Sunday, April 19, 2015

Who knew? Former Gov. Paterson, no expert on job creation, again involved/tangled with EB-5 projects

I'm catching up on a lot of news related to the EB-5 program, which has helped the developers of Atlantic Yards/Pacific Park raise $477 million in cheap capital, with another $100 million to go. Perhaps the clearest summary of the lure and sketchiness of the program came in a February 2012 quote from an EB-5 fundraiser to The Daily:“It’s just a way of being able to get free money, basically, to build all sorts of projects.”

Entrepreneurs hoping to raise money from Chinese immigrant investors under the EB-5 program know that elected and public officials--even former officials--help give the project a sheen of legitimacy.(That's why promoters of the Atlantic Yards investment improperly tried to suggest a top State Department official was backing it.)

Thus former New York Gov. David Paterson, no expert in such projects and notorious for spuriously claiming that Atlantic Yards would have "job creation the likes of which Brooklyn has never seen," has been in demand.

And sometimes things go wrong. On 4/14/15, the Real Deal reported, How a former NY governor and a promising crowdfunding startup fell out:
For an ambitious real estate tech startup, bringing on a well-connected former governor as an adviser sounds like a match made in heaven. But in the case of iFunding and former New York Gov. David Paterson, the marriage quickly turned sour.
A year after the real estate crowdfunding startup announced New York’s former governor had joined its board, the two sides are no longer on speaking terms. Instead, they have exchanged a series of bizarre accusations, involving questionable EB-5 deals, an alleged travel ban and supposedly dire financial straits. 
The people behind iFunding saw Paterson "as their rainmaker in China," but then there were "alleged legal troubles," relating to Paterson’s effort to "court investors for the New York Immigration Fund," a regional center funding a new Times Square Hotel. 

Paterson told the Real Deal the complaints related to the regional center, not his work, and says the crowdfunding site cut him off.

I reported 12/14/11, Former Governor Paterson signs up to promote an EB-5 project, regarding the hotel. He has since vanished from the web site.

Other Paterson efforts: green taxis

Last December, Sing Tao Daily, as translated by Voices of New York, reported Paterson Brings Chinese Immigrant Investors to New York:
Since 2011, Paterson has traveled to China three times. And he is making his fourth trip on Dec. 12. This trip is for the green taxi project of NuRide Transportation Group, a Long Island City-based transportation company that is raising money for expansion. “I might be the first former governor in the U.S. going to China to promote the EB-5 [investment immigration] program,” said Paterson.
That may be true, but several current governors have gone.

Beyond the Times Square Hotel project, according to Sing Tao Daily, Paterson in 2013 went to China "to promote the Crowne Plaza Hotel project [link] in Long Island City."

And the next project was green taxis:
On Dec. 12, Paterson will arrive in China and start to promote NuRide’s project in Shanghai and Nanjing. NuRide, for which Paterson is a board member, has already been running green taxi and delivery cars. This new project aims to raise $20 million from 40 immigrant investors in the first phase to purchase more green taxies and to remodel some of them.
Here's where it gets interesting. NuRide's website is down or dead, but a cache remains:

And here's the partial assessment by an outside evaluator in the EB-5 world, which indicates a lot of unknowns.

Sing Tao Daily reported:
The promotional brochure, in Chinese, has pictures of Paterson giving a speech as governor as well as former Mayor Michael Bloomberg grinning in a green taxi. Paterson said he has talked to the TLC (Taxi & Limousine Commission) and current Mayor Bill de Blasio about the project. But he noted this project is not a governmental project but rather a private one. “We can help the city to fill the void. So the city will be willing to work with us. But of course, an EB-5 program won’t be a governmental one unless people from the government are present at the promotion,” said Paterson.
Paterson interviewed; photo from Mona Shah blog
That's par for the course, suggesting a governmental imprimatur without saying so.

Attorney Mona Shah reported on the visit by her firm and Paterson to the Luxury Property Showcase (LPS) Expo in Shanghai:
In Shanghai, former New York Governor David Paterson endorsed the New York City Green Transportation project, developed by NuRide Transportation Group. This project demonstrates how EB-5 capital is slowly traversing into the realm of transportation and infrastructure investment in the United States. The Governor’s presence attracted attention from local Chinese media, Xinhua news agency, Sina, Sohu, etc. The MSA [Mona Shah & Associates] team certainly made their presence known in China’s EB-5 capital market.
Paterson also appeared at an EB-5 seminar in February in New York. Remember, even if he knows little about EB-5 a former public official looks good in China.

A Sunset Park project?

Paterson is also apparently pitching what a Chinese new article--through imperfect machine translation--called an "8th Avenue project" in the "largest Chinese district" in New York, which would be Sunset Park, Brooklyn.

If so, that's likely this Raymond Chan project, as described in the Real Deal, the World Journal, and on this EB-5 related website, which indicates an effort to raise $150 million. (Or maybe this medical project on 8th Avenue in Sunset Park, from the same developer.)

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