For Chinese citizens, American green cards can be notoriously difficult to obtain. But a Beijing immigration company called Qiaowai tells visa applicants of a secret weapon: It is working on behalf of a real estate firm owned by the family of President Trump’s son-in-law and adviser, Jared Kushner.
The Kushner family came to the United States as refugees, worked hard and made it big — and if you invest in Kushner properties, so can you.
That was the message delivered Saturday by White House senior adviser Jared Kushner’s sister to a ballroom full of wealthy Chinese investors, renewing questions about the Kushner family’s business ties to China.
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 a New Jersey real estate project to secure what’s known as an investor visa.
The EB-5 immigrant investor visa program, which allows foreign investors to invest in U.S. projects that create jobs and then apply to immigrate, has been used by both the Trump and Kushner family businesses [Emily Rauhala, “In a Beijing Ballroom, Kushner Family Flogs $500,000 ‘Investor Visa’ to Wealthy Chinese,” Washington Post, 2017.05.06].
And remember: when rich immigrants buy their EB-5 visas, they also pay tens of thousands of dollars in fees to the lawyers and other agents who help arrange their visas.
Rauhala reports that the organizers of the Kushner EB-5 pitch kept reporters away from the speakers and attendees, saying, “This is not the story we want.” I imagine it’s not the story the Kushners and the Trumps want, either: everything for sale, including American residency!
Bank settlement and impending EB-5 trial in Vermont, EB-5 felony plea bargain in South Dakota… we have proven waste, fraud, and abuse in American immigration policy, yet a President who won votes by shouting about immigration reform doesn’t notice, and Congress persistently resists reform. Maybe distraction and inaction are the best we can hope for—maybe the distraction of this week’s kamikaze budgeting will lead to inaction on EB-5 and a quiet, overdue expiration of a bad immigration program.
Meanwhile in South Dakota, the state has let EB-5 czar Joop Bollen off with non-punitive settlements of lawsuits and a $2,000 plea bargain in the only criminal case to arise from our EB-5 scandal. EB-5 watchdog David North finds the South Dakota prosecutions surprisingly weak compared to Vermont’s:
Meanwhile, in a somewhat parallel case in South Dakota, the one other state that had, for a while, a state entity serving as the regional center, there has been no such relief. If anything the South Dakota case was much more egregious than the one in Vermont.
More money was lost or stolen, more projects failed, the state’s political leaders were deeply involved in some aspects of the case, a key player was found dead (his shotgun wound in the stomach was ruled a suicide by the State’s Attorney General), a mysterious multi-million-dollar payment was made to a bank account in Cyprus owned by a Russian railroad oligarch, and a state criminal indictment of another key play, Joop Bollen, ended with an extremely generous plea bargain including no jail time and a $2,000 fine, as has been previously reported (see here and here) [David North, “Big Finance Firms Pony Up in Vt. EB-5 Case — Nothing Similar in S.D.,” Center for Immigration Studies, 2017.04.14].
North cocks an eyebrow at South Dakota’s U.S. Attorney Randy Seiler for taking no action on South Dakota’s EB-5 scandal. We’ll see what voters think of state Attorney General Marty Jackley’s relatively gentle treatment of South Dakota’s EB-5 scandal compared to Vermont’s more vigorous prosecution of EB-5 improprieties.
Bonus Political Connection: Don’t forget—Donald Trump appears to have profited from the Vermont EB-5 scandal: among Quiros’s many challenged expenditures is a $2.2-million condo in Trump Tower New York. It remains to be seen whether anyone can connect the dots from South Dakota’s EB-5 program through Northern Beef Packers, Ultracare Holdings Limited of Cyprus that received $1.5 million from NBP, and Ultracare’s Russian owner Globaltrans Investment Inc. to Donald Trump’s friends in Russia.
The Daugaard Administration caught a break from USCIS last week. In a decision issued on March 15, the USCIS Administrative Appeals Office withdrew an earlier decision to revoke South Dakota’s EB-5 Regional Center status. We aren’t in the clear; USCIS simply says it needs further proceedings to determine whether the feds can trust South Dakota to run the EB-5 visa investment program honestly and effectively.
