Thanks to the acts of the president, his son-in-law, and the latter's sister, many more people in America now know about the EB-5 program than did six months ago. (This is the immigrant investor program in which an alien family gets, ultimately, a set of green cards for a $500,000 investment)
There are newspaper reports that Jared Kushner wants to get rid of the family's EB-5 debt in Jersey City, N.J., for the half-occupied Trump Plaza complex there. Part of the debt is $50 million put up by 100 Chinese families who presumably have their green cards by now.
That would be good idea, politically, in that it would tend to dampen the negative press attention that EB-5 and other business deals have brought to the Trump and Kushner families, but it would be a terrible idea financially for the Kushners. (The president has a franchise deal with Trump Plaza, but it is the Kushners' property.)
The reason why such a debt-replacement scheme is such a dreadful idea for the Kushners is the mirror image of why EB-5 is such a favorite of big-city real estate developers. The family will now have to pay market interest rates for the $50 million loan, not the deep discount rates that come with EB-5 investments.
I have no inside information on the Kushners' finances, but often EB-5 investors get only 1 percent, or at most 2 percent on their investments, so the family is probably paying no more than $1 million a year on this particular debt. They will probably have to pay two or three or more times as much when they borrow on the market.
Meanwhile, one of the continuing EB-5 dramas — this one with a $100 million price tag — has ventured back on stage as the federal agency founded by Sen. Elizabeth Warren (D-Mass.) has moved against another of those California-based, EB-5 middlemen, Jim Seol.
The agency is the Financial Industry Regulatory Authority (FINRA); Seol used to be an employee of a firm called Ameriprise Financial Services; while working there he was also the owner of an EB-5 regional center, Western Regional Center, Inc., and he raised $100 million for the center. His sin, an unusual but rather mild one in the EB-5 field, was his failure to tell his day-job employers about his successful moonlighting.
For this FINRA has barred him "for participating in private securities transactions, engaging in undisclosed outside business activities, and for making misrepresentations to his employer in compliance questionnaires," according to the agency's press release.
In this case, it should be pointed out, FINRA made no charges of missing or stolen millions, as there are in so many other EB-5 situations.