Pubdate: Tue, 26 Apr 2011
Source: Brownsville Herald, The (TX)
Contact: http://www.brownsvilleherald.com/sections/contact/
Copyright: 2011 The Brownsville Herald
Website: http://www.brownsvilleherald.com/
Details: http://www.mapinc.org/media/1402
Author: Jared Janes, The Monitor
Note: Jared Janes covers Hidalgo County government, Edinburg and 
general assignments for The Monitor. El Nuevo staff writer Martha L. 
Hernandez contributed to this report.

MEXICAN VIOLENCE SPURS WEALTHY TOWARD U.S. INVESTMENTS

MCALLEN -- Rosendo Gonzalez sought a way for his family to leave 
Mexico when his wife was robbed at gunpoint.

A self-made businessman with a close-knit family, Gonzalez, 47, is 
one of a number of wealthy Mexican nationals looking to escape a 
violence-torn country who are taking advantage of a U.S. immigration 
program that promises green cards in return for investment.

Gonzalez intends to spend up to $5 million opening an Hidalgo 
County-based plastics factory that will complement the one he founded 
in Monterrey when he was 27. The investment will help Gonzalez, who 
has had permanent residency here since he was a child, bring his 
family to the United States.

"My heart is still over there with my family," Gonzalez said April 15 
during a trip to look at a warehouse he is considering purchasing. "I 
have to do something to get my family out."

Intrigued by the EB-5 program, dozens of Mexican families are 
traveling across the border to a nondescript McAllen office building.

Marketed throughout Mexico as USA Now, the office is one of six 
regional centers in Texas for the EB-5 investor visa, an immigration 
program launched two decades ago to stimulate economic activity by 
encouraging foreign nationals to invest at least $500,000 and create 
at least 10 jobs. U.S. businessmen with bold plans are using the 
program to raise capital for ventures ranging from construction of an 
NBA basketball arena in Brooklyn to expansions of Vermont ski resorts.

But in McAllen, rich Mexican nationals are lured more by the 
potential for a green card than for profit.

The USA Now Regional Center has secured $83 million in commitments 
from Mexican investors since it received a license to operate in late 
March, said Marco Ramirez, the company director who is ambitiously 
seeking $150 million for his fund within its first year of operation. 
Ramirez declined to discuss the specifics of his investment 
opportunities but said he offers funds for health care, property 
management and green energy.

An energetic entrepreneur who says he never would have discovered the 
EB-5 program if his floor covering business hadn't closed in the 
recession, Ramirez's schedule is packed each day pitching his program 
to Mexican families seeking legal residency in the U.S. away from the 
routine violence that continues to plague Mexico.

Targeted because of their wealth and community stature, most of his 
families have paid street taxes to operate their business. Others 
have been robbed at gunpoint in their homes or prepaid ransoms to 
prevent kidnappings.

Ramirez recounted the story of a businessman who drove four hours 
each weekend to stay in McAllen, risking running across highway 
checkpoints armed by cartel gunmen.

"He told me, 'I would rather pray the rosary for four hours on my way 
to McAllen than to pray it all weekend staying home,'" Ramirez 
recalled in between investor meetings this week. "He was living in fear."

Mexican Visas

Drive past rows of homes in Hidalgo County's wealthiest subdivisions 
and count the cars with Mexican license plates. Quantifying the exact 
impact of foreign investment in the Rio Grande Valley's economy is a 
daunting task, economic development officials say. But Mexican 
shoppers have always generated activity in local retail, housing and 
entertainment markets.

But with violence continuing unabated in the fifth year of President 
Felipe Calderon's war against the drug cartels, more Mexican 
nationals than ever are seeking legal residency here.

Rio Grande Valley immigration attorneys are swamped by requests for 
an alphabet soup of work, student and investment visas. And 
McAllen-based attorney Pollyanna Molina said there is growing 
interest in the EB-5 visa, which requires a hefty investment but can 
result in permanent residency.

Under the EB-5 program, candidates are screened for infectious 
diseases and undergo criminal background checks, and their $500,000 
investment is carefully vetted to ensure it was obtained legally. If 
investors make good on a promise to create 10 jobs within two years, 
they - along with their spouses and children -- are granted green cards.

The intent of the EB-5 program was to attract successful foreign 
businessmen like Gonzalez who wanted to expand into the U.S. But 
regional centers like USA Now that operate effectively as a private 
equity fund are a growing option for passive investors with no 
interest in scrutinizing how the money is spent.

"It's a large amount of money, but some families aren't concerned 
about it," Molina said. "They just want to secure their green card."

It's difficult to ascertain whether that is a local or nationwide 
phenomenon. Because U.S. Citizenship and Immigration Services does 
not survey individual investors, any evidence on what spurred their 
interest in the program is purely anecdotal, agency spokeswoman Luz 
Irazabal said.

However, increased interest in the program's U.S. side undoubtedly 
has been used as an alternative means to raise capital in tight 
lending markets. When the recession began in 2007, there were only 11 
active regional centers in the country. When USA Now received its 
license last month, there were 125.

More regional centers seeking to raise capital for their own projects 
allows foreign investors to selectively choose where they put their 
money. But Irazabal said time will tell whether more regional centers 
will increase the 4,200 EB-5 visas issued last year -- twice as many 
as previous years -- toward the 10,000 allotted each year.

