Former Mayor Richard M. Daley is aiming to cash in on a federal program that gives foreigners the chance to obtain permanent U.S. residency in exchange for investing in businesses that create jobs in the United States.
Tur Partners — which Daley formed with his son Patrick Daley after leaving office — has permission from the U.S. Department of Homeland Security to solicit money from foreign investors who would bankroll construction projects or other businesses in the Chicago area in exchange for green cards allowing them to live here forever.
The Obama administration granted Daley’s company authority to pool money from foreign investors to help finance a “hypothetical” skyscraper that Magellan Development has talked about building at 195 N. Columbus Dr. in its 28-acre Lakeshore East development that Daley approved while mayor, according to hundreds of pages of heavily redacted documents the Homeland Security Department released to the Chicago Sun-Times under the U.S. Freedom of Information Act.
Former Mayor Richard M. Daley formed Tur Partners with his son Patrick Daley (above) after he left office. | Brian Jackson/ Sun-Times
Former Mayor Richard M. Daley formed Tur Partners with his son Patrick Daley (above) after he left office. | Brian Jackson/ Sun-Times
Daley’s company also could solicit foreign financing to help Magellan build another skyscraper in Lakeshore East — the proposed $900 million, 88-story Wanda Vista tower — condos, hotels and stores — that Mayor Rahm Emanuel announced with fanfare shortly before Christmas. Financed primarily by Chinese businessmen, it would be Chicago’s third-tallest building, rising on the south bank of the Chicago River east of Michigan Avenue.
The Emanuel administration had been unaware that the former mayor’s company had any involvement with Magellan, according to a City Hall source.
As a federally approved “EB-5 regional center,” Tur Partners has the authority to solicit foreign investors for business projects in 14 counties between Kenosha, Wisconsin, and Gary, Indiana. But it has yet to do so, according to H. Ronald Klasko, a Philadelphia lawyer who submitted Tur’s application to the Department of Homeland Security on Nov. 19, 2013. The application was approved last July 17, but Klasko says Tur doesn’t have any deals in place yet.
“They haven’t raised any money,” Klasko says. “They’re searching for a project. You can’t raise money without a client.”
Tur Partners has been working closely with Magellan, which hopes to build both skyscrapers with money raised under the controversial EB-5 immigrant-investor program, which grants permanent residency to foreigners who help create jobs in the United States, according to documents and sources.
Tur Partners Metropolitan Regional Center LLC is headed by Daley and Lori Healey, his onetime City Hall chief of staff, who might be leaving Tur to become CEO of the Metropolitan Pier and Exposition Authority, the government agency that owns McCormick Place and Navy Pier.
Healey and Magellan president David Carlins did not respond to calls seeking comment.
“Magellan has made no final decisions on the use of EB-5 or which regional center they will be using,” according to a written statement from Magellan. “This was an organic conversation between Lori Healey and David Carlins. Tur was applying to be an EB-5 center, and she reached out to him for — what was at the time — a hypothetical project to attach to the application. It is Magellan’s intent to fully investigate the feasibility of EB-5 as a funding source . . .”
As one of more than 600 EB-5 regional centers nationwide, including 23 in Illinois, Tur Partners can solicit foreign investors who can obtain green cards if their investments create at least 10 new jobs within two years in projects approved by the federal government.
Under the federal program’s rules, immigrants must invest $1 million each to obtain a green card, but if the project is an area of high unemployment, they need invest only $500,000 each. Tur’s foreign investors need invest only $500,000 because the federal government agreed that the Lakeshore East development is an area of high unemployment. Lakeshore East, a community of high-priced apartments, is bounded by Randolph Street, Wacker Drive, Columbus and Lake Shore Drive.
Tur, along with its attorney Klasko, would screen potential investors to ensure their money was legally obtained and that they aren’t on “terrorist watch lists,” according to Tur’s application. The investors also would be investigated by federal authorities.
Once someone is approved by the federal government, the investor, spouse and any minor children each are issued conditional green cards allowing them to remain in the United States for two years. At that point, the government tries to verify that the immigrant’s investment created the required 10 jobs, or more. If that’s the case, the family receives permanent green cards allowing them to live anywhere in the United States.
Tur would then lend the investors’ money to the project developer.
There’s money to be made not only from the investments doing well but also from fees that the EB-5 regional centers charge the foreigners seeking green cards.
Regional centers such as Tur “generally obtain between $25,000 and $50,000 in unregulated fees from foreign investors,” according to an audit, released in December 2013, by the Homeland Security Department’s Office of the Inspector General.
The audit was highly critical of the EB-5 program. It found that U.S. Citizenship and Immigration Services, a federal agency, “is limited in its ability to prevent fraud or national security threats that could harm the U.S.; and it cannot demonstrate that the program is improving the U.S. economy and creating jobs for U.S. citizens as intended by Congress.”
The inspector general found that some “foreign investors are able to gain eligibility for permanent resident status without proof of U.S. job creation,” noting that some foreign investors have been given credit for jobs that actually were created as a result of money put into projects by U.S. investors.
According to the audit, USCIS has reported that “more than $6.8 billion has been invested in the U.S. economy . . . and a minimum of 49,000 jobs have been created” by the EB-5 program — but the auditors said they were unable to “validate these statistics.”
USCIS has acknowledged the agency doesn’t have the ability or authority needed to determine whether the immigrant investors properly created the number of jobs needed to gain permanent U.S. residency for themselves and their families.
The inspector general says the agency is working to change the regulations to give it authority to shut down any EB-5 regional center that violates the rules.
Questions about the EB-5 program, which was launched in 1990, also have prompted an ongoing audit by the U.S. Government Accountability Office, an arm of Congress. The GAO probe began after a Chicago man was indicted last summer on charges accusing him of stealing $11 million from Chinese businessmen who had invested in a hotel project near O’Hare Airport that never got built.
Most of the immigrant investors who have gained permanent green cards are Chinese, according to federal officials and Klasko, the Tur attorney. Klasko says he expects Tur will solicit investors from China, where Daley has frequently traveled since leaving office in 2011.
“In China, there’s a network of migration agents, hundreds of them,” Klasko says. “The agency will coordinate everything.”
Meanwhile, both Magellan proposed skycrapers at Lakeshore East remain on the drawing board. They would need zoning approval from the Chicago City Council, a process that typically takes months.
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