Having just written a blog a couple of days ago about how the immigrant investor program seems to attract crooks and wastrels, yesterday I encountered yet another instance of this pattern.
The facts may not all be in, but the charge in a civil lawsuit in California is disturbing. The former chief financial officer of SolarMax Technology in Los Angeles, Michael McCaffrey, has asserted that his former employer fired him for revealing the company's "fraud and financial improprieties" in connection with its raising of some $60 million in EB-5 funds.
Bear in mind that McCaffrey was fired and is presumably angry about that. Nevertheless, the specifics sound worrisome. According to a press release from McCaffrey's attorney:
McCaffrey discovered that SolarMax, by engaging in a series of Enron-like "round trip" transactions with sham middleman entities, reported approximately $50,000,000 in phantom revenue on its 2011 and 2012 audited financial statements. In an effort to create a false impression of stronger financial performances and thus to attract investment capital, the suit alleges that SolarMax disseminated these artificially inflated figures to EB-5 investors (mostly in Taiwan and China).
So far, only one side has spoken on this issue, but it will be interesting to see how it develops and what, if anything, the Department of Homeland Security does in light of these charges.
It is not the first time that an EB-5 promoter has been charged with lying to potential investors in China. The CEO of the firm, incidentally, is David Hsu and the other executives sued also have Chinese names.