The graft-ridden immigrant investor (EB-5) program and New Orleans' sloppy governance were destined to come together, and they have done so, according to investigative reporting just published by Al Jazeera America.
A few years ago the (now-jailed) Mayor of New Orleans, Ray Nagin, signed a 30-year exclusive agreement with NobleOutreach NOLA LLC, a USCIS-recognized EB-5 regional center. It was to be the city's sole connection to EB-5 financing, with a cluster of half-million dollar investments from largely Chinese aliens designed to continue the post-Katrina re-building process.
The problem in New Orleans is the non-utilization of the EB-5 moneys for their stated purpose. A conference center/hotel in a high-poverty area, Algiers, just on the other side of the Mississippi from the French Quarter, has not been built as promised and the Chinese investors (rarely stirred to action in other areas under similar circumstances) have taken NobleOutreach into state court for non-delivery on the promises made. An earlier case in federal courts, along the same lines, was not successful.
According to the news report, the suit charges "NobleOutreach and its leadership established a complex network of companies designed to extort $15.5 million from 27 international investors, most of them from China."
What followed, according to filings from the plaintiffs obtained by Al Jazeera, is that Hungerford and Milbrath [NobleOutreach executives] directed $6 million from the investors' funds into Bay-NOLA-Management, a consulting company based in Maryland. An additional $1.8 million went into high salaries for Hungerford, Milbrath and their wives "for which they provide little or no services," the court filings allege.
Al Jazeera America has developed a healthy interest in the EB-5 program, to the extent that the network sent around a TV crew to interview me at my home on the subject last month, the results of which were included in their program "America Tonight", a "60 Minutes" sort of program.
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