(See here how Brooklyn Borough President Marty Markowitz helped Forest City Ratner raise funds for Atlantic Yards.)
In 'INVESTOR VISA' PROBE: Federal program trading foreign finance for citizenship comes under scrutiny, The Daily's Sarah Ryley (ex-Brooklyn Eagle) reported yesterday:
A burgeoning immigration program that gives wealthy foreigners and their families a chance at citizenship if they lay down big cash is under scrutiny by Homeland Security and the Securities and Exchange Commission, The Daily has learned.Beyond the legal disputes, there's much evidence of misleading marketing, as shown in videos from web sites in China regarding the Atlantic Yards investment.
...Jay Peak Resort in Vermont has used $200 million to transform itself into a year-round destination. And the developer of a new basketball arena for the Brooklyn Nets has collected $228 million to replace costly conventional financing.
But many projects have gone bust and some are in legal disputes that allege fraud, casting doubt on the immigration agency's ability to effectively monitor the program....
Last month, Homeland Security's Office of Inspector General launched an investigation to determine if the program is "effectively administered and managed to detect and deter fraud, waste, abuse, while avoiding national security threats," according to the internal announcement obtained by The Daily.
Security laws violated?
The main issue seems to be whether EB-5 projects adhere to securities laws:
A confidential internal memo drafted by the attorneys, also obtained exclusively by The Daily, acknowledges the immigration agency is making no effort to determine whether these projects are adhering to securities law, and therefore "is potentially granting [investor visa] petitions based on patently illegal investments and/or investment schemes."Regional centers up for renewal
The timing of the revelation is interesting; the regional center program, which is an oft-renewed pilot, must be renewed before it expires by the end of the month. The Senate has already passed a three-year reauthorization, with no effort at reform.
The House of Representatives is scheduled to vote today.
According to the Daily, on investment banker "thinks legislators should send 'a strong statement that says the EB5 program in all respects is subject to securities law.'"
There's no reform
In fact, at Congressional hearings, there's been little appetite for reform, though, as the Daily reports, one industry watchdog, Michael Gibson of EB5info.com, said he's "complained to the SEC about more than a dozen unlicensed brokerages" that he says get more than $100,000 for investors they recruit..
Wide base of support
According to a letter backing renewal of the plan, from the trade group Association to Invest in the USA (IIUSA):
The EB-5 program has strong bipartisan support in the Senate and the House of Representatives. There are currently over 200 regional centers approved in 44 states and territories. The Program is essential to many state and local government economic development entities as well as numerous industry groups and private sector project and business developers. The reauthorization has been endorsed by the U.S. Conference of Mayors and a number of individual Governors who have seen the Program’s economic impact firsthand.The reason state and local government economic development entities--including the City of New York, which signed the letter--like the program is that they get developers and entrepreneurs cheap capital at no cost. Other signers, like immigration law firms and regional centers, earn big bucks.
And numerous developers signed the letter, including Forest City Ratner Companies.
The IIUSA calls it "a common sense U.S. job creator with no cost to U.S. taxpayers."
The cost, however, is an opportunity cost: whether more meaningful investments that actually create jobs--as opposed to jobs on paper, in some cases--would be garnered by "selling" visas.