Would You Buy a North Korean Used Car from This EB-5 Promoter?

By David North on July 6, 2016

There are plenty of bizarre business notions in the EB-5 program, but this one wins the Oscar for creativity.

The idea: Let's use $630,000 of an EB-5 investor's money to buy and ship 100 used cars from North Korea to an about-to-be-formed southern California car dealership. (Given North Korea's poverty, perhaps used cars are cheap there.)

Let's ignore the American market's non-thirst for such cars, and the tough question of how to obtain parts for North Korea-produced cars, and simply focus on the U.S. government's long-standing ban on economic traffic with North Korea — making the idea a non-starter, but not before a Chinese EB-5 investor (Dongxia Qiu) and her money were separated.

This raised a question in my mind: Do they manufacture automobiles in North Korea? The answer is yes, a few, with minimal power (80 hp) and according to an American website they are made by

... Pyeonghwa Motors, whose name is Korean for "peace," [which] was formed in 1999 out of a partnership between South Korea's controversial Unification Church and Ryonbong General Corp., a corporation controlled by the North Korean government.

Unfortunately the EB-5 program makes it easy for "marks," like Ms. Qiu, to be taken for a ride. She decided to enter a 50/50 car dealer arrangement with U.S. resident Zheng Yuan, whose business experience, from passing references in court records, was in the jewelry business. She would be chairman of the firm, but would not have control over the funds. She would put up $1 million, he would run the show. Yuan started diverting funds, she said, and she sued.

Links to the case, Dongxia Qiu v. Zheng Yuan, in California's Fourth Appellate Division, appear to be non-functional.

Ms. Qiu, incidentally, did not take her EB-5 funds to a regional center, the usual route, and instead had to pony up a million dollars for one of those unusual cases in which moneys are not pooled through DHS-licensed regional centers. In the latter cases, the usual investment is half a million dollars.