Crony capitalism or friends in high places

Obama nominee faces investigation involving company run by brother of Hillary Clinton

By Michael Isikoff
NBC News National Investigative Correspondent

President Barack Obama’s nominee to be the Homeland Security Department’s No. 2 official is under investigation over alleged intervention to obtain approval for a company run by a brother of Hillary Clinton to participate in a program that provides U.S. visas for foreign investors, according to an email the department’s inspector general sent to lawmakers Monday night and obtained by NBC News.

The investigation into Alejandro Mayorkas – who currently serves as director of U.S. Citizenship and Immigration Services (UCIS), an agency within Homeland Security – was opened in September 2012 based on a referral from an FBI counterintelligence analyst, according to the email. The inspector general probe was first reported by The Associated Press.

"At this point in our investigation, we do not have any findings of criminal misconduct," the email from the Homeland Security inspector general states. "We are unaware of whether Mayorkas is aware that we have an investigation."

The probe is based on allegations that Mayorkas personally intervened to win an approval for Gulf Coast Funds Management, a financing company headed by Clinton’s brother Anthony Rodham, after USCIS officials rejected its application, according to an aide to GOP Sen. Charles Grassley, who had received internal USCIS emails about the matter from a department whistleblower.

Gulf Coast has received media attention in recent months over its partnership with Greentech, an electric car company run by Terry McAuliffe, the Democratic nominee for governor of Virginia.

In a letter to Homeland Secretary Janet Napolitano released Tuesday night, Grassley asked for details about the department’s handling of the company’s application and quoted from an internal agency email about Gulf Coast describing it as a “politically…well connected company” and noting the involvement of Rodham and McAuliffe. However, the author of the email — who is not identified — added after noting the firm’s political connections, “not that I think it matters because it shouldn’t impact how we do our job.” 

Grassley, a foe of Obama's immigration policies, had asked the inspector general for a report on the probe after getting tipped off by the whistleblower, the aide said. 

The emails obtained by Grassley's office, which were shared with NBC News, show that, after winning approval to participate in the foreign visa program, at least one of the visas sought by Rodham's firm was for a vice president of Huawei Technologies, a Chinese telecommunications firm that has been investigated by the House Intelligence Committee over claims that it is closely tied to the Chinese intelligence services. Huawei Technologies has denied such charges.

A spokesman for Homeland Security had no comment. The disclosure of the probe comes barely a week after Napolitano announced her resignation as Homeland Security secretary and just before a Thursday hearing before the Senate Homeland Security and Governmental Affairs Committee on Mayorkas' nomination to be deputy secretary. 

GOP aides said Republican senators will now attempt to postpone the hearing and block his confirmation until the inspector general probe is resolved. "We do not want this to go forward," said an aide to Sen. Tom Coburn, the ranking Republcan on the panel.   

The email from the Homeland Security inspector general's office states it initially included allegations that USCIS lawyers sought to obstruct an audit of the agency's EB-5 visa program that was being conducted by the Securities and Exchange Commission. The E-5 program, which has been authorized by Congress, provides visas to foreigners who invest $500,000 in job-creating development projects by U.S. companies that are approved by UCIS for designated "regional centers."

As the probe continued, "preliminary investigative findings" refocused the investigation in part  on whether Mayorkas had "allegedly assisted with the approval" of an application by Gulf Coast Funds Management after the application had been denied by his agency's officials in California and the denial had been upheld by an appeals office.

During the course of the probe, the email states, the inspector general learned of other allegations "involving alleged conflicts of interest, misuse of position, mismanagement of the EB-5 program, and an appearance of impropriety by Mayorkas and other" officials within the UCSIS. 

D. Simone Williams, a lawyer for Gulf Coast Funds Management, said in an email response for comment that the company "was not aware of any investigation by Department of Homeland Security. Our management abides by all regulations under USCIS and GCFM’s contact with USCIS has been limited to procedural inquiries. We are not aware of an investor visa application denial associated with our Regional Center. In fact, none of the investor visa applications associated with our Regional Center, sought the assistance of USCIS, after being denied and an appeal was rejected."   

The inspector general’s position within Homeland Security is vacant and the office is headed by deputy inspector general Charles K. Edwards. His office did not immediately respond to a request for comment.

The email indicates that the FBI's Washington field office, which was conducting a background investigation of Mayorkas on behalf of the White House, was informed of the probe by the inspector general in June. The White House announced the president's intent to nominate Mayorkas on June 27. The aide to Grassley said GOP senators want to know why the White House moved forward with the nomination when a probe into his conduct was under way.

At Tuesday’s White House press briefing, press secretary Jay Carney was asked about the initial AP report of the investigation. Carney reponded: "Well, it's an investigation, as I understand it. I've just seen the report. I would refer you to the IG, which apparently, according to this report, is conducting an investigation into DHS."  

Below is a full text of the email:

The DHS OIG is investigating Director Mayorkas.  Director Mayorkas was not specifically named in the initial complaint; however, the DHS OIG is now investigating allegations concerning the actions/conduct of Director Mayorkas and other USCIS management officials.

This investigation has been open since September 2012.  DHS OIG's investigation was initiated based on an investigative referral submitted by a FBI Analyst, Counterintelligence Unit, Washington, DC.  The complaint was forwarded to a DHS-OIG employee who subsequently referred it to the DHS OIG Hotline.

Initial allegations were that (1) USCIS managers and counsel directed employees to obstruct an OIG audit and (2) a (unnamed) USCIS Director personally facilitated and assisted an applicant/petitioner with an EB-5 visa approval after the petitioner was initially found to be ineligible for the program.

Preliminary investigative findings determined that the alleged obstruction was by the USCIS Office of General Counsel and related to an audit/investigation of the EB-5 program being conducted by the U.S. Securities and Exchange Commission (SEC), rather than a DHS OIG audit; and clarified that Director Mayorkas allegedly assisted with the approval of an application submitted on behalf of Gulf Coast Funds Management (GCFM), a Regional Center applicant under the Immigrant Investor Pilot Program, after GCFM's application was denied by the USCIS California Service Center and the denial was upheld by the USCIS Administrative Appeals Office (AAO).

During the course of the DHS-OIG investigation, subsequent allegations have been indentified involving alleged conflicts of interest, misuse of position, mismanagement of the EB-5 program, and an appearance of impropriety by Mayorkas and other USCIS management officials.

At this point in our investigation, we do not have any findings of criminal misconduct.

We are unaware of whether Mayorkas is aware that we have an investigation.

In response to a June 2013 inquiry from the FBI Washington Field Office, Investigative Operations (reportedly conducting a background investigation on behalf of the White House), the DHS OIG advised of the investigation involving alleged misconduct by Mayorkas.

The DHS OIG also has an ongoing audit regarding the EB-5 program.  The audit was started in August of last year and is in its final stages of field work.