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Hillary's brother heads funds firm seeking wealthy Chinese for Miss. car plant investment

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By Lou Kilzer
Thursday, July 25, 2013, 12:01 a.m.
 

A federal visa program that has prompted a probe of one of the nation's top immigration officials and a company run by Hillary Rodham Clinton's brother is a pay-for-green-card device increasingly used by corrupt Chinese officials to move tainted cash offshore, experts tell the Tribune-Review.

Paul Gillis, co-director of the international MBA program at Peking University's Guanghua School of Management in Beijing, says profit is not always the motive when rich Chinese try to buy a United States EB-5 visa, allowing them and their families to “hop on United Airlines and never come back.”

With the Chinese economy facing uncertain times, many who have accumulated vast fortunes in the past two decades of unprecedented growth are concerned about the long term and “even the short term, as bad as the pollution has become,” Gillis said. He said some increasingly look to move their money — and their families — out of China.

The Trib reported last year in its award-winning “Shadow Economy” series that more than half of high-worth individuals in China are looking for a way out and that hundreds of billions — if not several trillion dollars — have left the country during the past decade.

“A lot of (EB-5 visas) are structured to sell interests in a business that needs lots of employees — but basically will break even. Once the person has his green card, he can sell the interest to the next guy,” Gillis said.

Although such a plan might bring some investment money into the United States, much of the money may remain in offshore bank accounts in the British Virgin Islands, Belize or some 70-plus other jurisdictions around the world that will secretly stash the cash from the Internal Revenue Service or other nations' tax authorities, the Trib investigation found.

Gillis' assessment of the potential for abuse of the EB-5 visa program was shared by E.J. Fagan, a spokesman for Global Financial Integrity, a Washington-based firm that tracks international illicit money flows.

Neither Gillis nor Fagan talked directly about the situation involving Clinton's brother, Anthony Rodham, and the Mississippi miniature electric car manufacturer GreenTech Automotive, part-owned by its former CEO, Terry McAuliffe. He is a longtime Clinton family fundraiser, former head of the Democratic National Committee and a candidate for governor of Virginia.

Rodham heads Gulf Coast Funds Management LLC, which manages by agreement an investment fund trying to secure visas for rich Chinese who would invest in GreenTech.

A securities document, posted by a document-sharing site for a $50 million fund meant to benefit GreenTech, indicates that the venture was designed to secure EB-5 visas for foreign investors who could expect in five years only to break even on their investment.

Each unit of the fund cost $500,000 — the minimum to qualify for the special visa, according to the memorandum circulated in 2009. The customer then could be assessed a $55,000 management fee.

If the investor did not get approval for one of the coveted EB-5 visas, the money would be returned. If after five years the company was up and running, the investor would get the $555,000 initial investment back in the form of GreenTech common stock. In other words, it appears to be a break-even operation.

Managing that investment placement is Capital Wealth Holdings Limited, a company incorporated in the British Virgin Islands and run by Charles Wang. Wang took over as GreenTech CEO as McAuliffe resigned last year.

The EB-5 visa program is designed to promote immigration to those who would invest a minimum of $500,000 in the United States, producing at least 10 jobs in the process. The plans for GreenTech are not modest.

The company said it planned to produce two-seat and five-seat electric cars at a plant in Horn Lake, Miss., with the support of former Republican national chairman and former Mississippi Gov. Haley Barbour. The two-seat MyCar reaches speeds of about 35 mph and is expected to sell for about $18,000.

The financial memorandum said GreenTech will produce 11.86 jobs per $500,000 unit, using a formula that predicts both direct and indirect jobs.

The memorandum said the company planned to raise as much as $10 billion as startup capital and reach full production within five years, churning out up to a million cars a year, $33 billion in revenue and 400,000 jobs.

“The Mississippi facility will be one of the largest automobile manufacturing plants in the world,” the document said.

The fledging company, with no distribution network, would compete against industry leader General Motors in a market that experts have said is problematic at best.

An investigation by the U.S. Inspector General began after Alejandro Mayorkas, director of U.S. Citizenship and Immigration Services, allegedly intervened to help a GreenTech investor win an EB-5 visa that was rejected by lower personnel, The Associated Press reported .

Mayorkas, with ties to the Rodham wing of the Clinton family, was nominated by President Obama to become the No. 2 official in the Department of Homeland Security.

In a statement to the Trib, GreenTech said it was not aware of the IG probe before the AP story. GreenTech said that it worked through Rodham's firm when EB-5 funds are involved and it “does not (itself) interact with U.S. Citizenship and Immigration Service officials.”

Rodham's secretary told the Trib that he was on vacation and unavailable for comment.

Lou Kilzer is a staff writer for Trib Total Media. He can be reached at 412-380-5628 or lkilzer@tribweb.com.

 

 
 


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