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Feds call McAuliffe car company’s use of investment program ‘possible fraud’

By   /   August 2, 2013  /   1 Comment

Part 45 of 74 in the series Terry McAuliffe - Carmogul
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TRAPPED: Prompted by Watchdog reports, Virginia gubernatorial candidate Terry McAuliffe’s car company has become the subject of an SEC probe.

By Kenric Ward, Tori Richards and Earl Glynn | Watchdog.org

Terry McAuliffe has one more reason to regret linking his Virginia governor’s campaign to GreenTech Automotive, his beleaguered green car company.

Government documents released Friday reveal that the U.S. Securities and Exchange Commission is investigating GreenTech’s sister company, Gulf Coast Funds Management, prompted by a lengthy Watchdog investigation into the company’s cash-for-visas financing.

Declaring that “fraud (is) possible,” a U.S. Citizenship and Immigration Services memo among the 97 pages of government documents released Friday says the SEC has already subpoenaed bank records from Gulf Coast Funds Management, GreenTech’s funding arm or “regional center.”

“The SEC is looking into the Regional Center for possible security violations,” one of the documents, a U.S. Citizenship and Immigration Services (USCIS) memo, reveals.  The memo goes on to note “(m)ultiple articles posted online scrutinize the Regional Center and Principal for possible wrongdoings.”

The SEC issued the subpoena in May, a month after GreenTech filed an $85 million lawsuit alleging that Watchdog reports defamed the company.

Until recently, McAuliffe made GreenTech Exhibit A in his run for the governor’s job in Virginia — proof, he said, that he knew how to create an economic rebound in the challenged commonwealth. But in April,  just hours after the company filed its defamation suit against Watchdog, GreenTech abruptly announced that McAuliffe had resigned as company chairman four months earlier. He remains a major stockholder in the company. His campaign spokesman told the Washington Post that McAuliffe was not aware of the SEC investigation.

The SEC declined to comment on the investigation.

Documents show SEC investigators linked their probe to a GreenTech promissory note first published by Watchdog. That promissory note says GreenTech “promises to purchase back” preferred stock issued to investors if the company does not go public within five years.

A recent Watchdog investigation discovered a Chinese-language website in which a reporter documented company executives making similar no-risk promises to potential investors during massive presentations in China in 2010.

‘FULL REFUND’: GreenTech’s Wang (left) and Gulf Coast’s Rodham speak to reporters after a 2010 investment promotion in China.

GreenTech is partially funded through the government EB-5 program, which awards visas to foreign nationals who invest at least $500,000 in targeted U.S. companies. Federal guidelines “absolutely require” that the investments be “at risk,” said Chris Bentley, spokesman for USCIS, which oversees the program.

For those reasons and others, “guarantees of investment returns are prohibited under the EB-5 program, as are guarantees of citizenship, but it is well known that such promises are used to attract investment from foreign nationals,” said Eric Ruark, director of research for the Federation for American Immigration Reform.

“USCIS has long been aware of this problem and has consistently failed to take steps to prevent this from happening,” Ruark said, though not specifically referring to GreenTech.

USCIS director Alejandro Mayorkas said he saw no violation in such arrangements.

Speaking before a Senate panel convened last month to consider his nomination to the No. 2 spot at the Department of Homeland Security, Mayorkas said GreenTech investors’ funds were “at risk” because there may be no value to the start-up company’s stock at the end of five years.

“The conclusion was that the capital remained at risk because there may never be a market,” Mayorkas told the Senate Homeland Security Committee.

The unsigned GreenTech promissory note was part of a Gulf Coast Funds Management training manual obtained by Watchdog.

The USCIS document revealing the investigation is undated, but it notes that Gulf Coast’s “Principle Administrator is the brother to current Secretary of State and former First Lady of the United States Hillary Rodham Clinton. A query of [databases] found that Anthony Rodham had previous tax liens as well as judgments.”

Clinton resigned her Cabinet position in February.

Rodham is president and CEO of the Gulf Coast regional center, which shares an office with GTA in McLean, Va.

The Chinese website Xin Tong News reported in 2010 that GreenTech CEO Charles Wang and Rodham met in October with potential investors. Xin Tong said the “GTA car project has been well received” by Chinese investors and receives “strong support from the U.S. government at all levels.” Significantly, the website noted, “Investors can quickly complete an immigration application” and “after easily” receiving a U.S. green card, claim a “five-year full refund or 555,000 shares [in a] high-return business.”

Watchdog reported last month that an executive with China’s Huawei Technologies – which has been under congressional investigation over national-security issues – had applied for an EB-5 visa through Gulf Coast.

Neither GTA nor Gulf Coast officials were available for comment.