As Seth Tupper notes, the USCIS decision recognizes that the government must weigh both the financial shenanigans that took place in the Rounds/Bollen/Benda EB-5 program and the economic good the program did for South Dakota. On the positive side, USCIS cites the “thousands” of jobs created by EB-5 in South Dakota.
“Since 2013, the State of South Dakota has worked diligently to resolve the problems stemming from the federal EB-5 program in South Dakota,” said Tony Venhuizen, the Governor’s chief of staff. “Today’s settlement and the recovery of $1.5 million from SDRC, Inc. not only compensates the state for past EB-5 related expenses, but also ensures the state has the funds it would otherwise have had under the contract with SDRC, Inc. to guard against any future claims.”
Under the terms of the settlement, SDRC will immediately pay $546,250 into an existing state-controlled indemnification account, with an additional $81,250 payment by Sept. 1, 2019. Since commencing its civil actions, the state separately recovered an additional $894,633.32 in indemnification funds owed to the state by SDRC, Inc. [Office of Governor Dennis Daugaard, press release, 2017.03.14]
The $546,250 appears to be payback for the legal costs the state incurred in the Darley case, in which a California business sued the state over monkeyshines in the South Dakota EB-5 program. The settlement appears to include no damages or penalties, only fulfillment of obligations created by the state’s contract with Bollen’s SDRC Inc.
The only legal case remaining in play on South Dakota’s EB-5 scandal is the LP6 Claimants case, in which Chinese EB-5 investors are suing the state and Bollen for blowing smoke on the value of the Northern Beef Packers EB-5 project in Aberdeen.
At last week’s press conference following the guilty plea of the state’s former EB-5 czar Joop Bollen, I asked Attorney General Marty Jackley if the state had investigated any other private entities like Bollen’s that hold indemnification funds for the state to ensure that other state contractors were leaving such funds intact and not using them as personal ATMs. A.G. Jackley said such funds are “common legal practice” but spoke of no other investigations, emphasized his complete non-involvement in drafting the agreement creating the fund Bollen managed for the Governor’s Office of Economic Development, and recommended taking any questions on the topic to the Legislature and the Governor.
I checked with Auditor General and the Bureau of Finance and Management.
In response to my question—”Do other private entities hold similar funds that in which the state has a secured interest?”—Auditor General Guindon said he is “not aware of the existence of any other indemnification accounts similar to the one held by SDRC Inc.”
In its dealings with former state employee Bollen, the state—the Governor’s Office of Economic Development under Governor Mike Rounds, whose GOED signed the contract, and Governor Dennis Daugaard, whose administration let that contract continue until the feds made them nervous—appears to have taken a unique risk that it takes with no other private entity, leaving state money in a private account over which it could not exercise direct oversight.
Bollen may not have absconded with any funds—as his attorney reminded the judge last week, Bollen replaced the funds he “borrowed” from the state within days—but the state did allow itself to lose money needlessly. As I noted in September, the state required Bollen to collect fees from EB-5 investors for the state. The GOED–SDRC Inc. contract required Bollen to hold those funds so they would not show up on the state’s books. However, by leaving those funds in Bollen’s hands, GOED left those funds subject to federal income tax liability. I don’t have the SDRC Inc. tax returns handy (O! would that I could get my hands on them!), but if those state fees collected and held by SDRC Inc. were taxed at 35%, then on the $2.6 million shown in the SDRC Inc. indemnification fund as of June 30, 2016, the state gave up $1.4 million in federal taxes.
$1.4 million—that’s a high price to pay just to keep public money out of public sight. Given that no other state agency appears to engage in such a costly practice, we should continue to ask why the Rounds/Daugaard GOED was so eager to take that risk.
In trivia from yesterday’s Aberdeen crackerbarrel…
Senator Brock Greenfield (R-2/Clark) compared his anti-refugee bill to his mom’s anti-nuclear waste bill, saying both are simply measures to expand the Legislature’s oversight. It’s funny that Republicans are working hard to expand government power. It’s not funny that Senator Greenfield views refugees the same way he views nuclear waste.
