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March 6, 2011
US cash for visas scheme targets China
Tom Spender
Tom Spender was instrumental in covering a campaign in China that included Gregg Hayden, general manager of the New York City Regional Center, along with Peter Davidson of the ESDC, the tool of developer Bruce Ratner, to help raise capital for Atlantic Yards. The vehicle used was the federal EB-5 program, which supplies green cards to investors on the basis of job creation. Claims of job creation for the Atlantic Yards project are dubious at best, and Spender is suspicious of claims guaranteeing green cards for the investors.
Dodgy dealings between developers and the authorities – sounds just like China! And there is a Chinese angle – under what’s known as an “EB-5” programme, foreigners invest $500,000 into America at almost zero interest rates, theoretically in return for Green Cards, for themselves and their families.
In credit-crunched times, a cheap cash for visas scheme appeals to developers. And it appeals to the Chinese too, who typically want Green Cards so their kids can go to university in the US, which they consider to have a superior education system.
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I was asked to go along to an EB-5 roadshow in Beijing at which officials from the New York City Regional Center – one of many companies across the US dedicated to encouraging rich foreigners to invest in US projects – presented the Atlantic Yards scheme to rich Chinese.
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Anyway, the roadshow – which ran for a gruelling 6 months – was due to end last month. According to a Wall Street Journal article, Hayden and his colleagues got the commitments they were looking for. The investors also include a small number of South Koreans.
That means 498 Chinese (and Koreans) have signed up to hand over half a million dollars each, having had assurances from Hayden and others that they are “100% sure” to get their Green Cards. It would be interesting to know what kind of background these investors have and how sanguine they are about the risk involved. From what I can see, China is a high-risk business environment where little can be taken for granted, so people here may be more familiar with risk than many westerners. The rich are spectacularly rich – for them, chucking half a million at the chance of a Green Card may not be a big deal – but some investors may have raised the money from family members and friends. In the past, some EB-5 investors have not only not got the Green Cards but have actually lost their investment. The current crop might do well not to take Hayden’s assurances too literally.
Posted by steve at March 6, 2011 9:54 PM