The immigrant investor (EB-5) program has just received another black eye as a project in El Monte, Calif., collapsed amidst a complex, multi-part scandal.
One of the sidelights was the appearance of a minor (but jailed) Watergate figure, Donald Segretti, as the lawyer for the ousted developers.
Covering these events in detail (with a bias toward the program nationally) is EB5info, an internet news service, which had this to say on November 7:
It happened again, and it probably won't be the last time.
The El Monte Regional Center in El Monte, California just got the boot from USCIS. In the agency's own words, the regional center was "No longer promoting job creation or the kind of local economic development for which it was initially certified [by USCIS] to do." ...
As with any failed EB-5 project, among the most disappointing outcomes is the investor's lost opportunity to obtain a U.S. green card. El Monte gives us only the latest in a number of EB-5 project disasters, another being the embarrassing case of Missouri state officials lending public support to the catastrophic Mamtek International deal.
For more on that Missouri deal see here.
Fortunately, in the case of the El Monte development, after years of promotion it only secured $500,000 investments from two overseas investors. The scheme was supposed to turn a low-income area around an old bus station into a $1 billion urban center, called Transit Village.
Among the problems that the two investors and USCIS initially overlooked, according to
EB5injo, were these:
- The developers had been accused of committing felonies and at one point were placed under arrest.
- The developer had filed for bankruptcy.
- Bang Zhao Lin who purchased the project's original developer, had never developed property in the U.S. and had zero real estate experience outside of Asia.
- An executive with the developer had been named as a defendant in another EB-5- related lawsuit in which investors were allegedly swindled.
The full list of such items in the article carried six more, similar problems.
This was, by the way, the second time that the EB-5 program has found itself linked with Watergate matters. Earlier, as described in one of my blogs at the time, someone working with the program had tried to rebuild the old Watergate Hotel, using, among other things, some tainted money from an Iranian government source, as well as numerous other dubious financial maneuvers.
Segretti apparently played only a walk-on role in the El Monte affair.
Regional Centers are USCIS-licensed entities designed to channel EB-5 investments, of $500,000, each into appropriate financial deals within depressed areas in the U.S. If the investment sticks for two years, the investor can, as far as USCIS is concerned, withdraw his or her money and everyone in the investor's immediate family gets a life-long green card.
The demise of the El Monte regional center was the second one in recent months; earlier USCIS had to terminate another questionable one in Victorville, Calif., as reported earlier.
Meanwhile, the USCIS leadership – despite these horror stories – is valiantly trying to make the process of securing a regional center easier and faster, which is the subject of an existing blog and a forthcoming CIS Backgrounder.