Forest City Ratner misled foreign investors: Watchdog

Dec.December 09, 2013 05:30 PM

Cause of Action, a watchdog group, has accused Forest City Ratner of misrepresenting the risk to foreign investors of backing its $4.9 billion Atlantic Yards project, and asked federal legislators to investigate the developer.

Forest City allegedly exploited census data to entice foreign investors to use the EB-5 program, which provides visas in exchange for creating American jobs. Cause of Action completed an 18-month investigation of its own before appealing to the U.S. House Committee on Oversight and Government Reform.

A spokesperson for Forest City did not immediately respond to Law360’s request for comment.

“Our investigation uncovered that not only did FCR violate the law and engage in political profiteering, but the DOJ turned a blind eye to FCR’s criminal activity,” Dan Epstein, executive director of Cause for Action, said in a statement cited by Law360. “We can’t rely on these federal agencies to properly apply their own rules … which is why Congress should intervene and investigate these practices.”

To utilize the EB-5 program, developers must show that a project is located in a high-unemployment area. But the targeted employment area designed for Atlantic Yards only uses census tracks as a basis for its boundaries, Cause of Action said, which effectively creates a gerrymandered EB-5 district. The group claimed that politicians used such gaps as a way around getting prohibited contributions from foreign residents. [Law360]Julie Strickland

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