Policy: Environment & Energy

Report: GreenTech Automotive suspected in 'visas-for-sale' scheme

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Virginia,Watchdog,Michal Conger,Terry McAuliffe,Mississippi,Waste and Fraud,Follow the Money,Energy and Environment

GreenTech Automotive had never before built or sold a single automobile when it promised in 2008 to create thousands of jobs and produce one million electric passenger cars within five years.

But so far the Mississippi-based company has failed to produce any cars, and that has lawmakers and local officials wondering if selling immigrant investor visas, not green cars, is the taxpayer-subsidized company's real endgame.

"The real engine driving GreenTech’s business plan appears to be its management’s extraordinary talent for exploiting taxpayers to advance their own interests," according to a report released Monday by Cause of Action, a nonpartisan government watchdog organization.

The report on GreenTech is the second in the nonprofit's series of investigative efforts focused on politicized corporations run by well-connected executives who base their business plans on generating revenue streams from some form of government assistance, grants, or subsidies rather than products or services for consumers.

Terry McAuliffe, the Democratic nominee for governor of Virginia, became chairman of the firm in 2009 after GreenTech President Charles Wang made a $50,000 donation to McAuliffe's 2009 Virginia gubernatorial campaign.

McAuliffe put his political connections to work for GreenTech and GreenTech's sister company, Gulf Coast, both owned by Capital Wealth Holdings, according to CofA. Gulf Coast is run by Hillary Clinton's brother, Anthony Rodham. McAuliffe is a close personal friend and political associate of Clinton and her husband, the former president.

GreenTech's funding plan centers on EB-5 visas, which provide residency for foreign investors who invest at least $500,000 in job creation in rural areas of the U.S.

The company was started with millions of dollars in loans and tax incentives from the state of Mississippi in return for the promise of billions in foreign investment and thousands of direct and indirect jobs.

A few months before McAuliffe came on as chairman, Mississippi's Republican then-Gov. Haley Barbour wrote to U.S. Citizenship and Immigration Services requesting that the agency make Gulf Coast a regional center for processing EB-5 visas.

The request was approved, and Gulf Coast became the biggest regional center in the country, serving Louisiana and Mississippi, according to CofA.

The report says McAuliffe also used his connections with top Department of Homeland Security and USCIS officials to pressure USCIS to fast-track EB-5 visas for his company, leading Rep. Chuck Grassley, R-Iowa, to write a letter to USCIS Director Alejandro Mayorkas in July 2013 asking about "preferential treatment" given to GreenTech and Gulf Coast visas.

"The list of prominent GreenTech and Gulf Coast backers reads like an invitation to a gathering of the McAuliffe-Clinton inner circle. Together, GreenTech and its corporate predecessor, HKAC, have donated upwards of $85,000 towards McAuliffe’s campaigns for Governor," the CofA report said.

Both GreenTech and Gulf Coast reaped major profit from the visas. GreenTech raised $67 million from more than 100 of the visas between 2009 and 2012, and Gulf Coast has collected $7.4 million from those investors, according to CofA.

The close relationship between the two companies caused officials at the Virginia Economic Development Partnership, which spotted a conflict of interest, to deny Gulf Coast's application to be Virginia's regional center.

VEDP also rejected the company's bid for tax incentives to manufacture its green cars in Virginia, despite energetic lobbying by McAuliffe.

"Documents from the VEDP show that GreenTech’s operations were structured primarily to obtain fees from Chinese green card applicants and to benefit McAuliffe’s political aspirations, not to build a successful automotive manufacturing business," CofA said.

VEDP officials were also skeptical because of GreenTech's ambitious economic promises. Not only did GreenTech officials lack automotive experience or market preparation, but they pledged to make one million cars within five years of beginning production, which is more than 10 percent of total annual car production in the U.S.

The company also promised to create 25,000 on-site jobs, more than three times as many as Mississippi's largest private employer, automaker Nissan, and more than 11 indirect jobs for each new on-site job, for a total of 296,500 jobs.

But Liz Povar, then the state partnership's director of business development, wrote in a November 2009 email to colleagues that she "still can’t get (her) head around this being anything other than a visa-for-sale scheme with potential national security implications that we have no way to confirm or discount."

GreenTech's optimistic projections were essential in securing investors, according to CofA.

"At worst, GreenTech’s estimates of its production capabilities may be part of a larger scheme to defraud EB-5 investors. Projecting large production figures allows the company to project large costs, which in 2009 were predicted to be approximately $30 billion annually at full capacity," the report said.

Mississippi officials apparently had no such qualms about GreenTech's impressive projections, giving the company millions in loans and tax incentives to bring its jobs to the state.

"Less than two years later, however, media reports indicate that the Horn Lake (Mississippi) facility resembles a Potemkin village; little, if any, automobile manufacturing has actually taken place," CofA said.

GreenTech employs fewer than 100 people at its Horn Lake assembly plant, according to ABC News. The company plans to move to its new Tunica, Miss., facility late this year.

The Tunica property doesn't even belong to GreenTech yet. Tunica County gave the $2 million for the 100-acre parcel to the Tunica County Economic Development Foundation, which purchased the property, and the title will transfer for GreenTech if it invests $60 million in the county and creates 350 jobs by the end of 2014, with a pledge to maintain those jobs for another decade, according to CofA.

"Whether such a move, if it actually occurs, will spur the job creation and investment that GreenTech has promised remains an open question," the report said.

A message left for a GreenTech spokesman Tuesday afternoon has not been returned.

Go here for the full report.

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