The Washington Times
LAS VEGAS – The Obama administration overruled career Homeland Security officials and expedited visa applications for about two dozen foreign investors for a politically connected Las Vegas casino hotel after repeated pressure from Senate Majority Leader Harry Reid and his staff, according to internal government documents obtained by The Washington Times.
The move to overturn what is normally a non-appealable visa decision came despite concerns about “suspicious financial activity” involving some of the visa applicants from Asia, and it ultimately benefited several companies whose executives have donated heavily in recent years to Democrats, the documents show. It also ensnared Mr. Obama’s current nominee to be the No. 2 Homeland Security official, Alejandro “Ali” Mayorkas, whose appointment is to be reviewed by the Senate on Wednesday.
The intervention from Mr. Reid’s staff was so intense at one point a year ago that a U.S. Citizenship and Immigration Services (USCIS) official reported that it prompted a phone shouting match, turning a normally bureaucratic review process inside the Homeland Security Department into a politically charged drama that worried career officials.
“This one is going to be a major headache for us all because Sen. Reid’s office/staff is pushing hard and I just had a long yelling match on the phone,” USCIS Legislative Affairs official Miguel “Mike” Rodriguez warned in a Dec. 5, 2012, email to Homeland Security Department officials.
The emails, obtained by The Times from government officials concerned that the EB-5 investor visa program has become too politicized, detail how the SLS Hotel, formerly known as the Sahara Casino, tried to jump to the head of the line for its request for about two dozen visas for Asian investors willing to help it fund a major renovation of the storied property on the Las Vegas Strip.
Despite early pressure from Mr. Reid’s staff, career officials inside the Department of Homeland Security initially turned down the SLS Hotel on the grounds that it failed to meet the criteria for expedited review. The decision, dated Dec. 17, 2012, stated flatly that “there is no appeal or reconsideration of this decision.”
But that simply prompted Mr. Reid to personally reach out to the top official at USCIS, Alejandro “Ali” Mayorkas, setting into motion a process that consumed top political officials inside the Homeland Security and Commerce departments and ultimately resulted in a ruling that granted expedited status to the hotel over the objections of career officials.
“Ali had a call with Sen. Reid on these I-526 cases on Tuesday of this week,” Mr. Rodriguez wrote top officials on Jan. 11. “While no guarantees were made on the call, Ali did promise the Senator that USCIS would take a ‘fresh look’ at the expedited request.”
Government officials did a lot more than give a fresh look — forwarding from Mr. Reid’s office the names of people involved with the hotel project that could help the federal agency change its mind on the expedited status request. Mr. Reid’s staff repeatedly made the case that the hotel would lose its potential funding for its renovation if Homeland Security’s USCIS didn’t expedite the visas.
“As you can imagine this project is pretty important to Southern Nevada. It will probably be the only ‘new’ property opening up on the Strip for some time, and if their $300 million senior lending facility from JP Morgan Chase expires because these visas aren’t processed expeditiously, it will be a huge setback for the project and the 8,600 jobs associated with it,” Michael Vannozzi, then a top aide to Mr. Reid, wrote Homeland Security officials at one point.
The hotel needed the foreign investors’ visas to be approved so that their money could be brought into the country and paired with the JP Morgan financing to underwrite the renovation of the hotel, the documents stated.
“Applications approved for expedited processing move to the front of the processing queue but otherwise go through the same robust eligibility and security review utilized for all EB-5 decisions,” the spokesman said.
A spokeswoman for Mr. Reid said the senator “has supported and will support the SLS Las Vegas in any way he can.”
“Sen. Reid believes it is his job to do all he can to promote economic growth and development in the state, and he makes no apologies for helping to bring jobs to Nevada,” spokeswoman Kristen Orthman said.
Hotel officials did not respond to a request for comment.
The emergence of the documents comes at a sensitive time for the Obama administration and Mr. Mayorkas, whose nomination to be deputy secretary of DHS is being considered Wednesday by a Senate committee.
Mr. Mayorkas and his agency are already under investigation for visa application decisions made involving an electric car company associated with Terry McAuliffe, a longtime Democratic fundraiser and now the governor-elect of Virginia.
Officials say the EB-5 program, created by Congress in 1990, is designed to attract investors willing to risk capital in ventures that will create jobs in the United States. Would-be entrepreneurs who invest at least $500,000 in a new U.S. business can apply.
The citizenship services agency says the goal of the program is to “stimulate the U.S. economy through job creation and capital investment by foreign investors.”
Almost all foreign investments in the EB-5 program are channeled through special companies called “regional centers.” Once their business plan is approved by immigration officials, the companies bundle investments into qualifying new businesses. Investors then can apply for an EB-5 visa, and, if approved, can claim a conditional green card immediately upon entry to the United States. After two years, the conditions are removed if the investment has created the jobs or looks likely to.
The emails referencing Mr. Reid’s intervention could increase concerns that the worker visa program has been exploited by political pressures.
“It’s not one party’s monopoly, but it’s kind of inherently worrisome,” said David North, a policy analyst at the Center for Immigration Studies, a group that advocates for less immigration into the U.S. “There certainly are political pressures to cut short the review process.”
Executives for the two main companies involved in the hotel project have donated more than $127,000 to political causes over the last three elections, mostly to Democrats, Federal Election Commission records show.
Sen. Dean Heller, Nevada Republican, wrote a letter on the matter to USCIS California Service Center on December 19, 2012.
“I strongly encourage you to consider this request and the impact the project will have on Nevada’s economy,” he wrote, under the assumption that the petitions were still being processed. “Time is of the essence and advancing Nevada’s economy would be strongly supported by this project.”
Mr. Heller’s office said there were no subsequent conversations with USCIS or DHS.
According to the plan, the project is estimated to create 8,600 jobs.
Peter Joseph, executive director of the Association to Invest in the USA (IIUSA), a membership organization representing 107 federally designated EB-5 Regional Centers across the country, pointed out that USCIS is dealing with a backlog of about 7,000 applications — proof that they’re employing careful scrutiny.
“Based on the backlog, they clearly take it seriously, and rightfully so,” he said. “I think that the data tells the story — that this is a program that is being administered carefully with the appropriate in-house expertise.”
DHS declined to say which specific cases had been expedited. It is not clear whether the applications flagged for security reasons were ultimately approved, but USCIS said in a statement that the agency “takes seriously our responsibility to safeguard national security and public safety while deciding requests for immigration benefits.”
“USCIS subjects all benefit requests to a background check process which includes coordinating with law enforcement agencies where applicable,” the statement reads. “USCIS does not proceed to a final decision regarding any benefit requests until concerns identified during the background check process are sufficiently resolved.”
The Las Vegas Review-Journal reported in February that SBE Entertainment was indeed able to secure the last piece of the $415 million in financing that they were seeking.
SBE Chief Executive Officer Sam Nazarian said the money raised through the EB-5 funding was “far above” what had been expected and would allow SBE to pay down its senior note on the property, the paper reported. The terms of the project required $115 million in EB-5 capital.
The project was apparently struggling to secure that last bit of funding. Adam Horowitz of Lever Capital Partners wrote to the managing director of Stockbridge Real Estate Funds, which was working on the project, on January 24 saying they had reached out to more than 70 national and international investors/lenders, and all but one said their lack of knowledge of the EB-5 program would prevent them from providing capital for the project.
“Brevet Capital, a New York City based private equity fund, was the one lender that showed interest since they had been spending time working on such projects,” Mr. Horowitz wrote. “Their one hurdle was that there needed to be at least one (1) I-526 petition approval. Since that approval has not been granted they have currently withdrawn from discussions.”