We have suggested in this blog that many proposed EB-5 investments (for would-be immigrant investors) are pretty marginal, but here's one that is so bad that its marginality merits extensive coverage in a Canadian newspaper, Toronto's Globe and Mail.
An American businessman, Greg Jamison, tried and failed to get the financing he needed from rich aliens so that he could gain control of the Phoenix Coyotes, a professional hockey team in the middle of the desert, according to the paper.
Apparently mindful that there may be no hockey season at all this year because of a labor dispute, that the utility costs of keeping the ice frozen on an indoor rink in sizzling Phoenix are sky high, and that the Coyotes were usually at the very bottom of the National Hockey League's attendance records, the alien investors simply were not buying.
Among other clouds hanging over the deal was a bit of financial history – the last owner, Jerry Moyes, lost $300 million before he placed it in bankruptcy. The price for the Phoenix team, now owned by the NHL, is set at $170 million, though another team, the somewhat more popular St. Louis Blues, went for $130 million recently (and that sale also included both a hockey farm team and an opera house).
The EB-5 program gives a handful of green cards to all members of a family investing either half a million or a million dollars in a project in the U.S. that is supposed to create or save ten jobs, with the lower dollar figure being the threshold for projects depressed areas. USCIS has gone out of its way to promote the program, through a series of maneuvers to get investors to invest, and to get its own staff to approve the applications, as we outlined in a CIS Backgrounder earlier this year.
Though there is no indication that a Coyotes-related EB-5 application ever reached USCIS, the proposal sounds very much like the failed efforts to restore the now seedy Watergate Hotel in Washington, the failed factory in Missouri, the bankrupt dairy farms in South Dakota, and other dubious ventures tied to this program and described in the Backgrounder.
In this case, as in many others, the apparent (and totally rational) lack of interest in the investment by conventional investors (ones looking to make a profit rather than secure a green card) presumably caused the promoter to seek help from the EB-5 program.