Category Archives: Business

Visa program for wealthy foreigners still prompting questions

I was browsing the recent stories flagged by the group, Investigative Reporters & Editors, and noted one involving alleged fraud in a project in Vermont funded via the EB-5 visa program (“Red flags preceded fraud allegations at Jay Peak Resort“).

It reminded me of a column I wrote for Civil Beat back in late 2012, which looked inside how the visa program, which allows foreign citizens to get a “green card” and permanent U.S. residency in exchange for large investments in job-producing projects.

It might be time to take another look at how Hawaii projects tied to the visa program are doing.

In the meantime, here’s my column that first appeared in 2012. Still a good read, I think.

Patronage Games
It’s always good to know someone when you want a job.
October 23, 2012

One of the benefits of being a reporter is that you get to exercise your curiosity.

And so when I saw the news last month that UH West Oahu was facing a cash flow crunch because an $18 million loan had been unexpectedly delayed for several months, I decided to take a closer look at the deal.

My routine check into that tardy $18 million loan turned up an unexpected bit of apparent political patronage involving a personal friend and spiritual mentor to former Gov. Linda Lingle.

Here’s the story.

The EB-5 immigrant investor program

Construction of the new UH West Oahu campus was initially planned to be paid for with revenue bonds issued by the university, but a series of change orders drove up construction costs and forced the campus to line up additional financing. When the $18 million loan didn’t close on time, there wasn’t enough money on hand to pay all the bills. The Board of Regents was forced to draw on other funds to temporarily cover the gap at West Oahu.

The West Oahu loan was put together by New York-based CanAm Enterprises using the federal EB-5 Visa program, which offers foreign investors a path to a “green card” and permanent U.S. residency for themselves and their families in exchange for an investment of $500,000 in a qualified local company or project.

This loan is being funded by 36 foreign investors recruited by CanAm and organized into a limited partnership. The investors’ money is in an escrow account while the proposed deal is being scrutinized by the U.S. Citizenship and Immigration Service to see if it meets program requirements.

USCIS must confirm individual investors have documented the source of their funds to prove the money was legally obtained, and the project has to show the planned investment will create at least 10 fulltime permanent jobs for each participant. In this case, that would be 360 permanent jobs created that would not otherwise exist without the loan.

Felicia Imperator, a spokesperson for CanAm’s New York office, said the company “has no reason to believe the project will not be approved.”

Inside the CanAm contract

CanAm administers the Hawaii Regional Center, the state’s EB-5 program, under the terms of an exclusive 5-year contract awarded in 2008 by the Department of Business, Economic Development and Tourism. The contract was approved and signed by then-director Ted Liu, a Lingle appointee.

CanAm was selected to rescue a program that had been floundering and was in danger of losing federal authorization.

Although the contract didn’t require the state to pay for CanAm’s services, it authorized the company to collect several types of fees, some on an ongoing basis, from both the immigrant investors and the businesses receiving financing.

CanAm initially said the company expected to place between $50 million and $100 million in investments annually, making its percentage fees potentially quite lucrative.

Making the connection

A year after the contract was signed, CanAm was ramping up its Hawaii program when Liu suggested the company hire Rabbi Itchel Krasnjansky as its local representative.

Krasnjansky, along with his wife, Pearl, are primarily known as leaders of the Orthodox Jewish organization, Chabad Lubavitch of Hawaii, for over two decades. The group now offers religious services, as well as a Hebrew school, a Kosher deli, and a community center in a side room on the main floor of the Ala Moana Hotel formerly occupied by a nightclub.

Perhaps more relevant were his strong ties with Liu’s boss, then-Gov. Lingle, who he describes as a personal friend and who met with the Rabbi weekly to study the Torah during her two terms as governor. Krasnjansky’s Chabad Lubavitch was invited to host a kosher Seder at Washington Place each year on the Jewish Passover holiday, another indicator of their close ties to the governor.

Krasnjansky also had the governor’s ear on the issue of civil unions, which he strongly opposed and was later described as a key advisor behind her decision to veto HB444 during the 2010 legislative session.