"When the economy wasn't doing well, this was still a stable country 
with opportunity for growth," Irazabal said. "The EB-5 is a vehicle 
to help the U.S. economy but at the same time, it's a way for someone 
who is interested in this country to take advantage of the many 
opportunities that are available here."

Business Opportunities

Someone is always coming through the doors of USA Now, where 
Ramirez's staff handles paperwork, arranges business meetings and 
pitches proposals. Since the company was approved as a regional 
center last month, a group of about 10 investors -- with the 
potential for more once USA Now begins an $80,000 advertising blitz 
for Holy Week -- learn about the company's various investment options each day.

Ramirez said discussing the specifics of proposals could break up 
acquisition offers or spoil pending tax break incentives, but he said 
Mike Irby's proposition for investors is similar to USA Now's array of options.

Irby has worked daily since the beginning of the year to raise $15 
million from Mexican investors to finance the acquisition of a 
wholesale gas company he couldn't name. A Mercedes native who grew up 
in his grandfather's gas station and has spent his life in the oil 
and gas business, Irby formulated an idea for a clean energy proposal 
last year but struggled to get commercial banks to buy into his plan.

He's had better luck raising capital from USA Now's investors, 
including employees of the Mexican state-owned petroleum company 
Pemex who he sells on the need for alternative fuel sources as 
gasoline prices continue a steady climb.

"It's really difficult to go out and find the money to do an 
acquisition like this on your own," said Irby, who convinced Ramirez 
to include his proposal in USA Now's fund. "But there's a new wave 
coming on as far as clean fuels, and that's where we're trying to 
position ourselves."

USA Now's business model is tilted toward its own ventures, where it 
stands to make the greatest profit. Most of the $10,000 it collects 
in required fees from EB-5 investors will go toward expenses for 
promoting the regional center, tracking the investors' job creation 
and completing the mountain of paperwork required by an intricate bureaucracy.

But the USA Now staff often operate as fixers who help industrial 
heavyweights -- about 16 manufacturers like Rosendo Gonzalez are 
contemplating an EB-5 visa here -- navigate the process of 
establishing their own business in the U.S. Since Gonzalez committed 
to the EB-5 program, Ramirez has accompanied him to look at 
warehouses with local realtors and discuss tax abatements with 
Hidalgo County cities.

Gonzalez founded FAMA Technology, a plastics processing company based 
in Monterrey, when he was 27, eventually patenting a plumbing 
mechanism that uses less water when flushing toilets. Today, the 
company employs more than 350 people and ships its products 
throughout Mexico, Central and South America and other undeveloped 
countries with low water pressure.

Despite his company's success, Gonzalez was never interested in 
penetrating the U.S. market until criminal gangs accosted his plant 
manager and his wife. Gonzalez, who is already in the U.S. and does 
not intend to return to Mexico, plans to invest anywhere from $4 to 
$5 million in the Valley, creating about 25 jobs initially as he 
ramps up operations.

In return, Gonzalez wants to obtain visas for his wife and seven 
children, and he's considering bringing other key personnel from his 
Monterrey operation.

"We really see this as a very good opportunity because we were not 
considering the U.S. market," he said. "It's another option that was 
triggered by what is happening in Mexico."

'Almost Everything'

But for every heavy hitter like Gonzalez, there are three to four 
investors like the Ramirez family.

Mr. and Mrs. Ramirez, who do not want to be identified by their first 
names for fear of being targeted, put aside money their whole careers 
as educators in Reynosa to build a nest egg for a retirement they 
wanted to enjoy in Mexico.

But in the past three years, the family has been robbed twice, once 
when traveling to San Fernando and again when thugs broke into their 
home. With their 20-year-old son nearing the age where he wouldn't 
qualify under his parents' EB-5 visa (children over the age of 21 
require a separate investment), the Ramirez family decided now was an 
opportune time to invest in the U.S.

Their retirement savings will cover most of the $500,000 investment. 
The rest will come from investment properties they plan to liquidate.

"It's almost everything that we have," said Mrs. Ramirez, a 
48-year-old high school teacher.

"If we remain there, we'll always feel insecure," said Mr. Ramirez, 
who will retire this year from a university job. "Nowadays, it's not 
safe to have money there, so we couldn't think about enjoying it."

Moving away from the only home they've known, even if it is just 
across the border, was a difficult decision, especially knowing that 
other relatives will stay behind, said Mrs. Ramirez. But she said 
even though USA Now's objective is to bring capital to the United 
States, the company treated her family like "people" and not like a 
contract representing a specific dollar figure.

Marco Ramirez says the biggest investment USA Now will make is in the 
safety of its investors.

For the 60 percent of investors like the Ramirez family who will 
participate in his fund, he wants to structure their investments in 
asset-based programs to protect the principal. For the 40 percent of 
investors like Gonzalez who are bringing their own businesses, he 
offers what business advice he can and helps them develop connections here.

When his application for a regional center was stalled in the 
government bureaucracy, he solicited letters from investors he 
already had lined up detailing the kidnappings, extortions and other 
threats against them.

"Sometimes hope is the only thing that gets us through the day," he 
said. "Their hope is to be in a place where they can sleep at night 
and think tomorrow will be better."
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MAP posted-by: Richard Lake