Don’t Let America Become a Dumping Ground for Chinese Laundered Money
September 18, 2014
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Will America Become a Dumping Ground for Chinese Laundered Money

Twenty years ago the Canadian population and culture was impacted by what seemed to be a unique phenomenon brought on by a particular immigration policy created to produce economic benefit.

Global events, of that time, combined with the structure of that immigration policy brought unexpected results.
Eventually a law was passed changing the dynamic of that policy. This resulted in a significant decline in the type and numbers of immigrants it generated.
The results however have been pernicious and long lasting for the existing Canadian cities and culture(s) it impacted.

Chinese Investors Exploited Canada’s Immigrant Investor Program

This was a time when China was moving from an agrarian society to a market society and the motto “to be rich is glorious” was heard and read everywhere. I traveled to China and saw many of the changes first hand. There was such energy; it was glorious to see!
However what started as a win/win policy for both Chinese immigrants wishing to come to Canada and the Canadian economy quickly evolved into something unforeseen.
The dynamics of the policy made it fairly easy for its target group. Simply put – a Chinese person could cut a check for $1 million and buy their Canadian citizenship. Yes, there were rules they had to follow, but for the most part it was just simple paperwork. In hindsight, it was obviously too simple.
Until a few years ago the Chinese applying for the program did not have to show proof of how they acquired their funds. The rules said the money couldn’t come from illegal activity, or be borrowed, but there was no proof required. Anyone with cash could apply. And Vancouver (in particular) filled up with Chinese applications.

A door was opened and in poured this specific group
Strong and numbers and able to create their own cultural enclaves – assimilation was not looked for.
Uncontrolled for a significant length of time this influx produced a demographic skew not anticipated
The effects have been profound especially in the larger cities of Canada and Vancouver in particular
Prior to the policy Vancouver was a melting pot of nationalities with genuine crossover from one ethnic group to another.
Now a number of very distinct enclaves, one of them enormous (Richmond B.C.), exist autonomously.
In fact English is a second language, or not spoken at all in these enclaves.
Demographically, when you visit many areas of Vancouver today you might think you are in China. The majority of students at the University of British Columbia are Chinese and top tier private schools like St. George have an overwhelmingly Chinese student population. It is only natural that this overwhelming invasion of Chinese people has caused resentment to quietly grow among other minorities, including the Caucasian population.
The Chinese influx of money has created significant problems, as well. Many high-end condo buildings in Vancouver are sold out, yet a huge percentage of units sit empty – shells for stashing cash as their Chinese owners move their money out of China. It has completely skewed the housing market. Houses near downtown cost well into seven digits and locals have been priced out of the area. Now you see many downtown white collar workers making very long commutes from their affordable homes in the outlying neighborhoods. San Francisco is the best example of this “occurrence” now happening in the United States.
Eventually, Canada smartened up and passed a law requiring applicants to show “proof of funds”. Not surprising the flow of applications from China stopped almost immediately — fairly strong indication that much of the money entering Canada came from questionable sources.
But it was too little too late. Now I fear that America is the central focus of these Visa applications.

China Is Cleaning House – has America become its Dumping Ground!

That Canadian immigration policy was very similar to the US EB5 Immigrant Investor and Green Card Program today.
In 2014, so far, 80% of the EB5 Visas have gone to Chinese investors. The EB5 rules state that investment funds cannot be the result of criminal activity, but I am not aware of the American government asking too many questions about proof of funds on these applications. Without strict proof, laundered money or illegal funds could be used to (essentially) ‘buy’ a Green Card and then US Citizenship.
I fear that with the crack down of the Chinese government on corrupt officials EB5 applications will flood America. Remember America does not have an extradition treaty with China.
China is so rife with corruption, and public opinion of those in power so low, that many people last month cheered a thief, Fan Yunyun, when she told police her gang targeted corrupt officials to steal their luxury watches, pre-paid shopping cards and other bribes.
Communist Party Chief, xi Jinping, who is also president, has made the fight against corruption the centerpiece of his leadership that began nearly two years ago.
Obviously, there is a problem when a Chinese bureaucrat earning $15,000 a year can fund a $500,000 EB5 application. SLS Casino, which opened this September in Las Vegas was built primarily by Chinese EB5 applicants seeking permanent status in the USA. I would not be surprised if they build the next five casinos, too!
Quotas, Proof, Waiting Periods – Let’s Learn From Canada’s Painful Lesson
Hindsight has 20/20 vision.
Had the Canadian government taken a more balanced approach at the start to granting permanent visa applications (essentially for financial gain) the influx and subsequent cultural consequences would have been profoundly different.

Even a simple quota applied to their program would have made a difference.

For example, a quota of 10% for China applications accepted in any given year. A quota is a reasonable and easily managed control. Given there is 196 countries in the world awarding 10% quota to one country seems more than fair.

I’m sure many Chinese EB5 applications are perfectly legitimate. America is the land of opportunity and hard workers have always thrived here. We should maintain America as a nation where legitimate investors are welcome. They invest. They build businesses. They hire workers. They pay taxes. They want to be successful Americans.

But the reality is that in the case of EB5 many law firms have formed specifically to help Chinese Nationals become American investors. These law firms are in a position to oversee the investigation process to ensure a legitimate paper trail.
Proof of funding is only common sense! And allow time to investigate.
However these law firms priority is to make money and not be a gate keeper. That is the job of the American Government.

There is a major reason why the Chinese government is cracking down on corruption.
The result is an exodus of those who are targeted – to The USA
Let’s assist China in their battle with a strong extradition policy.

Time Is Short – The Next Wave of Chinese EB5 Applications Starts October 1st
The clock resets for another influx of these EB5 applications on October 1st. Just a few days away! We will likely see 80% of those applications out of China!
Politicians and media broadcast about illegal immigrants breaching the US southern border because it is a good visual and gets politicians elected especially in places like Arizona and Texas. These illegal immigrants are poor and desperate and an easy target, but no one is talking about EB5. Probably because most Mexicans don’t have money to invest!
We must get vocal with our politicians. We need to take a stand if we want to prevent the American EB5 program from having the kind of effect the same policy had in Canada

The point here is that change is good but it should be managed with consideration for consequences on all sides

America publicizes constantly its steps to control money laundering and corruption. Let’s take that conviction into the EB5 program!
Here is a short list of things I believe our publicly elected government employees should do:
Put quotas in place
Slow the application process
Tighten the proof of funding requirements
Establish an extradition policy to make America less of a safe haven.
And we need them to act fast! October 1st is just a few days away.
Write to your government representatives. Get them to pay attention to what is happening in the world.
China is cleaning house and America is the next dumping ground!

I intend to send this letter to Harry Reid and hope — at very least – that he and other politicians will force some changes in this EB5 program. It is a good idea, it can have great impact on areas needing businesses to grow, but as it stands, it is too easy to corrupt. The EB5 Immigrant Investor and Green Card Program needs some serious changes to protect the American people.
One final footnote. I live in Las Vegas and Casino stocks are down big this week. Macau revenues are also significantly down this quarter. According to several casino executives, the main reason for the downturn is because much of the corrupted money is laying low or hiding.

Michael Lathigee
Suite 1115319
6955 North Durango Drive
Las Vegas, Nevada, 89149

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