Another Lagoon In The Swamp: The EB-5 Green Card Program

The February 2017 issue of “Verdict”, the monthly print pub from Judicial Watch, featured a story by Micah Morrison about yet another corrupted federal program.  This one doles out green cards to wealthy foreigners in exchange for payments of $500,000.  As the article says, “The stated purpose of the EB-5 program is job creation.  Each $500K fee is supposed to be directed to projects in economically distressed targeted employment areas in the US to create ten full-time jobs.”

This program has generated income for Uncle Sam in the range of $15B to $21B in the last ten years.  And how many full-time jobs have been created in “economically distressed” areas?  Apparently nearly ZERO, according to the GAO.  Instead, the lion’s share of the money has gone to fund construction of high-end apartment / condo complexes and upscale retail shops in areas such as Beverly Hills, Las Vegas, Miami, Atlantic Yards in Brooklyn, Nassau Coliseum in Long Island, and …. (surprise) in Manhattan.

Who is buying these green cards and running the developments?  The majority are Russian and Chinese nationals, but there are domestic partners as well.  Jared Kushner, Donald Trump’s son-in-law, raised $50M via EB-5 funding towards construction of a 50-storey in New Jersey called Trump Bay Street.  But my purpose here is not to indict the new President’s family and their real estate acumen.  The Trumps are simply using legal avenues provided by stupidly-designed federal programs to conduct their business, which is high-end real estate development.

More troubling is the fact that Chuckie Schumer, that asshat who never misses an opportunity to lecture us about the “plight of working men and women”, defends the program’s upscale tilt.  Senator Scummer — er, Schumer — is on record mocking testimony given at a recent Senate Judiciary Committee hearing that called for funds to go to poor urban areas.  Schumer said, “It won’t happen; that is not how cities are structured”.  And that’s not how Chuckles holds onto his Senate seat, either.

This is  egregious on its face:  Schumer sucks funds into metro New York City and defends their use for luxury projects.  Yeah, a lot of US jobs are being created — in the NYC construction trades, which are heavily unionized (and those unions are big financial supporters of Schumer).  But wait, there’s more.  There’s apparently an overseas aftermarket in reselling these $500K green cards.  “Hustlers around the world are hawking” these visas, with funding coming from the drug trade and human trafficking.  And the US partners of the foreign developers leverage OUR taxpayer monies as security to borrow additional funds for projects that are wholly privately owned.

Micah Morrison has recently published more on this topic.  Here’s his January 26th article from JW’s website titled “The EB-5 Test”:

In 2008, the director of the Zhoukou Municipal Grain Reserve in China’s agricultural Henan Province began moving money overseas. Qiao Jianjun sent $4 million to U.S. banks. $2 million went to Canada. Another $6 million went elsewhere: Singapore, Switzerland, St. Kitts. Mr. Qiao’s wife obtained a U.S. visa and moved to Seattle and bought a four-bedroom home. In 2011, Mr. Qiao skipped town, flying out of Zhoukou City and joining his wife in the United States. The law caught up with Mrs. Qiao in 2015, arresting her for fraud and money laundering. She’ll do five years. Mr. Qiao is in the wind.

The story of the Qiaos should be of some interest to the new Trump Administration because they arrived in the United States thanks to the controversial EB-5 visa program, which is up for renewal in April. The Obama Administration proposed changes to the program on its way out the door. How the Trump Administration handles the proposed changes will provide an early test of its approach to real-world corruption issues.

Powerful forces are arrayed on both sides of the program. Currently under EB-5, foreigners—they are mostly Chinese citizens—gain a green card and a path to U.S. citizenship by putting up $500,000 to be used for job creation in the U.S. in a high unemployment district. Development projects financed by EB-5 are supposed to be centered in economically distressed “targeted employment areas,” but usually they’re not. Marketing for the program is hot, gaudy and largely unregulated. The program is beloved by the real estate industry because of the cheap financing it provides, bringing in $15 billion to $20 billion in easy money in the last decade and financing development projects in such distressed areas as Manhattan, Brooklyn, Las Vegas, Miami and Beverly Hills. Mr. Trump himself is loosely connected to the program through a $40 million EB-5 play by a Trump-branded luxury hotel in Austin. His son-in-law and senior adviser, Jared Kushner, raised $50 million in EB-5 funds for a luxury tower in New Jersey.

