Company lures foreign cash, feds call it a Ponzi scheme

Source: San Antonio Express-NewsAug.儲存倉 25--On a steamy, mid-May afternoon earlier this year, a handful of men in dark blazers huddled on Cotulla's outskirts to celebrate the grand opening of a new hotel, billed as the latest example of the power of foreign capital.The gathering, as described later on the website of the McAllen private equity group USA Now, brought together the hotel developers and Mexican investors whose money helped fund the newly opened Instalodge Hotel and Suites.While the foreigners toured the facilities that day, USA Now's director Marco Ramirez extolled the virtues of the federal program that made the project possible -- one that has granted thousands of green cards to immigrant investors willing to use their capital to create U.S. jobs."There are many families from Mexico for whom it is very complicated to obtain even a tourist visa," Ramirez told a television news crew covering the Cotulla opening. "This is a great way to eliminate those problems."Except, said Instalodge developer Landmark Consolidated in an interview last week, despite what USA Now and Ramirez continue to claim on their website, the Cotulla hotel project didn't happen that way at all.No foreign investors provided financing. And Ramirez and his company weren't involved in the construction. "It's a little bit baffling," Landmark President Raymond McCall said after the Express-News brought the write-up on the event on USA Now's website to his attention. "They certainly make it sound like their investors financed this project, and that just wasn't the case."McCall isn't the only one with questions.A month after FBI agents raided USA Now's McAllen offices and accused Ramirez and his wife Bebe of defrauding Mexican investors in what authorities have described in search-warrant affidavits as an elaborate Ponzi scheme, the news has prompted dozens of former business partners and clients like Landmark to re-evaluate their relationship with the company.With millions at stake and threats of legal action, few were willing to speak openly about their past dealings with USA Now. But court documents and government records paint a portrait of a firm with outsized goals, trouble completing projects and a trail of questions surrounding the way it managed other people's money.The Ramirezes, who have not been charged with a crime, did not respond to repeated attempts to comment for this story. Their lawyer has denied the allegations against them. And as for the Cotulla project, USA Now officials have since described its prominence on their website as a mistake.But the company's troubled history and threat of new legal problems have left many wondering why it took federal investigators so long to catch on."These people had a license to raise foreign capital from the U.S. government," said Michael Gibson, managing director of USAdvisors.org, a firm that specializes in evaluating financial risk for foreign investors. "It looks like the government just isn't doing its due diligence here."Indeed, the federal agency that approves the licenses admits it doesn't check the backgrounds of applicants, only the strength of their busines plans.Aggressive marketingMarco Ramirez opened USA Now in 2010, joining a rapidly growing network of what are known as EB-5 regional centers, named after the visa Congress created for immigrant investors in the 1990s as a way of potentially boosting the U.S. economy.Under the program, foreign nationals who agree to invest at least $500,000 in a business venture that will create at least 10 jobs in a high-unemployment area are fast-tracked for green cards to legally live in the United States.Over the last two decades, 393 government-sanctioned regional centers have cropped up across the country to recruit foreign cash. In all, they have raised more than $6.8 billion in investments and created 49,000 jobs, according to U.S. Citizenship and Immigration Services, the federal agency that oversees the program.But the program hasn't developed without criticism, including questions from those who say the government does little to screen regional center applicants and that poor business plans have resulted in high-profile debacles like a failed sewage plant project in California that have lost investors millions. Other instances of fraud and abuse have threatened to scuttle the program in the past.Still, Ramirez saw opportunity south of the border.In the days after opening USA Now in a nondescript McAllen office park, he emerged as one of the EB-5 program's loudest boosters in South Texas.In a 2010 interview with the Express-News, Ramirez said the company had already raised $55 million from Mexican investors, money he hoped to invest in projects like a $20 million Edinburg shopping center, a $30 million condo building on South Padre Island and an effort to establish a passenger airline with routes between Mexico and the Rio Grande Valley. None of those projects came to fruition.A year later, he told The Monitor newspaper in McAllen that the company had raised $83 million, with plans to reach $150 million, by 2012.All the while, USA Now was engaged in an aggressive marketing campaign to recruit more investors at workshops in Mexico City and ad blitzes targeted toward holidays like Holy Week. One video from the period, still available on the company's