The mirage broker

NY Daily News 

A prominent Queens businessman and political donor is facing accusations that he and his wife lured hundreds of unwitting Chinese nationals into pouring a quarter-billion dollars into two development projects with the promise that their investments would help secure residency in the United States.

According to a complaint filed in Brooklyn Federal Court by the U.S. Securities and Exchange Commission, Yi “Richard” Xia and his wife Julia Yue persuaded more than 450 investors to shell out $229 million to fund the construction of two five-star hotels, one in Flushing and the other in Corona.

The Flushing development, which was dubbed the Eastern Mirage Project and supposed to be finished in 2013, remains incomplete, and according to the SEC complaint, is “an unfinished and empty glass tower.” The other development, the Eastern Emerald Project, is “a largely vacant dirt hole surrounded by a concrete wall.”

Xia’s solicitations for investments spanned from 2010 to 2017, the SEC contends.

According to its complaint, Xia, 52, and Yue, 41, pitched the hotel projects as a way for investors from China to obtain American residency through the U.S. Citizenship and Immigration Services’ EB-5 program, which allows foreign nationals to qualify if they invest $500,000 or more in a project that creates or preserves jobs.

But, the SEC claims, the investors who made loans to project developers were being deceived.

Instead of their cash going where it was promised, money investors sent to the Mirage project was redirected to the Emerald development, and money intended for the Emerald project was sent to the Mirage job, the complaint claims.

“Defendants represented to investors that their $500,000 capital contributions would be used only for the construction and operation of that specific project. Instead, defendants repeatedly misappropriated money from one project and used it for another,” the complaint states. “Xia also misappropriated investor funds for personal and other improper expenses.”

To that end, the complaint claims that “at least $9.7 million in ill-gotten gains” were funneled into Yue’s personal bank accounts “for no legitimate business purpose.”

Xia also promised investors the projects would be financed through government bonds and bank loans, according to the complaint, which contends those assertions were false.

Xia and his wife did not immediately return calls seeking comment.

 Campaign finance records indicate that over the years Xia has donated generously to political causes, including contributions to Assemblyman Ron Kim, Councilman Peter Koo, state Sen. John Liu and a Democratic political action committee that wheeled thousands of dollars to former Rep. Joe Crowley.

Hudson Yards was made possible with pilfered EB-5 funding that was meant for public housing developments through enabled cirvumvention and crooked gerrymandering

City Lab

Since its official unveiling last month, critics have been teeing off on Hudson Yards, the $25 billion office-and-apartment megaproject on Manhattan’s West Side. The Guardian’s Oliver Wainwright calls it “bargain-basement building-by-the-yard stuff that would feel more at home in the second-tier city of a developing economy.” In Curbed, Alexandra Lange writes that it suffers from “no contrast. No weirdness, no wildness, nothing off book.” The New York Times’ Michael Kimmelman describes it as a “vast neoliberal Zion.”

“New York politics and real estate are notoriously akin to Rashomon,” reads Kimmelman’s review. 

“Any verdict on an undertaking as costly and complex as Hudson Yards depends on one’s perspective.”

Views abound, sure, but so far, nobody seems to like what they see when they look at Hudson Yards. 

The project has managed to do something unique: unite all New Yorkers in a vernal equinox of acid contempt. Early reviews offer a litany of contrasts, with the development’s garish geometry and dull placelessness earning rebuke in equal measure. That’s before considering how certain features, particularly Thomas Heatherwick’s oft-derided shawarma-shaped bucket, square with other projects as “bellwethers pointing to exactly where our cities are going awry.”

However, among all the many reasons to feel salty about Hudson Yards, one perspective may deserve a place of privilege: the view from Harlem. Without their knowledge, the residents of a number of public housing developments helped to make Hudson Yards possible. The mega-luxury of this mini-Dubai was financed in part through a program that was supposed to help alleviate urban poverty. Hudson Yards ate Harlem’s lunch.


