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CAR COMPANY'S BIG PLANS HAVEN'T MATERIALIZED
Sunday August 11, 2013 1:06 PM
TUNICA, Miss. (AP) Four years ago, a startup car company announced with great fanfare big plans for the Mississippi Delta: Using money from foreign investors and other sources, it would build a massive auto plant to churn out a new line of energy-efficient cars and bring thousands of jobs to the area.
It seemed like a win for everyone involved. The foreign investors who plunked down at least $500,000 for the venture would get the opportunity to stay in the United States and a path to citizenship, an impoverished area of Mississippi would get some desperately needed jobs, the state would generate tax revenues, and the political leaders involved would be able to tout job-creation prowess.
Today, the place where the plant was to be remains mostly vacant except for a temporary construction trailer. The company GreenTech Automotive Inc. is under investigation by the Securities and Exchange Commission and the probe is reverberating well beyond Mississippi's borders, bringing scrutiny to a Virginia gubernatorial candidate and the company run by the brother of former Secretary of State Hillary Rodham Clinton.
"Back in 2009, it was a big deal," said 21-year-old casino employee Perry Turner, who lives across the highway from GreenTech's mostly empty site in rural Tunica County. "I haven't heard much else about it."
Some analysts say it was a risky business plan and foreign investors may have been more interested in an easy way to get a visa and a chance at citizenship than trying to support a venture that had a high chance to turn a profit or create jobs.View gallery."In this July 30, 2013 photograph, Perry Turner, 21, who lives across the road from the planned site …
On that overcast day in October 2009, GreenTech's owner, Chinese businessman Xiaolin "Charles" Wang, unveiled four prototype cars during a flashy ceremony and promised to build a $2 billon plant in the heart of the Mississippi Delta.
Besides backing from foreign investors, some 100 acres were donated by Tunica County's economic development foundation, at a cost of $1.8 million, and in 2011 the state gave a $3 million loan toward site preparation. For a time, the company's chairman was politically connected heavyweight Terry McAuliffe, a close adviser to both former President Bill Clinton and former Secretary of State Hillary Clinton, a former Democratic national chairman and now a contender for Virginia governor.
The cars were supposed to start rolling off the assembly line in 2012. But the plant has yet to be built. The company now hopes to start producing cars next year. And while they say they still plan to build a plant in Tunica County, all that was on the land on a recent afternoon was a construction trailer, a few pieces of equipment and a few workers strolling around.
The company instead now uses a former elevator factory 30 miles away in Horn Lake. A McAuliffe spokesman says about 100 small electric vehicles were built by the time McAuliffe resigned from the company in December. The thousands of promised jobs have yet to materialize.
"It takes time to build a brand new company in a capital-intensive industry like electric vehicles, and we will not cut corners on quality or safety as we progress. We have a plan. The plan is working. We're sticking to it," GreenTech said in a statement.View gallery."File-In this July 6, 2012, file photograph, then GreenTech Automotive executive Terry McAuliffe, sec …
The company now says it has more than 100 workers and "once production is ramped up" should employ at least 350 the same number of jobs required under the state loan agreement.
Jeff Rent, a spokesman for the Mississippi Development Authority, says the company has assured MDA that they're on track to meet production and hiring goals outlined in a memorandum of understanding.
But industry analysts say the company faces hurdles to succeed.
"A brand-new electric car company without an established U.S. partner, or global partner, is a lofty goal," said Joe McCabe, president of AutomotiveCompass, which forecasts global vehicle and power train production. "They're one of several other electric manufacturing startups entering a tough market. They have to come with something better to the game, not just an also-ran."
Other analysts say GreenTech exposes problems with the program used to attract foreign investors known as the EB-5 visa program.View gallery."File-In this July 6, 2012, file photograph, former Mississippi Gov. Haley Barbour, left, and then Gr …
David North, a fellow with the Center for Immigration Studies, a nonprofit based in Washington, D.C., that examines immigration policies, said the foreign investors in the EB-5 program are primarily motivated by a desire to get green cards for them and their families, not to find lucrative propositions.
"So this EB-5 program by its very nature is often linked to second- and third-class investments," he said.
