FOR IMMEDIATE RELEASE CONTACT:
September 23, 2013 Jamie Morris, 202-499-2425
Cause of Action Report Exposes
GreenTech Automotive’s Abuse of Political Influence
“GreenTech Automotive: A Venture Capitalized by Cronyism”
WASHINGTON – Cause of Action (CoA), a government accountability organization, today released “GreenTech Automotive: A Venture Capitalized by Cronyism,” an investigative report revealing how GreenTech Automotive (GreenTech) used government funds and political connections to pursue big profits for its founder, Charles Wang, and Chairman, Terry McAuliffe. This is the second report in a series of investigations by Cause of Action shining light upon companies around the country that are structuring their businesses to use political connections for profit.
The CoA report details how GreenTech used political connections to receive millions of taxpayer dollars in loans and tax incentives, yet failed to meet expectations, instead exaggerating projections of job creation and vehicle production.
CoA’s six-month investigation uncovers how GreenTech relied on political graft to influence officials at the state and federal level to gain preferential treatment and skew the marketplace, resulting in American taxpayers underwriting the risk of speculative business ventures, while the company pocketed the profits.
Cause of Action’s Executive Director Dan Epstein explained:
“Concerns about how GreenTech does business have been expressed by every branch of our federal government – from Senator Grassley in Congress, to the Securities and Exchange Commission in the Executive Branch, to a federal judge in Mississippi- and American taxpayers share in the concern about how business is run in our country.
“GreenTech Automotive is an example of how cronyism means the government, not the market, is picking financial winners like Terry McAuliffe and Charles Wang.”
In light of issues raised in the report, CoA is alerting the House Oversight and Government Reform Committee of concern about GreenTech’s potentially improper activities.
Findings revealed in the report include:
- Terry McAuliffe, while GreenTech Chairman, e-mailed then-Mississippi Governor Haley Barbour, seeking his assistance in pressuring United States Citizenship and Immigration Services (USCIS) Director Alejandro Mayorkas into fast-tracking EB-5 visa applications by GreenTech’s Chinese investors.
- In 2009, when Mississippi Governor, Haley Barbour contacted Barbara Velarde, the head of the USCIS office that oversees the Regional Center program, urging the agency to designate Gulf Coast Funds Management (GCFM), a processing center than manages EB-5 investments for GreenTech and is run by former Secretary of State Hilary Clinton’s brother Tony Rodham, as the Regional Center for the entire state of Mississippi. Subsequently, GCFM became the country’s largest Regional Center for processing EB-5 investments, covering both Mississippi and Louisiana.
- GreenTech may have violated USCIS regulations in every one of its four rounds of financing by impermissibly structuring each investment as “risk-free.”
- GreenTech has made misleading statements to investors that potentially violate Section 17(a) of the 1933 Securities Act by inflating job-creation estimates.
- GreenTech submitted exaggerated projections about its manufacturing output and job creation prospects in its funding applications to both Mississippi and Virginia. Unlike Virginia, Mississippi state officials failed to conduct proper due diligence on GreenTech and ultimately gave the company millions in loans and tax incentives to locate its manufacturing facility within the state.
To access the full report, click here.
About Cause of Action:
Cause of Action is a non-profit, nonpartisan government accountability organization that fights to protect economic opportunity when federal regulations, spending and cronyism threaten it. For more information, visit www.causeofaction.org.