An electric-car company co-founded by Virginia gubernatorial candidate Terry McAuliffe (D) is being investigated by the Securities and Exchange Commission over its conduct in soliciting foreign investors, according to law enforcement documents and company officials.
In May, the SEC subpoenaed documents from GreenTech Automotive and bank records from a sister company, Gulf Coast Funds Management of McLean. The investigation is focused, at least in part, on alleged claims that the company “guarantees returns” to the investors, according to government documents.
GreenTech has sought overseas investors through a federal program that allows foreigners to gain special visas if they contribute at least $500,000 to create U.S. jobs. Gulf Coast, which is run by Anthony Rodham, the brother of former secretary of state Hillary Rodham Clinton, seeks investors for GreenTech and arranges the visas.
In recent months, the SEC has stepped up its scrutiny of companies that use the visa program, largely over concerns that investors may have been misled or defrauded by the companies seeking their money. The visa program has also raised national security concerns from some lawmakers worried that suspect individuals are using it to gain entry into the country.
The full focus of the SEC investigation into GreenTech and Gulf Coast is not known, and SEC officials declined to comment.
A spokesman for McAuliffe’s campaign said that the candidate “has no knowledge of any investigation,” which appears to have started in early 2013, according to Homeland Security Department documents. McAuliffe resigned as chairman of GreenTech in late 2012 as he began his run for governor, although he did not publicly reveal that he had done so for several months.
Some of the details about the SEC’s concerns are contained in nearly 100 pages of internal DHS documents and e-mails that were obtained by Sen. Charles E. Grassley (R-Iowa), a critic of the visa program.
Representatives of GreenTech and Gulf Coast, which share office space in Tysons Corner, confirmed Thursday that they had received subpoenas from the SEC for documents and said they planned to cooperate with the investigation. They declined to elaborate.
The new issues surrounding GreenTech are likely to create fresh political problems for McAuliffe, who launched the company after his failed 2009 bid for governor in part to burnish his credentials as a businessman and job creator.
McAuliffe initially pledged to build a factory “right in the heart of Virginia,” but the company instead set up shop in Mississippi after getting generous incentives from that state and local governments. Joining McAuliffe for the July 2012 ribbon-cutting were a top DHS official, then-Mississippi Gov. Haley Barbour (R) and president Bill Clinton.
McAuliffe’s close ties to the Clintons have fueled his political career — during the Clinton presidency, he was often referred to as “first friend.”
McAuliffe said last year that he thought GreenTech could build 10,000 cars in 2013. A fraction of that number has been built, and McAuliffe rarely mentions the company on the campaign trail.
The company’s struggles, its reliance on foreign investors and government help, and its location have become regular lines of attack by Republican gubernatorial candidate Ken Cuccinelli II. At a debate last month, for instance, Cuccinelli said to McAuliffe that the Democrat “walked right over the people of Martinsville on your way to Mississippi.”
Cuccinelli responded to news of the SEC investigation Friday by reiterating his calls for McAuliffe to be more transparent about his dealings with GreenTech.
“Instead of coming forward and addressing this matter head on, McAuliffe has refused to provide Virginians answers on a list of questions that is only growing longer and more serious by the day. . . . Virginians deserve answers and deserve them right now,” Cuccinelli said in a statement.
Aside from the SEC investigation, the newly obtained documents show greater communication between McAuliffe, Rodham and DHS officials than was previously known, as well as concern over a potential GreenTech investor tied to a Chinese firm that has raised national security concerns.
The documents counter the impression left last week by a top U.S. immigration official, Alejandro Mayorkas, who testified in front of a Senate panel that he met with McAuliffe on one occasion, “and that was the extent of the interaction.”
The documents show that Mayorkas and other senior DHS officials had a dozen e-mail and telephone contacts with McAuliffe, Rodham, and other representatives of GreenTech and Gulf Coast.
Mayorkas, who has been nominated to be second-in-command at DHS, is under investigation by the agency’s inspector general for allegedly providing special treatment for GreenTech. The investigation is preliminary and has not produced any findings of wrongdoing. Nonetheless, Senate Republicans have said they will not consider Mayorkas’s nomination until it is completed.
The new documents also show that some career DHS employees believe that Mayorkas broke protocol by altering a draft decision about GreenTech and how it handled stock returns to investors.
Whistleblowers have alleged to Senate investigators that Mayorkas became overly involved in GreenTech’s case.
“It appears that you inserted yourself into the process in an unusual way by reviewing and allegedly rewriting a draft [appeals office] opinion to benefit Gulf Coast and GreenTech,” Grassley said to Mayorkas this week in a letter that included an appendix of nearly 100 pages of internal documents and accounts of interviews with DHS employees. “At a minimum, you clearly created the impression among senior career staff that you were giving special treatment to these applicants.”
Mayorkas has emphatically rejected suggestions that he acted improperly or showed favoritism toward McAuliffe or any others with issues before DHS’s U.S. Citizenship and Immigration Services (USCIS) division, which he runs.
At the hearing, Mayorkas said: “I do not adjudicate cases. I address legal policy issues that are brought to my attention” by staff, members of Congress and media accounts. “Neither the temperature with which the complaint is made nor the author of the complaint are material to our decision making. The decision making is based on the law and the facts.”
Some of the Grassley documents show that Mayorkas warned his staff in e-mail and memos not to show any favoritism. In his confirmation hearing, Mayorkas said he personally referred GreenTech cases to national security and fraud experts for further review.
The Democratic chairman of the Senate Homeland Security panel, Thomas R. Carper (Del.), said this week that he was not convinced by Grassley’s claims and continues to support Mayorkas.
Aside from Mayorkas, the documents show that McAuliffe reached out to Homeland Security Secretary Janet Napolitano and other officials at the department seeking help in speeding up approval of the visas. Rodham, who is president and chief executive of Gulf Coast, also pushed DHS officials to help the company with its visa applications.
Campaign spokesman Josh Schwerin said McAuliffe’s involvement in the visa issue was limited to broad efforts to speed up the process. “There has been widespread frustration inside and outside USCIS about the bureaucracy there, and Terry was among those who expressed frustration on several occasions to multiple individuals,” Schwerin said.
The visa program, which is dominated by Chinese applicants, permits foreign nationals to enter the United States if they agree to invest at least $500,000 to create U.S. jobs. The program, 20 years old, enjoys broad bipartisan support but has recently been dogged by national security concerns.
Some of those concerns center around Huawei Technologies, a privately held electronics conglomerate with close ties to the Chinese government.
The documents obtained by The Washington Post show that an executive with Huawei applied for a visa through Gulf Coast by investing in GreenTech. DHS officials launched an inquiry into the executive that includes finding out where his investment money came from.
McAuliffe had no role in vetting applicants, his spokesman said.
Representatives of Huawei did not respond Thursday to requests for comment. The firm has long denied any impropriety.