Liu’s recommendation, noted later in a company report, likely carried considerable weight. Following several conference calls and a meeting in New York, Krasnjansky was hired.

It is difficult to determine, from the public record, what relevant business experience Krasnjansky brought to his new assignment, which required at least some familiarity with the arcane federal rules governing EB-5 program eligibility.

The responsibilities of CanAm’s local representative, according to documents filed with DBEDT, included promoting the investment program as an alternative source of financing for local businesses, responding to inquiries, and “facilitating CanAm’s due diligence investigations — including reviewing business plans, budgets, financial statements, and other pertinent information.”

In addition, the local representative “should have experience abroad working with immigration programs such as the EB-5 Program,” Liu wrote in a June 23, 2008, letter to the head of the foreign investor program at the USCIS.

Liu’s letter concluded: “To have the requisite skills and background to perform the above duties, the liaison will likely be an already established attorney, business leader or entrepreneur in Hawaii who is seeking to expand his or her existing activities within Hawaii through the Hawaii Regional Center.”

CanAm President Tom Rosenfeld, in a written response this week to questions about Krasnjansky’s selection, said only that he “came highly recommended by reputable members of the business community.” Rosenfeld did not mention Liu’s role in bringing the Rabbi and the company together.

“Mr. Krasnjansky played an important role in introducing the EB-5 Program to prominent business leaders in Hawaii,” Rosenfeld wrote, “and we continue to have a high regard for him.”

Rabbi Krasnjansky did not respond to a request for comment about his work for CanAm.

State business registration records show Krasnjansky was an officer or agent for four Hawaii businesses in addition to several nonprofit groups related to Chabad Lubavitch. Two of the companies were administratively terminated by state regulators after they failed to file required annual reports, and the other two are currently listed as “delinquent.”

The patronage game

It was, by all appearances, a classic example of the power of patronage, the ability of the governor to put friends and supporters into the way of financial opportunities. Classic politics, rewarding your friends, and unusual only in that this time it became a matter of public record.

It’s also the kind of wheeling and dealing that isn’t restricted to one party or the other.

Just weeks after Maui attorney and former state Rep. Tony Takitani served as emcee for Gov. Neil Abercrombie’s inauguration ceremonies in December 2010, he was selected by CanAm to replace Krasnjansky as the company’s exclusive local representative.

CanAm’s Rosenfeld said, in a written statement: “In addition to a law degree and practice expertise in real estate and land use law, Mr. Takitani is well positioned to identify qualifying investments and facilitate due diligence investigations in connection with prospective projects.”

Takitani, in a subsequent email, clarified that while his firm has expertise in real estate and land use law, he does not personally have practice expertise in those areas.

In any case, Takitani certainly has the professional skills and experience to do this job well, but his political credentials are just as strong.

Takitani, a veteran campaigner, was part of Abercrombie’s campaign team and kitchen cabinet, and is currently the governor’s official representative on the East-West Center’s Board of Governors.

According to his law firm’s website: “He previously served on the Hawaii Health Systems Corporation, the Maui United Way and served as Maui United Way Distribution Chairman, the Motor Vehicle Insurance Task Force, the Maui Memorial Medical Center Foundation and the Maui Memorial Medical Center CEO Selection Committee.” He was also appointed by Senate President Shan Tsutsui to the 2011 State Reapportionment Commission.

In a telephone interview, Takitani said he didn’t know how he had been selected.

“They called me one day and said that I was somebody that paid attention to things,” Takitani said. “They asked me to assist. It’s as simple as that.”

When asked if his name had been suggested by someone in the Abercrombie administration, Takitani demurred.

“I’m not exactly sure, but it wasn’t the administration,” he said.

Former HPR news director launches public relations service

Kayla Rosenfeld, former news director at Hawaii Public Radio and communications specialist for the state Department of Human Services, has launched her own solo company, Wild Rose Communications!

