When a group of wealthy Chinese investors sat down for a presentation at the Beijing Ritz-Carlton on Saturday, they weren’t just listening to a proposal to (as a presentation brochure advertised) “[i]nvest $500,000, and immigrate to the United States.”
They were listening to a proposal to invest $500,000 with Kushner Companies — owned by the family of President Donald Trump’s son-in-law Jared Kushner (who is, in his own right, one of the most powerful people in the United States).
Jared Kushner himself isn’t involved in the New Jersey development project for which his family was soliciting investments from China. But his sister Nicole Kushner Meyer was there to present to the would-be investors — and in case anyone in the audience didn’t make the connection, she was introduced as “Jared’s sister.” News of the meeting was broken Saturday by Emily Rauhala and William Wan of the Washington Post.
The Kushner family has a history of soliciting foreign investment via the EB-5 “investor visa,” which allows people to get visas and accelerated US permanent residency in exchange for investing six or seven figures in American business development projects. But the EB-5 also has a history of fraud and scandal — especially when associates of powerful government officials start to get involved in investment projects, and flex their muscles to get the visas approved.
The Kushner family company apologized for any implication that hyping their relationship to the first son-in-law was an “attempt to lure investors.” But while the “Jared’s sister” line was particularly clumsy, it was probably inevitable that the family’s involvement would end up raising eyebrows — because the White House in which Jared Kushner works is one of the most outspoken about curbing legal immigration in recent memory.
To many on the left and the right, there’s something distasteful about buying one’s way into American life. Trump allies like Steve Bannon and Stephen Miller argue that immigrants to America need to be selected for their desire to assimilate — an attitude that comes rife with racial overtones — and that the US needs to look out for its own interests over those of global capital.
But the “globalists” like Kushner’s family don’t see the problem with expanding foreign investment. Both the Kushner and Trump families are deeply intertwined with global capital. They’ve made only token efforts to disentangle themselves from it — at most, they’ve actively used the presidency to make their business holdings more attractive.
Immigration is the policy issue where this conflict is most unavoidable — and the weekend eruption over Kushner Companies’ EB-5 presentation may not be the last time the Trump and Kushner family business appear to contradict the administration’s policy goals. But the clash isn’t between two ideologies — it’s between people who see the Trump administration as a vehicle to promote Trump and Trump family businesses, and people who see it as a vehicle to Make America Great Again.
The EB-5 “investor visa”: how hundreds of thousands of dollars can get green cards for “job creators”
The idea behind the EB-5 visa (which Congress created in 1990) is that if you are willing to invest a lot of money to create American jobs, you deserve a chance to move to the United States.
Anyone who's willing to put $1 million into any US business is eligible to apply for an EB-5 visa (although the government might not approve the investment plan). For investors willing to back a company in a rural area, or an area with high unemployment, the investment threshold for an EB-5 visa is lowered to $500,000.
Only 8,600 visas went out to investors from the program's invention between 1990 and 2012, with about twice that number issued to spouses and children. But it's growing rapidly, largely thanks to investment from China:
In 2014, for the first time, the EB-5 program gave out all 10,000 visas (for investors, spouses, and children) that it's legally allowed to give. Since then, it’s flirted with the cap; in 2016, 9,947 EB-5s were handed out. More than three-quarters of those visas were handed out to people from China.
The initial EB-5 visa only lasts two years. At the end of that time, the government can give the investor (and family members) a green card — a much shorter wait than most immigrants have. But the investor can only get the green card if he or she can demonstrate that the investment resulted in the creation of at least 10 American jobs in those two years. No job creation, no green card.
When an investor puts the money directly into a project, he's on the hook for the number of jobs that particular project creates. That's a tremendous risk for the immigrants, so it wasn't appealing to too many people in the early 1990s. After a few years, to keep immigrant investors from flying completely blind, Congress let EB-5 investment money go through middlemen called "regional centers" — which are typically private companies, though they're sometimes nonprofits or state agencies.
One of these “regional centers,” licensed in several states (including New York and New Jersey), is a company called US Immigration Fund. US Immigration Fund has invested in past Kushner family projects — including the Trump Bay Street development in Jersey City — and is a partner in the Kushner 1 development that Nicole Kushner was pitching in China this weekend.
An investor working through a regional center also gets credit for "indirect" job creation — other jobs created as a result of that money. That makes it a safer investment for would-be visa holders, who are more likely to meet the job creation requirements when “indirect” jobs are counted — but makes it harder to argue that the money invested in the US by EB-5 visa holders is creating American jobs that wouldn’t otherwise exist.
The EB-5 program isn’t supposed to simply give visas to rich people. But in practice, with so little oversight over whether EB-5 visa holders are actually creating jobs, the “invest $500,000 and immigrate to the United States” pitch isn’t exactly wrong.
And that idea is anathema to many people in both parties — including the nationalist right that includes some of President Trump’s staunchest allies. (Breitbart, for example, has been reliably skeptical of the program.)
The people getting EB-5 visas are rich enough to take care of themselves — they don’t raise the same concerns about use of welfare, for example, that poorer immigrants do. But a key principle of Steve Bannon’s philosophy — and (while he hasn’t said it in so many words) Trump’s — is that “we’re not just an economy; we’re a civic society.” Immigrants don’t just need to be self-sustaining; they need to be willing and able to assimilate into American society, rather than trying to change it.
At best, this is a statement that immigrants ought to share “American values” (something the Trump administration has taken intermittent steps toward encoding in law, by adding ideological questions to visa interviews). At worst, it’s a statement of white supremacism (the fact that Bannon’s original “civic society” comments took place in a discussion about Asian-American tech CEOs certainly raises some eyebrows here). But in either form, it’s an expression that to become an American, you have to give up something first.
