The electric-car company headed until last fall by Democratic Virginia gubernatorial candidate Terry McAuliffe and a sister company led by the brother of former Secretary of State Hillary Clinton are under federal scrutiny over how they used a foreign investor visa program.
Nearly 100 pages of newly released documents reveal the Securities and Exchange Commission in May subpoenaed records of GreenTech Automotive and Gulf Coast Funds Management, a partner in GreenTech's efforts to establish plants in Mississippi. The inquiry is related to their use of a Department of Homeland Security program that grants permanent residency to foreign investors who invest $500,000 or more in economically struggling areas for ventures that create American jobs.
McAuliffe is a former chairman of the Democratic National Committee and close friend and chief fundraiser for the presidential campaigns of Bill and Hillary Clinton. He was a co-founder and chairman of GreenTech until he quietly resigned after announcing his candidacy for governor in November.
"I left the company in December of last year, and I don't know anything about it,'' McAuliffe said after participating in a forum in Wytheville, Va., with state Attorney General Ken Cuccinelli, his Republican opponent in the nation's only competitive governor's race this fall.
Gulf Coast's chief executive and president is Anthony Rodham, the brother of the former first lady.
There was no reply to telephone messages the AP left Friday afternoon at GreenTech's McLean, Va., headquarters and at Rodham's home.
SEC spokesman John Nester declined to comment on the investigation.
GreenTech, with the aid of Gulf Coast, used what is known as the EB-5 program to attract overseas capital, particularly from China where the company has its roots. Gulf Coast is one of hundreds of "Regional Centers'' that pool investments from foreign nationals looking to invest in U.S. businesses or industries as part of the foreign investor visa program.
Documents posted on the website of Sen. Charles E. Grassley, R-Iowa and the ranking member of the Senate Judiciary Committee, show that the SEC's subpoena sought unspecified documents from GreenTech and banking records from Gulf Coast. The documents also indicate that GreenTech impermissibly guaranteed investors returns on their money.
"The SEC is looking into the Regional Center (Gulf Coast) for possible security violations. SEC has issued subpoenas on the Regional Center's bank records. The SEC also informed USCIS of a publicly posted (an) unsigned promissory note posted online which guarantees returns on the GreenTech Automotive investment,'' according to one official summary that found ``fraud was possible but not fully verified.''
The documents include a 12-page letter from Grassley to Alejandro Mayorkas, director of U.S. Citizenship and Immigration Services which oversees the EB-5 program, accusing Mayorkas of providing unusually preferential treatment to the politically connected McAuliffe and Rodham to expedite EB-5 applications from foreign investors.
Among documents Grassley references is an email from McAuliffe in which he complains about the deliberate pace of USCIS staff in approving an application and drops the name of Virginia's senior U.S. senator, Mark R. Warner, to drive home his point.
"I have been extremely frustrated by the USCIS approval process,'' McAuliffe wrote to Doug Smith, a Homeland Security assistant secretary on July 28, 2010. "You should be aware that Senator Warner and other Members of Congress have made inquiries on this project.''
Mayorkas, testifying last week on his appointment before a skeptical Senate Homeland Security Committee, denied ever exercising undue influence on the outcome of a case.
McAuliffe, in the gubernatorial campaign, touts his stewardship at GreenTech as an example of his prowess at creating jobs. Last year, he said he located a start-up plant for the tiny, all-electric, two-seat MyCar in the Memphis, Tenn., suburb of Horn Lake, Miss., because Virginia economic development officials would not bid on the factory.
Years' worth of emails and other correspondence between McAuliffe and other GreenTech executives and Virginia Economic Development Partnership first reported by AP in December showed that VEDP staff under Democratic and Republican governors showed company officials a variety of sites in economically depressed Virginia regions. But the Virginia officials never got answers to questions about company operations and became skeptical of the investments-for-visas EB-5 program as a cornerstone of GreenTech's financing.
McAuliffe released a statement on the investigation into his former company, which read, in part:
"...The EB-5 program is designed to inject capital into the American economy and to create American jobs. It has broad bipartisan support, including from every member of Virginia's delegation and the current administration in Richmond. There has been widespread frustration, however, both inside and outside USCIS about the bureaucracy there and the pace of the investment program. Like many business leaders and political officials from both parties, I was among those who expressed frustration on several occasions to multiple individuals. I never asked for any preferential treatment, nor did I ever expect to receive any. Both Republican Senators from Mississippi also met with DHS to voice their concerns about the bureaucratic pace of the program."
MORE ON NBCWASHINGTON.COM