(Shant Shahrigian | New York Post) – The American dream cost Chinese immigrant Lance Lee $500,000.
The native of Guangzhou said he had his family mortgage some of their property so he could invest in the development of the University of Miami’s campus. Months later, Lee, who’d interned for 18 months at an ad agency in New York City, had his green card.
“Without EB-5 [visa program] … I would be counting days, counting years till my U.S. green card,” said Lee, 32, who recently got his citizenship and had his first child.
He’s now working to help other Chinese citizens gain green cards through the federal government’s EB-5 program.
Investors like Lee connect with U.S. lawyers and “regional centers” that specialize in finding projects ripe for foreign cash. Thanks to the EB-5 program, an investment of $500,000 to $1 million makes them eligible for a green card and, ultimately, citizenship. Feds promote the program as a job creation engine — each investment is supposed to create 10 jobs.
But the program, which Congress recently extended through Dec. 7, has been plagued with corruption.
In New York City, where real estate developments have gotten more EB-5 cash than perhaps anywhere else in the country, one of the most prolific businesses overseeing EB-5 investments is fighting a lawsuit from 100 Chinese investors who claim they were victims of fraud in a $77 million deal to develop the Battery Maritime Building in Downtown Manhattan.
“While the Defendants reaped millions in interest … and other payments,” the lawsuit contends, the project “turned into a catastrophe.”
The business, called New York City Regional Center (NYCRC), denies the allegation. “There was no fraud committed by our client, and the litigation has no merit,” attorney David Lender said in an email.
U.S. Customs and Immigration empowers 866 regional centers around the country to oversee EB-5 investments. Recent years have seen numerous high-profile scandals at the centers. One in Vermont was shut down this summer over allegations its principals misused over $200 million in a Ponzi-like scheme. The Securities and Exchange Commission charged a Florida center blew a large chunk of $43.9 million in EB-5 investments. And last year in California, two fraudsters pled guilty to stealing millions from EB-5 investors and trying to sell visas to people on China’s “100 Most Wanted List.”
Among those sounding the alarm is Sen. Charles Grassley (R-Iowa).
“There are no required background checks on anyone associated with a regional center,” he said in March. “There’s no prohibition against foreign governments owning or operating regional centers or projects. That’s right, foreign governments can own businesses that sell our Citizenship. Think about that.”
Nevertheless, EB-5 continues to draw vast foreign investment — $16.5 billion from 2010 to 2015, according to Invest in the USA, a national trade association for regional centers. About $4.5 billion of that sum went to New York State alone, the group said.
The lion’s share went to New York City, according to data from the NYCRC and NYU’s Stern Business School, including loans for these highly visible projects:
- At least $600 million for Hudson Yards
- $258 million for luxury condos at 76 11th Ave.
- $228 million for Barclays Center and related projects
- $200 million Downtown Brooklyn redevelopment
- $175 million for Empire Outlets on Staten Island
- $158 million for LinkNYC, the city’s public WiFi system
These investments and others led to an estimated 4,297 green cards for foreign investors.
The program was critical to building the deck over the train yard of Hudson Yards, which is Manhattan’s largest real estate development in decades.
“This capital, which comes at no cost to the American taxpayers, was the catalyst for the Hudson Yards project and allowed us to immediately create thousands of jobs all over the city,” said a spokeswoman for Related Cos., the developer of the sprawling Midtown project.
EB-5 critic David North of the nonprofit Center for Immigration Studies in Washington, D.C., says investing in New York City’s booming real estate market defeats the purpose of the program, which was intended to create jobs in areas that need them.
“It’s a ridiculous form of subsidy to some urban rich people,” North said of EB-5.
“It’s a bit of a misnomer when people refer to it as the ‘golden visa,’” said Allison Berman, a lawyer at New York City’s Greystone & Co., which advises developers on getting EB-5 funds. “A lot of people I meet with … are middle-income people who are really just doing what they think is going to best for the futures of their children.”
While North called for EB-5 to be shut down completely, other critics say the program can be saved. They include NYU Stern researcher Gary Friedland, who urged Congress to create a monitor to oversee EB-5 investment and prevent fraud.
“The program lacks integrity,” he told The Post. “We’ve recommended that an independent third-party fund administrator be appointed to oversee the flow of the funds.”
Since the EB-5 program launched in 1990, Congress has put off any reforms and reportedly voted to extend it 19 times.
While politicians debate the program, Lee, who got back his loan to the University of Miami Life Science and Technology Park, swears by its benefits.
He said, “Basically, I’m set. In this country, I don’t have anything to worry about anymore.”