Critics say EB-5 is a magnet for fraud and a vehicle for rich foreigners to purchase U.S. citizenship. Senator Charles Grassley denounced it on the floor of the Senate in December, saying the program “poses significant national security risks” and may be “facilitating terrorist travel, economic espionage, money laundering and investment fraud.” A Government Accountability Office report said international funds for EB-5 visas could come through the “drug trade, human trafficking, or other criminal activities.”

And those “targeted employment areas” intended to serve economically hard-hit regions? These days, critics charge, they’re often nothing more than a byzantine gerrymandering of pockets of high-unemployment mapped from census tracts to create a qualifying district.

The proposed regulatory changes go some distance to addressing reform concerns. The minimum qualifying amount for an EB-5 visa would be raised from $500,000 to $1.35 million for projects located in targeted unemployment areas. The power to designate such areas would be taken away from the states and given a consistent national standard. Transparency and accountability would be improved. Truly needy regions would be given a better shot at the money.

The real estate industry has reacted to the proposals with fear and loathing. “You can legislate all you want,” one EB-5 attorney told the Commercial Observer, “but if the bill went through as is, it would kill the program.” EB-5 proponents are looking to President Trump as a kindred spirit. “If you put aside his politics and just understand him as a real estate owner and investor,” John Banks, president of the influential Real Estate Board of New York told the Observer, “Trump understands that EB-5 is a good thing for the real estate industry.”

As for the case of the corrupt Chinese grain official and his wife, it turns out that Mrs. Qiao in fact was not Mrs. Qiao. Her name is Zhao Shilan. The couple had divorced in 2001 but claimed they were married on their EB-5 visa application. Riding EB-5, Ms. Zhao established U.S. residency, bought property and created shell companies with the stolen millions while waiting for her “husband,” who continued to loot Chinese government coffers until the scheme started to crumble. Then he got on a plane to the U.S. Then he disappeared.

Zhao Shilan went to jail for immigration fraud, money laundering, and international transport of stolen money. Mr. Qiao was last spotted in Switzerland. His run of great good luck will continue if it is the Americans and not the Chinese who catch up with him. In China, the sentence for official corruption is often a bullet to the head.

Clearly, President Trump needs to (a) remove his name, family involvement, and support from this scam; (b) tighten up regulations on the folks who qualify for EB-5 green cards by at minimum ending resale of these entry tickets to the USA; (c) direct those issuing the green cards and accepting foreign cash to mandate that investments be made in Detroit, Baltimore, Pittsburgh, and other places that truly need downtown renovation and long-term employment for American citizens.


— SafeSpace —



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3 Responses to Another Lagoon In The Swamp: The EB-5 Green Card Program

  1. Uriel says:

    Great post SafeSpace. Eb-5 cards need to stop until such time as they can correctly be overseen and those who got them probably need to be turned over to their governments for review. I believe Oversight is already considering this. Seems I read a blurb somewhere on it in reference to Trump.

  2. Hardnox says:

    Wow, just wow! Great post!

  3. upaces88 says:

    I am sick and tired of the Illegals here in Texas. I would never say they aren’t nice people. That’s not the issue here. They run across the border then RAPE ALL of o9ur Social Services.
    It is hot here in Texas as you probably already know. We can have ONE ele4ctricity bill paid for for a Social Agency.
    The. Illegals run to Texas to get WELFARE. When Senior citizens requested that ONE time payment, we were actually yelled at. ALL Social agencies were broke… yes, totally broke.
    What bothers me the most? They never go through classes to learn our history; then apply to become a Texan.