Sen. Chuck Grassley is Covering for Jared Kushner

If you’re like me, your eyes glaze over a little bit when people start talking about the intricacies of our immigration policies and the various kinds of visas we offer to foreign nationals. I certainly feel that way about the EB-5 visa, although I felt compelled to look into it since it has embroiled Jared Kushner and his family in controversy, and now Sen. Chuck Grassley (R-IA) is calling for an investigation.

The EB-5 visa was created in 1990 and put into its current form in 1993. The simplest way of understanding it is that it creates an avenue for foreigners to get permanent residence in the country (and possibly citizenship) if they’re willing to invest a million bucks in a business that will eventually employ at least ten people. There’s a provision for investing in economically needy areas that only a requires that you invest half a million. The changes made in 1993 introduced some problems and changed the nature of the program.

In order to make the program more investor-friendly, Congress enacted the 1993 Appropriations Act which amended the EB-5 program to create the “Pilot Immigration Program” — the Immigrant Investor Pilot Program (IIPP). Under the IIPP, foreign nationals could invest in a pre-approved regional center, or “economic unit [referred to as regional centers], public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, or increased domestic capital investment.” Investments within a regional center provide foreign nationals the added benefit of allowing them to count jobs created both directly and indirectly for purposes of meeting 10-job creation requirement. This was intended to help potential investors to meet “the program’s stringent requirements” through passive investment. With the IIPP, the EB-5 visa became an investors visa as opposed to an entrepreneur’s visa.

Basically, the IIPP made it possible to simply invest money without having any personal connection or role with any particular project. Since it allowed privately run “regional centers,” it introduced an incentive for private citizens to solicit funds from rich foreigners using eventual American citizenship as the dangle. It didn’t take long for the program to run into controversy, as these private entities started working the regulatory agency responsible for refereeing the application process.

In c.1995 former Immigration and Naturalization Service (INS) officials formed a company called AIS that acted as intermediaries between INS and immigrant entrepreneurs in the EB-5 program. Whereas EB-5 required an investment of 500,000 AIS only required $125,000 cash with the rest — $375,000 in the form of a promissory note. AIS claimed the promissory note would “be forgiven once the immigrant’s permanent residency application was approved”. The U.S. immigration agency, which was then known as the Immigration and Naturalization Service (INS), had interpreted the regulations regarding financial qualifications in a way that accepted this arrangement until c. 1998 when they were under investigation by the Government Accountability Office (GAO). There were allegations that the INS was giving preferential treatment to AIS in EB-5 matters.

If you’re pitching a foreign millionaire on investing in your “regional center,” you’ll need to convince them that you can deliver on your end of the deal. And since your end isn’t some assurance that they’ll get a good financial return on their investment but that they’ll get the citizenship they desire, you’ll want to gain influence and control over the citizenship approval process.

This is where the Kushner family comes into it.

It’s not unusual for commercial real estate builders to utilize the EB-5 visa. Most major hotel chains have used the program to raise capital, in part because it is cheaper than borrowing from a bank. The Kushner family has a history with the EB-5, using it for example to finance a project in Journal Square in New Jersey. Just last March, Kushner Properties announced that they were abandoning a plan to use EB-5 financing to team up with a Chinese insurance company named Anbang and convert the Manhattan skyscraper at 666 Fifth Avenue into luxury residential units. Still, when President Trump signed his first major piece of legislation on May 5th, it included an extension of the Immigrant Investor Visa Program through September 30, 2017. Whatever else you might say about it, the program has benefitted the president since he has used it to finance some of his Trump-branded building projects.

Chuck Grassley has had problems with the EB-5 for a while now, describing it as a program that “has been rife with fraud and national security weaknesses.” In February, he teamed with Sen. Diane Feinstein (D-CA) to introduce a bill that would terminate the EB-5.

What he wants to investigate at the moment is what he considers fraudulent representations made by a Chinese firm named Qiaowai that was marketing a Kushner Industries project in Jersey City to Chinese investors. That Grassley is concerned about this is understandable, but it appears to be missing the larger point. And that’s a point that is not lost on the president:

The most serious point of contention between the president and his son-in-law, two people familiar with the interactions said, was a video clip this month of Mr. Kushner’s sister Nicole Meyer pitching potential investors in Beijing on a Kushner Companies condominium project in Jersey City. At one point, Ms. Meyer — who remains close to Mr. Kushner — dangled the availability of EB-5 visas to the United States as an enticement for Chinese financiers willing to spend $500,000 or more.

For Mr. Trump, Ms. Meyer’s performance violated two major rules: Politically, it undercut his immigration crackdown, and in a personal sense, it smacked of profiteering off Mr. Trump — one of the sins that warrants expulsion from his orbit.

In the following days during routine West Wing meetings, the president made several snarky, disparaging comments about Mr. Kushner’s family and the visas that were clearly intended to express his annoyance, two aides said. Mr. Kushner did not respond, at least not in earshot.

In simple terms, the president is angry that the Kushner family is using his name to promise citizenship to prospective Chinese investors, while Chuck Grassley is angry that a Chinese company used those assurances to make the same claim. This looks like a way for Grassley to continue his war on the EB-5 visa while actually shifting the accountability for this case away from the Kushner family.

This is a clever way for Grassley to protect the White House while seeming to be a tough guy. But it’s fraudulent. There are legitimate moral and national security questions about the EB-5 visa, but the main problem has been that it invites people to commit corrupt acts. There could be no more corrupt act than having the president (or his staff) making private assurances to potential investors that they’ll get citizenship in return for their investments in private commercial investment vehicles.

http://washingtonmonthly.com/2017/05/29/sen-chuck-grassley-is-covering-for-jared-kushner/

Mentions

• One Journal Square (EB-5 Not Used)
• 88 KUSHNER-KABR (Trump Bay Street)
• U.S. Immigration Fund - NJ