Giving visas out to sufficiently high bidders is the antithesis of the “not just an economy” philosophy — especially when the US government doesn’t require that investment income to provide jobs for Americans directly,
The EB-5 program has been riddled with scandal — often involving powerful friends of government officials
The government agency tasked with approving the investment plans for EB-5 visas, and with checking to see if the investors have followed through on their promise to create US jobs, is US Citizenship and Immigration Services. It’s not a financial regulatory agency, and (especially as the EB-5 program began to become popular in the late 2000s and early 2010s) it hasn’t had a great track record of telling legitimate investments — things that involve risk and reward — from ways for people in countries like China to park their income abroad, and get a US green card out of it to boot.
As a result, the EB-5 program has been the subject of some high-profile scandals.
In South Dakota, a scandal over a sketchy “regional center” (whose investment projects included, among other things, a beef slaughtering plant that closed after nine months) led to the suicide of one ex-state employee, and threatened to sink the campaign of then-Gov. Mike Rounds when he ran for the US Senate in 2014.
At the federal level, a 2015 report accused then-Deputy Homeland Security Secretary Alejandro Mayorkas of getting involved (when he was head of USCIS) in some EB-5 applications to benefit powerful people — including Virginia Gov. Terry McAuliffe, a Democratic Party power player and longtime associate of the Clintons, and Anthony Rodham, the brother of Hillary Rodham Clinton.
The regional center run by Anthony Rodham got shut down by the Obama administration in October 2016. But while it wasn’t a huge talking point in the presidential election, the involvement of Clinton associates in the EB-5 scandal added to the inchoate sense many people felt that she and her family had used their positions to line their pockets after Bill Clinton left office in 2001. It was an illustration of the festering swamp Donald Trump promised to drain. In other words, it was exactly the sort of conflict of interest that Trump’s family ought to have been aware could pose political problems for them.
Kushner himself, after coming under scrutiny during the transition for his involvement in EB-5 investment projects, divested his stake in the project his sister was pitching. But previous EB-5 scandals haven’t been about government officials enriching themselves through the program, either — they’ve been about officials turning a blind eye to bad investments due to lobbying by powerful people outside government.
A statement Sunday from Kushner Companies expressed Nicole Kushner Meyer’s “apologies if that mention of her brother was in any way interpreted as an attempt to lure investors. That was not Ms. Meyer’s intention.” Given the history of the program, however, it’s easy to understand why that might have been seen as an asset.
An effort to tighten up the EB-5 visa was already underway — and the Kushner project is trying to help investors slip under the wire
Ironically, Mayorkas — the official accused of intervening on behalf of Anthony Rodham — proceeded in 2013 to reform the EB-5 program to standardize how investments were evaluated, in an attempt to end what one analyst called the “Wild West” vibe of the program. But problems have continued.
In April 2017, the government raided the offices of a regional center in California that had collected $50 million from investors in Hong Kong and China from 2009 to 2016 — but never bothered to build anything on some of the empty lots it bought with the money.
The continued problems with the EB-5 visa have caused members of both parties — led by Senate Judiciary Committee Chair Chuck Grassley (R-IA) and former ranking member Patrick Leahy (D-VT) — to call for changes to the program. They had an opportunity this spring, with the program set to expire without congressional authorization in May. Instead, though, as part of the funding deal signed by President Trump last week, Congress extended the EB-5 visa’s authorization through October.
The Trump administration has expressed openness to changes in advance of the October deadline, including raising the minimum investment to $1.3 million. It makes sense that the White House would support reforms to the EB-5 program, given its skepticism of legal immigration in general (and its interest in cracking down on fraud).
But in the meantime, recruiters are appealing to would-be investors to sign up while it’s still easy to get a visa and green card. And one of those recruiters is Nicole Kushner Meyer. According to the Post, a fellow presenter at the Beijing Ritz-Carlton said, “Invest early, and you will invest under the old rules.”
This isn’t just Kushner vs. Bannon. It’s Kushnerism vs. Bannonism.
In other contexts, Trump rails against businesses that try to take advantage of US law — including immigration law — to line their own pockets. The point of fixing the EB-5 program is that there is something wrong with the way it is now.
But Jared Kushner has no ideological attachment to nationalism or Bannonism. Neither does his sister, or the rest of his family. They’ve used EB-5 investments in their real estate projects for years; they’re certainly not going to give them up now, when they have more cachet in the global market than ever.
In the leaky Kremlinology of the Trump White House, Kushner and Bannon are often cast as mortal enemies; the rise of the former has come at the latter’s expense. Partly this is because President Trump likes having multiple close advisers competing for his affection. But partly, it’s because Steve Bannon has an incredibly ambitious vision for making America great again, and Jared Kushner doesn’t. Kushner’s ideology appears to be a vague technocracy; he is, as he reminded his father-in-law during the campaign, “not a speechwriter [but] a real estate guy.”
It’s hard to implement an ambitious agenda without buy-in at the highest levels of government. For that reason alone, Kushner poses a serious threat to Bannon. But when it comes to things like EB-5 visas, Kushner (a veteran of the real estate industry that his family’s still in) understands foreign investment for visas as a deal worth making.
Perhaps both sides can get what they want; perhaps the White House will sign on to aggressive reforms of the EB-5 visa in fall, while Kushner Companies traipses around China hawking visas “under the old rules” in the meantime. But at some point, the administration will have to decide whether rich foreigners are an asset to the Trump and Kushner family businesses, or a threat to America.