Here’s how she describes her effort:

As sole proprietor of Wild Rose Communications, I offer a menu of thoughtfully tailored services to meet your personal and small business needs. These include, but are not limited to, public relations, research, emcee, conference planning, document editing, website management, public speaking coaching, and writing summary reports. Areas of focus and interest include environmental conservation, marine science, the Asia-Pacific region, the healing arts, and human services.

And her self-description:

I describe myself as a Humanitarian, Communicator, Health and Wellness Enthusiast, Environmentalist, Feminist.

I am a seasoned broadcast journalist, and an organized capable communications professional. I have 15 years of experience in public relations, government and non-profit communications, journalism, radio news reporting, issues of the Asia-Pacific region, and environmental education.

If you know Kayla, you know that she puts everything into her projects. She’s a straight shooter, a hard worker, and a talented story teller in various media.

Check out the Wild Rose website, which features some of her current clients, and also serves as an archive of her previous radio and video productions. Check back frequently for content updates.

If you have leads on possible gigs that would fit Kayla and Wild Rose Communications, email her directly. or give her a call (or send a text) at 808-230-5960.

Giant hotel merger gets little attention in local news media

If you haven’t been reading business news over the past few months, you might not have been following the bidding between Marriott and a rival, Anbang Insurance Group Co. Ltd., to takeover the Starwood hotel chain, Starwood Hotels & Resorts Worldwide Inc.

The two rival bidders each sweetened the pot after Marriott’s initial bid late last year, but in the end it appears Marriott will pull off the deal. The company’s shareholders are scheduled to vote on Friday, and both companies are recommending approval.

What’s interesting to me is that there has been little local reporting on the Marriott-Starwood buyout, despite its obvious impact on the state’s largest industry.

Here are the brands associated with the two chains, which will boast a combined total of about 5,500 hotels and 1.1 million guest rooms in over 100 countries.

About Marriott International, Inc.

Marriott International, Inc. (NASDAQ: MAR) is a global leading lodging company based in Bethesda, Maryland, USA, with more than 4,400 properties in 87 countries and territories. Marriott International reported revenues of more than $14 billion in fiscal year 2015. The company operates and franchises hotels and licenses vacation ownership resorts under 19 brands, including: The Ritz-Carlton®, Bulgari®, EDITION®, JW Marriott®, Autograph Collection® Hotels, Renaissance® Hotels, Marriott Hotels®, Delta Hotels and Resorts®, Marriott Executive Apartments®, Marriott Vacation Club®, Gaylord Hotels®, AC Hotels by Marriott®, Courtyard®, Residence Inn®, SpringHill Suites®, Fairfield Inn & Suites®, TownePlace Suites®, Protea Hotels® and MoxyHotels®. Marriott has been consistently recognized as a top employer and for its superior business ethics. The company also manages the award-winning guest loyalty program, Marriott Rewards® and The Ritz-Carlton Rewards® program, which together comprise nearly 55 million members. For more information or reservations, please visit our website at www.marriott.com, and for the latest company news, visit www.marriottnewscenter.com.

About Starwood Hotels & Resorts Worldwide, Inc.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with nearly 1,300 properties in some 100 countries and over 188,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences under the renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®,Tribute Portfolio™, Four Points® by Sheraton, Aloft®, Element®, along with an expanded partnership with Design Hotels™. The company also boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG®). Visit www.starwoodhotels.com for more information and stay connected @starwoodbuzz on Twitter and Instagram and facebook.com/Starwood.

Read through the list of hotel brands and you’ll see how many properties in Hawaii will be impacted by the merger. In those areas where the two companies hotels are clustered together, it can be expected to have an increased impact.

But you wouldn’t know if from the lack of local attention to the deal and its possible implications.

A search of the Star-Advertiser’s archives found several wire service stories about the deal, but no local reporting, although given the vagaries of the search engine, some might have been missed.

A similar search at Pacific Business News turned up a local story published last week, “Marriott-Starwood merger could affect Hawaii radius restrictions“.