Under the EB-5 visa program, foreigners can invest $500,000 or $1 million in American business ventures depending on the location of the project. In GreenTech's case, the program called for $500,000 investments.
Under the rules of the program, each EB-5 investment must create at least 10 jobs. In exchange, the foreign investors get to stay in the United States for up to two years and can then apply for full citizenship, a speedier process than afforded to most other immigrants who must wait five years after establishing residency before being eligible for citizenship.
The federal U.S. Citizenship and Immigration Services' Immigrant Investor Program also designates so-called "regional centers," companies that have authorization to handle the company's EB-5 investments and can collect thousands of dollars in fees from foreign investors to process their visa applications.View gallery."File-In this Oct. 6, 2009, file photograph, Xiaolin "Charles" Wang, president and chief executive of …
In this case, Gulf Coast Funds Management a company headed by Tony Rodham, the brother of former Secretary of State Hillary Clinton is the designated "regional center" and has raised 45.5 million from foreign investors for GreenTech, according to an internal USCIS document obtained by The Associated Press that outlines background information about the firm. Rodham has not responded to phone messages at Gulf Coast Funds or a message sent to an email address listed in government reports submitted to the government.
Hybrid Kinetic Motors, a predecessor to GreenTech, paid Gulf Coast $250,000 for assistance in setting the EB-5 program, according to a lawsuit between Wang and his former partner. Regional centers collect additional fees for processing the investments.
Of GreenTech's 91 foreign investors, only one has received permanent residency status, according to an internal USCIS document obtained by the AP that outlines background information about the firm; the name of that one investor was not disclosed. Neither USCIS or the companies have said whether the slow pace of reaching production goals has affected the immigration status of its other foreign investors.
Christopher Bentley, spokesman for USCIS, said in an email to the AP that he couldn't comment on details on the plans by GreenTech and Gulf Coast Funds.
In May, the SEC subpoenaed unspecified documents from GreenTech and banking records from Gulf Coast, according to nearly 100 pages of documents recently released by Sen. Charles Grassley, R-Iowa.View gallery."In this Oct. 6, 2009, file photograph, Xiaolin "Charles" Wang, president and chief executive officer …
The documents indicate that GreenTech allegedly improperly guaranteed investors returns on their money. GreenTech has acknowledged receiving the subpoenas and said the company is cooperating with investigators.
The Department of Homeland Security inspector general also is investigating allegations that USCIS director Alejandro Mayorkas President Barack Obama's pick for the No. 2 slot at DHS used his influence to help Gulf Coast obtain a foreign investor visa for a Chinese executive.
Since the 2009 groundbreaking, GreenTech has changed its business plan. Instead of producing versions of the four prototypes it showcased then, including hybrid cars, it now says its plant, when built, will have the capacity to make 30,000 electric vehicles a sedan and small electric vehicles known as MyCars each year. It now aims to have the first ones rolling off the line in Tunica by next April.
In the meantime, GreenTech has been using space at an old factory elevator in Horn Lake, Miss., where the company says it's building MyCars, neighborhood electric cars that are a cross between a golf cart and a full-sized vehicle. It's not clear how many of the MyCars which are not legal to drive on U.S. highways have been sold.
GreenTech recently declined an AP request to tour the Horn Lake facility. The company won't say how many MyCars it has produced or sold, but says it has "international distribution agreements for 30,000 vehicles over the next three years."View gallery."File-In this July 6, 2012, file photograph, then GreenTech Automotive chairman Terry McAuliffe addre …
Local officials haven't lost hope it will all still happen as advertised.
"I still look at this as an ongoing economic development project," said Lyn Arnold, president and CEO of the Tunica County Chamber of Commerce.
But some residents are ready to see results, like 33-year-old waitress Shaquita Pickett, who says a car plant would be a big boost for the county.
"We really do need one here because we need better jobs," she said.
View gallery."In this July 29, 2013 photograph, a satellite office of GreenTech Automotive is adjacent to two cash …
Weiss reported from Charlotte, N.C. Associated Press writers Jeff Amy in Jackson, Miss.; Bob Lewis in Richmond, Va.; Alicia A. Caldwell in Washington D.C.; Michael Kunzelman in New Orleans; and AP researchers Judy Ausuebel and Rhonda Shafner contributed to this report.
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