REPORT: Unfair Enrichment: How Forest City Enterprises Acts Above the Law

Political Profiteering

How Forest City Enterprises Makes Private Profits at the Expense of America’s Taxpayers

Part III of III:

Unfair Enrichment: How Forest City Enterprises Acts Above the Law

Download Report

Download Letter to Honorable Darrell E. Issa, Chairman, U.S. House Committee on Oversight and Government Reform

I. Introduction

A new neighbor has moved to your community.  But it is not someone who shares your backyard, a parking space, or neighborhood watch duties.  Rather, this neighbor plans to buy the influence of your mayor, your city council member, and your Senator with campaign contributions.  He wants his political cronies to declare your neighborhood blighted, and condemn its homes and businesses, so that he can build luxury apartment buildings, shopping centers, and a basketball arena.  He wants to congest your streets with thousands of cars and people.  And your new neighbor wants you to pay for it.  He plans to get millions of dollars in public subsidies, tax breaks, and tax-exempt financing by spending enormous amounts lobbying your representatives in government.  Not long after the ink dries on these deals, and public funding is secured, he will sell the development before it is finished, leaving you and your community without the promised public benefits.

Your new neighbor is Forest City Enterprises (FCE), a publicly-traded real estate development company with over $10 billion in assets.  Its business model involves getting unfair deals and making huge profits with the political influence it buys with campaign contributions and, if necessary, bribes.

This third and final report is the culmination of Cause of Action’s (CoA) 18-month investigation of FCE, its business practices, and the influence it wields over communities and public officials through enormous political spending and lobbying.  This investigation involved thorough statistical analyses of millions of dollars in public subsidies, gross and net profits, and campaign spending in federal, state, and local races across the country.  It also required the review of thousands of pages of documents, including legal filings, legal opinions and transcripts; the filing of Freedom of Information Act requests in New York, Texas and the District of Columbia; and telephone and in-person interviews with individuals with personal knowledge of the events that are described herein.

CoA’s first report in this series showed that FCE has a business model that depends upon political profiteering.  FCE consistently uses public money and government influence to reap millions in profit.  Using highly-paid lobbyists, political connections, campaign contributions, and strategic hiring of government officials, FCE obtains lavish public subsidies, tax-exempt financing, and eminent domain condemnations of private land.  Between 2002 and 2012, FCE, its subsidiaries, and its employees spent $23 million on campaign contributions and lobbying at the federal, state, and local level.  In return it received 52 direct and indirect government subsidies or financial benefits totaling at least $2.6 billion.  These subsidies amounted to 23% of FCE’s $11.4 billion revenue during that time.

In its second report, CoA exposed FCE’s pattern of promising local governments that its development projects would generate plentiful jobs, housing, economic development, and tax revenues.  However, once FCE receives public financial support, it often renegotiates or delays implementation of the benefits that it has promised.  FCE promised to create more than 70,000 permanent jobs and 3,750 affordable housing units for projects in Brooklyn and Albuquerque, but has actually produced only 3,000 permanent jobs, in total, and built no affordable housing units.  Meanwhile, FCE took in $277.2 million in public subsidies from those communities after contributing $310,450 to local political candidates and spending over $8.6 million on lobbyists.  In short, FCE lobbies, profits, and then bilks taxpayers by breaching its promises to the community.

This final report details ways in which FCE violated federal law, took advantage of manipulated census data, and poured hundreds of thousands of dollars into funding ballot initiatives supporting eminent domain for private use.  FCE’s New York subsidiary, Forest City Ratner (FCR), appears to have violated federal regulations in order to attract foreign investors to support its $4.9 billion Atlantic Yards development in Brooklyn.  It took advantage of a federal immigration program using manipulated unemployment data and misleading advertising.  In 2012, when the Department of Justice secured convictions of local politicians involved in a bribery scheme that was hatched to get approval of FCR’s development in Yonkers, N.Y., the evidence at trial clearly showed that at least two FCR executives were also involved.  Yet, despite this evidence, no one at FCR was ever prosecuted.  Finally, FCE has benefited from, and actively lobbied to expand, the government’s condemnation of property for private development using eminent domain, the power that allows government to take private property for public use.  All of these activities show that FCE has ignored or subverted legal norms in order to maximize its profits.

While FCE continually looks for opportunities to expand its enterprise across the country, the company and its executives often employ nefarious schemes in order to secure the land, money, and votes needed to secure multi-million dollar development contracts.  In sum, FCE exploits political connections for enormous profits and fails to follow the law—the epitome of political profiteering.

