More Wrinkles in the South Dakota Investor Visa Scandal

A couple of new elements have popped up in the ever-expanding EB-5 investor visa scandal in South Dakota.

In addition to the mysterious gunshot death of a local EB-5 middleman, the disappearance of tens of millions of dollars, the odd role in the scheme of a Russian railroad’s subsidiary in Cyprus, thwarted investigations a laWatergate, and other variables reported in my recent blog, we have:

  • – A report that foreign, nonimmigrant workers were used in the construction; this in a program that sells visas so as to create jobs for legal residents of the United States; and
  • – An indication that unless there is a court ruling to the contrary, all the Asian EB-5 investors in the firm will be wiped out completely in favor of other debtors.

An alert reader who knows more about the case than I do commented on a recent CIS report on China City in America, a grandiose EB-5 project proposal in upstate New York, that there was some prospect that non-U.S. workers would be used on that project to construct Chinese-style buildings.

He e-mailed me to say that had already happened during the construction stage of the Northern Beef Packers plant, the the South Dakota EB-5 project at the center of the scandal. He said that he thought as many as 80 Korean nonimmigrant workers had been imported for the project, but could document, at the moment, the use of only 30 of them, as reported by the Aberdeen, S.D., American News.

We at CIS had made the point that there is a tendency for Asian alien workers to be used in projects funded by Asian investors, despite the fact that EB-5 projects are, by law, designed to create jobs for people who are unrelated to the investors and who are either U.S. citizens or green card holders. USCIS has no record of scrutinizing this sort of thing.

Meanwhile, the slaughterhouse, which cost more than $100 million to build, was auctioned off for $4.7 million in cash and $35 million in the cancellation of a somewhat murky debt on December 5. This arrangement, unless changed by a U.S. bankruptcy judge, would seem to indicate that the Asian EB-5 investors, who put in something like $60 million, may come away with nothing, according to the local press.

The cash will mostly be used to lift a construction lien on the plant and will be a payment to a local building contractor. The Korean workers were presumably paid, as they worked on the project before it went bankrupt.

May the Chinese financial press carry the story on the losses to the EB-5 investors!

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