Wall Street Journal
By Angus Loten and James Grimaldi
August 8, 2013
Some U.S. immigration service employees are accusing the agency's director of fast-tracking approvals earlier this year of a foreign-investor-funded project to rebuild the landmark Sahara casino and hotel in Las Vegas, over the objections of internal agency analysts who were suspicious about the source of the funds.
In internal emails sent to Sen. Chuck Grassley by agency workers, Alejandro Mayorkas, director of U.S. Citizenship and Immigration Services and the nominee for the No. 2 post at the Department of Homeland Security, questions a lower-level decision to withhold expedited processing for at least 23 applications filed by Chinese and Thai citizens, who sought to invest $11.5 million in the $415 million casino project under the federal EB-5 investor visa program.
In one email, an agency analyst cites "significant" criminal suspicions about the source of several of the investors' funds, including "highly suspicious money transfers" that merit a closer review of the applications by the agency. Such suspicions also made the analyst concerned about national security, the email said, without offering specifics.
In a Jan. 25 email, Mr. Mayorkas told agency officials that the Commerce Department had already concluded that "the expedite criteria have been met" for the casino project.
The exchange is one of several dozen between Mr. Mayorkas and agency officials in the emails, released online over the past two weeks by Mr. Grassley, the ranking Republican on the Senate Judiciary Committee. The Iowa senator has sought to slow the confirmation of Mr. Mayorkas to the Homeland Security post, citing his concerns that the nominee provided favored treatment to the Sahara project and other companies in the EB-5 program. The department's internal watchdog also has been investigating whether Mr. Mayorkas gave preferential treatment to any EB-5 projects.
Mr. Mayorkas was unavailable to comment for this article, according to a DHS spokesman. At his recent Senate confirmation hearing, he said he learned about the internal investigation three days earlier, when the agency watchdog notified Senate committee members. He called allegations made by investigators that he tried to speed through EB-5 applications "unequivocally false," and he said he gets involved in individual applications only to the extent that they clarify broader policy issues affecting the entire program.
The EB-5 program provides green cards to individual foreign investors—and their families—who put at least $500,000 into a project that creates at least 10 U.S. jobs. The program, created by Congress in 1990, has exploded in popularity the past two years. Entrepreneurs last year raised roughly $1.8 billion in EB-5 funds from foreign investors—most of them Chinese—who were issued 7,641 visas.
EB-5 investors have to prove that their investment funds come from legal, clean sources. This has led to bureaucratic delays in EB-5 approvals, causing hundreds of entrepreneurs to complain that their projects have been starved of needed capital. Agency officials, who process several thousand EB-5 applications each year, acknowledge that the process has slowed as they grapple with fraud suspicions and defects in job-creation estimates, among other issues. Last year, the agency hired a half-dozen economists to better assess the likelihood that proposed projects backed by EB-5 investors would yield enough new jobs to warrant granting green cards.
At his July Senate hearing, Mr. Mayorkas, a 53-year-old Cuban-born Democrat who is a former U.S. attorney in Los Angeles, said he had beefed up national-security checks and hired additional security staff for dealing with the visa applications.
Industry analysts say typical applications take a year or two for the immigration service to process.
The Sahara project, which is controlled by Los Angeles nightclub owner Sam Nazarian and his partners, got approvals from the agency in roughly seven months, according to Ron Klasko, the immigration lawyer who represented the investors in their applications. Mr. Klasko said the expedited processing of the first 23 foreign investors' applications—which was needed to secure a loan that was set to expire—was approved through proper channels at the agency.
Since then, Mr. Klasko said, applications from nearly 300 other foreign investors, most of them also Chinese and Thai, have been approved or are pending. A spokesman for Mr. Nazarian's company, SBE Entertainment Group, said the renovation is more than one-third done, and the casino is on track to open in October 2014.
According to the agency emails, Mr. Mayorkas on Jan. 30 had urged expediting applications by investors in the Sahara hotel while continuing security checks. "If, for example, a security issue arises that will take time to resolve, then—regardless of whether we have agreed to expedited review—we will take the time needed to resolve the security issue," Mr. Mayorkas wrote, according to the email.
Mr. Grassley, in a recently released letter to Mr. Mayorkas, criticized how he handled the matter, saying he created the impression he was granting a favor to the Sahara investment group. The senator cited other emails from agency employees. In one, an employee says on Jan. 29 that an initial review of the Sahara project found "highly suspicious money transfers" associated with some of the applicants.
Another employee in that email chain also disagrees with the decision to fast-track the applications, saying "we do not approve an expedite request prior to reviewing the case for security issues…in this case there are significant security concerns that will cause significant delays in having the security checks completed."
For more information, go to: www.beverlyhillsimmigrationlaw.com
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