By Eriq Gardner, The Hollywood Reporter
The newly released documents buttress a report issued late last month detailing how an immigration director was swayed with respect to hundreds of millions of dollars in film and TV investments under the EB-5 visa program.
The U.S. Department of Homeland Security’s inspector general has released hundreds of pages of emails plus other documents in support of its investigation of improper influence on the EB-5 immigration program. Many of the documents discuss hundreds of millions of dollars in financing for film and television productions from Sony Pictures and Time Warner with prominent politicians including former Pennsylvania governor Ed Rendall and the office of former Los Angeles mayor Antonio Villaraigosa interjecting in an effort to get approvals.
Since inception in 1990, the EB-5 visa program allows foreign nationals to become conditional permanent residents upon an investment of at least $500,000 for a qualifying project that creates American jobs. Entertainment studios begun to eye the program to get film investment capital, but some projects have been rejected. For example, in 2009, Lionsgate was denied funding from EB-5 investors because it was determined that the studio was not legally obligated to accept the funding.
After a whistleblower stepped forward, DHS’s inspector general looked into whether Alejandro Mayorkas, former director of United States Citizenship and Immigration Services, gave special treatment to politically-connected applicants and exerted improper influence in the adjudication of the EB-5 program. A core part of the investigation looked into Mayorkas’ order reversing a decision denying funding of Sony movie projects. He’s also said to have handpicked a review board to review a separate series of Time Warner movie projects.
Late last month, a report about the investigation was released. The report’s discussion on how Senate Majority Leader Harry Reid intervened over some Las Vegas projects and how Virginia governor Terry McAuliffe interjected for an electric car company commanded the most press attention, but the report also dealt significantly with the proposed projects involving Lionsgate, Sony and Time Warner.
Sony was initially denied for the same reason that Lionsgate gate rejected. But then Mayorkas got lobbied.
According to one newly released email from Katherine Hennigan, senior policy director in the Los Angeles Mayor’s office, she wrote of “an apparent misunderstanding of what the standard financing practices in the film/TV industry are” and urged cooperation as “delays are now starting to jeopardize the attractiveness of this vital program to our local Film Studios.”
Rendell spoke to Mayorkas over the phone, according to several emails, and according to one financier, was assured of cooperation.
There are also many messages from CanAm Tom Rosenfeld going into more details about the Sony project. The studio was to get a $100 million loan, according to him, with agreement to spend double that on film and TV production in a high unemployment area in Los Angeles. He also says in another message that the USCIS verdict was so pressing that $21.5 million in funds from 43 investors was at risk if a decision in favor of Sony didn’t come immediately.
According to the inspector general, Mayorkas directed his staff to stop denying petitions in the LA Film project, and upon more lobbying, Sony got approval in late 2011. One EB-5 official said headquarters’ involvement in the applications was “not normal.”
In 2012, the government immigration office began hearing a lot of lobbying on petitions dealing with 240 investors who were pledging $250 million for films from Time Warner. Again, Rendell and Rosenfeld made their pitches and described the situation as similar to Sony. According to the inspector general, the California staff was poised to deny the applications because there weren’t specifics about the projects Time Warner would complete, no commitment from Time Warner to borrow the money, no sourcing on job creation estimates, insufficient evidence about job creation and problematic escrow agreements.
The immigration staffers are even said to have drafted a denial decision before Mayorkas shook things up with a new procedures and a new review board, which in 2013, was directed to look into the Time Warner case.
In March 2012, the board is described as having a teleconference with California staff recommending denial of the petitions. One adjudicator expressed the opinion, “We did not feel that the project was creating new jobs, and that [the project was] just using the money to replace other funds available to Time Warner, including cash reserves and their $5 billion revolving credit facility with Citibank. So the EB-5 money was not really resulting in any new projects that would not have otherwise been produced in the absence of EB-5 capital.”
Two days later, according to the inspector general’s report, the decision from higher-up to approve was passed along, leading to staff resentment and one member’s description of a “mad rush” to approve the many petitions.
The inspector general says it can’t determine Mayorkas’ motives for intervention but says that actions taken “created an appearance of favoritism and special access.”
Why do you think the successful film companies went after EB-5 funds?