EB-5 may be “legalized crack cocaine,” but it creates jobs: Shvo adviser

It’s not easy to backtrack on a statement found in court documents, but Howard Michaels is attempting to do just that about his “legalized crack cocaine” comment about the EB-5 program.

Michaels, who heads the Carlton Group, wrote the phrase in a 2014 email to Michael Shvo, telling the developer he and his partners “would be crazy not to jump on this” to finance their 91-story tower at 125 Greenwich Street.

Shvo, who is developing the 275-unit condominium tower with Davide Bizzi’s Bizzi & Partners and Howard Lorber’s New Valley, heeded the counsel: the developers secured $175 million in mezzanine financing through an EB-5 loan.

Michaels said in a subsequent email that he was “pointing out the virtues of the EB-5 financing,” which he said is low-cost and “creates lots of construction jobs and employment,” the Wall Street Journal reported.

In March, the Carlton Group filed a lawsuit against the developers of 125 Greenwich Street, seeking nearly $4 million worth of unpaid commission.

For its April issue, The Real Deal took an in-depth look at the EB-5 gravy train — from developers to regional centers to banks to the so-called migration agent.

Developers are using the program, which grants foreign investors a U.S. green card in exchange for a $500,000 investment, more than ever. The number of applications for the program climbed to 17,691 in 2015 from 6,554 in 2013, according to U.S. Citizenship and Immigration Services.

On Wednesday, Congress will again look at the program at a hearing of the U.S. Senate Judiciary Committee, the Journal reported. [WSJ] — Dusica Sue Malesevic