‘When you invest in Montana, you have the full support of the state,” Governor Steve Bullock says at the conclusion of a video soliciting Chinese investment in the Treasure State.
The circumstances surrounding the video, which was recently provided to National Review, remain unclear. Though Bullock’s gubernatorial office claims it was made to be presented to a 2015 trade delegation of Chinese companies considering purchasing Montana’s exports, his spokeswoman was unable to provide any documentation proving that was the case.
National Review was, however, able to locate a copy of the video on Ixigua, a Chinese platform that resembles YouTube. The video on Ixigua carries a caption that suggests the video is part of an effort to solicit investment in Montana through the EB-5 visa program, which promises wealthy foreign nationals permanent residency in the U.S. in exchange for a minimum $500,000 investment in an American development project that’s been sponsored by a “regional center” — a legal entity approved by the U.S. Customs and Immigration Services (USCIS). “The Governor of Montana kindly invites you to participate in this ‘free schedule’ EB-5 project,” the caption says.
Bullock’s office says the video was never used to solicit EB-5 investment in Montana. But it appears to have been uploaded to Ixigua in July 2017 by a firm called “Zhaolong Immigration,” which advertises itself as “an immigration agency specializing in providing overseas investment immigration and overseas real estate immigration services.” And the description that accompanies the upload reads:
In July, Zhaolong released the Big Sky luxury hotel EB-5 project in Big Sky Montana, USA. The project is adjacent to Yellowstone National Park and the top clubhouse, the Yellowstone Club. ‘Visa Reservation’ Places, to avoid the long waiting period, get the green card early to repay [sic].
Pitched as a way to bring jobs to struggling rural areas, the EB-5 program has predominantly been utilized by developers in major cities since its inception as part of the Immigration Act of 1990. The program has faced bipartisan criticism, most notably from Senators Dianne Feinstein of California and Chuck Grassley of Iowa, both for failing to deliver capital and jobs to rural areas as promised and for facilitating rampant immigration and financial fraud.
Bullock, who is currently running for the Senate against incumbent Republican Steve Daines, has not discussed the EB-5 program at length in public, but he did suggest expanding the pool of foreign nationals eligible to participate during his failed 2020 presidential run. As part of his “A Fair Shot for Rural America” platform, Bullock proposed lowering the minimum investment threshold for participation in the program from $500,000 to $350,000 in cases where the money flowed to specially designated areas with high unemployment, and the investors agreed to live in those areas for ten years.
When reached for comment, Bullock’s campaign presented the proposal as a reform designed to reorient the “flawed” program to its original stated purpose: directing capital to struggling rural areas.
“The EB-5 program is flawed, rewarding big corporations and large American cities with little oversight. Governor Bullock believes the federal EB-5 program needs to be reformed and restricted,” campaign spokeswoman Olivia Bercow said. “To do what it originally intended, the program needs to make sure those living in rural areas don’t get further left behind economically and that people who use this program live in and contribute to the rural communities they have invested in for at least 10 years.”
Bullock and the program’s more vocal critics at least agree on its flaws. “EB-5 was designed to generate new employment opportunities in rural and economically distressed areas, but it has long been hijacked by glitzy project developers looking to siphon resources away from areas that need them most,” Grassley said in a statement. “The program has also been riddled with massive fraud and has even resulted in the selling of visas to some of China’s wealthiest criminals. The program is long overdue for an overhaul.”
Fraud associated with the program cuts in both directions. Chinese investors, who make up 85 percent of EB-5 visa recipients, have sued American developers for misrepresenting the nature of their projects and the resulting returns they should expect, while wealthy Chinese criminals have used the program to launder stolen money. EB-5 fraud has even been alleged in Bullock’s home state of Montana, where a gold mine known as “Butte Highlands Joint Venture” was sued by a group of Chinese investors who claimed the project’s American developers cheated them out of $14.5 million.
In addition to fraud, the program has also been exploited by the Chinese government to compromise American national security. Last year, a Chinese national who’d secured residency in the U.S. on an EB-5 visa sent a number of hydrophones — devices that can detect submarines underwater — to a Chinese university associated with the People’s Liberation Army.
“Wealthy Chinese people may seek residency in the United States for a number of reasons. Some want a foreign bolt-hole for when things go pear-shaped in China. A precaution many are taking is getting their wealth out of China, and therefore out of reach of the Chinese government. They know it can be confiscated at any time. And they are wary of a financial collapse devaluing their capital overnight,” says Clive Hamilton, an Australian professor of public ethics and the co-author of the recent book Hidden Hands: Exposing How The Chinese Communist Party Is Reshaping The World. “So U.S. residency offers huge rewards. Like all people of Chinese heritage abroad, the CCP believes it owns them. If they have family or business links back in China then they are vulnerable to pressure and co-option by the Party.”
The program’s usefulness to Beijing isn’t confined to direct espionage, either. Hamilton suggests that Chinese officials likely view it as yet another avenue by which they can co-opt American business and political elites and into acting against American interests. “State and municipal politicians are often easy meat for CCP influence. They have their eyes on the dollars and believe national security is a Washington issue,” he says.
The primary beneficiary of EB-5 investment in Montana has been the Yellowstone Club, an exclusive private ski resort for the ultra-wealthy in Big Sky, Mont., where Bullock has hosted corporate fundraisers in the past.
The club is owned by CrossHarbor Capital Partners, which was co-founded by Sam Byrne, one of Bullock’s biggest donors. Byrne has contributed $31,154.32 to Bullock’s Big Sky Values PAC since 2017, according to the Federal Elections Commission database. He contributed the maximum allowable amount to Bullock’s 2012 and 2016 gubernatorial-reelection campaigns. He has also donated to the Republican incumbent Daines, who has not co-sponsored legislation that would limit the EB-5 program or otherwise publicly supported reform efforts.
CrossHarbor Capital, meanwhile, has used EB-5 investment to expand the Yellowstone Club considerably since acquiring the property in a 2009 fire sale. One recent Yellowstone Club expansion, known as the “Big Springs Village” project, is expected to bring in $140 million in EB-5 funds, according to the website for the USCIS-approved Northern Rockies Regional Center (NRRC), which sponsors the Yellowstone Club’s participation in the EB-5 program.
Former Montana senator and U.S. ambassador to China Max Baucus personally wrote a letter to Chinese investors recommending the Yellowstone Club as a promising opportunity. Baucus has made headlines in recent months for spouting Chinese Communist Party talking points in appearances on American cable-news shows and interviews with Chinese state-run media outlets.
“Joe McCarthy [and] Adolf Hitler were making statements based on nationalism . . . riling people up, making people believe things that were really not true,” Baucus told the state-owned Chinese Global Television Network in May, as Beijing was taking flak for its coverup of the coronavirus outbreak. “The White House and some in Congress are making statements against China that are so over the top and so hypercritical, they are based not on the facts, or if they are based on fact, sheer demagoguery, and that’s what McCarthy did in the 1950s.”
Baucus played a key role in the NRRC’s effort to become the first regional center approved by USCIS, and he has parlayed his government work fostering closer ties with China into a number of lucrative business roles, including a seat on the board of Alibaba, a Chinese e-commerce giant with strong CCP connections. Whether he is intentionally seeking to provide cover for the Chinese dictatorship’s many sins, that’s what he’s done in practice. As professor Hamilton notes, oftentimes Chinese investments in America offer more than a mere financial reward.