Specifically, the project raised at least $1.2 billion of its financing through a controversial investor visa program known as EB-5. This program enables immigrants to secure visas in exchange for real estate investments. Foreigners who pump between $500,000 and $1 million into U.S. real estate projects can purchase visas for their families, making it a favorite for wealthy families abroad, namely in China. EB-5 is supposed to be a way to jumpstart investment in remote rural areas, or distressed urban ones.


Hudson Yards, of course, is nobody’s idea of distressed. Located at the source of New York’s High Line, it’s the most expensive real-estate project in U.S. history. It could not possibly qualify as distressed under the terms of the program, or any understanding of the word. In order to buy EB-5 visas at the lower rate ($500,000), immigrant investors must put their money behind projects in areas with high unemployment—a proxy for need.

 Manhattan’s West Side may not suffer for lack of opportunity, but, as Kimmelman notes, New York real estate is a realm for Kurosawa-esque visionaries. The Related Companies, the developer behind Hudson Yards, raked in at least $1.2 billion in EB-5 funds for this project. To qualify, Related needed a work-around to bypass the distressed-area requirements—a pass that New York authorities were happy to issue.


Here’s how these requirement works: EB-5 visa applicants must invest a minimum of $500,000 in a project within a designated geographic area called a targeted employment area, or TEA. To be eligible for this financing, a project needs to qualify as falling within a TEA—which is going to be either a rural area or a distressed urban area. For an urban area to count as a TEA, it has to meet a certain unemployment threshold (150 percent of national unemployment).

 Lower Manhattan doesn’t meet this unemployment threshold, so Hudson Yards, on its own, can’t qualify as a distressed urban area. However, when Congress created the EB-5 visa as a part of immigration reform legislation in 1990, lawmakers did not specify how states should draw up the geographic boundaries for a TEA.


New York takes a rather liberal approach to drawing these lines. Empire State Development, the economic development agency for the New York state government, determines the boundaries for qualifying TEAs. Under state law, the agency has the authority to string together an unlimited number of census tracts in order to achieve the desired aggregate unemployment standard. Think of it as a form of creative financial gerrymandering.  

As I reported back in 2017, records obtained by CityLab under the Freedom of Information Act reveal the gerrymandered map that Empire State used to qualify Hudson Yards for EB-5 financing. This particular TEA snakes up from the West Side and includes Central Park. (Think about that: a map of Manhattan that claims Central Park as an economically troubled area.) Beyond the park, the qualifying zone for Hudson Yards captures several census tracts in Harlem, where public housing projects boost the overall unemployment figure.   

 These funds might have financed alternative developments in Harlem directly. Other developers have successfully raised EB-5 funds for projects in actually distressed areas of New York. For example, Asian Americans for Equality, a nonprofit organization, once pursued EB-5 funding to finance a food hub and university project in northeast Kansas City, a grocery store destroyed by Hurricane Sandy in the Far Rockaways, and an affordable housing complex in Queens’ Flushing neighborhood.  


Instead, Related sopped up hundreds of millions in funds never intended to finance luxury projects. 

The developer has successfully leveraged Harlem unemployment to raise more in EB-5 financing than any other developer in the nation. Related recently sought a third tranche of EB-5 funds for Hudson Yards, targeting $380 million—bringing the total as high as $1.6 billion, according to New York University’s Stern Center for Real Estate Finance Research.

EB-5 under fire

From DNA Info:

A Manhattan-based immigration lawyer and real estate broker wants to connect wealthy Chinese investors looking for green cards with small developers and nonprofits to build affordable housing, recreation centers, assisted living facilities and other projects across the city.

Min Chan hopes to tap the controversial federal immigration program known as EB-5, which grants visas to foreigners who invest $500,000 in U.S. projects that create 10 full-time jobs within 2 years. The program also gives visas to their families and children.

Roughly 85 percent of applicants last year were from China, thanks to the county's soaring number of millionaires in recent years, according to a report from commercial real estate firm Savills Studley. The State Department announced this month that the U.S. already reached its quota for its 10,000 EB-5 visas to be given out this fiscal year because of demand from China — marking the second year in a row the program hit its limit.

