RICHMOND — A group of Chinese investors has filed suit against Gov. Terry McAuliffe (D) and the electric car company he helped found before taking office, claiming they were tricked into investing large sums of money and moving to the United States for an enterprise that has gone sour.
McAuliffe has said he quit GreenTech Automotive in late 2012, before his successful run for governor and before the company failed to generate the jobs and revenue it had promised.
But GreenTech's descent into accusations and investigations has continued to shadow McAuliffe as he completes his term as governor and ponders a possible run for the presidency in 2020.
The lawsuit, filed a week ago in Fairfax County Circuit Court on behalf of 32 investors originally from China, accuses McAuliffe and partner Anthony Rodham — the brother of Hillary Clinton — of luring the investors with promises of insider connections.
"Defendants milked these connections in marketing materials, which featured Mr. McAuliffe, the former head of the Democratic National Committee and chief fundraiser for the Clinton political operation, alongside luminaries like former President Bill Clinton, who headlined the company's groundbreaking ceremony," the lawsuit says.
It charges that the company's founders, including GreenTech executive Xiaolin "Charles" Wang, "manipulated and leveraged" the federal EB-5 visa program to get the investors approved for residency in the United States. Under EB-5, immigrants who invest at least $500,000 in a business venture that generates a certain number of jobs are eligible for permanent residency status.
McAuliffe, through a spokeswoman for his political action committee, Common Good VA, said the suit was a stunt. "We strongly reject this baseless suit which has no merit whatsoever," Crystal Carson said in an email. "The claims, which regurgitate old political attacks regarding a company that Governor McAuliffe left five years ago, were brought by a lawyer with conservative ties. We are confident it will be dismissed."
Later in the day, Carson issued a new statement further distancing McAuliffe from the claims in the suit. "We have verified that . . . all of the plaintiffs named in this suit invested with the company after he left in December of 2012 and we are planning a vigorous legal response to his inclusion in the suit," she said.
One of the lawyers who filed the suit — Scott Abeles of the Washington office of Gerard Fox Law — said there was nothing political about the case. He denied having conservative ties, beyond occasionally representing the U.S. Chamber of Commerce and other clients who might be seen as right-leaning.
"I will say I voted for three people named Clinton for president over the last 20 years or so, so I wouldn't give too much credit to this notion of a political attack," Abeles said.
The suit seeks to have GreenTech and the individuals associated with it repay the more than $500,000 invested by each plaintiff, plus other fees, interest and punitive damages. Many of the investors moved to the United States and may have to return to China because GreenTech is not meeting expectations, Abeles said.
McAuliffe used GreenTech as an example of his entrepreneurial prowess when running for office, touting the high-tech electric cars and the international quality of the business. But early in 2013, after questions began surfacing about GreenTech's lofty promises and its use of the visa program, McAuliffe began distancing himself from the company, revealing he had resigned from the board late the year before.
Since then, GreenTech's manufacturing facility in Mississippi has seemingly struggled to stay in business, producing few jobs. Attempts to reach the company for comment were unsuccessful. Earlier this year, Mississippi's state auditor slammed the company for bad faith and said it should repay nearly $6.4 million in incentives.
The situation has continued to provide fodder for critics who want to paint McAuliffe as a fast-dealing Clinton operative, even as his recent success in Virginia — with Democrats sweeping statewide offices and making huge gains in the House of Delegates in this month's elections — increase his stature on the national political scene.