Monday, April 25, 2011

Kunpeng, consultancy promoting AY to immigrant investors in China, among firms willing to deceive regulators, according to newspaper investigation

There's new evidence that consultants helping Chinese millionaires immigrate, as in the program involving the "Brooklyn Arena and Infrastructure Project," are skating toward fraud.

In this case, the evidence does not involve the EB-5 program, in which investors park $500,000 for a purportedly job-creating project in exchange for green cards for themselves and their family, but rather a similar Canadian program.

Kunpeng International, a consultant prominent in promoting the Brooklyn project as an associate of the New York City Regional Center (NYCRC), an investment pool working with Forest City Ratner, has been identified as one willing to deceive Canadian regulators.

(Kunpeng's head is at right in the photo with the Empire State Development Corporation's Peter Davidson, who provided a certificate during a roadshow in China last October. That proclamation, as I wrote, elides the difference between the Brooklyn Arena and Infrastructure Project before the potential investors--purportedly the arena, infrastructure, and railyard--and the Atlantic Yards project as a whole, which would produce many more jobs and potential benefits.)

Helping a fictitious applicant

In a 4/22/11 article headlined How China’s ‘crooked consultants’ help the rich enter Canada, the Globe and Mail reports that a fictitious potential immigrant created for the purposes of the article--who has the required minimum $1.6 million CAD in assets but not the required documentation providing the wealth is legitimate--was offered help in sugarcoating his past by 18 of the 22 China-based immigration consultants approached.

Of the 22, 12 said that even a criminal record--jail time for stabbing someone in a fight--could be overcome:
If the relative were to persuade – bribe, if necessary – someone at his local police station to issue such a certificate, explained an agent at Kunpeng International, a Beijing-based firm, Canadian officials “can’t come to China to check the archives” in person.
John Ryan, chief executive officer of the Canadian Society of Immigration Consultants, a former consultant in China, told the newspaper that business ethics in China are flexible:
“In Chinese culture, they feel that, in dealing with governments, they need an edge. They don’t really understand that, in our Canadian system, they can deal openly and honestly with the government and be dealt with fairly.”
Previous coverage

As described in a 12/10/10 installment in my Anatomy of a Shady Deal series, China presents a valuable, unique opportunity, given the confluence of basketball fever, plentiful new money, the desire to get children educated (and other opportunities) in the United States, a language barrier, limited watchdog reporting on this issue, little emphasis on transparency, variable amounts of business sophistication, and flexible business ethics.

The lead-in to a video, webcast by the Kunpeng consultancy, promotes the project with upbeat, gauzy images.



Pushing the envelope

As I reported 10/4/10, the NYCRC's Gregg Hayden, when faced with a question about why exactly green card-seeking Chinese investors were needed for a project that included deep-pocketed Russian billionaire Mikhail Prokhorov, simply evaded the question.

However, as I reported 10/7/10, Chinese investors reading the transcript were given an additional dose of candor, words not in Hayden's mouth but which elaborate on the logic and spirit of his statement:
The costs of using investment funds are relatively lower than the costs of bank loans. Although the NBA project funds are sufficient, business is business, and we are in pursuit of profit maximization.
(Emphasis added)

This blatant admission of the developer's true goals gives a lie to the official claim that the investment would create or save jobs, and provides more evidence that the plan violates the spirit, and perhaps the letter, of the EB-5 visa program.

The Q&A appeared on the blog (Google Translate version) of Hu Weihang, who heads Kunpeng. A statement like "business is business," while it may sound like a violation of the spirit of American immigration law, to a Chinese audience conveys that it's a serious project, according to the translator I consulted.

A law firm's proclamation

As I wrote 12/15/10, the Kunpeng firm even received a proclamation from the Ithaca, NY-based law firm Miller Mayer, which works for the NYCRC, its lawyers filing papers with federal authorities and accompanying the NYCRC on tour, and is recommended by the NYCRC to potential investors.

(Graphic from blog of Kunpeng's Hu Weihang.)

It states:
Miller Mayer, LLP
Of Ithaca, New York, United States of America
Proudly Recognizes

Kunpeng International

As a First-Order Agency in Support of Our Mission To Provide Chinese Investors with First-Order Legal Service. In furtherance of our mutual goals and desires, we honor your participation in these efforts.

Honor and Recognition Conferred This Day,
October 11, 2010 by Miller Mayer, LLP
Attorneys at Law
[signed by firm name partners]
It's not clear whether "First-Order Agency" and "First-Order Legal Service" have any formal definition. Presumably such phrases aim to impress in a country where ceremony is valued.

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