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Last updatethứ 7, 18 01 2020 7pm

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US 'Green Cards for Cash' Business Owner Charged in $110 Million Scheme

A California man accused of building a business empire by exploiting a controversial government-sponsored visa program for wealthy foreigners was arrested on Tuesday on charges of defrauding Chinese and other foreign investors seeking residency in the United States.

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FILE - New citizens stand during a U.S. Citizenship and Immigration Services (USCIS) naturalization ceremony in Manhattan, New York, April 10, 2017. Three men were accused Tuesday of abusing a U.S. visa program and making false statements to the USCIS.

Thomas Henderson allegedly raised more than $110 million from more than 200 foreign investors seeking U.S. residency under the EB-5 visa program only to divert the funds into private investment projects, jeopardizing more than 2,000 jobs in northern California, according to a grand jury indictment unsealed on Tuesday.  

Henderson, 70, and two accomplices  – Kexing Hu and Cooper Lee - were charged with conspiracy to misappropriate foreign investor funds; lying to foreign investors about the use of their funds; and making false statements to the U.S. Citizenship and Immigration Service, the administrator of the EB-5 program.

Henderson and Lee were arrested Tuesday morning.  Hu, who operated Henderson’s Shanghai office and solicited investors in China, remains at large.  

The three face multiple charges of wire fraud, conspiracy to commit offenses against the United States and making false statements.

During an initial court appearance in Oakland, California, Henderson pleaded not guilty to the charges.

The indictment comes less than a year after Henderson agreed to pay more than $1.4 million in penalties to settle a fraud lawsuit brought by the Securities and Exchange Commission.

EB-5 program 

The EB-5 program was created by Congress in 1990 to promote economic growth and job creation in the United States by encouraging foreign investment.  Under the program, foreign nationals may receive permanent residency by investing a minimum of $500,000 to $1 million in a U.S. business that creates at least 10 jobs.

In 2011, Henderson created the San Francisco Regional Center to solicit funds from foreign investors under the EB-5 program.   

On its website, SFRC boasts that it is the only USCIS-designated organization in Northern California to have secured all its investors "conditional" permanent residency.

The indictment 

According to the indictment, from 2011 to 2016, Henderson and Hu raised more than $110 million from more than 200 primarily Chinese investors. The other investors were Indian and Vietnamese nationals.

The funds were supposed to go into seven new businesses that together promised to create more than 2,000 jobs in northern California.  These projects included an acute care nursing facility, a warehousing business, and three call centers.  

Instead, according to the indictment, Henderson diverted millions of dollars of investor money to buy commercial properties, a dairy product processing plant, a sausage company, and other unrelated projects.

The investors in six of the seven EB-5 projects have lost most of their investment money, and “many investors are unlikely to receive permanent legal residency because the…EB-5 projects in which they invested were not sufficiently capitalized and failed to create new jobs,” according to the indictment.

Similar cases 

This is not the first major fraud case involving the EB-5 program.  In 2017, Chicago hotel developer Anshoo Sethi was sentenced to three years in prison for fraudulently raising nearly $160 million from Chinese investors for a hotel project that never materialized.  None of the investors received residency.

The visa program’s popularity in recent years has created a backlog of more than 34,000 applicants for the roughly 10,000 visas available every year.  Chinese nationals now have to wait an average of 16 years to get an EB-5 visa.