Given the all-too-relaxed way that the Department of Homeland Security enforces immigration law, maybe we can look to competing, private sector actors to do the department's work.
In these instances, straightforward middlemen expose the shenanigans of their rivals, and while they are doing this for their own purposes, they are, indirectly, providing a public service. A recent example from the federal courts was called to my attention by Joe Whalen, an EB-5 consultant, but first a little background.
The immigrant investor (EB-5) program revolves around DHS-licensed entities called regional centers. They recruit alien investors who, in exchange for a regional-center-approved (but not guaranteed) investment of $500,000 get a family-sized set of green cards if the investment stays in place for at least two years and if a successful claim can be made regarding the creation of 10 new jobs. The regional centers collect fees for their services over and above the half million, and then pass along the basic investment to a developer who, in turn, completes the project, usually a real estate deal. (That is, if all goes well, as it often does not.)
The regional centers — and DHS has licensed far too many of them — are in competition with each other to attract the investors and, sometimes, as in this case, resort to what their competitors regard as dirty tricks.
In the instant case, one (well-established) EB-5 promoter has sued another one for claiming credit for a big EB-5 hotel deal. The first firm said that the second one had nothing to do with putting together the EB-5 financing for a $176 million Marriott Courtyard/Residence Hotel in Los Angeles, which is prominently displayed on the second firm's website.
The illustration appears under the headline "Representative Projects: Current projects and ones completed by EB-5 United principals".
Suing in this case is American Life, Inc., a Washington State corporation; they said that they arranged the financing. Being sued is EB-5 United, LLC, with offices in Santa Monica, Calif. The case is in the federal district court for Western Washington, and the photo above is shown in one of ALI's court documents. The complaint can be seen in the files of PACER, the federal courts' electronic documents system, at 2:14-cv-01268-RAJ.
Since the suit was filed quite recently, on August 18, neither we nor the court has heard EB-5 United's side of the story.
According to their rival's complaint, EB-5 United's principal, B. Scott Fuller:
[C]laims to be (1) the member of a limited liability company that is (2) the member of another limited liability company that is (3) one of a number of members of a limited liability company that is (4) a general partner in the limited partnership responsible for the Hotel Project.
It would have been nice if a chart had been supplied, but it was not.
Getting back to the fundamental consideration of enforcing immigration law — it obviously would be far better if the government were regulating such matters, as opposed to the filing of private lawsuits, but I suppose the latter is better than nothing. Further, there are major immigration law problems — such illegal entries — where the prospect of competitors suing competitors is unlikely. Can you see one bunch of coyotes going into federal court against another group?
Finally, what this suit will do may, at best, be minor, but in another recent case also involving EB-5, it was major. This was the role of the rival EB-5 middleman who blew the whistle on the fraudulent developers of hotels near Chicago's O'Hare airport. Tens of millions of dollars were saved for Chinese investors by the alertness of an American EB-5 operative, who, in turn, was richly rewarded by the operations of the federal False Claims Act, as Fortune magazine and we reported earlier.
These attacks on rival immigration actors sometimes lead nowhere, as we reported a couple of years ago about two for-profit vocational schools in New Zealand, with one performing an undercover investigation of the other. In the end the Kiwi judge tossed out the evidence.
It will be interesting to see how the court handles the current feud between the two EB-5 middlemen; who really deserves the credit for raising the money for the new hotel; and what penalties, if any, will be laid on the losing company.