Raids over EB-5 fraud scheme involve China's most-wanted fugitives
They spent millions on luxury houses and high-priced cars. And millions more for vacant lots. On one lot, signs in Chinese and English posted on a chain-link fence that surrounds it read: "retail shops for lease" and "partnerships welcome".
The houses, the cars, the vacant lots and more are part of what authorities described as an alleged $50 million EB-5 visa fraud, which involves three of China's most-wanted fugitives accused of bribery and other crimes.
On April 5, Federal agents raided several locations in the greater Los Angeles area. They searched the office of the California Investment Immigration Fund (CIIF) in San Gabriel, a home in Arcadia, a townhouse in El Monte and a Porsche SUV of the suspects. They sized computers, financial documents and other records for evidence of the alleged fraud.
No arrests were made, and Thom Mrozek, spokesman for the US attorney's office of the Central District of California, said on April 6 that no charges had been filed against the suspects at this point. They could face charges of visa fraud, money laundering and conspiracy to defraud the federal government.
Victoria Chan, an attorney, and Tat Chan, her foreign national father, persuaded more than 100 Chinese nationals to invest a total of $50 million with CIIF and related companies since establishing the business in 2008, according to a search warrant unsealed by the US District Court for the Central District.
The court document also named another suspect, Fang Zeng, the father's female companion and a Chinese national.
The federal EB-5 visa program requires applicants to make an investment of at least $1 million (or $500,000 in an area designated as rural or high-unemployment) and create or preserve at least 10 jobs for US workers in exchange of the US permanent residency, or "green card".
However, instead of legitimately investing the funds into US businesses, the trio either refunded the funds to the EB-5 investors while their petitions were pending in a way to solicit investors, or stole millions of dollars to use for personal expenditures, including buying million-dollar houses, according to a 113-page affidavit filed in support of the search warrants.
The investigators found no construction took place at any of the proposed project locations and very few actual full-time American jobs were created.
As a result of the fraud scheme, many Chinese nationals obtained US green cards through EB-5 program improperly, said the affidavit.
Among Chan's clients were at least three fugitives on China's 100 most-wanted list, charged with crimes like bribery. They were able to obtain green cards based on false information.
Xu Jin, listed as No 13 on the list, was director of the Development and Reform Commission in Wuhan, Hubei province. In China, he is accused of "embezzlement, accepting bribes, abuse of power" and faces a maximum punishment of death.
His wife, Liu Fang, listed No. 66 on the list, was the deputy director of the Hubei branch of China Life Insurance Company. She is accused of "accepting bribes" and also faces the maximum punishment of death.
Another fugitive, "K. L.", as named in the affidavit, used the same purported "new" American employees that were used by Liu Fang in her EB-5 petition.
The EB-5 program, which was begun in 1990, has become popular in the last decade. More than 14,000 foreigners applied to make investments in the US through the program in the fiscal year ended Sept 30, 2016, according to US Citizenship and Immigration Services. Most of the visas go to Chinese investors.
EB-5 is scheduled to expire on April 28, and Congress is debating whether to keep the program or reauthorize it and make changes to satisfy critics.
One lawmaker who wants to end the program is Senators Dianne Feinstein, Democrat of California. Earlier this year she and Senator Chuck Grassley, Republican of Iowa, said in a joint statement: "The EB-5 program is inherently flawed. It says that US citizenship is for sale. It is wrong to have a special pathway to citizenship for the wealthy while millions wait in line for visas."