The program, which enables developers to tap low-interest funding, is intended to be a job-generator for high-poverty and high-unemployment areas.

In reality, EB-5 is helping fund some of the city's swankiest projects from some of the top developers like Silverstein Properties' towering, ultra-luxurious Four Seasons Hotel New York Downtown rising at 30 Park Place, the Durst Organization's Danish-desinged glassy pyramid-shaped high-end rental rising on West 57th Street and Kushner Real Estate Group's NoMad tower at 281 Fifth Ave.

The EB-5 program — which is up for review in Congress this September — has come under fire for lax regulations that have led to shadowy transactions and scams. Some watchdogs have raised national security concerns since the fast-tracked EB-5 visas aren't required to have the same background checks as other visa applicants.

Result of rezoning Queens Blvd

From Curbed:

The 69-unit building is being developed by Steve Cheung (based in Bayside) and will be designed Michael Kang (an architect based in Flushing). It will entail 55,000 square feet of residential and 5,500 square feet of commercial space. There will also be a small communal space and an asymmetric rooftop that will form penthouse terraces, plus a garage with room for 59 cars. According to YIMBY, about a quarter of the development was backed by foreign money (probably Chinese) under the EB-5 visa program, which grants green cards to foreign investors whose projects will produce American jobs.

Above is a screenshot from Google Street View of the site. The lot is across the street from the former St. Mary's elementary school. I'm not sure why there's a pedestrian bridge depicted where the Entenmann's outlet store is in the rendering. I wonder what kind of prices they'll get being a block away from the Metro Motel (hot sheets/family homeless shelter).

Although Curbed & YIMBY made a big deal about this being in Elmhurst (and Curbed actually linked back to this blog, thanks) the project is actually in Woodside which was rezoned along with northern Maspeth in 2006. (Elmhurst wasn't rezoned at all.)

Fresh Direct really got a sweetheart deal

Very interesting post over at Atlantic Yards Report:

ESD is about to give Fresh Direct a $9 million grant and a $1 million loan to move/expand from Long Island City to the South Bronx.

That's on top of $10.5 million from the New York City Industrial Development Authority and $1 million from the New York State Department of Transportation and $5 million in New Markets Tax Credit Equity.

Add $15 million from the investment fund Brightwood Capital, $40 million in the company itself, and a whopping $84,168,000 in an EB-5 loan.

Unmentioned are previous promises (which may have been adjusted) of $18.9 million in state Excelsior tax credits; $4 million in state energy grants and incentives; up to $1 million in vouchers for the purchase of electric vehicles; about $74 million in city sales tax exemptions, mortgage recording tax deferral, and real estate tax exemptions; $4.9 million in city energy benefits; $1 million capital grant from Bronx Overall Economic Development Corporation; and a $3 million loan and $500,000 capital grant from the Borough President

Let's put aside the strangeness of the city and state subsidizing a cross-borough move based on a perceived threat from New Jersey, an unlikely base for a delivery service that needs quick access to Manhattan.

Or that Fresh Direct is moving after having gotten subsidies to stay in Queens through 2025.

Or that neighbors (see South Bronx Unite) pose some heavy concerns about the project's environmental impacts, and that if the promised job total is not reached, there's no "clawback provision" to recover subsidies. (See Good Jobs New York timeline.)

The really strange thing is the reliance, according to ESD Board Materials (p, 51ff.), on the EB-5 immigrant investor program, in which foreign millionaires, mostly from China, park $500,000 in a purportedly job-creating investment, get green cards for themselves and their families, and later get their money back. (In this case, they're getting a relatively high--for EB-5--rate of 4.5%.)

The developer gets cheap capital. The public is supposed to get 10 jobs for each investor.

According to promotional material supplied almost surely by the New York City Regional Center, the private investment pool set up to market EB-5 investments (and reap fees), the project would not be $166 million in total, but $208 million.

That's not the only misleading part. EB-5 funding is said to make up just 40% of the project, rather than more than 50%.

And Fresh Direct is said to be providing the rest of the funds, which is clearly not true.