Banana Republic

Kushner Companies EB-5 Activities in China Constitute Securities Fraud
BY GARY CHODOROW

As has been widely reported, Kushner Companies recently put on a roadshow to market to Chinese investors a New Jersey real estate project called One Journal Square. 

The investments are structured such that investors may qualify for green cards through the EB-5 program, which requires a minimum $500,000 investment resulting in the creation of at least 10 U.S. jobs.
Initial reporting about the roadshow led the Kushner Companies to apologize last week for boasting about their ties to White House adviser Jared Kushner during the roadshow. 

“In a sector where investors are wary of failing projects and policy changes that would jeopardize their visas,” writes Alexandra Harney for Reuters, such boasts are meant to “reassure potential investors their EB-5 projects will be successful.”
Reuters is now reporting that Kushner Companies’ activities may have crossed the line from boasting to misrepresentation, making the company vulnerable to charges of securities fraud by the U.S. Securities and Exchange Commission (SEC). 

Specifically, advertisements by the company’s marketing agent in China contain multiple misrepresentations about the safety of the investment.
Kushner Companies’ marketing agent, QWOS Group, also known as Qiaowai, produced an online advertisement claiming that the investment “in a real sense guarantees a permanent green card and the safety of the investment principal.” 

After Reuters asked Qiaowai for comment, the advertisement was deleted. 

Other advertisements for the project made similar false claims.
The SEC enforces Section 10(b) of the Securities and Exchange Act of 1934, and Rule 10b-5, codified at 17 C.F.R. 240.10b-5, which target securities fraud. 

EB-5 investments are frequently structured as a type of “security” subject to the antifraud provisions of federal securities laws, according to SEC congressional testimony. 

Rule 10b-5 makes it unlawful to “make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.”
Qiaowai’s advertisements violate the rule in two ways. 

1. First, EB-5 investments are financially risky, not guaranteed. The immigration law specifically prohibits investments where the money is not at risk. 
2. Second, there is no guarantee that an investor will actually get a green card. There are a host of reasons why an investor could be denied a green card. 

Some are related to the investor, such as health issues, membership in the Communist Party, inability to prove that the funds invested were earned legally, prior U.S. immigration violations, etc. 

Some are related to the project, such as failure to employ the required number of U.S. workers, or delays or changes to the project.
In a jointly issued Investor Alert, USCIS and SEC warn against precisely these types of misrepresentation:
Beware if you spot any of these hallmarks of fraud:
Promises of a visa or becoming a lawful permanent resident. 

Investing through EB-5 makes you eligible to apply for a conditional visa, but there is no guarantee that USCIS will grant you a conditional visa or subsequently remove the conditions on your lawful permanent residency. 

USCIS carefully reviews each case and denies cases where eligibility rules are not met. 

Guarantees of the receipt or timing of a visa or green card are warning signs of fraud.
Guaranteed investment returns or no investment risk. 

Money invested through EB-5 must be at risk for the purpose of generating a return. 

If you are guaranteed investment returns or told you will get back a portion of the money you invested, be suspicious.
Kushner Companies may not be shielded from liability just because they hired Qiaowai rather than doing the marketing themselves. 

They may be liable for the actions of their agents, sometimes referred to in the industry as “finders.” Securities lawyers advise that developers should know the parties marketing their deal abroad. 

The best practice is to have a clear agreement with the agent in which the agent agrees to comply with securities laws and to provide all marketing materials to the developer’s securities counsel for review before publication.
The SEC did not respond to questions by Reuters about Qiaowai’s ads.
Besides the One Journal Square project, Qiaowai previously helped the Kushner Companies raise funds for Trump Bay Street, an apartment complex in Jersey City, New Jersey, that The Trump Organization licensed its name to.

Banana Republic

Kushner Companies Backs Out of Chinese Investor Events After Furor
By JAVIER C. HERNÁNDEZ

Nicole Meyer, a sister of the senior White House adviser Jared Kushner, at a promotional event in Shanghai on Sunday. Critics pointed to the roadshow, which sought to solicit $150 million in financing for a Jersey City housing development, as an example of the conflicts of interest in the Trump administration.

BEIJING — The real estate company owned by the family of Jared Kushner, son-in-law and senior adviser to Trump, said on Friday that its employees would no longer take part in a cross-country roadshow in China this month.
Executives from Kushner Companies, including Nicole Meyer, Kushner’s sister, were expected to appear in the southern cities of Shenzhen and Guangzhou and the central city of Wuhan this month, according to ads for the events.
But after an uproar, the company and its Chinese partner said on Friday that Kushner Companies would no longer be present at those events, although it will continue to actively court investors.
The company is seeking $150 million in financing for a New Jersey housing development through a program that gives foreigners who invest at least $500,000 a shot at green cards, which allow permanent residence in the United States. 

The overall sum represents about 15 percent of the total cost of the property project.

But the effort to raise money in China drew widespread criticism, with ethics experts saying it presented a conflict of interest. 

Kushner continues to benefit from a stake in his family’s real estate business and other investments worth as much as $600 million.

On Friday, Risa B. Heller, a spokeswoman for Kushner Companies, said its employees would no longer participate in the roadshow after taking part in meetings in Beijing and Shanghai last weekend.
“No one from Kushner Companies will be in China this weekend,” she said in a statement, which was earlier reported by The Washington Post.
The Chinese partner of Kushner Companies, an immigration agency named Qiaowai, said on Friday that the meetings this month would go forward, but that no one from Kushner Companies would attend. 

