousands of immigrants have been burned by misrepresentations that EB-5 promoters make about the program, both inside and outside the United States. Many have lost not only their money but their chance at winning US citizenship.

"I always tell the people who approach me that the EB-5 investment program is a risky business," said Brian Su, a Springfield, Illinois-based immigration consultant who publishes a popular blog on the program. "If you cannot bear the loss, the total loss of your investment, don't play this game."

But those risks are downplayed by almost everyone involved in the program - including the USCIS itself. Chris Bentley, the agency's spokesman, for instance, said "the overwhelming majority" of EB-5 investors and their dependents go on to qualify for permanent resident status. An analysis of USCIS's own data, however, suggests that's not true. Nearly half the immigrant investors who won EB-5 visas during its 20-year history have failed to obtain permanent residency.

The rise in recent years of an unregulated industry paid to fill the EB-5 pipeline with rich foreigners has only added to the dangers. The US businesses the immigrants are now steered to - by firms like Maslink and by US immigration attorneys - are often the ones paying the highest commissions, not the ones offering the best investments, according to the industry insiders.

"It's the Wild West," said Henry Liebman, a Seattle attorney and developer who has been doing EB-5 funded projects almost since the program's inception.

"You're dealing with a bunch of unregulated companies, most of them small, that aren't registered with anyone and can do whatever they want," he said. "It's definitely buyer beware."

A Chinese warning

The number of US businesses seeking immigrant investors through EB-5 has exploded over the past three years.

In 2007, there were just 11 specially designated businesses allowed to offer EB-5 visas to foreign investors in exchange for their cash; today there are 117 and 88 more are applying for the status. Many of the newcomers are commercial real-estate builders looking for alternative funding to keep their projects alive.

"As sources of domestic capital have dried up, developers have tried to scramble to find other ways to finance their projects either in whole or in part," said Stephen Yale-Loehr, an adjunct law professor at Cornell University Law School and the unofficial dean of the EB-5 bar.

As they assemble their marketing machines, some of them tap former real estate associates who, only a few years ago, were peddling interest-only, subprime and stated income loans, says Michael Gibson, who performs due-diligence on EB-5 projects for immigrants.

"We are seeing people who are coming into the market right now who are offering advice, promoting some of these centers, who a year or two ago were selling mortgage products," Gibson said. "They will tell investors almost anything they can to get them to sign the subscription agreement."

Overseas, the firms pushing the program are coming under scrutiny. In fact, China's ministry of public security issued two warnings this year about EB-5 and imposed new restrictions on the promoters.

Companies like Maslink are now supposed to get approval from Chinese authorities before hosting sales presentations. But Su says the marketers have simply moved their presentations out of public settings like hotel ballrooms and into smaller, more private settings.

"The Chinese government, they realize this EB-5 thing is risky and that a lot of the EB-5 companies are not telling the whole story," Su said.

Yet the two agencies in the United States tasked with oversight of the EB-5 program - USCIS and the US Securities and Exchange Commission (SEC) - said they are unaware of any marketing abuses in the program.

Minefield

To date, only one of the US businesses - known as "regional centers" in USCIS parlance - has been decertified despite evidence that many are endangering the immigration status of their investors by violating basic program rules.

Over two months this fall, Reuters reporters in the United States, China and Korea attended EB-5 sales presentations and interviewed dozens of people associated with the program - from officials at the US agencies that monitor it to the immigrants who have used it, from the attorneys that steer immigrants into specific investments to the US businesses that pay them to do so.

The picture that emerged was troubling. The examination found widespread problems in the way the program is promoted. Some marketers, for instance, imply or claim outright that the investments they're selling are insured or government-backed and that the EB-5 immigrants who invest in them are guaranteed permanent green cards. Neither is ever true.

An analysis of recent rulings by USCIS's appeals office, meanwhile, found that a growing number of the US businesses in the program are inadvertently torpedoing the residency applications of their investors by changing their projects in material ways without first obtaining USCIS approval.

Lessons unlearned

Unfortunately, these missteps often come to light years into the immigrants' residency in the United States, when they petition to have the conditions on their green cards lifted and are denied.

"The problem is that by that time, they've got their house, the kids are in school, they're friends with the neighbors, their lives are here," said Jose Latour, a former State Department official who practices immigration law in Florida.

"And through no fault of theirs, the rug is being pulled out from under them. There is nothing sadder than to see a family that followed the rules and did everything right and then loses because of a third party failing to reach their end of the deal."

In sum, the examination found the EB-5 program is anything but an easy and certain path for wealthy foreigners to get into the United States and stay here.

It's a lesson that thousands have learned the hard way over the past two decades and one that experts warn many more will learn in the years ahead. "If they make a bad investment choice and they end up facing removal, it's disastrous," said Gibson.

"There is no appeal to this denial - it's a huge burden for someone who has picked up their roots to come to the US."