How rich immigrants won U.S. residency by investing $1.4 billion in Philly projects

Around Philadelphia, dozens of the most heralded projects of the last 20 years — Comcast’s headquarters, SEPTA’s Wawa station and Key card fare system, Stephen Starr’s Butcher and Singer chophouse, the Kimpton Hotel Monaco, Chinatown’s Crane tower, the Valley Forge and Pennsylvania Convention Center expansions — have this in common:

They were built by immigrants.

Not low-wage, newly arrived laborers, as in earlier times. But with immigrant cash — more specifically, the $500,000-plus invested in the region by each of more than 2,000 foreigners, mainly from China, in exchange for green cards, which allow them to live and work in the United States and apply for citizenship.

Since 2004, more than 2,000 wealthy foreign investors aiming to live legally in the U.S. have pumped $1.4 billion into 40 Philadelphia-area projects in exchange for EB-5 visas, which allow investors and their spouses and children to immigrate. Nationally, more than 100,000 of these visas have been issued and more than $70 billion raised since an early version of the program debuted in 1990. The vast majority were delivered in the 10 years ending in 2020, when the program stalled as the pandemic hit and Congress pushed for changes.

Often abused and repeatedly revised, the 33-year-old visa program is being revived once again. Background checks have tightened to curb episodes of corruption that have dogged the program. Projects will be more targeted to inner-city and rural development, and transportation. And the cost has increased: Foreigners seeking residency and potential citizenship need to pay upward of $800,000 per family.

The program’s supporters hope it can expand fast enough to stimulate American construction at a time when borrowing costs have soared and projects have stalled. EB-5 investors lend cheap, often at interest rates of just 1%.

“The Convention Center expansion never would have been built without EB-5,” said former Philadelphia mayor and Pennsylvania Gov. Ed Rendell.

Critics like David North, of the Center for Immigration Studies, a Washington-based nonprofit that seeks strict limits on new citizens, say the program’s complexity, with “lots of middlemen,” invited fraud by applicants, developers, and visa agencies.

“I don’t think it’s moral for any country to sell admission for cash,” said North, who studied Mexican labor immigration for the federal government in the 1960s, the effects of the Reagan-era immigration amnesty for the Ford Foundation in the late 1980s, and the impact of U.S. recruitment of foreign engineers over the past 20 years.

The Courtyard by Marriott Philadelphia South rose at the Navy Yard in 2014 with the help of $17 million raised from EB-5 visa applicants, among them Alex Chin, a real estate professional from China. He is the rare visa recipient who actually visited Philadelphia before sending money.

In China’s Shenzhen region, Chin met agents for CanAm Enterprises, one of the first private firms that sent agents to Shenzhen and other big cities to promote EB-5 after the new Department of Homeland Security set new investment rules in 2002. He recalls being reassured to learn of CanAm’s partnership with the Philadelphia Industrial Development Corp. (PIDC), the powerful city-backed land development agency. Chin says that was a powerful point for China visa-seekers: It gave CanAm official sanction.

He also liked what he learned about the town. “I knew Philadelphia was a famous city, created by Quakers, that used to be the U.S. capital, and has many good colleges. All of this attracted us‚” said Chin, who spoke only on the condition that he be identified by an old family name to protect his wife and children from unfriendly scrutiny. (The government doesn’t identify EB-5 visa applicants or holders.) To learn more, he watched the 1985 film Witness, featuring Harrison Ford as a Philadelphia detective, and visited the Weitzman National Museum of American Jewish History in Center City and the Pearl S. Buck House in Bucks County.

A year after his investment, he and his family were given visas, and they bought a house on the West Coast. To Chin this all happened fast: To get traditional U.S. visas, “some of my friends waited 10 years,” he said.

The PIDC deal made Philadelphia a center for EB-5 investments at the beginning of the program’s busiest years, said Tom Rosenfeld, head of CanAm.

Rosenfeld’s family had emigrated from Israel to Northeast Philly when he was a child. His firm first worked in Canada, which had its own pay-for-visa program. In 2004 he convinced PIDC leaders to establish a “regional center” under federal rules to direct EB-5 investors to Philadelphia projects.