Qiaowai had marketed the Kushner family’s visit as a five-city tour over two weeks, ending in Wuhan. 

The Chinese firm will still give presentations on the New Jersey project, field questions on the investor visa program and solicit investments.
Meyer added a star turn to efforts by Kushner Companies to raise money in China. 

Kushner is married to Trump’s elder daughter, Ivanka. 

Since Trump took office in January, fascination with his family has grown in China, especially as Kushner has become a power broker in relations between Washington and Beijing.
Speaking at the Ritz-Carlton Hotel in Beijing on Saturday, Meyer said the New Jersey project, called One Journal Square, “means a lot to me and my entire family.” 

She said Kushner, who resigned as chief executive of the company in January, was now serving in the White House.
Meyer’s remarks drew intense backlash in the United States, with critics seizing on the roadshow as a stark example of the conflicts of interest in Trump’s White House.
The company later apologized, saying Meyer did not intend to use her brother’s name to lure investors. 

Sean Spicer, the White House press secretary, said Kushner was in compliance with ethics rules and had “nothing to do” with the company’s work in China.
Adding to the fallout, the mayor of Jersey City, N.J., where One Journal Square is set to be built, said on Sunday that he opposed the Kushner family’s request for hefty tax breaks for the project.
The roadshow also raised questions about the investor visa program known as EB-5, which has been plagued by fraud and abuse scandals and is likely to be overhauled this year.
Even in China, where business and politics often mix, there was a hint of indignation. 

State-run news media published reports asking whether the company was benefiting from unfair competition.
“Caution urged on Kushner project,” read a headline in the Global Times newspaper.
But Hao Junbo, a lawyer in Beijing, said Meyer’s emphasis on family connections would probably prove to be a winning message in China.
“Chinese people have a tradition of worshiping powerful officials,” he said. 

“It’s an innate attraction to Chinese investors. They will automatically label the program as one with official backing after they hear the name of Trump’s son-in-law.”

Banana Republic

In a Beijing ballroom, Kushner family flogs $500,000 ‘investor visa’ to wealthy Chinese
By Emily Rauhala

The event was hosted by the Chinese company Qiaowai, which connects U.S. companies with Chinese investors. 

BEIJING — The Kushner family came to the United States as refugees, worked hard and made it big — and if you invest in Kushner properties, so can you.
That was the message delivered Saturday by White House senior adviser Jared Kushner’s sister to a ballroom full of wealthy Chinese investors, renewing questions about the Kushner family’s business ties to China.
Over several hours of slide shows and presentations, representatives from the Kushner family business urged Chinese citizens gathered at the Ritz-Carlton hotel to consider investing hundreds of thousands of dollars in a New Jersey real estate project to secure what’s known as an investor visa.
The EB-5 immigrant investor visa program, which allows foreign investors to invest in U.S. projects that create jobs and then apply to immigrate, has been used by both the Trump and Kushner family businesses.
But Trump’s vow to crack down on immigration, as well as criticism from members of Congress, has led to questions about the future of a program known here as the “golden visa.”
The reception desk at the Ritz-Carlton.

The EB-5 has been extremely popular among rich Chinese who are eager to get their families — and their wealth — out of the country, though the fact that some move their money out illegally has made the program unpopular with the Chinese government, too.
In the ballroom of the Ritz-Carlton on Saturday, Chinese investors were advised to invest sooner rather than later in case the rules change. 

“Invest early, and you will invest under the old rules,” one speaker said.
The woman identified as “Jared’s sister” was believed to be Nicole Kushner, who is involved in the family business, not Dara Kushner, who generally stays out of the spotlight. 

But the woman’s face was not clearly visible from the back of the ballroom, where reporters were told to remain.
Saturday’s event in Beijing was hosted by the Chinese company Qiaowai, which connects U.S. companies with Chinese investors. 

The tagline on a brochure for the event: “Invest $500,000 and immigrate to the United States.”
Qiaowai is working with Kushner to secure funding for Kushner 1, a real estate project in New Jersey. 

Promotional materials tout the buildings’ proximity to Manhattan and note that the project will create more than 6,000 jobs.
“This project has stable funding, creates sufficient jobs and guarantees the safety of investors’ money,” one description reads.
Although there was no visible reference to Trump, the materials noted the Kushner family’s “celebrity” status. 

Wang Yun, a Chinese investor who attended the event, said the Kushner family’s ties to Trump, via son-in-law Jared, were a part of the project’s appeal — but also a source of concern.
“Even though this is the project of the son-in-law’s family, of course it is still affiliated,” Wang.
Wang reasoned that the link to Trump would be a boon if the presidency goes well but could be disastrous if it does not: “We heard that there are rumors that he is the most likely to be impeached president in American history. That’s why I doubt this project.”
Many of the people who attended the event declined to be interviewed, citing privacy concerns, or were blocked by organizers from speaking to the news media.
Though the event was publicly advertised in Beijing, the hosts were exceptionally anxious about the presence of reporters.
Journalists were initially seated at the back of the ballroom, but as the presentations got underway, a public-relations representative asked The Washington Post to leave, saying the presence of foreign reporters threatened the “stability” of the event.
At one point, organizers grabbed a reporter’s phone and backpack to try to force that person to leave. Later, as investors started leaving the ballroom, organizers physically surrounded attendees to stop them from giving interviews.
Asked why reporters were asked to leave, a public-relations representative, who declined to identify herself, said simply, “This is not the story we want.”