You have to feel sorry for the people at Department of Homeland Security (DHS) who manage the EB-5 program, especially the publicists, as the immigrant investor program takes multiple blows, day after day, week after week.
My favorite story, not yet in the mainstream media, would have had this headline 40 years ago: "ChiComs Take Over Multi-Million Dollar Capitalist Tool in Brooklyn".
This deals with the fact that our Homeland Security people have permitted EB-5 funds to be invested in an entity that will support a project 70 percent owned by the City of Shanghai; this is the Brooklyn real estate development formerly known as Atlantic Yards, run by Bruce Ratner.
Given the nature of government in China, it is safe to say that the spy agency there, and thus the Communist Party, knows all about this development. Maybe, just maybe, DHS has dropped a line telling the FBI about this as well. Maybe.
As humorist Dave Barry would say: "I am not making this up."
So the administration allows an entity controlled by the Chinese government to accept investments from (and perhaps take fees from) rich Chinese who make those payments in order to secure American green cards. Who says our government is not in bed with Beijing?
Ironies abound:
- Nervous Chinese wanting to buy an escape hatch from China put their money into a Chinese-government-controlled entity to do so.
- The name for one of their vehicles for such transactions is Greenland USA.
- The American entrepreneurs agree to change the name from Atlantic Yards to Pacific Park Brooklyn, which sounds like a real (if symbolic) bow to the Far East.
The Greenland Group is owned by the City of Shanghai. It controls Greenland USA, which in turn is in a joint venture with Forest City Ratner Co. You can be sure that little green or forest-like will result from all this construction activity in Brooklyn. (And why aren't some U.S.-based lawyers, on behalf of Copenhagen, suing China for stealing the good name of Denmark's Greenland, the world's biggest colony?)
The promoters of Atlantic Yards/Pacific Park Brooklyn, by the way, used a photo of Assistant Secretary of State Charles Rivkin and quotes from him to boost their investment pitch in China. Our majestic State Department noticed and forced the promoters to change the text of their ads, according to a website that pays attention to Atlantic Yards/Pacific Park Brooklyn.
Meanwhile, back to other recent troubles of the EB-5 program. They are numerous.
the EB-5 Visa Program:
Fortune Magazine. The venerable, highly-regarded bible of American big business (they created the Fortune 500, after all) has just run another stunning exposé on one of the numerous shady characters who use (and abuse) the program. Peter Elkind's latest EB-5 article, "The tangled past of the hottest money-raiser in America's visa-for-sale program", includes this lede: "Nicholas Mastroianni, II, has raised hundreds of millions of dollars — and generated a long litany of lawsuits, disputes, and unpaid debts."
Mastroianni, you will not be surprised to hear, is also involved in Atlantic Yards/Pacific Park Brooklyn.
Elkind's latest followed another Fortune EB-5 article dealing with the massive swindle in a Chicago EB-5 case broken by the Securities and Exchange Commission — not DHS — which was the subject of an earlier blog of mine.
South Dakota. Whereas there have been only two recent negative articles Fortune magazine about the EB-5 program, they appear virtually every day in all of South Dakota's newspapers, usually as the lead story, such as this one.
In that state the EB-5 program was, until recently, run through a monopoly state agency, as we reported the other day. Then-Governor Mike Rounds (R), who presided over the state EB-5 program as it experienced multiple bankruptcies and other scandals, is now the GOP candidate for Senate and he seems to spend much of his time defending himself over various EB-5 related issues.
Rounds, once regarded as having the easiest GOP Senate race in the nation, for an open seat in a very Republican state, is now reported as having the narrowest of leads over his not very strong Democratic opponent.
Australia and Canada. The conservative, pro-business governments in these two countries have both made decisions this year that shed a negative light, indirectly, on the U.S. immigrant investor program. Both nations have decided that their previous arrangements undervalued permanent residence in their nations — though both had dollar-level demands that were considerably more than those imposed by the United States.
In Canada, one had to lend CAD$800,000 interest-free to a provincial government for five years. That would be US$712,000 at current exchange rates, which is 42.4 percent more than the US$500,000 minimum investment that the United States requires.
Canada simply abandoned its program earlier this year, saying it makes no sense for the nation generally.
Australia, operating on similar thoughts, has taken a different approach. To get the most attractive immigrant investor program in that country, an alien now has to invest AUS$15 million (US$13 million) rather than AUS$5 million as in the past.
DHS could double the American investment take, from $500,000 to $1 million for each set of visas with a stroke of a pen, but that would cause harm to the hundreds of middlemen, lawyers, visa salesmen, brokers, and promoters of various kinds in the regional center business, so it will not happen.
The EB-5 program should be killed. If it is to continue, Congress should follow the lead of the Aussies and raise the bidding to at least $5 million for a set of visas, if not $10 million.
And the money should go into federal or state treasuries (as it did in Canada) rather than to individual fat cats.