McALLEN, Texas (AP) — A South Texas business that helps the U.S. government recruit foreigners seeking visas in exchange for $500,000 job-creating investments is being investigated for running a possible Ponzi scheme, according to court documents that suggest some money was used to buy a Mercedes and settle legal disputes.
A company director previously told The Associated Press that USA Now Regional Center was focusing on Mexican investors because of their proximity and the deteriorating security situation across the border.
Search warrants indicate the FBI has been investigating USA Now Regional Center since at least early last year on suspicion of wire fraud, money laundering and transportation of stolen property. Federal agents searched the company’s office and the owners’ home in McAllen earlier this month.
USA Now is among hundreds of private businesses designated by U.S. Citizenship and Immigration Services to recruit foreign investors to the “EB-5″ investor visa program. The so-called regional centers — which have boomed in recent years, but also attracted controversy — offer investment opportunities to foreigners and then pool their money for development projects ranging from hotels to a Vermont ski resort.
The U.S. government’s objective is to attract foreign capital and create jobs. But the investors are primarily interested in getting permanent U.S. residency for themselves and their families, and any financial gain from the investment is generally considered a bonus.
No charges have been filed in the McAllen case. The FBI declined comment, citing its ongoing investigation.
The company’s attorney, Tony Canales, told The Associated Press that the FBI doesn’t understand the business. “We think the government’s wrong. We think we can explain it,” he said Wednesday, declining to go into details.
Bank records obtained by the FBI show that on the same days investors transferred their $500,000 payments to USA Now, the money was routed through other bank accounts. Those accounts were used to buy a new Mercedes for the company’s owner, pay off the owner’s civil lawsuit settlement and at least once to repay an investor who wanted out, according to court documents filed this month in federal court in McAllen.
The FBI seized the Mercedes and a pickup truck that it said was purchased with an investor’s money, the court records show.
The FBI agent leading the case wrote in his request for the search warrants that he believed it was “a scheme executed by employees of USA Now Regional Center to defraud foreign investors by using investors’ funds for personal gain and other illegitimate manners without the investors’ knowledge or approval.” The agent labeled it a “Ponzi scheme,” showing how money from one investor was used to make interest payments to others.
The investigation was first reported by The Monitor newspaper in McAllen.
There have been EB-5 debacles in California with a proposed sewage treatment plant, in a South Dakota dairy and a plant in Missouri to produce an artificial sweetener.
There are other investor-type visas, but not all offer permanent residency. Experts say the residency bonus is the primary draw, noting that other routes toward green cards can take many years.
USA Now’s director of operations, Marco Ramirez, was named in the search warrants and did not return a call for comment Wednesday. But in a July 2011 interview with The Associated Press, he said the company was focusing on Mexican investors because of their proximity and the deteriorating security situation across the border.
“The biggest reason is security, 60 percent of the families that come through here have had a situation” such as extortion or kidnapping by organized crime, Ramirez said.
At the time of that interview, Ramirez said USA Now had nearly 200 investors and almost $100 million — just four months after the company had been approved as a regional center by U.S. Citizenship and Immigration Services.
The government does not release any information about the number of applications filed through individual regional centers nor the number of their clients who successfully obtain visas.
Associated Press writer Larry Kaplow contributed to this report from Mexico City.