website, emphasizes escalating drug迷你倉沙田violence in Mexico and offers EB-5 investment as a way to escape it.However, throughout this time, USA Now had no authorization to raise money as part of the EB-5 program, according to USCIS documents obtained by the Express-News.It was not until March 2011 -- nearly a year after USA Now first opened its doors -- that the federal government approved the regional center's application.Though he declined to comment on Ramirez's specific case, USCIS spokesman Chris Bentley said that courting investors as an EB-5 regional center without the proper authorizations would violate program rules.Signs of troubleHowever, even before USCIS granted its approval, there were signs of trouble that might have given the agency pause. The Ramirezes had been repeatedly accused of mismanaging the investments of others prior to opening USA Now.In 2008, the Ramirezes partnered with two couples from Monterrey to buy and manage an apartment complex in McAllen. But when the project fell apart, so too did the relationship between the investors.The two couples -- Fernando and Emma Olivarez and William and Yolanda Haley -- sued their former partners in an Hidalgo County state district court, claiming the Ramirezes' had depleted the hundreds of thousands they paid in and appeared to have spent much of it on trips to H-E-B and Sears and used more to pay off personal credit cards.Both couples declined to comment on the ongoing case. But according to court filings, the Olivarezes settled their claims against the Ramirezes in 2011 for $485,000 -- a sum FBI investigators now claim came directly from USA Now's investment pool.Others, too, lodged complaints, including a group of U.S. lawyers, who turned to the Ramirezes to help bail them out after a subdivision they were developing near Alton fell into foreclosure. According to a lawsuit filed by the attorneys last year, the couple promised to pool their investors' money with cash the lawyers were able to raise to save the property, but never came through.The FBI has claimed that Marco Ramirez used at least $50,000 from the project to buy a 2011 Dodge 3500 truck.In each of the lawsuits, the Ramirezes denied the claims against them but settled the cases.Asked whether USCIS might have weighed those previous allegations when deciding whether to approve the Ramirezes application to open a regional center in 2011, Bentley, the agency spokesman, said probably not. Regional center applicants are primarily evaluated solely on the quality of their business proposals, not their backgrounds as investment managers, he said."We're not looking at the bonafides of the participants," he said. "It's more looking at the validity of their business plan."Jewelry, cars, firearmsBut Ramirez's attorney Tony Canales said it would be wrong to lump USA Now in with previous high-profile EB-5 failures.The FBI says the Ramirezes' took millions from their investors and spent it on luxury cars, jewelry and firearms for themselves. They operated the rest of their business like a Ponzi scheme, using money from new clients to pay returns to the old, investigator Benjamin LaBuz wrote in a court affidavit filed last month.But Canales maintains that the allegations fundamentally misunderstand the Ramirezes' business.Much of the money they flagged as misspent, he said, went through the Bayou Grill, a McAllen Cajun-food restaurant USA Now has legally sponsored with investor money. Bebe Ramirez is a co-owner of the dining spot, and is thus entitled to take home a salary from its earnings, he said."We think the government's wrong. We think we can explain all of it," he said in a recent interview, declining to go into detail.But despite Marco Ramirez's repeated claims of investments in businesses ranging from a 22-story luxury tower in McAllen to a repurposing of a shuttered San Benito hospital into a bustling medical center, it remains unclear just how much of USA Now's money went to ventures outside the restaurant.Asked by the Express-News to provide a list of completed projects funded with investor money, USA Now responded by citing only the Bayou Grill and a series of planned restaurants and hotels across South Texas, none of which had begun construction.Both the tower complex and the hospital never made it past the preliminary discussion phase before falling apart, said developers involved in both. In fact, said John Guevara, a tax attorney for the City of San Benito who managed the hospital resale, he was surprised to see Marco Ramirez trumpeting the project in a local news article in late 2011."I was shocked," he said. "Here we were about to put the site up for sale, and Ramirez was talking to the local press about a plan I had never even heard about."And still, the only project listed on USA Now's website remains the Cotulla Instalodge, a week after USA Now officials conceded their investors played no role -- a fact that perturbs McCall, its developer.In an interview Thursday, McCall said his company had briefly planned to partner with USA Now on a future hotel in Karnes County.But in the face of USA Now's mounting legal problems, he said he was placing the project on indefinite hold.jroebuck@express-news.netTwitter: @jeremyrroebuckCopyright: ___ (c)2013 the San Antonio Express-News Visit the San Antonio Express-News at .mysanantonio.com Distributed by MCT Information Services迷你倉價錢