One of the real, if seldom-noticed, problems with the star-crossed EB-5 program is that when an EB-5 funded project is failing because of fraud or faulty management it often adds state and local governments to its list of victims. EB-5 is the program that gives a set of green cards to alien investors who place half a million dollars in federally sanctioned, but not guaranteed, economic development projects.
The most recent instance of this kind of collateral damage involves the frequently mentioned GreenTech Automotive Company, which secured EB-5 funding through a regional center run by Secretary Clinton's brother, Anthony Rodham, and was once run by the current governor of Virginia, Terry McAuliffe (D).
The latest black eye for GreenTech came a few days ago, when the State of Mississippi told the firm that it must pay its overdue loan payment of $150,000 to the State by November 7 or face foreclosure action. GreenTech had borrowed $3 million from the state to get its planned factory under way in the Mississippi delta and, according to a recent Associated Press dispatch, has been overdue on a partial loan repayment since June 30 of this year.
Mississippi also pointed out that GreenTech's promise to invest $60 million in the plant has not happened.
The loan and the EB-5 funding were on separate tracks, but presumably without the aliens' funds in place, Mississippi would not have made the loan in the first place.
GreenTech's current management said that it was in the throes of a financial arrangement with corporate partners in China, and it would make the payment if the new arrangements were completed in time.
The State of Mississippi is a bit-player in the GreenTech drama; in contrast, the states of South Dakota and Vermont played much more active roles in the multiple EB-5 scandals in their states, and have suffered much more in the way of financial and reputational losses than Mississippi ever will, as we have noted earlier (see here and here).
States are not the only governmental victims of EB-5 projects. As we reported earlier, an EB-5 project, the Klausner Lumber Company in north Florida, "also obtained, via Suwannee County, federal money from the Community Development Block Grant program for hiring a minimum of 86 employees [who] must be from low to moderate income families."
The county could have used the money in many other ways; the new workers were largely European employees of Klausner, working illegally on tourist visas.
We are currently looking into reports that one or more additional EB-5 projects — involving loans to charter schools — have similarly caused financial damage to local school boards.