In Hawaii, the deal would combine nine Starwood hotel properties, including the Sheraton Waikiki and The Royal Hawaiian, with Marriott’s 17 hotel and time-share properties, including the Waikiki Beach Marriott Resort & Spa.

I wonder whether such a deal will reduce competition and result in higher prices in Hawaii? Will the merger lead to reductions in executive staff, or a consolidation of suppliers? Will there be some properties jettisoned by the new conglomerate? Lots of questions, little initiative on the part of local media.

Still getting my hair cut in the same place

After our early walk today, I had to get moving to make a scheduled haircut in Kaimuki.
As I was sitting down with a cup of coffee, I had a startling realization.

I’ve been getting my hair cut in the same spot since 1969. That boggles my mind, to tell the truth. It’s a small barber shop on the ground floor of the round high rise building on 9th Avenue, just off of Waialae.

Dai Yen ChangPrior to 1978, it was a rental building owned by Dai Yen Chang, a retired dentist and former member of the Honolulu Board of Supervisors (which later became the City Council). Chang was elected in 1926, the first full-blooded Chinese to be elected to the board.

We rented an apartment in the building from 1969 through the middle of 1978, and for part of that time our assigned parking stall was right in front of the barber shop. So it was natural to start going to Ms. May, who owned the shop at the time.

It was a comfortable spot, close to home, and made it part of my less-than-fastidious haircut schedule.

It’s been through only a couple of ownership changes.

When May retired after a few years, the business was bought by Arthur and his wife, Jean. That was sometime before 1978, when the building went condo and all the tenants moved out. Then, about 10 years ago, Art retired and the space was purchased by Leila, who formerly operated a barber shop in Chinatown. I rode through each transition.

And here I am, nearly 47 years after my first haircut in the building, still taking my business to the same place.

I tell myself that it’s like this in island communities. Mobility is limited, and people retain ties to their neighborhoods and their neighbors.

In any case, while there in Kaimuki this morning, I took a few pictures in honor of this long history.

History in Kaimuki

History in Kaimuki

History in Kaimuki

Local news: Half the product, twice the price

In a column on the Nieman Lab blog last week, Ken Doctor refers to an earlier observation that “we’ve just about reaching the point (“The halving of America’s daily newsrooms”) where we’ll have half the number of daily journalists working as compared to 1990.”

He then looks at some of the details of that decline in journalism.

Doctor offers the opinion that while the largest national newsrooms are likely to survive the digital transition, he fears for the future of local news and, in turn, democracy (“The financialization of news is dimming the lights of the local press“).

Among many biting comments:

While national/global news companies have cut their newsrooms, they have still maintained sufficient capacity to make their news brands valuable in the digital age. It’s not just the numbers of journalists: It’s a good mix of veteran experienced journalists who know their beats deeply and younger journalists, still early in their careers but natively more digitally inclined.

At the local press, it’s a different picture. As newsrooms have halved, older, experienced journalists have been disproportionately made to feel redundant, and then made sent off. The main reason: money. Older journalists earn more of it, and their cutting makes short-term financial sense.

The result: a disaster whose death spiral seems to be accelerating. When I’ve given talks, I’ve gotten a lot of nods from people in the industry when I show one single slide: A two-liter bottle of Coke selling for $1 next to a one-liter bottle priced at $2. That’s essentially what local publishers have done in product and pricing of print over the last five years, doubled the price and halved the product, a halving that, of course, carries through to their digital offerings.

Any company that disrespects its own products, and those who produce them, probably deserves its eventual fate.

He looks at several cases, The Independent (UK), now going all digital; The Las Vegas Review Journal, bought out and now firmly under the political control of Sheldon Adelson; the Philadelphia dailies, now being turned over to a nonprofit foundation; and the adventures of Tribune Publishing and it’s expansion in Southern California.

In any case, a very interesting column that’s will be worth your while to spend some time reading.

And then, also from Nieman Lab, different ideas of the future (“Brain food: Here are 15 smart people talking for 5 minutes each about journalism’s future“).

I’ve just started to watch/listen to these short snippets. If you’re interested in news, and the news media, check them out.