Jared Kushner's company under renewed scrutiny over Chinese and Israeli deals

Family’s real estate company received a subpoena from the SEC, and separately questions have been raised about his business dealings in Israel

Last year, the Guardian reported on an event staged by the Kushner family in China to woo wealthy investors into luxury developments.

On Sunday, the Wall Street Journal confirmed that the real estate empire run by the family of Donald Trump’s senior adviser and son-in-law had received a subpoena from the Securities and Exchange Commission (SEC) requesting information.

Separately, the Kushner real estate company has reportedly entered into business relationships with Israeli financial institutions since Jared Kushner sought to establish himself as the administration’s Middle East peace broker.

According to the New York Times Kushner’s company received an investment nearing $30m from Menora Mivtachim, one of Israel’s largest insurers, in the spring of 2017, shortly before the president and his son-in-law visited the country. According to the report, the funds were directed into a Maryland development. 

Kushner, who has been charged with brokering peace between Israel and Palestine, has taken out at least four loans from Bank Hapoalim, Israel’s largest bank and currently under a US Department of Justice criminal investigation.

A White House spokesperson denied that government ethics laws had been broken in the Menora Mivtachim deal. “We have tremendous confidence in the job Jared is doing leading our peace efforts and he takes the ethics rules very seriously and would never compromise himself or the administration.”

Both developments contribute to concern that Kushner’s White House role is compromised by the family’s foreign business dealings.

In August, the Journal also reported that federal prosecutors in New York were looking for information about development projects financed in part by an EB-5 program – which allows foreign investors to gain US residency by investing in the US and creating American jobs.

While neither body has commented on the investigation, a spokeswoman for the Kushner company has previously confirmed that while the company has used EB-5 to fund the development, “it fully complied with its rules and regulations, and did nothing improper. We are cooperating with legal requests for information”.

Last year, the Guardian reported on an event staged by the Kushner family in China to woo wealthy investors into luxury developments, including One Journal Square, two skyscrapers currently being built in New Jersey, with the prospect of receiving US green cards in return.

Almost 85% of EB-5 allocations come from China – the program has ballooned in recent years as the wealth of China’s middle class has grown. In 2005 just 350 visas were granted under EB-5; by 2015 the number was 9,500, according to figures cited by the FBI.

Members of the audience at the Kushner Cos presentation were reportedly told that if they stumped up at least half a million dollars for the project they could become US residents under a controversial cash-for-residency program that is known in China as the “golden visa”.

The Kushner company later issued an apology on behalf of Nicole Kushner Meyer, Jared Kushner’s sister, for using her brother’s name during her pitch for more than $150m from wealthy Chinese for the New Jersey real estate project now believed to be the focus of the SEC inquiry. 

“In the course of discussing this project and the firm’s history with potential investors, Ms Meyer wanted to make clear that her brother had stepped away from the company in January and has nothing to do with this project,” the firm said.

“Kushner Companies apologizes if that mention of her brother was in any way interpreted as an attempt to lure investors. That was not Ms Meyer’s intention.”

Under the terms of EB-5, which was developed and authorized by Congress to fund developments in economically disadvantaged regions, green cards are offered to aspiring immigrants who invest at least $500,000 in certain US businesses determined to be capable of creating at least 10 jobs per investor.

But the program has been coming under increased scrutiny and often described as open to abuse. In April, the FBI conducted raids in the San Gabriel Valley in California on the California Investment Immigration Fund, a business allegedly connected to EB-5 abuses.

The number of applicants vying for the annual allotment of 10,667 visas roughly doubles year-on-year. The program’s popularity comes despite warnings that it has grown far beyond its intended use.

A paper submitted by Texas lawyer Shae Armstrong to the Center for Immigration Studies alleged that secret commissions paid from US projects to Chinese state-run EB-5 agents may violate the Foreign Corrupt Practices Act. 

According to Armstrong, EB-5 abuses are not confined to individual investor abuse but now include entities under foreign-government control.

Confirmation that the SEC is looking into Kushner’s New Jersey development comes as federal prosecutors have requested documents from the company pertaining to a $285m loan the firm received from Deutsche Bank. Last March, the company was forced to abandon a project with Chinese insurance giant Anbang to convert its 666 Fifth Avenue flagship building into luxury residential units using EB-5 financing.

https://www.theguardian.com/us-news/2018/jan/08/jared-kushners-company-under-renewed-scrutiny-over-chinese-and-israeli-deals

Mentions

• UNITED STATES SECURITIES AND EXCHANGE COMMISSION
• One Journal Square (EB-5 Not Used)
• California Investment Immigration Fund (CIIF)

States

• New York