II. Findings

Attracting Investors by Manipulating Unemployment Data: Atlantic Yards And the EB-5 Visa Program

  • Finding:          The New York Department of Labor (NYDOL) and the Empire State Development Corporation (ESDC) manipulated census data in order to create a “targeted employment area” for the New York City Regional Center (NYCRC) and Forest City Ratner (FCR) in violation of U.S. Citizenship & Immigration Services (USCIS) regulations. 
  • Finding:          FCR and NYCRC, with the cooperation of New York elected officials, misleadingly advertised the Atlantic Yards Project to potential investors by keeping the actual purpose of EB-5 funding ambiguous and exaggerating job creation predictions.  Moreover, FCR misled the public by promising that EB-5 would create a substantial number of jobs, despite ESDC predictions to the contrary.
  • Finding:          Job statistics for the Atlantic Yards Project are not based on actual numbers but on estimates derived from economic models and “reasonable methodologies.”  Nevertheless, due to questionable USCIS rules, Atlantic Yards EB-5 investors received credit for job creation.
  • Finding:          The job creation predictions for the Atlantic Yards Project appear to violate federal securities law.  Moreover, NYCRC contracted the same immigration lawyer and economist as GreenTech Automotive, another crony corporation currently under investigation by the Securities and Exchange Commission.

Anatomy of a Bribe: Forest City Ratner and the Ridge Hill Development

  • Finding:          The Department of Justice (DOJ) failed to prosecute FCR executives who bribed Yonkers City Council Member Sandy Annabi.  FCR executives covered up payments to Yonkers Republican Party Chairman Zehy Jereis under the guise of a consulting contract for “retail hunting” in order to protect themselves from federal criminal liability when, in fact, Jereis’s consulting contract was in exchange for Annabi’s vote approving FCR’s Ridge Hill project.  FCR executives made false promises and used political pressure to influence Annabi.
  • Finding:          Evidence at trial showed that Bruce Ratner appears to have participated in the bribery scheme because he gave Jereis the consulting job.
  • Finding:          In 2010, two Members of Congress wrote to U.S. Attorney Preet Bharara about concerns that political favoritism affected DOJ’s decision not to prosecute FCR.  CoA’s investigation reveals that FCE and members of the Ratner family have connections with noteworthy political appointees in the Obama Administration’s Department of Justice, including the U.S. Attorney General.  They made substantial campaign contributions to the Democratic Party and Democratic candidates in New York.

Public Seizures for Private Benefits: Atlantic Yards and Eminent Domain 

  • Finding:          FCE defended and benefited from eminent domain seizures for private development in California and New York.  FCR benefited from eminent domain seizures for its Atlantic Yards Project and New York Times Building.  FCE’s California subsidiary, Forest City Residential West (FCRW), benefited from eminent domain seizures for The Uptown project in Oakland.  FCRW spent a combined $350,000 on California ballot initiatives in 2006 and 2008 to protect broad eminent domain powers that benefit private developers.

Figure 1: The Atlantic Yards Project Targeted Employment Area for EB-5 violates USCIS regulations by crossing all existing political boundaries 

(click to enlarge)


Related Documents: Forest City Enterprises

All of the documents from our investigation of Forest City Enterprises.

FOIA Requests

District of Columbia Office of the Deputy Mayor for Planning and Economic Development (DMPED)

Request 1

FOIA Request (June 26, 2013)

Response Letter (July 18, 2013)

Documents (July 18, 2013)

Request 2

FOIA Request (August 2, 2013)

Documents (August 23, 2013)

Council of the District of Columbia

FOIA Request (August 6, 2013)

Response Letter (September 4, 2013)

Documents (September 4, 2013)

District of Columbia Executive Office of the Mayor

FOIA Request (August 6, 2013 )

Response Letter (September 13, 2013)

Documents (September 13, 2013)

Empire State Development Corporation (New York)

Request 1

FOIL Request (April 17, 2013 )

Response Letter (May 16, 2013)

Documents (May 16, 2013)

Request 2

FOIL Request (August 8, 2013)

Awaiting Documents

Dallas (TX) City Hall

Public Information Act Request (August 12, 2013)

No Responsive Documents

Political Spending Data

Forest City Enterprises Political Spending Spreadsheet





New Rochelle Political Spending

Donations to New Rochelle Mayor Noam Bramson from Forest City Enterprises after they were selected as developer for the Echo Bay project:

Name Date Contribution
Ronald Ratner 8/1/2007 $1,000
Charles Ratner 8/1/2007 $1,000
James Ratner 8/1/2007 $1,000
Brian Ratner 8/1/2007 $1,000
Deborah Ratner Salzberg 8/1/2007 $1,000