Contact Tori Richards at tori@watchdog.org or on twitter at @newswriter2. Kenric Ward can be reached at kenric@watchdogvirginia.org or at (571) 319-9824. @Kenricward

 

 

 

Part of 74 in the series Terry McAuliffe - Carmogul
  1. VA: As he runs for governor, McAuliffe wheels and deals electric cars in Mississippi
  2. VA: Media echo Watchdog exclusive on McAuliffe’s electric car maneuvers
  3. No news here: PolitFact brands Terry McAuliffe’s electric-car claim ‘false’
  4. Experts question source of McAuliffe car-company funding
  5. Terry McAuliffe on business ventures: ‘Some work, some don’t’
  6. How McAuliffe’s car company failed the Virginia test, landed in Mississippi
  7. Virginia official wants probe of McAuliffe company ‘visa-for-sale’ program
  8. McAuliffe car company sues Watchdog in libel claim
  9. Barack Obama’s GreenTech connection: Rick Wade
  10. Silence, secrecy, cops follow GreenTech’s China deal
  11. McAuliffe hones China’s crony-capitalism model in U.S.
  12. Promises keep Tunica County afloat
  13. McAuliffe company’s China hook-up: Will it work?
  14. McAuliffe car lags in Domino’s delivery
  15. McAuliffe car co. parent in off-shore tax shelter
  16. Lawmaker gives feds one more week for EB-5 answers
  17. Bolling: McAuliffe’s Mississippi package ‘attractive’
  18. Inside, execs knew McAuliffe plan had ‘substantial risk’
  19. Union darling McAuliffe and his non-union car company
  20. Did Clinton aid the birth of ‘McAuliffe’ car company?
  21. McAuliffe feels heat over GreenTech resignation
  22. TV report: One year later, ‘party is over’ at GreenTech
  23. Months after he said he left company, McAuliffe kept talking GreenTech
  24. Clinton connection: More money for McAuliffe
  25. Terry McAuliffe used loophole to avoid key SEC oversight of his car company
  26. VA officials: McAuliffe green car more politics than biz
  27. McAuliffe car company announces it’s ready to roll — again
  28. Before Watchdog, McAuliffe blamed federal officials for money trouble
  29. McAuliffe gets cash from GreenTech exec, board members
  30. Watchdog report on McAuliffe spurs FOI request to Homeland Security
  31. McAuliffe leaves GreenTech questions hanging at debate
  32. Totally wired: McAuliffe went to Napolitano to expedite company funding
  33. McAuliffe bragged about GreenTech’s cash position while begging feds for faster processing of ‘cash for visas’
  34. Investigation targets Homeland official’s relationship to McAuliffe company
  35. Even before news of federal probe, McAuliffe ducked GreenTech questions
  36. McAuliffe company pressed Homeland official on 81 investor visas
  37. Rodham company sought visa for controversial Chinese exec
  38. Immigration official says he met with McAuliffe to discuss visas for foreign investors
  39. Whiners: Mayorkas says Gulf Coast ‘continues to complain’
  40. VIDEO: Ex-GreenTech employee says little happened at Horn Lake plant
  41. Online ad to Terry McAuliffe: Drop your lawsuit
  42. National security on ‘hold’: Lawmakers press McAuliffe for answers
  43. Citizens United documentary film delves into McAuliffe, GreenTech
  44. VIDEO: Terry McAuliffe’s 15 million-square-foot car plant … in China
  45. Feds call McAuliffe car company’s use of investment program ‘possible fraud’
  46. GreenTech courted Obama’s Solyndra aide
  47. GOP legislators call for McAuliffe to answer GreenTech questions
  48. McAuliffe ‘desperate’ over documentary, Citizens United says
  49. GreenTech weighed Fisker-style federal loan
  50. Group tells Terry: Follow ‘McAuliffe Standard’ on disclosure
  51. Car and Driver races into GreenTech controversy
  52. Congressman: McAuliffe owes Virginians explanation about White House meeting
  53. Feds loosen oversight as McAuliffe car company makes mysterious management change
  54. GreenTech execs use Times and ABC to throw McAuliffe under the (non-electric) bus
  55. Aide in union contribution swap hosts California fund-raiser for McAuliffe
  56. Despite denials, docs show McAuliffe company asked feds to fast-track visa for investor tied to spy list
  57. Former Democrat Party director was on GreenTech payroll
  58. More bad news for McAuliffe car company as GreenTech China venture stalls
  59. Clinton Foundation posts deficits on McAuliffe’s watch
  60. VIDEO: GreenTech record dogs McAuliffe at energy forum
  61. Auto industry expert labels McAuliffe electric car ‘preposterous’
  62. Democratic leaders have their own Bain pain in Mideast private equity deal
  63. Hillary PAC adviser served as GreenTech spokeswoman
  64. New emails add evidence McAuliffe pressed U.S. officials to approve GreenTech funding
  65. After endorsement, Post shrinks facts to cover Terry McAuliffe
  66. Ties that bind: Following the McAuliffe-Clinton money trail
  67. McAuliffe tilts at windmills; Chinese venture goes bust
  68. Federal investigations cast shadow over McAuliffe on Election Day
  69. DHS inspector over GreenTech-McAuliffe case is under investigation
  70. McAuliffe names former GreenTech employee secretary of commonwealth
  71. McAuliffe lawyers, accountants sort GreenTech stock amid federal investigations
  72. Nuking filibusters, Dems clear way for Mayorkas at Homeland Security
  73. U.S. judge hands Watchdog a victory over VA governor’s green-car company
  74. Attorney: McAuliffe is ‘100 percent divested’ of GreenTech

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Tori Richards is a Pulitzer Prize-nominated reporter who has covered some of the biggest news in the world during her 25 years in the business. She has also won a dozen national and local writing awards for her coverage of the judicial system. Richards has worked for CBS News, Bloomberg, Reuters. Agence-France Presse, the NY Post, the NY Times and The Daily among others. Her work has also appeared on CNN.com, FoxNews.com and US News & World Report. Some of her biggest stories included the cases of OJ Simpson, Michael Jackson, the Aryan Brotherhood and the Night Stalker.

  • LAF

    Sounds like McAuliffe’s got lots of “pellets” to sell us, but they’re not made of wood.

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