The Kushner family could have avoided the controversy they find themselves in over courting rich Chinese investors if they had only talked to Idaho Gov. Butch Otter.
Nicole Meyer is the sister of Jared Kushner, President Trump’s son-in-law and special adviser. Meyer pitched rich Chinese on investing in a New Jersey luxury development by the family-owned Kushner Cos. last week, and referred to her brother in making her appeal. The sales job came hours after Trump — who campaigned criticizing China and promising to get tough on immigration — signed the budget bill that reauthorized the program that gives foreign investors green cards if they invest a minimum $500,000 in projects that create jobs in the U.S.
The EB-5 immigration investment program was established in 1990 by Congress to encourage foreign investment. The EB stands for “employment-based.” When the bottom fell out of Idaho’s economy in 2007, Otter was desperate for a state economic development program and was short on cash to make it happen.
After a few fits and starts, Otter made the EB-5 program and immigration investment a part of Project 60, his effort to increase Idaho’s gross domestic product to $60 billion. After personally appealing to Chinese investors on a trade mission 2010, Otter ran into a firestorm of controversy and conspiracy theories about selling out Idaho to the Chinese. He backed off making any more calls for immigrant investment. His is a cautionary tale the Kushners could learn from.
Idaho’s richest investors and biggest corporations were either sitting on their money or investing elsewhere during the Great Recession. When a savvy, disheveled but flamboyant Taiwanese businessman offered access to his $500 million immigration-investment network in China, Idaho Department of Commerce officials signed on.
Raymond Ku was one of the pioneers in the immigration-for-investment business on the China side, having helped hundreds move from Hong Kong to British Columbia in the late 1980s and the early 1990s under a similar program there. He pitched Idaho Govs. Dirk Kempthorne and Jim Risch before the Otter administration jumped on board.
The idea was that foreigners who want to come to the United States could invest in “regional centers,” which in turn invest in American business opportunities. The foreign investors get a shot at both profits and a green card.
Along comes Sima Muroff, then a 33-year-old son of Russian immigrants. The developer and his partners in Blackhawk on the River in McCall had started the Idaho Regional Center to get money for the real estate development and mining.
Otter was heading to China for a trade mission in 2010. On top of “selling groceries” — his term for promoting Idaho exports — he would support Muroff and Ku’s immigration-investment efforts.
I went along on the trade mission to watch Otter in action. He was up for re-election and my editors wanted to see how the then-68-year-old, rumored to be in questionable health, did under the strains of a busy, weeklong trip to the other side of the world.
Otter outlasted everyone there, leaving no doubt about his health or stamina. His salesmanship on behalf of companies like Melaleuca and products like Idaho potatoes, wheat and hay was enthusiastic. Otter also was unabashed when he told Muroff and Ku’s investors in presentations in Shanghai, Quangzhou and Bejing what a great place Idaho was to live and invest.
But I could see a difference between these presentations and the pitch he made for the other companies. He tried to keep an arm’s-length distance. I doubt, though, that the Chinese families who sat in the aisles and stood along the wall of crowded hotel conference rooms noticed any difference in the governor’s salesmanship.
Idaho was the land of gold, just as it had been for past generations of Chinese. Eventually more than 200 people invested in Muroff’s development and mining businesses. Most were rich from the economic growth of the past two decades and the China real estate boom, but some scraped together all they had to come up with $500,000.
Watching Muroff and Ku make the deal was like watching a cinematic blend of “Austin Powers” and “Mad Men.” Ku barked orders to his attractive female assistant “Funi” — pronounced Funny — as he jumped into a car on the way to a French-Cantonese fusion restaurant Upday Chao in Quangzhou.
Young women — immigration consultants — filled the tables around the businessmen and Idaho officials, who were often mocked by the club’s wacky owners. Many courses of Cantonese specialties were interrupted by frequent toasts, songs, magical tricks and practical jokes.
BACK IN IDAHO
Soon after the trade mission returned to Idaho, Muroff put the money to work, building a large lodge at Blackhawk and processing gold ore from the ghost town of Quartzburg near Placerville. But Muroff was not able to get the U.S. Citizenship and Immigration Services Agency to certify that the investments met the requirements for handing out green cards to the would-be immigrants.
It had been a fascinating trip and a novel approach in tough times to boosting Idaho’s economy. In one of my follow-up stories, I wrote: “A Chinese national company is interested in developing a 10,000- to 30,000-acre technology zone for industry, retail centers and homes south of the Boise Airport.”
The far-right in Idaho and elsewhere went berserk. Otter was flooded with calls for more than two years telling him to reject the Chinese investment that had been portrayed in the far-right press as a kind of invasion. The China company never was heard from after that.
Otter didn’t want to have anything to do with Muroff and wouldn’t allow him on another trade mission to China.
Fast-forward to 2017. On April 28, the Security and Exchange Commission announced a settlement with Muroff, who it alleged had siphoned off more than $5 million of Chinese investor funds for an investment in a zip-line operation and purchases of two personal residences, a Range Rover and a BMW. Muroff agreed to repay $5 million, plus $800,000 in interest and a $2 million penalty. He neither admitted nor denied wrongdoing.
Investors have several lawsuits pending against Muroff and his companies; the immigration service and an independent manager to be appointed may yet get them their green cards — and maybe even some of their money.
Had the Kushners asked Butch Otter if going to China to promote immigration investment is worth the trouble, I’m guessing he might say, “Why not direct investment?”
Idaho continues to look to the East. The Department of Commerce has been working with the U.S. Department of Commerce’s SelectUSA program, which encourages companies, not individual investors, to invest in the U.S.
Just two weeks ago, as a part of the program, Japan’s Sakae Casting opened an office in Idaho Falls, its first American operation.