It was the first major piece of legislation that US President Donald Trump signed into law, and buried on page 734 was one sentence that brought a potential benefit to the president’s extended family: renewal of a program offering permanent residence in the US to affluent foreigners investing money in real-estate projects.
Just hours after the appropriations measure was signed on Friday last week, the company that had until January been run by Trump’s son-in-law and top adviser, Jared Kushner, was urging wealthy Chinese in Beijing to consider investing US$500,000 each in a pair of Jersey City, New Jersey, luxury apartment towers the family-owned Kushner Cos plans to build.
Kushner was even cited at a marketing presentation by his sister Nicole Meyer, who was on her way to China even before the bill was signed.
The project “means a lot to me and my entire family,” she told the prospective investors.
The sequence of events offers one of the most explicit examples to date of the peril of the Trump and Kushner families maintaining close ties to their business interests and creates an impression they stand to profit off Trump’s presence in the White House. It also illustrates the problems of the EB-5 visa program that prominent Republican and Democratic members of US Congress want changed.
“It is just one more dilemma that a family with vast commercial interest has when relatives are in the federal government, particularly the White House,” said Michael Cardozo, who served as a deputy White House counsel in the administration of former US president Jimmy Carter, which struggled with its own controversies related to the president’s brother, Billy Carter, and his work on behalf of a US company seeking to get into the oil industry in Libya. “The actions of relatives can come back and bite those serving those in the government.”
Bipartisan critics in Washington have said they want to revamp the visa program, because it is often abused.
It supports high-end luxury projects, like the Kushner family deal, instead of promoting job creation in the rural US or distressed urban areas, as it was intended.
It has also been criticized by federal regulators for insufficient safeguards against illicit money entering the US; in the case of one applicant, they found potential financial ties to a string of Chinese brothels.
There is no assertion that Kushner broke any conflict-of-interest rule; but the law does not prevent his relatives from trying to exploit those ties to benefit the family business.
Kushner’s portfolio includes a central role on China policy. That role has heightened the Kushner family name in a nation accounting for more than 80 percent of the EB-5 visas issued. Wealthy Chinese see the program as an easy way to legally move to the US.
In fact, Kushner Cos — when Kushner was still at the helm — had received US$50 million in EB-5 financing for a separate New Jersey project, a Trump-branded luxury high-rise tower in Jersey City that opened late last year.
On Monday, US Senator Dianne Feinstein called the visa program “a stark conflict of interest for the Trump White House.”
Meanwhile, ethics watchdog group Democracy 21 called for Kushner to recuse himself from all policy dealing with China. The group had previously called for Kushner to make public a full list of his family firm’s overseas business partners and lenders, as well as a full divestiture of his business assets into a blind trust.
After a surge in attention to the topic over the weekend, a spokesman for Trump on Monday said that the president also endorsed changes to the visa program, including perhaps increasing the price foreigners must pay to get the special immigration status.
A White House statement said the administration “is evaluating wholesale reform of the EB-5 program to ensure that the program is used as intended and that investment is being spread to all areas of the country.”
The statement also said that Kushner, who is married to Ivanka Trump, had recused himself from EB-5 related matters: “Jared takes the ethics rules very seriously and would never compromise himself or the administration.”
In a statement from Kushner Cos, Meyer said it was not her intent to mention her brother as a way to lure investors.
Other family members of US presidents have created stirs in past decades — including Neil Bush, the son of former US president George H.W. Bush — as they have engaged in outside business ventures that intersected with the federal government.
Former US secretary of state Hillary Rodham Clinton’s brother Anthony Rodham was once cited for inappropriate appeals to government officials about a grant through this very same visa program.
However, the matters involving Kushner, the White House and Kushner Cos are different. None of those previous presidential relatives took jobs in the White House while simultaneously benefiting from a multibillion-dollar business with international partners, who also stand to benefit from federal programs.
Although Kushner has shed stakes in some of the company’s investments, he has retained most of his interest as the main beneficiary of a series of trusts invested in the firm’s various projects.
His stake, along with some other investments, is worth as much as US$600 million, and possibly much more, according to a government ethics disclosure form made public by Kushner in March. However, Kushner Cos has declined to make public a list of its partners.
The firm has received investments or loans from around the world, including Goldman Sachs, the Blackstone Group, Deutsche Bank and Israel’s Bank Hapoalim, the subject of a US Department of Justice tax investigation.
Last month, the New York Times reported that the Kushners had partnered with at least one member of Israel’s wealthy Steinmetz family. The family’s most well-known member, Beny Steinmetz, is the subject of a department investigation into alleged bribes.
In March, Kushner’s firm said it ended talks with Anbang Insurance Group, a Chinese company with ties to prominent members of the Chinese Communist Party. Those talks began around the time Trump secured the Republican nomination and also raised questions because of the potentially favorable terms for Kushner Cos.
When it was created in 1990, the EB-5 visa program was intended to provide a new source of financing for projects in underserved areas, defined as places with high unemployment.
However, there are no federal standards for defining such neighborhoods and developers often provide gerrymandered maps to qualify under the program.
The Kushner project in Jersey City “is a textbook example of the abuses we have seen in the last six or seven years,” said Shae Armstrong, a Dallas lawyer who has joined with members of Congress, including Senator Chuck Grassley and Feinstein to call for changes in the program.
That part of Jersey City, less than 5km from Manhattan, is hardly an economically depressed area, and a luxury apartment building is going to create few permanent jobs.
“And it is why other towns in rural America are not getting EB-5 money,” Armstrong said.
Indeed, in the Beijing presentation delivered by Meyer, the firm cited the high household income of the majority of the residents — between US$100,000 and US$200,000 — in the Trump-branded building that has already received EB-5 financing.
The US$1 billion Kushner project at the center of the current controversy is a set of high-rise towers — 1,730 apartments and 8,268m2 of retail space. The company is seeking US$150 million through the EB-5 program.
Traditional lenders can charge interest of between 12 percent and 18 percent, said Gary Friedland, a professor at New York University who has written extensively about the program.
However, EB-5 loans can wind up costing developers as little as 4 percent, he said.
“The immigrant investor’s primary purpose is to secure a visa, so they accept minimal interest, as low as half a percent,” Friedland said.
According to Cornell University immigration law professor Steve Yale-Loehr, for developers, the appeal of EB-5 can be summed up in two words: “Cheap money.”
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