As the December 11 deadline approaches for the termination — or renewal — of the heart of the EB-5 program, three more negative stories have emerged about various aspects of the program. We have not reported on any of them before.
They involve yet another Las Vegas casino, mismanaged California restaurants, and an effort to create an H-1B visa artificially to ensure the completion of an EB-5 investment.
Casino. This week's Las Vegas/casino/EB-5 story is not to be confused with the earlier one about Sen. Harry Reid (D-Nev.) being accused of using political muscle with then USCIS Director (now DHS Deputy Secretary) Alejandro Mayorkas to secure approval of 230 EB-5 petitions so that the SLS Hotel and Casino could be funded, as reported by Breitbart. Reid's son, Rory, has a connection with that project.
This time it is the not-quite-finished Lucky Dragon Hotel & Casino, which has already benefitted from $60 million in EB-5 funding. Its promoters now say, according to the Las Vegas Review-Journal, that they need another $25 million in EB-5 money or $30 million in tax increment financing (a subsidy by local taxpayers), or else the project will not open. And they did not sound optimistic about getting more EB-5 funding. The request for these funds was made earlier this month to the Las Vegas Redevelopment Agency.
While the funding shortfall is at least awkward for the promoters of Lucky Dragon, specifically, and for boosters of the EB-5 program, generally, nobody has hauled anybody into court, or at least not yet. That's not the case with the next item.
Restaurants. Until recently, all the troubles with the EB-5 program have come from the part through which half-million-dollar investments are placed in pooled funds through the DHS-licensed regional centers, such as the casino ventures mentioned above. There is also a little-used alternative scheme in which, for a family-sized set of green cards, an alien investor can directly put a $1 million or more into a U.S. business that the investor controls. The advantage to the investor is that, though more money is needed, the investor makes the decisions and he probably thinks he will get a better return on the money than is standard through the pooled arrangements. (This part of the program is not impacted by the December 11 deadline.)
One such alien, Yu Sun, invested more than $1 million in two Japanese-style restaurants in California, Sushi Akatora and Izakaya Akatora; he hired Michael Cardenas and his Pegasus Dining Group LLC to manage them.
The story, were it to be written by Hollywood, would have a happy ending, with the Chinese money being invested through a Hispanic manager and his company with a Greek name in two Japanese restaurants — an only-in-America narrative with a splendidly diverse cast.
It did not turn out that way. Sun has sued Cardenas in the California courts, charging mismanagement, fraudulent concealment, and breach of contract, among other things, according to Law 360 (behind a paywall).
H-1B Visa as Part of an EB-5 Deal. It had to happen eventually, and it finally has. An alien investor wanted to get his whole family into the United States for his half-million investment, but there was one problem. A son of his was over 21, and thus could not be counted as a family member for visa-issuance purposes. (And daddy, I guess, did not want to pony up an additional half-million, another way of solving the problem.)
The EB-5 promoter was not fazed; he said that he would get an H-1B visa for the son (as a "needed worker") to close the deal.
Whether it worked or not, neither I, nor my excellent source, knows, but that was the proposed arrangement. Since I am providing no documentation, no names or places are mentioned, but the proposed interaction of the two programs is ironic, probably illegal, and presumably not mentioned in the applications filed with the government.