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Chinese investors chase 'golden visas' to the US

The family of Trump's advisor and son-in-law, Kushner, has ignited controversy for using White House ties to lure Chinese investors. At the center is a US visa program that critics say is used to attract Chinese wealth.

The One Journal Square project is a proposed two-tower luxury apartment high rise in Jersey City, New Jersey that promises tenants a sleek lifestyle with views overlooking Manhattan. The project is planned to begin construction in 2018, but first it needs money.

Last week, the New York-based real estate development group heading One Journal Square, Kushner Companies, held a promotional event in Beijing to attract Chinese investors to the project. After an investment starting at $500,000 (460,000 euros), Chinese investors were promised a fast track to US citizenship under the US Immigrant Investor Program, also known as EB-5.

Trump's son-in-law is heir to Kushner Companies' international real estate empire and was principle owner until his appointment to the White House in January 2017.

After separate accounts of the promotional event for One Journal Square were published last weekend from Beijing correspondents of the Washington Post and New York Times, a media firestorm broke out alleging that Kushner Companies was taking advantage of its family connection to the US presidency as a marketing ploy to make investing in its properties more attractive.

USA One Journal Square Bauprojekt der Kushner Companies (Getty Images/S. Platt)

Trump's senior White House advisor and son-in-law, Jared Kushner, is heir to Kushner Companies' international real estate empire

According to the reports, marketing materials from the Chinese organizer, Qiaowai, labeled the project "Kushner 1" and referred to the company as the "star Kushner real estate family." A correspondent from the Washington Post said in an interview with CNN that she was asked to leave the event that she attended after seeing an advertisement for a "Kushner event featuring Jared's sister." Kushner's sister, Nicole Meyer, reportedly spoke briefly at the event about the Kushner family's immigrant background.

On Monday, Kushner Companies issued a public apology for using Jared Kushner's name as part of the promotional material, saying that it wasn't Meyer's "intention" to lure investors. And on Thursday, Kushner Companies announced it had cancelled sales presentations for "Kushner 1" that were planned this weekend in the southern Chinese cities of Shenzhen and Guangzhou.

According to a statement from his lawyer obtained by Reuters news agency, Jared Kushner has no involvement in the operation of Kushner Companies and divested himself of the One Journal Square project before taking the White House position.

Included among Kushner's many duties at Trump's White House is the role of an unofficial diplomatic liaison to China. According to media reports, Kushner worked with China's US ambassador Cui Tiankai to establish the groundwork for President Trump's first meeting with Chinese President Xi Jinping in April.

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Visas for sale?

According to a 2016 report from the Congressional Research Service, China is the top EB-5 recipient country with 84 percent of EB-5 visas going to Chinese citizens. This amounts to over 8,100 individual visas. EB-5 visas are capped at 10,000 per year.

The Kushner sales conference in Beijing came one day after President Trump extended the EB-5 program until at least September as an addition to the 2017 budget appropriation act. Chinese investors attending the event were also reportedly encouraged to invest promptly because the EB-5's days may be numbered.

The program has come under heavy criticism from US lawmakers for lack of transparency and regulatory difficulty. The Obama administration had proposed in early 2017 to raise the minimum investment from $500,000 to $1.3 million.

California Senator Dianne Feinstein said in statement introducing legislation to end the program that it is "inherently flawed," and put US citizenship "for sale" with a "special pathway for the wealthy."

Critics say that the EB-5, which was launched in 1990 to bring foreign investment into poor sectors of the US economy, has turned into a tool for real estate developers to secure cheap and easy financing from Chinese wealth. Unlike other domestic investors, Chinese investors under the EB-5 program are focused on residency status and less concerned with returns.

"There is a lot of evidence that Chinese investors are so focused on the green card that they rarely engage in sufficient due diligence," said David North, an EB-5 researcher at the Center for Immigration Studies (CIS) in Washington.

"The EB-5 facilitated investment of Chinese money in big city real estate deals - often luxury condos and fancy hotels - is not driven by Chinese decision-making about the nature of the investments," North told DW.

"The Chinese want the green cards, for themselves and their families, and the way to obtain them is to participate in the EB-5 program, which in turn, usually channels the money into urban real estate," he added.

Donald Trump mit mit Tochter Ivanka und Schwiegersohn Jared Kushner (Getty Images/M. Wilson)

On Thursday, Kushner Companies announced it had cancelled sales presentations for 'Kushner 1'

Another brick in the wall

Kushner Companies wants to finance 15 percent of the One Journal Square with EB-5 investments, an amount of $150 million. The projects total worth is estimated at over $820 million.

Under the EB-5 program, investors are required to invest $500,000 through a "regional center" that, under the rules, is proposing a venture in an area anywhere in the US with high unemployment. But poorer neighborhoods can be fused with more affluent ones, and this has allowed the EB-5 program to bring Chinese investment to real estate in Beverly Hills or New York City. And very few applications are turned down.

Audrey Singer, a US immigration expert and senior fellow at the Urban Institute in Washington told DW that the program has come under fire because of allegations of fraud and the lack of transparency.

"I think what people are focused on - for good reason - is that there have been major cases of fraud. The program seems really easy to exploit and really hard to monitor," said Singer.

There have also been cases in which Chinese investors in EB-5 programs fall victim to corruption. "This is a routine occurrence, often the scammers are Chinese-Americans," said North from the CIS.

As an EB-5 researcher, North has collected evidence of fraud cases. This includes an egregious case in April that was uncovered after the FBI busted an EB-5 regional center in California for scamming $50 million from investors in mainland China through a phony construction project.

The insecure rich

According to Singer, the number of Chinese applications for the EB-5 program skyrocketed after 2008. A big contributor was the growth of wealth in China combined with lack of safe investment opportunities.

"There are a lot of push factors out of China," said Singer adding that economic growth has changed the outlook of many Chinese families in big cities. "A lot of Chinese families want opportunities for their kids and the US provides a lot more opportunities in their view."

"In most countries political and economic powers are linked. This is not true for many of the rich, often newly-rich, in China," said North. "They are nervous for themselves and their families, and often seek an escape route, usually called a 'second passport.' EB-5 offers this to the insecure rich."

Singer said it was simplistic to reduce EB-5 to a "cash for residency" program. She said other countries do offer residency directly for cash, but that the US program is more complicated.

"The money has to be at risk, 10 jobs need to be created and applicants don't get citizenship right away," she said. "They have to wait two years before they get restrictions on their green card removed."

"This is a program in which the government gives visas to big-city middlemen who in turn sell them to alien investors," said North. "The program should be terminated."

As for One Journal Square, it was reported this week that a key investor dropped out and that the Mayor of Jersey City announced it would not be granting tax breaks that the developers had hoped for. Despite all of the controversy it drew, it appears that "Kushner 1" is not yet the golden ticket to America that the prospective Chinese immigrants in Beijing were promised.

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