Best friends against the Muslim ban in West Palm Beach.
Senator Greenfield boasted that legislators don’t attack each other, then noted wryly that a couple of his Republican colleagues may try to prove him wrong. Brock didn’t say names, but we know who he meant, don’t we, Stace and Lance?
Addressing a questioner’s concern with transparency, accountability, and Joop Bollen’s big smile, rookie Representative Drew Dennert (R-3/Aberdeen) said the root of the corruption problem with EB-5 and GEAR UP was federal money. Hmmm… that’s like saying the root of South Dakota’s meth problem is acetone manufacturers.
Since Republicans struggle with simile and subtlety, let’s just say it: No, Drew, the root of EB-5 and GEAR UP corruption was corrupt friends of friends who thought they could take money from the till because nobody in Pierre was watching.
And in participation awards:
Representative Burt Tulson drove 120 miles to get 85 characters, including spaces.
Hmmm… 75 characters, 10 empty spaces… that’s darn near a description of the Republican caucus in Pierre.
Joop Bollen pled guilty this morning to one of five felony charges of mishandling funds related to his administration of South Dakota’s EB-5 program. Judge Portra gave Bollen a suspended imposition of sentence with two years of probation, a $2,000 fine, $104 in court costs.
Six days before Bollen’s scheduled trial, Attorney General Marty Jackley appeared in the Brown County courtroom of Judge Tony Portra to read a plea agreement freshly signed by the state and Bollen. In the plea agreement, Bollen admits that, on February 17, 2012, he took $300,000 from a fund that his corporation SDRC Inc. was supposed to hold to indemnify the state in case of lawsuits arising from the EB-5 visa investment program. Bollen purchased Tax Increment Finance bonds on Northern Beef Packers, the beef plant that EB-5 investment helped build on the south edge of Aberdeen. By taking that money, Bollen violated SDCL 44-1-12, a Class 6 felony. Judge Portra asked Bollen if he agreed the Attorney General’s statement; Bollen answered, “Yes, Your Honor.”
Under the plea agreement, the state dropped the other four charges, which included $944,000 in unauthorized withdrawals from funds Bollen/SDRC Inc. were supposed to hold for the state, money that Bollen allegedly converted to personal use. Those other funds and uses were not mentioned in today’s hearing. The state also agreed not to pursue any further charges against Bollen on this matter, to remain silent on sentencing, and not to use this plea against Bollen in pending civil litigation. In addition to his plea today, Bollen agrees to testify fully future proceedings.
Judge Portra asked Bollen a series of questions about his understanding of the plea agreement and his rights. Bollen answered, subdued but sure, “Yes, Your Honor… I do… I have… I am.” Judge Portra asked if Bollen had received any other promises to secure his plea. After a brief querying glance at his attorney, Reed Rasmussen, Bollen said, “No, sir.” Any force, need more time—“No… No, Your Honor.”
What is your plea—“Guilty.”
The defense waived Bollen’s right to pre-sentencing hearing and asked the court to render sentence immediately. Judge Portra asked the state for comment. Attorney General Jackley reiterated the position stated in the plea agreement, that the state would leave sentencing to the court. A.G. Jackley did note that the Legislature has dictated, per the 2013 criminal justice reform bill, that defendants in Class 6 felony cases like this should receive probation, not prison, and that he knew of no aggravating factors to override that presumption of probation. A.G. Jackley also noted that the defendant’s plea had averted the need for a trial.
Rasmussen acknowledged that Bollen had taken the $300,000 and, perhaps extraneously to the charge at hand, had violated his contract with the state to have $1,000,000 in that indemnification fund by the end of December 2011. Still, Rasmussen said, Bollen returned the $300,000 to the bank account within four days of the illegal withdrawal. The only victim of the crime was the state, and no money (including $2.5 million in state money still held in SDRC Inc. accounts) is missing.
Rasmussen said Bollen has already been punished with three years of the media dragging his name through the mud. “I don’t do blogs or Facebook or whatever,” said Rasmussen, but he has heard there are some terrible things out there.
