EB-5, VEB Updates, Bad Juju For Jared
A snarky, disparaging—and let’s be honest, wildly entertaining—color commentary on the Trump White House in the New York Times last week noted that the president lately has been taking a dim view of his son-in-law and senior aide, Jared Kushner. Mr. Kushner’s star is falling. The president made “several snarky, disparaging comments about Mr. Kushner’s family” and the “Trump-Kushner relationship…is showing unmistakable signs of strain,” the Times reported. It noted that Mr. Kushner’s influence diminished as he came under scrutiny in the Russia connection case, but “the most serious point of contention between the president and his son-in-law” was the Kushner family’s push in China to fund a New Jersey luxury tower project through the controversial EB-5 visa program.
We’ve been following EB-5 and outlined the Kushner China hustle last month. Foreigners—mostly wealthy Chinese—pay $500,000 for an EB-5 visa, which gives them a green card and a path to U.S. citizenship. The program was established by Congress to funnel low-interest loans, well below commercial lending standards, to development projects in economically distressed areas. But the money—more than $20 billion—mostly has gone to finance lavish developments in flashy locations like Manhattan, Miami and Beverly Hills. The real estate industry loves the program because it provides cheap financing.
In the May 24 edition of City & State, the Brooklyn-based journalist Norman Oder provided new details about the Kushner’s New Jersey luxury apartment projects. Mr. Oder had been covering EB-5 since 2010 at his groundbreaking Atlantic Yards/Pacific Park Report. Using New Jersey sunshine laws, Mr. Oder revealed previously unreported “creative mapmaking” of census tracts critical to two Kushner projects in New Jersey that use EB-5 funds.
Census data are essential for gaining EB-5 funds. The Kushner EB-5 filings are reflected in maps, Mr. Oder notes, strung together “into shapes like a club or a wobbly walking stick” to create the appearance of a high joblessness zone and qualify as a Targeted Unemployment Area (TEA), in EB-5 jargon.
“Given fierce competition for investors, nearly every EB-5 project somehow winds up in a TEA,” Mr. Oder writes, “no matter how prosperous its immediate locale.”
For the Kushner’s luxury waterfront Bay Street project, marketed as “Trump Bay Street” in a branding deal with the Trump Organization, the maps stretch “more than four miles” to the poorer sections of Jersey City, Mr. Oder notes.
For the Journal Square project—the one that raised the president’s ire when Kushner Companies pitches in China hit the news—the prosperous downtown hub, with an unemployment rate of 4 percent, was linked to three poorer neighborhoods with unemployment rates ranging from 10 percent to 12 percent.
“This gerrymandering makes a mockery of the philosophy behind the Targeted Employment Areas: to direct jobs to those who need them,” Mr. Oder wrote.
A week after Mr. Oder’s report, the Washington Post published a big investigative story on the New Jersey projects. EB-5 projections for Trump Bay Street allowed “Kushner Companies and its partners to get $50 million in low-cost financing” for the upscale development, the Post reported. Meanwhile, in China, Mr. Kushner’s sister was “rushing to raise $150 million” in EB-5 funds for the Journal Square project.
EB-5 is not the only bad juju haunting Mr. Kushner. Last week, we pointed to Mr. Kushner’s December meeting with Russian banker Sergey Gorkov, the head of Vnesheconombank, or VEB, as a troubling development in the Russian connection story. Big Russian money is now in the mix, however tangentially. On Monday, the New York Times added new details.
VEB is no ordinary bank. It’s an entirely owned and operated enterprise of Putin Inc. Mr. Gorkov is a graduate of Russia’s spy school and close to Mr. Putin. In 2014, the Obama administration imposed sanctions on VEB for meddling in Ukraine. The sanctions hit hard and the Russian government has spent more than $10 billion propping VEB up.
The White House says Mr. Kushner met with Mr. Gorkov “in his capacity as a transition official.” But VEB says it was a business meeting with the head of Kushner Companies and part of a “roadshow” to promote new financial opportunities for the bank. That’s a potentially critical distinction.
At the time of the December meeting, Kushner Companies was bleeding cash from its flagship 666 5th Avenue property and looking at looming payments of more than $1 billion. Mr. Kushner was searching for new financing. The White House says Mr. Kushner did not discuss Kushner Companies business with Mr. Gorkov and did not know VEB was under sanctions.
On Monday, the Times named financial names, filling in some important blanks in the story. It reported that while in New York in December, Mr. Gorkov also met with representatives of JPMorgan Chase, Citigroup and a third, unidentified financial group. Goldman Sachs tried to meet Mr. Gorkov but failed due to a scheduling conflict.
VEB has “deep ties to Washington and Wall Street,” the Times noted. Citi and JPMorgan “had long, established relationships clearing financial transactions” for the bank. “Between 2006 and 2013, Goldman, Citi and Morgan Stanley helped the Russian bank issue one bond after another.” In 2013 and 2014, before sanctions hit, the U.S. Export Import Bank backed two loans for $1.2 billion that allowed a VEB subsidiary to acquire Boeing aircraft.
VEB also figured in an attempt to recruit Carter Page—later a Trump adviser—as a spy and in an indirect bailout of a Trump hotel partner in Toronto. VEB’s activities in the United States, the Times noted, “have stirred concerns whether the bank, which few Americans have heard of despite its ties to Wall Street and big companies like Boeing, has been spreading Russian influence along with its financial footprint.”
Micah Morrison is chief investigative reporter for Judicial Watch. Follow him on Twitter @micah_morrison. Tips: [email protected]
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