CanAm recruited visa-seeking investors, mostly in China, the largest source of EB-5 applicants nationwide. PIDC found the projects and developers. Initial projects were small. “There was little knowledge or positive history regarding the program,” Rosenfeld said. “A $500,000 immigration investment, by any family, is a big deal.”

One of the 201 visa-seekers who did not have difficulty coming up with the money was Sang Ah Park, a daughter-in-law of Chun Doo-hwan, the last military dictator of South Korea. In 2007, she used a slice of the ill-gotten millions he collected as dictator to help finance the Pennsylvania Convention Center’s $800 million expansion.

After Chun was voted out of office and convicted of murder and bribery, Korean courts demanded he return more than $200 million he’d extorted from Hyundai, Samsung, and other companies.

Instead, U.S. and Korean investigators say, a web of Chun’s friends and family, including Park, attempted to move the money abroad. According to a lawsuit filed by the U.S. Marshals Service in 2015, Park invested $530,000 of Chun’s money in a fund set up by the PIDC EB-5 center to allow foreigners to invest in the Convention Center, in return for visas. The family didn’t fight the suit, and the U.S. seized the money to return it to Korea, according to federal court records.

That seizure was one of more than two dozen federal cases alleging fraud by EB-5 regional center clients, according to North, the immigration critic. He said it was the only such case in Philadelphia.

At its peak in 2014-17, EB-5 raised around $7 billion a year for developers — and delivered 10,000 visas a year for rich immigrants. The program caught on with Manhattan developers, and New York quickly outpaced Philadelphia as a recipient of EB-5 cash.

Critics in Congress complained that EB-5 visas across the U.S. were too often approved for luxury projects supported by eager politicians for favored developers or lobbying clients, far from the program’s initial aim of creating jobs in underinvested areas.

The Trump administration announced an overhaul just as the pandemic was reducing both U.S. construction projects and worldwide immigration. The number of EB-5 visas issued yearly, mostly from projects already built, dropped in 2020 to around 1,000, and new projects slowed to a near halt.

Last year Congress approved EB-5 changes that tighten audit and background check rules for agencies that help immigrants get these visas, while also setting higher minimum investments, and setting aside some EB-5 visas for projects in poor inner-city and rural areas, plus highways and other infrastructure.

With high interest rates driving up borrowing and construction costs, agencies that specialize in EB-5 visas are now eager to reaccelerate the program — but its resurgence has come more slowly than planned.

CanAm and the two smaller agencies that together financed 40 developments in the Philadelphia region from 2004 to 2022 said they have funded no new ones so far this year, though there have been inquiries from developers and nonprofits.

Rendell was governor of Pennsylvania in 2008, when 200 EB-5 visa-seekers pledged a joint $122 million in crucial, cheap financing for the Pennsylvania Convention Center. The project eventually cost a total of $800 million, making it the most expensive building in state history. But the early, low-cost EB-5 cash was key, arriving during the financial crisis, when, as Rendell recalls, state tax revenues took a dive, and financial markets made it tough to borrow.

To be sure, “a lot of people around the country used [EB-5] for projects that people complained would have been funded anyway,” acknowledged Rendell, who was among several high-profile former and current officials from across the U.S. who were flagged in a 2015 U.S. Inspector General report for lobbying Obama administration officials for their EB-5 agency clients. In Rendell’s case that included Hollywood studios whose EB-5 applications Rendell supported as governor.

The inspector general found that Rendell and his friends at CanAm enjoyed “improper personal access” to Alejandro Mayorkas, then the head of the federal immigration service. Mayorkas defended his actions as appropriate. He, Rendell, and the other officials named in the report were not charged with violations. Mayorkas now heads the Department of Homeland Security, which includes immigration.

“Look, we abused the system a little bit, not intentionally or illegally,” Rendell said. Congress was right to revise the program, he said; the changes made last year were overdue.