Given Bollen’s lack of criminal record and good conduct since his arrest (he traveled to Europe while on bond), Rasmussen asked for suspended imposition of sentence with little or no probation.
Asked by Judge Portra if he wished to address the court, Bollen said, “I’m fine, thank you.”
Judge Portra said he found Bollen “eligible and a good candidate” for suspended imposition of sentence. Judge Portra said he has given suspended imposition to offenders with “much lesser prospects for rehabilitation.”
Alluding to the defense’s statement about media mud-dragging, Judge Portra said he was choosing his sentence in part to make clear that this case is “far less juicy and salacious” than is otherwise believed. “Benda” and “EB-5” get a lot of press, said Judge Portra, but this crime and this plea are not about Benda or EB-5.
Judge Portra thus declared jail not appropriate. Bollen could have faced two years in prison and a $4,000 fine. Instead, Bollen pays $2,104 and walks home mostly free. Judge Portra imposed two years probation, but without any restriction on drinking alcohol. Judge Portra imposed no travel restriction but noted that Bollen will need to check with the probation officer about limits on travel that may be imposed by the interstate compact on probation rules that South Dakota observes.
Court adjourned. Bollen left, making no comment to the press (even though I asked nicely).
* * *
Attorney General Marty Jackley held a press conference following the hearing (see full video from Aberdeen American News on Facebook). One theme that emerged from his statements to the assembled journalists was that A.G. Jackley views today’s plea deal as an achievement distinguishing his office from federla investigators. He noted that the Department of Justice, FBI, and U.S. Attorney had all failed to find anything in South Dakota’s EB-5 program on which to bring charges. Only his office has brought pursued indictments against EB-5 players—first Richard Benda in 2013, an arrest and prosecution averted by Benda’s untimely death; and now Bollen. Jackley said that contrast shows that the feds have failed to exercise due oversight over EB-5 and that it is up to state authorities to fill the gap with measures like his proposed conflict-of-interest measure, Senate Bill 27 (which would not appear to pertain to the activities for which he prosecuted Bollen, but hey, Jackley is also campaigning on a couple of fronts, so cut him some slack).
A.G. Jackley used this assertion of the superior performance of his office over the feds to avoid my question about whether this investigation has led him to findings or actions against any accomplices, like Bollen’s Georgia business partner Pyush Patel. A.G. Jackley gave no indication that other participants in Bollen’s mishandling of funds have been identified or investigated.
The Attorney General did not mention the oversight USCIS exercised by revoking South Dakota’s authorization to participate in the EB-5 program. When I asked whether today’s plea would help the state make the case to USCIS to reinstate South Dakota’s EB-5 status, A.G. Jackley said that’s a question for the Governor and his Office of Economic Development. He did acknowledge the positive economic impact EB-5 had on several communities.
I asked whether other private entities are holding indemnification funds for the state and whether the discovery of Bollen’s mishandling of secured funds had prompted a review of other funds to make sure no one else was turning such funds into personal ATMs. A.G. Jackley mentioned no other such investigations and said that question should go to the Legislature and the Governor.
I asked A.G. Jackley if the requirement that Bollen “cooperate and testify truthfully” differs at all from the obligation an un-pled Bollen would have had to respond to a subpoena and testify in EB-5 matters. A.G. Jackley said “If there are any future proceedings” (again, no indication of anything in the pipeline), and if Bollen failed to testify truthfully, that action could revoke the plea agreement and subject Bollen to trial. But playing nice, A.G. Jackley said he anticipates no problems with Bollen’s complying with the agreement he signed.
Attorney General Marty Jackley advises that Joop Bollen is scheduled to appear on Wednesday, February 1, 2017, at 9:30 a.m. at the Brown County Courthouse for a Change of Plea Hearing. Attorney General Jackley will be present and available for any questions after the hearing [Attorney General’s office, media advisory, 2017.01.30].
I’m bummed that I don’t get to play courtroom reporter for a whole week. Marty Jackley, Mike Rounds, and other well-placed Republicans may be glad that there will be no chance of Bollen airing dirty EB-5 laundry in the course of a vigorous defense.