Donations to New Rochelle Mayor and candidate for Westchester County Executive Noam Bramson from Forest City Residential Group’s Echo Bay project consultants:

Name Date Contribution Relationship
Andrew Tung



Planner and Site Engineer
Gerhard Schwalbe



Planner and Site Engineer
KSQ Architects



Tocci Building



Construction Consultant
Roux Associates



Environmental Resources Consultant



Lobbyist and Legal Counsel



Lobbyist and Legal Counsel


Ridge Hill Development

Representative Darrell Issa and Representative Lamar Smith letter to Honorable Preet Bharara, United States Attorney, Southern District of New York regarding allegations of favoritism in decision not to charge Forest City Ratner in bribery scheme

March 20, 2010 Letter

US v. Annabi and Jereis

Forest City Ratner named as “Developer No. 2”


Superceding Indictment

SDNY Press Release

Trial transcripts

Part I

Part II

Part III

Part IV

Other Documents

Atlantic Yards

New York City Independent Budget Office Analysis of Barclays Center

Community Benefits Agreement

Figure 1: The Atlantic Yards Project Targeted Employment Area for EB-5 violates USCIS regulations by crossing all existing political boundaries 

(click to enlarge)


Mesa Del Sol

New Mexico Legislative Finance Committee Analysis of Subsidies

Mesa Del Sol TIDD Audit 2010-2012

City of Albuquerque Resolution amending affordable housing requirements for FCE

Related Documents: GreenTech Automotive

FOIA Productions

U.S. Citizenship and Immigration Services

Gulf Coast Funds Management EB-5 Regional Center

Mississippi Development Authority

FOIA Request (April 15, 2013)

Documents (April 26, 2013)

Memorandum of Understanding

Office of the Mississippi Secretary of State

FOIA Request (May 14, 2013)

Documents (May 20, 2013)

Mississippi Department of Archives and History

Emails regarding GreenTech

McAuliffe Email to Haley Barbour FW_ EB-5 Pending Cases & Processing Times

Colby Lane Emails

Virginia Economic Development Partnership

FOIA Request (April 16, 2013)





GTA 2010

GTA 2011

GTA 2012

GTA Aug-Sep 2009

Excerpted FOIA Production

The documents below show how Gulf Coast Funds Management, the visa firm for GreenTech Automotive, was backed by political heavy hitters before Terry McAuliffe. The documents were used in a POLITCO story found here.


Letter to Committee on Oversight and Government Reform (September 24, 2013)


Dan Epstein on WINA The Schilling Show 9/30/13

Executive Director Dan Epstein discussing our report on GreenTech Automotive.

REPORT: GreenTech Automotive: A Venture Capitalized by Cronyism

Executive Summary

“It seemed like a win for everyone involved when a startup car company, backed by political heavyweights, wooed investors with plans to build a massive auto plant in the Mississippi Delta, hire thousands of people and pump out a brand new line of fuel-efficient vehicles…But today, the company is under a federal investigation and about the only thing on its land in Tunica County is a temporary construction office.”

–          Associated Press, August 12, 2013

Less than half of all businesses started between 1977 and 2000 survived to five years.  Market competition is cruel but it’s not unfair.  Unfair is when political heavyweights use their influence to skew the market and force taxpayers to underwrite the risk of speculative new business ventures; taxpayers suffer while crony companies reap the profits.  Such is the case with GreenTech Automotive, Inc. (GreenTech), a startup automobile manufacturer that promised jobs and economic growth in Virginia and Mississippi but has failed to deliver.  The following report is the latest from Cause of Action’s (CoA) investigations into companies that rely upon the politically powerful, not the competitive marketplace, to determine economic winners and losers.

The story of GreenTech and its principals, Terry McAuliffe and Charles Wang, weaves a tale of promises to invest billions of dollars and create thousands of jobs as a result of alleged technological breakthroughs.  What is becoming increasingly likely, however, is that taxpayers will instead bear the costs of broken promises by subsidizing a failed business that used political connections and pressure to profit from taxpayer dollars.

Terry McAuliffe has made a career of using politics to profit.