CanAm’s success funding more and larger projects inspired imitators. In 2012 Pasquale “Pat” Deon, the Bucks County Republican Party leader who chaired SEPTA’s board and served on the Pennsylvania Turnpike Commission, invited a group of friends to lunch at the Union League in Philadelphia to see if they could come up with a hometown firm of their own to “sell some green card” work permits for public projects and collect lucrative fees, according to a 2022 Delaware court memo by Chancery Court judge James Travis Laster resolving a dispute at the firm these friends went on to found.

Among those sitting at Deon’s table was Joseph Manheim, then-chief investment officer for Swarthmore Group, a Philadelphia money manager that specialized in public contracts. (Swarthmore closed and filed for bankruptcy liquidation last year.) Manheim left the Union League and consulted with Albert Mezzaroba, a Pennsylvania lawyer with connections to senior officials at both SEPTA and the Pennsylvania Turnpike Commission, two public agencies in perpetual need of project funding. Manheim quit Swarthmore Group and set up Delaware Valley Resource Center, which would rival CanAm as a federally approved “regional center” to recruit EB-5 visa investors, with a focus on government agencies like SEPTA and the turnpike.

With SEPTA’s blessing, DVRC began raising $175 million (of a hoped-for $300 million) for SEPTA capital projects — a new Wawa train station, upgrades to the City Hall subway station, the train yard in Frazer, new locomotives.

“SEPTA received an attractive interest rate that made it competitive vs. traditional bond financing,” said Nick Grieshaber, chief financial officer at the transit agency.

To raise another $175 million in 2018 for its ill-fated Key card fare system, turnstiles, gates, and other station work, SEPTA in 2018 went with DVRC’s older rival, CanAm. The agency “would consider EB-5 funding in the future,” added Grieshaber. “It’s another tool in the toolbox. We have a large and aging infrastructure, and it requires a lot of funding.”

At the turnpike commission, starting in 2013, DVRC’s foreign clients raised $200 million to help fund the long-delayed connection between the turnpike and I-95 in Bucks County. Starting in 2016, it raised another $184 million to help widen 130 miles of the highway.

The program’s rates are attractive, compared to borrowing from bondholders, said Rick Dreher, chief financial officer at the turnpike — but “with EB-5 there is a significant time delay,” he added. He’s hopeful the commission will again turn to the program and cut its borrowing costs: “We think most of the recent changes in the program lend themselves to our kind of infrastructure projects.”

Developer Ahsan Nasratullah says he first sought EB-5 investments in 2012 for the Crane, a mostly market-rate, 150-apartment high-rise tower in Chinatown. PIDC, he said, wasn’t sure the project was an EB-5 fit.

So the native of Bangladesh set up Global City Regional Center LLC in Philadelphia. Staff and board included some well-connected Democrats: the late Anthony Rodham, brother of then-Secretary of State Hillary Clinton, who owned other EB-5 companies, and handled Global City’s lobbying; Nasratullah’s wife, Nina Ahmad, who in April won one of the city party’s at-large nominations to Philadelphia City Council, was a director. She is now off the board, Nasratullah said.

Global City raised $8.8 million for the $75 million Chinatown tower before it was built in 2017, mostly with bank and public financing. Global City also raised $2.5 million for Ocugen, a Chester County biotech company started by a fellow Bangladeshi immigrant. “That was a hard sell,” Nasratullah said.

Unlike its larger rival CanAm, “we have to go to businesspeople we know personally, not agents and brokers,” he said. “People I knew in Bangladesh had contacts in Malaysia, so we approached them. And we knew some immigration lawyers in Africa. We located a dentist from Canada who wanted a visa.”

Now, Nasratullah says he’s working on finding investors for a project that could fit EB-5′s new urban focus: the Africatown development in Southwest Philadelphia. The plan is to replace the crowded rowhouses that currently house offices, meeting rooms, a recording studio, and other spaces for the African Cultural Alliance of North America.

“That project is very well known,” Nasratullah said. “A lot of people from Cameroon, Liberia, Togo have toured the community. I believe we can find through their networks people who want to come here and have the resources to invest in Southwest Philadelphia, where for a while no one wanted to put their money.”