Acting at the last minute and without public notice, Congress is moving to give special exemptions to a small group of foreign investors who sought to gain permanent U.S. residency by participating in financial partnerships labeled "questionable" by a federal agency.

The exemptions were included this week in amendments to a Justice Department spending bill. The amendments were passed Wednesday by a conference committee; and the House, in a 400-4 vote, approved the full bill yesterday. The compromise legislation goes to the Senate.

Under the measure, foreign residents seeking permanent residency by investing up to $1 million in a U.S. business would be given another two years to bring their investments in line with standards set by the Immigration and Naturalization Service in 1998.

'Relatively small group'

Stephen Yale-Loehr, an immigration attorney from New York, said the amendments will benefit a "relatively small group" of about 200 foreign investors. A recent report by the American Immigration Lawyers Association placed the number at 800.

Many of the affected investors "are in deportation proceedings," said Lincoln Stone, a Los Angeles attorney who represents several of the investors.

INS officials did not respond yesterday to a request for comment on the measure.

The investor visa program was created by Congress in 1990. Under the program, foreign residents can gain permanent residency by investing $1 million in a U.S. business. The investment must create at least 10 jobs. A $500,000 investment will qualify if the business is in a high-unemployment area.

But the investors who will benefit from the new legislation have typically put up only $125,000 of a $500,000 investment and signed a promissory note for the balance. The bill would permit them to gain residency if they pay off the full amount in the next two years.

An October 1999 report by the Justice Department's inspector general concluded that very little of the original foreign investment ever made it to the troubled businesses that the program was supposed to help.

The report concluded that former INS general counsel Paul W. Virtue "repeatedly assisted these questionable investment partnerships" while he was working for the agency.

Virtue resigned from his INS post in May 1999, a few months before the inspector general's report was completed, and works for the Washington law firm of Hogan and Hartson. Congressional records show that the firm is registered as a lobbyist for American Immigration Services, or AIS Inc., a Greenbelt firm that is the primary beneficiary of Virtue's actions and the new legislation.

The records show that AIS hired two other lobbying firms, Public Affairs Management of Philadelphia and Rick Swartz and Associates of Washington, to push for approval of the legislation that the House passed yesterday.

AIS officials could not be reached for comment.

Steven E. Perlman, a New York immigration lawyer who sued the INS to force the release of portions of the internal investigation of the investor visa program, called the congressional action "outrageous."

"It was all done out of public view," said Perlman, adding that he had advised key members of Congress about problems with the program and had asked that a public hearing be held before any final action.

He said the legislation gives "unprecedented" benefits to the investors despite the findings of the inspector general's report.

The internal report became public in June after a copy was obtained by The Sun.

'Suspect decisions'

"Specifically, we found that Virtue made a series of suspect decisions that directly benefited these investment partnerships," the report said. "Virtue admitted to numerous mistakes and regrets in the administration of the program."

Other documents released as the result of Perlman's lawsuit show that former INS Commissioner Gene McNary was under investigation for his role as an attorney for AIS after he left the agency.

Yale-Loehr and other backers of the new legislation contend that foreign investors were treated unfairly when the INS issued a series of decisions in 1998 that retroactively set tighter standards for the investor visa program.