As far back as 1997, Business Week declared that “[m]any of Terry McAuliffe’s business deals are intertwined with his political interests.” According to Leaders Magazine in 2007, McAuliffe “started over two dozen companies in the fields of banking, insurance, marketing, and real estate.  McAuliffe served as Chairman of Federal City National Bank and, most recently, was an owner and Chairman of American Heritage Homes.” These companies and his political fundraising career earned him millions in personal profit, but also brought Department of Justice investigations, accusations of conspiracy and illegal donation schemes, and Department of Labor penalties. What is clear is that political fundraiser and businessman McAuliffe has made a habit of using his connections and favors to rake in profits, and he has continued that pattern with GreenTech. After receiving campaign contributions from Charles Wang in 2008 for his first gubernatorial bid, Terry McAuliffe made his deep political Rolodex available for GreenTech’s benefit.  As Amy Gardner from The Washington Post has observed, many of McAuliffe’s biggest business deals “came in partnership with prominent donors and politicians, creating a portrait over the years of a Washington insider who got rich as he rose to power in the Democratic Party.” He continued that pattern with GreenTech, benefitting the company through his own political connections.

  • In 2008, Charles Wang made a $50,000 donation to Terry McAuliffe’s gubernatorial campaign.  Shortly thereafter, Wang’s company merged with what is now GreenTech and McAuliffe was named Chairman.
  • As GreenTech Chairman, in an email to then-Governor Haley Barbour, McAuliffe cited efforts by U.S. Senators Thad Cochran (R-MS) and Roger Wicker (R-MS) to pressure the United States Citizenship and Immigration Services (USCIS) Director Alejandro Mayorkas into fast-tracking EB-5 visa applications that would provide Chinese investments for GreenTech.
  • McAuliffe sent numerous emails to Director Mayorkas and Douglas Smith, Department of Homeland Security’s assistant secretary for the Office of the Private Sector, expressing frustration with USCIS’ slow visa approval process. Smith attended GreenTech’s groundbreaking at its temporary Horn Lake facility, where McAuliffe also privately met with President Bill Clinton and Chinese investors.
  • Anthony Rodham, brother of former Secretary of State Hillary Clinton, is President and CEO of Gulf Coast Funds Management (Gulf Coast) the country’s largest Regional Center for processing EB-5 investments, and the manager of EB-5 investments for GreenTech.

GreenTech utilized the EB-5 visa program as a catalyst for favors and a prop for business deals.

In 2008, Gulf Coast, a sister company of GreenTech, used political pressure to position itself as a powerful Regional Center for managing two states’ EB-5 investments, yielding large profits. GreenTech was financed by Chinese investors with a strong interest in securing visas in exchange for millions of dollars in capital through EB-5.

  • Then-Mississippi Governor Haley Barbour, one of Terry McAuliffe’s current business partners, contacted Barbara Velarde, the head of the USCIS office that oversees the Regional Center program, urging the agency to designate Gulf Coast as the Regional Center for the entire state of Mississippi.
  • Kathleen Blanco, who was Governor of Louisiana at the time that USCIS approved Gulf Coast’s application, is currently a member of Gulf Coast’s board.
  • Between 2009 and 2012, GreenTech raised $67 million from more than one hundred EB-5 investors. Gulf Coast has collected a total of approximately $7.4 million in profits from GreenTech investors.

GreenTech is abusing taxpayer funds.

Under the leadership of Charles Wang and Terry McAuliffe, GreenTech submitted exaggerated projections about its manufacturing output and job creation prospects, convincing Mississippi state officials to award millions of taxpayer dollars in loans and tax incentives to develop a GreenTech plant within the state.

  • In exchange for a promise to build a manufacturing facility in Tunica County, the Mississippi Development Authority (MDA) agreed to provide a $3 million loan to GreenTech from the Mississippi Industry Incentive Financing Revolving Fund to construct an access road to the facility.
  • A $2 million loan was given to the Tunica County Economic Development Foundation to purchase the site on which the facility would be built.  GreenTech received a host of tax breaks and incentives including reduced state income, franchise, property, sales and use taxes and income tax rebates for company employees.
  • GreenTech has claimed that it will create 25,000 direct jobs that will each create 11.86 indirect and induced jobs, or 296,500 jobs in total.  This is problematic both in expectation and legality given that current law provides for no more than 10,000 EB-5 visas per year.

While it is unknown whether GreenTech will meet its own estimate of 25,000 full-time jobs in Mississippi by 2014, according to NBC12 News in Richmond, Va., a former GreenTech employee claims that GreenTech’s “lofty goals were nowhere near reality.”

What follows in this report are these and additional findings from a six-month investigation of the relationships and political deals that allowed GreenTech to entice Mississippi into a misbegotten experiment in green automotive technology. As this report reveals, the real engine driving GreenTech’s business plan appears to be its management’s extraordinary talent for exploiting taxpayers to advance their own interests.


PDFGreenTech Automotive: A Venture Capitalized by Cronyism

Exhibits:Exhibits 1-32

Wang Emails: 1 & 2

GTA Exhibit 6 (here) was the Document used in a Washington Post story