Tuesday, May 19, 2015

EB-5 farce: my blog used to help sell Nassau Coliseum investment to immigrants seeking green cards (true)

Fifth of a five-part series on Forest City Ratner's plans for Nassau Coliseum redevelopment.
Part 1 concerned the overall plan. Part 2 addressed the curious politics of a Community Benefits Agreement. Part 3 addressed the astonishing pitch in China for EB-5 investment. Part 4 discussed Forest City's claim, at the Nassau County Legislature, it wasn't making much profit on EB-5, and its defense of a sketchy fundraising partner. This fifth part concerns the brazen effort by EB-5 promoters to use an excerpt from this blog.


It's no secret that I'm a wee bit critical of the EB-5 program, under which immigrant investors get green cards for themselves and their families in exchange for parking $500,000 in a purportedly job-creating enterprise.

After all, the benefit goes mostly to the developer/entrepreneur, the middlemen, and the immigrant investors, not the public, which "owns" the valuable property (visas) being traded.

Moreover, the marketing of EB-5 projects is often at best deceptive and at worst fraudulent. Immigrant investors, especially those in China, by far the largest market, are not necessarily expected to do diligence, or to understand what they read in English.

Consider the excerpt at right and below from the recent iteration of the Qiao Wai web site pitching the Nassau Coliseum EB-5 investment, $90 million from 180 investors.

Arrow added by AYR, other highlighting in original
The excerpt aims to convince potential investors that the deal is solid.  Indeed, most of the evidence easily bolsters that perspective.

But the web site's sloppy use of an excerpt from my blog--including the seemingly damning subtitle "Other questionable statements"--shows that those promoting EB-5 have no expectation potential investors can understand English.

It's not dissimilar to the use of stale, off-topic quotations, while promoting the EB-5 investment in Atlantic Yards, from former Brooklyn Borough President Marty Markowitz, former New York City Mayor Mike Bloomberg, and former New York State Governor David Paterson.

There's no regulation, and they get away with what they can. (I did nudge the U.S. State Department about the improper use of a top official, and they pressured the promoters to stop.)

The Nassau Coliseum pitch

The heading of this section, according to a professional translator, promises "Government oversight throughout the entire process, guaranteeing the integrity of the project."

It elaborates that various levels of government in New York will participate.

Note that Chinese investors feel more confident when government is involved.

Step 1 indicates that, once the reconstruction project was established, "it was given policy support and tax relief from the government."

(Actually, the project was promoted in August 2013 by Nassau County Executive Ed Mangano as "100% privately financed Coliseum that will share revenue with the County at zero expense to the taxpayer.")

Step 2 indicates that representatives of Nassau County met with Forest City Enterprises to sign a long-term lease for the Coliseum--quite true.

Step 3 notes that the state government has agreed to "invest part of its funds to support the construction of the facilities surrounding the reconstruction project." Indeed, in January, Gov. Cuomo's executive budget proposed allotting some portion of a $150 million fund to a Coliseum parking facility.

Step 4 reaches farce

Step 4 cites a 2015 statement by Mangano that "the reconstruction project of the Long Island Coliseum supported by the government will begin in the latter part of this year." That's true, except that "support" is more cooperation than anything else.

But do check out Step 4, which contains an excerpt from this blog, published 3/27/15 under the headline Nassau County Executive Mangano bizarrely suggests renovated Coliseum will lure Islanders back; Ratner in dispute over retail plan?

A section I subtitled "Watching Mangano wink" addressed the County Executive's curious announced plan to lure the New York Islanders back to the renovated Coliseum, though they have announced a relocation to Brooklyn, which has far more suites and sponsorship opportunities.

"Other questionable statements"

The next section was subtitled "Other questionable statements." Bizarrely enough, those excerpting it for the Qiao Wai web site did not remove the subtitle. Note the big red arrow I added.

The EB-5 promoters did highlight, using red rectangles, Mangano's statements that construction would begin at the Coliseum later this year and would employ 2,700 people--both pieces of information that would inspire confidence in those considering EB-5 investments.

(Each of the 180 investors has to "create" 10 jobs, though the number is not a head count but rather an economist's calculation, and the investors can gain credit for jobs calculated based on the entire amount of money in the project, not solely their investment.)

The next paragraph in my post questioned the claim of 2,700 jobs and $10 billion in economic benefit. It was, unsurprisingly, excluded from the excerpt. But anyone who understands English should have been flummoxed by the "Other questionable statements" subheading.

At bottom of the excerpt, the message is sunny: with the project "moving forward, it’s expected that more supportive government policies will gradually come out. So stay tuned."

Indeed, that's Forest City Ratner's m.o., to make a deal and then wrangle "more supportive government policies." In that, the investors were provided with some unwitting candor.

Arrow added by AYR, other highlighting in original

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