Golden Visas & The Promised Land
The scandal-ridden EB-5 program jumped back into the news this week with a Washington Post story about the Kushner company hawking Golden Visas in Beijing. Jared Kushner of course is Ivanka’s husband and a top adviser to the president. He has recused from EB-5 issues and divested from much of the family business, but that hasn’t fooled the Chinese. A culture that’s been around for four thousand years knows a few things about emperors and princelings.
We warned about EB-5 trouble in December and again in January. Critics say the visa program is a magnet for all sorts of shady deals. Senator Charles Grassley has denounced it on the floor of the Senate, saying the program 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.”
Under EB-5, foreigners—these days, mostly rich Chinese—pay $500,000 for the so-called “Golden Visa,” gaining a green card and a path to U.S. citizenship. The program has brought in around $20 billion and possibly a lot more—it’s hard to get a firm figure out of the loosely supervised initiatives. It is beloved by the American real estate industry because it provides cheap money to finance development projects, including lavish spreads in Miami, Manhattan Brooklyn, Las Vegas and Beverly Hills. Never mind that the program is supposed to provide funds for the creation of jobs in economically distressed areas.
The Trump Organization is connected to EB-5 through a $40 million play by a luxury hotel in Austin. Jared Kushner raised $50 million in EB-5 funds for a luxury tower in New Jersey. It’s the New Jersey project that thrust EB-5 back into the spotlight this week.
On Saturday, Washington Post reporters in Beijing got wind of a Kushner family EB-5 sales event. “Over several hours of slide shows and presentations, representatives from the Kushner family business urged Chinese citizens gathered at the Ritz-Carlton hotel to consider investing hundreds of thousands of dollars” in the New Jersey project, the Post reported. The event was led by Nicole Kushner Meyer, Jared Kushner’s sister. References to Jared Kusher and President Trump appeared in the promotional material. “Kusher family ties were an obvious part of the project’s appeal,” the Washington Post report noted.
“Even though this is the project of the son-in-law’s family,” Chinese investor Wang Yun told the Post, “of course it is still affiliated.”
Of course it is. To win favor with the emperor, do business with the prince. The naïve do not survive long in the swamp.
The Post noted that since Mr. Trump became president, “rumors have circulated among the wealthy of the world about the future of the EB-5 program, given Trump’s repeated vows to crack down on immigration and the increased congressional scrutiny of EB-5.” The program was set to expire right before the Kushner sales pitch in China, but in an amazing coincidence, an extension mysteriously appeared in a obscure citation buried deep in the dense budget bill passed by Congress.
Prosecutions for EB-5 abuse are underway in California and Idaho, but President’s Trump’s hometown appears to be one of the biggest offenders. Senator Chuck Schumer is a fierce defender of EB-5 funds for major real-estate developers. Mr. Schumer is a longtime ally of the powerful developer and Democratic Party heavyweight Bruce Ratner, a Clinton confidant who built the Barclays Center sports arena and Atlantic Yards development in Brooklyn with more than $500 million in EB-5 funds. Mr. Ratner is also in the EB-5 business on Long Island, where he has teamed up with a Russian mogul, Mikhail Prokhorov, to seek $90 million in EB-5 funds for the renovation of Nassau Coliseum.
According to a Judicial Watch investigation, after leveraging more than $1 billion in taxpayer assistance and EB-5 funds to develop Barclays Center and Atlantic Yards, Mr. Ratner walked away from the project. He sold his stake in Barclays to Mr. Prokhorov for more than $500 million and transferred ownership of Atlantic Yards to a business controlled by the Chinese government for $208 million. All this is perfectly legal, which is the real scandal.
In fact, most EB-5 money appears to end up in New York City. Recent data (see here and here) suggests that about 56% of EB-5 funds—more than $10 billion—went to the city. David North of the Center for Immigration Studies drilled down into a study by two New York University scholars, Jeanne Calderon and Gary Friedland, who painstakingly compiled data from 52 large EB-5 projects nationwide.
Mr. North’s conclusion? The Obama administration hid a “huge tilt” of EB-5 funds to New York. The “Obama administration,” writes Mr. North, “…has refused to produce statistics on the distribution of EB-5 moneys geographically…. Whether the administration did this deliberately or not, the result has been to mask the enormous tilt of these funds—originally designed to serve depressed areas—to prosperous areas such as Park Avenue and Wall Street.”
Responding to the EB-5 uproar this week, the Trump White House issued a statement saying it is “evaluating wholesale reform of the EB-5 program.” Meanwhile, if you can afford one, the Golden Visa still buys a ticket to the Promised Land.
